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Revolutionary FAR Part 19 Overhaul: What Small Businesses Need to Know Now

The Federal Acquisition Regulation (FAR) Part 19, the rulebook governing how the federal government contracts with small businesses, has just experienced its most significant reform in 41 years. Dubbed the “Revolutionary FAR Overhaul” (RFO), this initiative is a substantial effort to streamline federal contracting by eliminating unnecessary burdens and rewriting rules in plain language. While the RFO brings genuine benefits in cutting red tape, it also introduces a massive change that fundamentally alters the competitive landscape for small businesses on many federal contracts.

This overhaul is currently being implemented in phases, starting with temporary “deviations” that agencies are adopting immediately. It is crucial for small businesses to understand this mixed bag of changes and adjust their strategies right away.

The Win: Reduced Red Tape and Faster Awards

The overarching goal of the RFO is to modernize procurement. For small businesses, this translates into several major administrative improvements and benefits:

Dramatically Reduced Red Tape: The government is removing over 1,600 burdensome requirements. This includes one-third fewer boilerplate requirements for commercial work, simplifying SAM registration and maintenance, and lowering the administrative costs associated with pursuing federal contracts.
Faster Contract Awards: Small businesses can expect increased use of simplified acquisition procedures, leading to shorter times from solicitation to award, and reducing carrying costs while waiting for decisions.
Better Access to Large Contracts: The changes recognize government-wide contracts (GWACs) like OASIS+ and GSA Multiple Award Schedule (MAS) as essential procurement tools. Small businesses will have easier access to these vehicles through new “on-ramps” and opportunities to join existing contracts without waiting for full recompetes.
Improved Competition Feedback: The RFO emphasizes greater use of post-award debriefings, giving businesses better insight into why they didn’t win, and providing actionable information to improve future proposals.
Practical Demonstration Opportunities: There is a shift toward technical demonstrations over written proposals, allowing firms to show capabilities as they would to private sector customers, ultimately reducing expensive proposal writing contests.

The Loss: The Split in the “Rule of Two” Protection

The “Rule of Two” is a cornerstone protection requiring contracting officers to set aside contracts exclusively for small businesses when they reasonably expect to receive competitive offers from at least two responsible small businesses. The RFO has created a two-tier protection system:

1. The Rule of Two is Preserved for New Contracts

For new contract awards (specifically those between the micro-purchase threshold (MPT) and the simplified acquisition threshold (SAT)), the Rule of Two remains intact. Contracting officers must set aside these opportunities when the two-small-business condition is met.

2. Mandatory Set-Asides are Eliminated for Task Orders

This is the most critical change. For task and delivery orders placed under existing multiple-award contracts (including GSA MAS, GWACs, agency-specific vehicles, and all indefinite delivery/indefinite quantity (IDIQ) contracts), the Rule of Two no longer applies.

The Shift to Discretion: For these orders, set-asides are now discretionary and non-protestable. Contracting officers may set them aside, but they are not required to do so.
The Impact: A substantial portion of federal contracting dollars flow through these task and delivery orders. Losing mandatory set-asides here means small businesses will face increased competition from large businesses on opportunities where they previously held regulatory protection.

Changes to 8(a) Program Dynamics

Firms participating in the 8(a) Business Development Program will also see fundamental changes:

Competition First: Contracting officers must now first attempt competitive 8(a) acquisitions below the competitive threshold before considering sole source awards. This competitive threshold is increasing (to $8.5M for manufacturers and $5.5M for all other baselines as of October 1, 2025).
Automatic Release: Follow-on requirements can now be automatically released from the 8(a) program to be set aside for other socioeconomic programs (HUBZone, SDVOSB, or WOSB) without the traditional formal oversight from the Small Business Administration (SBA).

Top 5 Critical Takeaways and Immediate Actions

Small businesses must prepare for a more competitive environment on multiple-award contracts by making strategic adjustments.

Discretion Becomes Key: Success on multiple-award contracts now depends heavily on contracting officer relationships and agency culture, rather than mandatory regulatory requirements.
Strategic Positioning Essential: Getting onto multiple-award contracts as a prime contractor is now more critical than ever, as you cannot rely on the Rule of Two protection for subsequent task and delivery orders.
Invest in Relationships: Cultivate stronger relationships with contracting officers, as they now hold the discretion for set-asides on significant contract dollars.
Embrace Demonstration: Invest in technical demonstration capabilities over focusing solely on expensive proposal writing contests.
Window for Influence: These rules are temporary deviations subject to formal rulemaking. The forthcoming public comment period provides a critical opportunity to advocate for the restoration of stronger protections, particularly regarding task and delivery order set-asides.

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