A New Era For Small Business: Key Takeaways From The FAR Part 19 Rewrite

Highlights

• The Federal Acquisition Regulation (FAR) Council has issued an update to FAR Part 19, which establishes the framework for promoting small business participation.
• The long-awaited update, released on Sept. 26, 2025, aims to streamline content, reduce unnecessary duplication and clarify procedures for both contracting officers and offerors.
• This Holland & Knight alert highlights the key changes to the FAR Part 19 rewrite and how it marks a significant evolution in the regulatory landscape.

As part of its Revolutionary FAR Overhaul (RFO), the Federal Acquisition Regulation Council (FAR Council) on Sept. 26, 2025, issued its long-awaited update to FAR Part 19, which governs the small business program. FAR Part 19 has long served as the cornerstone for federal small business contracting policy, shaping how agencies engage with small business concerns in the procurement process. Rooted in statutory mandates such as the Small Business Act (15 U.S.C. §§ 631 et seq.), 10 U.S.C. § 3203, and 41 U.S.C. §§ 3104, 3303, FAR Part 19 establishes the framework for promoting small business participation, ensuring fair competition, and supporting socioeconomic programs within federal acquisitions.

Here are the most notable aspects of the revised FAR Part 19:

• Retitling and Structure: The part is now titled "Small Business" (formerly "Small Business Programs") and reorganized around the acquisition life cycle: Presolicitation (19.1), Evaluation and Award (19.2) and Postaward (19.3).
• Rule of Two Maintained: The "rule of two" remains in effect for contracts between the micro-purchase threshold (MPT) and the simplified acquisition threshold (SAT). For orders under multiple-award contracts, set-aside decisions are now discretionary and non-protestable (although whether the Government Accountability Office (GAO) and U.S. Court of Federal Claims sees it this way remains to be seen).
• Order-Level Representation Eliminated: Small business rerepresentation requirements at the order level under multiple-award contracts have been removed. Size status is now determined at contract award and updated only for certain contract-level events.
• 8(a) Program Changes: Contracting officers must first attempt competitive 8(a) acquisitions below the competitive threshold using Small Business Administration (SBA)-approved vehicles before considering 8(a) sole source awards.
• Automatic Release from 8(a) Program: Follow-on requirements set aside for HUBZone, Service-Disabled Veteran-Owned Small Business (SDVOSB) or Women-Owned Small Business (WOSB) programs are automatically released from the 8(a) program, without a formal SBA release. This may conflict with SBA regulations at 13 C.F.R. § 124.503(d)(1).
• Socioeconomic Programs and Protests: No substantive changes to SDVOSB, WOSB or HUBZone program rules. Size and status protest procedures remain unchanged.

In the Practitioner Album accompanying the FAR Part 19 update, the FAR Council reinforced the important of small business in procurement by stating "that it is the Government's policy to provide maximum practicable opportunities in its acquisitions to small business, 8(a) participants, and other small business socioeconomic categories (i.e. veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business and women-owned small business concerns)."

Overview of the FAR Part 19 Rewrite

The FAR Part 19 rewrite is notable for its scope and intent. One of the most visible changes is the retitling of the part from "Small Business Programs" to simply "Small Business," signaling a broader and more integrated approach to small business policy. The update aims to streamline content, reduce unnecessary duplication and clarify procedures for both contracting officers and offerors. Key objectives include consolidating definitions, updating the scope of the part and moving substantive requirements into the relevant clauses and provisions. As with other revised FAR Parts, FAR Part 19 is now structured around the acquisition life cycle, divided up into Presolicitation (19.1), Evaluation and Award (19.2) and Postaward (19.3). These changes are designed to enhance usability, ensure regulatory clarity and support the government's ongoing commitment to small business participation in federal procurement.

The "Rule of Two" Survives

A central feature of the FAR Part 19 rewrite is the treatment of the "rule of two," a statutory requirement that mandates set-asides for small businesses when at least two responsible small business concerns are expected to submit offers at fair market prices. The rule of two remains firmly in place, as required by statute for contracts between the micro-purchase threshold (MPT) and the SAT. This statutory foundation ensures that small businesses continue to have meaningful access to federal contracting opportunities in this range.

Importantly, despite lacking a statutory basis, the FAR Council has chosen to retain the rule of two for contracts above the SAT, emphasizing its role as "essential to sound procurement" policy. This decision reflects a commitment to fostering competition and supporting small business growth, even in larger acquisitions. For contracting officers, this means that the process for determining set-asides remains consistent and predictable for contracts above the MPT, reinforcing statutory and policy objectives.

However, the rewrite clarifies a critical distinction for orders placed under multiple-award contracts. FAR Part 19 reaffirms that the rule of two does not apply to individual orders; instead, contracting officers are granted discretion to set aside orders for small businesses. Specifically, the revised text states that the decision to set aside – or not set aside – an order under a multiple-award contract is an exercise of discretion and cannot serve as the basis for a protest. By clarifying the non-protestable nature of these decisions, the rewrite empowers contracting officers to exercise judgment based on market research and procurement objectives, while providing contractors with a more predictable and efficient ordering environment.

Removal of Small Business Representation Requirements at the Order Level

The FAR Part 19 rewrite introduces notable changes to the procedures governing orders placed under multiple-award contracts. One of the most significant updates is the removal of small business rerepresentation requirements at the order level. Previously, agencies often required offerors to rerepresent their small business status when responding to orders under multiple-award contracts. Under the revised FAR Part 19, this requirement has been eliminated, streamlining the ordering process and reducing administrative burden for both agencies and contractors.

Therefore, for multiple-award contracts, small business credit for agencies is now determined by the size status established at the contract level, rather than at the order level. This determination is made by the contracting officer at the time of contract award and is updated only when certain contract-level events occur, such as the exercise of an option or a novation. This approach provides greater clarity and consistency in how agencies receive credit for small business participation, aligning credit with the original size determination and minimizing the need for repeated representations throughout the life of the contract.

However, this update could come into conflict with the current SBA regulations on size and status recertifications. Under 13 C.F.R. § 125.12(c), a contracting officer may still request a size or status certification at the order level, despite order-level recertifications being removed in the update. Given this apparent discrepancy, both contractors and agencies should exercise caution and closely monitor for future guidance when competing for task orders.

Changes to 8(a) Set-Asides and Competition

The FAR Part 19 rewrite also brings important updates to the rules governing small business set-asides and competition, with particular focus on the 8(a) Business Development program (8(a) program) and related socioeconomic set-aside programs. For acquisitions below the competitive threshold specified in Section 19.108-7(a)(2), contracting officers are now required to first attempt to conduct the acquisition as a competitive 8(a) order using SBA-approved government-wide contracts. If a competitive 8(a) acquisition is not feasible, only then may the contracting officer proceed with a sole source 8(a) award. This change prioritizes competition within the 8(a) program and leverages existing government-wide vehicles to maximize opportunities for eligible small businesses.

Furthermore, the revised FAR has eliminated the 8(a) limitation on the contracting officer's ability to sole source to an SDVOSB. FAR Part 19.1406(a)(3) previously did not permit a sole source to an SDVOSB if the requirement was currently being performed by an 8(a) participant under the 8(a) program or had been accepted as a requirement by SBA under the 8(a) program. This consideration has been eliminated, thereby allowing agencies to make sole source SDVOSB awards even where the requirement is currently being performed by an 8(a).

Automatic Release of Requirements from the 8(a) Program

Another significant update concerns the automatic release of requirements from the 8(a) program. The FAR Part 19 rewrite now provides that if a follow-on requirement of an 8(a) contract will be set aside under the HUBZone, SDVOSB or WOSB programs, the requirement is automatically released from the 8(a) program without necessitating a formal release request. This provision appears to be designed to advance the government's objective of broadening participation across various socioeconomic programs and allowing efficient transition to another set-aside category.

Similar to the changes to recertifications, this change seems to conflict with SBA regulations, which maintain that any procurement initially awarded as an 8(a) contract should remain within the 8(a) program unless explicitly released by the SBA for non-8(a) competition (13 C.F.R. § 124.503(d)(1)). Again, given this apparent discrepancy, both contractors and agencies should exercise caution and closely monitor future guidance when transitioning follow-on procurements.

Rules for Socioeconomic Programs and Size/Status Protests Remain Largely Untouched

There are no material changes to the rules related to the SBA's 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 Contractors

1. The FAR Council's proposed updates to FAR Part 19 will not impact currently pending awards. It is important that this update will largely be applicable to small business procurements moving forward. Though the nature of how small businesses contract with the federal government will change, currently pending small business set-aside solicitations and contracts should not be impacted.
2. Small businesses must pay attention to agency deviations issued for FAR Part 19. This update to FAR Part 19 will be implemented agency by agency as part of a class deviation. Accordingly, it is critical that small business contractors track which agencies have adopted the updated FAR Part 19.
3. The proposed update to FAR Part 19 is likely, although not necessarily, the final version. These revisions to FAR Part 19 are part of the informal process, whereby agencies issue class deviations on an individual basis. Once the RFO is complete, the FAR Council will subject the overhauled FAR to formal notice and comment rulemaking so that it can be promulgated as law. This process will entail a formal notice in the Federal Register detailing the proposed changes, the legal authority for and rationale behind the revisions, the rationale behind the proposal, and a specific deadline for the public and industry to submit written comments on the proposed changes. After the comment period closes, the Office of Federal Procurement Policy and the FAR Council will review and consider all relevant, timely submitted comments. Accordingly, it is possible that further changes will be made to the revised Part 19 before it officially becomes part of the FAR.
4. It is expected that the SBA will soon issue guidance that aligns with the updated FAR Part 19, based on recent comments from Larry Allen, the Associate Administrator for the Office of Government-wide Policy at the U.S. General Services Administration and one of the lead architects of the RFO. Contractors should be on the lookout for this guidance from the SBA.

Conclusion and Future Outlook

The FAR Part 19 rewrite represents a comprehensive modernization of federal small business contracting regulations, emphasizing clarity, efficiency and expanded opportunities for small businesses. By streamlining procedures, updating key provisions and clauses, and clarifying statutory foundations, the rewrite supports a more transparent and effective procurement environment.

Looking ahead, small businesses and agencies should anticipate continued regulatory refinement and remain vigilant in tracking updates to ensure compliance and maximize small business participation. Staying current with FAR developments is essential for leveraging opportunities and navigating the evolving landscape of government procurement.

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