FAR Part 19 Proposed Changes

Impact on Small Business Contracting

NOTE: This article summarizes what I discuss in the video. It is not a word-for-word transcript. Enjoy both at your leisure.

5 Surprising Truths Buried in the New FAR Part 19 Overhaul

Introduction: Navigating the Fog of Regulatory Change

Sweeping changes to the Federal Acquisition Regulation (FAR) often create anxiety and confusion for federal contractors. While the stated goal of the recent overhaul was to “streamline” the rules governing small business programs, the reality is far more complex.

This high-level analysis cuts through the noise to reveal the five most surprising and impactful takeaways from the proposed FAR Part 19 rewrite. Understanding these truths is critical for any contractor navigating the new landscape of federal procurement.

1. The Rumors Were Wrong: The “Rule of Two” Is Here to Stay

A major fear circulating within the small business community was the potential elimination of the “Rule of Two,” the core principle compelling federal agencies to set contracts aside for small businesses. These concerns were unfounded.

The new rule, located under FAR 19.104-1, retains the central mandate: a contracting officer must set a contract aside if there is a reasonable expectation of receiving offers from two or more responsible small businesses that can deliver on competitive terms and at fair market prices, quality, and delivery. According to legal experts close to the overhaul process, the rule’s elimination was never a serious consideration.

“I’ve heard from various folks on the Hill and other places that likely wouldn’t happen. And apparently, from my further discussions with folks on the FAR Part 19 rewrites and some of the FAR overhaul committees, it was never going to happen. They had never put the elimination of the rule of two on the reader board.”

While the fundamental principle remains, the new language is part of a broader trend in the FAR rewrite: providing more discretion to individual contracting officers, a theme that significantly impacts how contractors must approach the market.

2. A Major Shift: The “Once 8(a), Always 8(a)” Doctrine Is Gone

One of the most definitive changes in the overhaul is the elimination of the long-standing “Once 8(a), Always 8(a)” doctrine. Previously, if a contract requirement was awarded under the 8(a) Business Development Program, any follow-on procurement for that same requirement had to remain in the 8(a) program unless the Small Business Administration (SBA) formally granted a release.

The new FAR 19.108-11 completely removes this requirement, seemingly giving a procuring agency the discretion to move a follow-on contract to a different set-aside program—such as woman-owned, HUBZone, or a general small business set-aside—without seeking SBA approval.

However, this new freedom comes with a critical, hidden conflict. The FAR change does not exist in a vacuum. Most agencies that use the 8(a) program operate under a formal Memorandum of Understanding (MOU) with the SBA. Those MOUs often contain language that still legally requires the agency to get SBA approval to move a follow-on contract out of the 8(a) program. The FAR rewrite does not override these existing MOUs, creating a direct legal clash that makes the new freedom for contracting officers highly uncertain in practice.

3. The Counter-Intuitive Twist: Why Losing “Always 8(a)” Might Actually Help 8(a) Firms

On the surface, ending the “Once 8(a), Always 8(a)” rule appears to be a major loss for 8(a) certified companies. However, a deeper analysis reveals this change could actually be a boon for 8(a) firms pursuing new work—if the unresolved MOU conflicts don’t get in the way.

The strategic argument is that in the past, contracting officers were often hesitant to designate new requirements for the 8(a) program because they felt locked into that decision permanently. The need to go to the SBA and ask for a “Mother May I” release made the initial commitment a heavy one. By removing that permanent constraint, the intent of the new rule is to encourage officials to utilize the 8(a) program more freely for initial contracts.

“That sort of flexibility really takes the weight off the shoulders of the government officials so that they’re just making a decision about the here and now, not the forever. And that is actually probably a good thing.”

But while the intent is to give COs flexibility, the unresolved conflict with SBA MOUs creates a new risk. Savvy 8(a) firms and the SBA itself could challenge an agency’s attempt to move a contract, citing the binding MOU. This risk tempers the very flexibility the rule change was meant to create, potentially making officials just as cautious as before until the conflict between the FAR and the MOUs is formally resolved.

4. The Real Power Shift: Contracting Officers Now Have More Discretion Than Ever

A central, overarching theme of the entire FAR overhaul is the deliberate shift of power and authority into the hands of individual contracting officers (COs). The rewrite empowers them to make critical procurement decisions with fewer constraints. Two key examples from the new Part 19 illustrate this trend:

1. Multiple-Award Contracts: The new FAR 19-111-2 explicitly states that COs have the discretion to set aside orders under multiple-award contracts, including GSA schedules, but it is not mandatory. Furthermore, the government now states that a CO’s decision not to set an order aside is not subject to a bid protest.

2. Socioeconomic Prioritization: The new rules officially move away from the implied prioritization of specific socioeconomic categories. COs can now utilize “vanilla” small business set-asides (i.e., general set-asides not tied to a specific socioeconomic program) without first having to document their consideration of other socioeconomic programs like 8(a) or HUBZone, giving them more direct control over steering contracts.

For contractors, this means that proactive marketing and direct communication with COs are more critical than ever. With individual COs wielding more decision-making power, influencing their market research and procurement strategy is essential to winning work.

5. Brace for Confusion: Streamlining Has Created Gaps That Only Lawyers Can Fill

The effort to “streamline” FAR Part 19 has created a fundamental conflict: the revised text often clashes with the SBA’s own detailed regulations in Title 13 of the Code of Federal Regulations (13 CFR).

This creates significant legal ambiguity. The legal hierarchy is clear: Congress delegated authority on matters of business size and status to the SBA, not the FAR Council. Therefore, in any direct conflict between the two sets of rules, court precedents affirm that the SBA’s regulations in 13 CFR legally trump the FAR.

By stripping text out of the FAR in the name of simplification, the writers have created legal gaps and inconsistencies that will inevitably lead to disputes as contractors and agencies grapple with which rule to follow.

“...the more that has been removed from any section of the FAR, the more gaps will exist in real world applications, the more litigation will occur and the more that judges will have their say in the interpretations of what the rules mean.”

This isn’t just a short-term problem. It triggers a predictable and costly feedback loop baked into our legal system. First, agencies and contractors test the ambiguous new rules. Second, disputes are settled by judges, who are forced to interpret what the “streamlined” rules mean, effectively creating law from the bench. Third, regulators and Congress may react to court decisions they dislike by issuing new, more detailed regulations to “fix” the ambiguity. This effort to “simplify” the FAR will ironically sow the seeds for a more complex and voluminous set of rules in the future.

Conclusion: An Evolving Landscape

The FAR Part 19 overhaul is not an endpoint but the beginning of a new chapter in federal procurement. It introduces significant new flexibility for contracting officers, but at the cost of creating considerable uncertainty and the potential for legal conflict between the FAR, SBA regulations, and existing agency MOUs. This is an evolution, driven by a regulatory feedback loop where attempts at simplification will likely lead to litigation, judicial gap-filling, and eventually, a new wave of even more detailed rules.

As contracting officers gain more discretion, will it lead to greater efficiency and competition, or will the unresolved conflicts between the FAR and SBA regulations create a new era of costly legal battles?