FAR Part 19 Overhaul: Considerations For Government Contractors

Go-To Guide:

• Restructure and Core Policy: FAR Part 19 is renamed from "Small Business Programs" to "Small Business" and reorganized around the acquisition lifecycle, while reaffirming the government's policy to maximize small business participation.
• The Rule of Two: The "Rule of Two" remains intact for acquisitions above the SAT, but federal agencies now have discretion to set-aside orders under multiple-award contracts (MACs). The agency's decision to set aside an order placed under a MAC is an exercise of discretion and not a basis for a protest.
• Small Business Representation: Small business representation is determined at the contract level and updated when certain contract-level events take place (e.g., option exercise, novation, or acquisition).
• 8(a) BD Program: For procurements below competitive thresholds, contracting officers must first consider competitive 8(a) BD program awards through government-wide vehicles before proceeding with a sole source. Follow-on procurements may now be released from 8(a) BD programs to other SBA programs (HUBZone, SDVOSB, WOSB), departing from the "once 8(a), always 8(a)" principle.

On Sept. 26, 2025, the Federal Acquisition Regulatory Council (FAR Council) issued an update to FAR Part 19, which governs small business programs. The rewrite makes several changes, such as streamlining and reorganizing the small business participation rules, largely maintaining key procurement rules (i.e., the Rule of Two), moving step-by-step "how-to" details into clauses and guidance, and addressing long-standing issues with multiple-award contracts (MACs) and the Small Business Administration (SBA)'s 8(a) Business Development (BD) program.

Overview of Revolutionary FAR Overhaul (RFO) to FAR Part 19

Name Modification. An evident change to FAR Part 19 is its name change from "Small Business Programs" to "Small Business." As with other overhauled sections, FAR Part 19 is rebuilt around the acquisition lifecycle: Presolicitation (19.1), Evaluation & Award (19.2), and Postaward (19.3). The revision's overall net effect is positive as it reads faster and reduces cross-reference between Parts 19 and 52.

The Rule of Two and Set-Aside Discretion. Despite fears that the FAR Council would eliminate the regulatory application of the "Rule of Two," the rule largely remains intact. Under the "Rule of Two," acquisitions between the micro-purchase threshold (MPT) and the simplified acquisition threshold (SAT) are required by statute to be set aside for small businesses if there is a reasonable expectation of obtaining offers from two or more responsible small businesses that are competitive in terms of fair market prices. The FAR Council retained this requirement for procurements above the SAT, noting the rule as "essential to sound procurement." However, the rule would not apply to orders under MACs, and instead, contracting officers have the discretion to set aside orders placed under MACs. Consequently, an agency merely exercising such discretion cannot be the basis for a bid protest.

Small Business Representations. FAR Part 19 would also no longer require agencies to collect small business representations at the order level for the purposes of small-business goal credit. Moving forward, size and agency small business credit would be determined at contract level and updated when certain contract level events take place (e.g., option exercise, novation, or acquisitions). Notably, this differs from 13 C.F.R. § 125.12 and 13 C.F.R. § 121.404, which still permits contracting officers to request size or status certification at the order level. Given these regulatory inconsistencies, it is unclear how agencies would implement recertification requirements at the order level.

8(a) Program. There are multiple changes to the 8(a) BD program. Even if below the 8(a) BD program competitive threshold, contracting officers would have to attempt a competitive 8(a) BD program acquisition using governmentwide acquisition contracts (GWACS) before turning to an 8(a) BD program sole source. For follow-on procurements, FAR Part 19 would provide automatic release from the 8(a) BD program when the agency plans to set-aside the procurement for other SBA programs, such as Historically Underutilized Business Zone Small Business (HUBZone), Service-Disabled Veteran-Owned Small Business (SDVOSB), or a Women-Owned Small Business (WOSB). This departs from the long-standing premise that "once an 8(a), always an 8(a)." Release does not have to be formally requested from the SBA in this situation. Together, these changes aim to shift the 8(a) BD program toward competition and widen access to other socioeconomic set-asides.

No Substantive Shifts to Socioeconomic Programs. The sections of the revised FAR Part 19 addressing SDVOSBs, WOSBs, and HUBZone concerns remain substantively the same. Rules related to size and status protests appear to be a verbatim cut and paste of the provisions in the former FAR Part 19.

Takeaways for Government Contractors

There are multiple aspects of this new update that are pertinent to government contractors. Notably, the FAR's proposed updates would not impact awards that are currently pending or seeking approval. However, the update would still apply to small business procurements moving forward. Moreover, some federal agencies may deviate from some of the updates, and contractors should track which agencies have maintained the original FAR Part 19 in contrast with the proposed updates. Ultimately, for contractors, these changes may translate into less procedural burden and a clearer operational guide, allowing entities to focus on positioning, pricing, and performance rather than interpreting rules.

* Special thanks to Law Clerk/JD Gaby Dell˘ for contributing to this GT Alert.

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