The Federal Acquisition Regulation (FAR) is undergoing the most significant rewrite since 1984 under Executive Order 14275 (the Revolutionary FAR Overhaul). Two things are happening in parallel, and they are easy to confuse.
What is effective today (current FAR, FAC 2026-01): Inflation-adjusted acquisition thresholds went into effect on October 1, 2025 under FAC 2025-06. The Rule of Two remains at FAR 19.502-2. The traditional Part 19 subpart structure (19.1 Size Standards, 19.5 Set-Asides, 19.8 8(a), etc.) is unchanged.
What is proposed but not yet effective: A broader restructuring of Part 19 was issued as a proposed rule in September 2025. That proposed rule includes a lifecycle reorganization of the subparts, section renumbering, and changes to set-aside discretion on multiple-award contract task orders. As of FAC 2026-01 (effective March 13, 2026), none of that restructuring has been finalized.
This guide separates the two. The thresholds are real. The lifecycle restructuring and section renumbering you may have read about in law-firm commentary is still in proposal status.
What You’ll Learn
- Which Part 19 changes are effective today and which are still proposed
- Apply the inflation-adjusted acquisition thresholds (FAC 2025-06) to your bids
- Understand current Rule of Two mechanics at FAR 19.502-2
- Track the FAR 2.0 / Part 19 rewrite through the FAC tracker
- Adjust your business development strategy for what’s actually in force
What Is the FAR Part 19 Overhaul — and What’s Actually Effective?
The FAR Part 19 overhaul is part of the broader FAR 2.0 initiative under Executive Order 14275 (April 2025), the most significant restructuring of federal acquisition rules since the FAR was created in 1984. Part 19 governs how contracting officers decide whether to set aside contracts for small businesses, which certification programs apply, and how agencies meet their small business goals.
What is in current law (FAC 2026-01, effective March 13, 2026):
- Inflation-adjusted acquisition thresholds (FAC 2025-06, effective October 1, 2025)
- The traditional Part 19 subpart structure: 19.1 Size Standards, 19.2 Policies, 19.3 Determination of Small Business Size, 19.5 Set-Asides, 19.6 Certificates of Competency, 19.7 Subcontracting, 19.8 8(a), 19.13 HUBZone, 19.14 SDVOSB, 19.15 WOSB
- The Rule of Two at FAR 19.502-2 — unchanged location, unchanged effect on new contract awards
What was issued as a proposed rule in September 2025 (not yet finalized):
- A lifecycle restructuring of Part 19 (presolicitation / evaluation and award / postaward subpart organization)
- A rename of Part 19 from “Small Business Programs” to “Small Business”
- Redesignation of section numbers within Part 19
- Changes to set-aside discretion on task and delivery orders under multiple-award contracts
Industry commentary from law firms including Holland & Knight and PilieroMazza analyzed the proposed rule when it dropped in September 2025. Some of that commentary reads as if the changes are already effective. They are not. Verify against the current FAR at acquisition.gov before relying on any specific structural claim.
The Rule of Two: What Stayed and What Changed
The Rule of Two is the foundation of small business set-aside contracting. Under this rule, contracting officers must set aside a contract exclusively for small businesses when they reasonably expect at least two qualified small firms to submit offers at fair market prices. The rule applies to every acquisition above the micro-purchase threshold and is the primary mechanism that directs billions of dollars in federal contracts to small businesses each year (per FAR 19.502-2 — the Rule of Two remains at this location; the September 2025 proposed rule would redesignate it, but as of FAC 2026-01 the section number is unchanged). The Rule of Two is intact in current law for new contract awards above the micro-purchase threshold.
Proposed change — not yet effective: The September 2025 proposed rule would make set-aside decisions for task and delivery orders under multiple-award contracts (MACs) discretionary, with those decisions not subject to protest. Under current law (FAR 16.505 and case law including Tolliver Group v. United States), task-order set-aside protests follow specific rules. They are not generally barred. The discretionary, non-protestable framing tracks the proposed Part 19 rewrite, not current FAR.
| Contract Type | Current Rule (FAC 2026-01) | Proposed Rule (Sept 2025, not yet effective) |
|---|---|---|
| New contracts above MPT | Rule of Two required (FAR 19.502-2) | Rule of Two preserved |
| Task/delivery orders on MACs | Set-aside protests follow FAR 16.505 and case law | Discretionary, non-protestable |
| Orders under GSA Schedule | FAR 8.405 ordering rules apply | Discretionary framing in proposed rule |
What this means for your business: For now, the Rule of Two and existing MAC task-order set-aside framework remain in effect. Track the FAR Council’s final rulemaking on the September 2025 proposed rule before changing how you compete for task-order work. If the proposed rule becomes final as drafted, MAC positions will require stronger relationships with task-order contracting officers and stronger past performance on the MAC.
New Acquisition Thresholds (October 1, 2025)
The FAR Council raised acquisition-related thresholds across the board effective October 1, 2025, through Federal Acquisition Circular (FAC) 2025-06 (published at 90 FR 41872). These are mandatory inflation adjustments required by 41 U.S.C. 1908, which directs the FAR Council to adjust thresholds every five years based on the Consumer Price Index.
| Threshold | Before (Pre-Oct 2025) | After (Oct 1, 2025) |
|---|---|---|
| Micro-Purchase Threshold (MPT) | $10,000 | $15,000 |
| Simplified Acquisition Threshold (SAT) | $250,000 | $350,000 |
| Simplified procedures (commercial) | $7,500,000 | $9,000,000 |
| Subcontracting plan (services) | $750,000 | $900,000 |
| Subcontracting plan (construction) | $1,500,000 | $2,000,000 |
| Cost or pricing data | $2,000,000 | $2,500,000 |
What this means for your business: The higher SAT means purchases up to $350,000 can now use simplified acquisition procedures. Government purchase card limits and micro-purchases up to $15,000 no longer require competition. For small businesses, this creates a mixed picture. More simplified purchases mean faster procurement cycles, but the set-aside protections that apply above the SAT now kick in at a higher dollar amount.
Sole-Source Threshold Increases (All Programs)
Every small business sole-source threshold was raised effective October 1, 2025, as part of the same inflation adjustment. This means contracting officers can now award larger contracts directly to certified firms without competition.
Services sole-source limits:
\n\n
| Program | Before | After (Oct 2025) |
|---|---|---|
| 8(a) | $4,500,000 | $5,500,000 |
| HUBZone | $4,500,000 | $5,500,000 |
| Service-Disabled Veteran-Owned Small Business (SDVOSB) | $4,000,000 | $5,000,000 |
| Women-Owned Small Business (WOSB/EDWOSB) | $4,500,000 | $5,500,000 |
\n\n
Manufacturing sole-source limits:
\n\n
| Program | Before | After (Oct 2025) |
|---|---|---|
| 8(a) | $7,000,000 | $8,500,000 |
| HUBZone | $7,000,000 | $8,500,000 |
| SDVOSB | $7,000,000 | $8,500,000 |
| WOSB/EDWOSB | $7,000,000 | $8,500,000 |
Note that SDVOSB is the outlier. Its services threshold increased to $5 million, while the other three programs all went to $5.5 million (per FAR 19.1406 for SDVOSB, compared to FAR 19.805-1, 19.1306, and 19.1507 for the others).
The practical impact: If you hold an 8(a), HUBZone, SDVOSB, or WOSB certification, you can now receive sole-source awards at higher dollar values. A services contract worth $5.5 million that would have required competition last year can now go sole-source to a certified firm. If you are not pursuing sole-source opportunities, these higher limits give you another reason to start.
TINA and CAS Threshold Changes (FY2026 NDAA)
The FY2026 National Defense Authorization Act (NDAA) raised two compliance thresholds that affect mid-size and larger contractors. These changes apply to contracts entered into after June 30, 2026 per the FY2026 NDAA. Contracts entered on or before that date remain under the prior thresholds.
Truth in Negotiations Act (TINA): The threshold for submitting certified cost or pricing data increases from $2.5 million to $10 million for contracts entered into after June 30, 2026 (FY2026 NDAA Sec. 1804(c)). Contractors on new awards under $10 million after that date will no longer need to provide certified cost data, which reduces a significant compliance burden. The $2.5 million threshold remains in effect for contracts entered on or before June 30, 2026.
Cost Accounting Standards (CAS): Full CAS coverage increases from $50 million to $100 million in CAS-covered contracts. The per-contract threshold for CAS applicability increases from $2.5 million to $35 million. Fewer contractors will need a CAS-compliant accounting system.
| Standard | Before | After (FY2026 NDAA) |
|---|---|---|
| TINA cost data threshold | $2,500,000 | $10,000,000 |
| CAS full coverage | $50,000,000 | $100,000,000 |
| CAS per-contract | $2,500,000 | $35,000,000 |
For your bidding strategy: If your contracts fall between $2.5 million and $10 million, you may no longer need to submit certified cost or pricing data after June 2026. That eliminates one of the most time-consuming compliance requirements in federal contracting. For growing firms approaching the $50 million mark, the CAS threshold increase gives you more room before full CAS compliance kicks in.
Socioeconomic Set-Aside Priority: Under Proposed Change
Under current FAR Part 19, the traditional set-aside framework remains in effect. The September 2025 proposed Part 19 rewrite would give contracting officers more discretion to choose any type of small business set-aside without a required sequence, but that change has not been finalized as of May 2026.
Industry analysis (PilieroMazza, Holland & Knight) anticipates the change. Small businesses should not assume the discretionary framework is in force on any given solicitation. Check the specific solicitation’s FAR clauses to see which version of Part 19 applies.
How to act on this: Socioeconomic certifications remain valuable for accessing program-specific set-asides and sole-source awards that non-certified firms cannot access. Whether the priority order stays or goes when the rule is finalized, your certifications still open doors.
How to Track Agency Adoption
The September 2025 Part 19 proposed rewrite has not produced a final rule. Agencies operate under the current Part 19 structure (Subpart 19.5 for set-asides, Subpart 19.8 for 8(a), etc.). If a solicitation cites unfamiliar Part 19 section numbers from the proposed rule, look up the section at acquisition.gov before relying on the cite.
Where to check the status:
- acquisition.gov/far-overhaul tracks the FAR 2.0 initiative phases under EO 14275.
- FAC tracker — every effective FAR change is published here. If a change isn’t in a published FAC, it isn’t effective.
- Federal Register for proposed and final rules on Part 19.
What to watch for: As of May 2026, the current FAR (FAC 2026-01) keeps the traditional Part 19 subpart structure. Don’t assume the proposed lifecycle restructuring is in force on any solicitation you read.
What Small Businesses Should Do Now
These changes do not require you to re-register, re-certify, or file anything new. But they do require you to update how you think about bidding and business development.
Update your bid/no-bid thresholds. If your internal process used the old $250,000 SAT or $10,000 MPT as decision points, update those numbers. The new thresholds affect which opportunities require formal competition and which do not.
Review your multiple-award contract positions. If you hold a position on a MAC, monitor the September 2025 proposed Part 19 rule. If finalized as written, set-aside decisions on individual orders will become discretionary. Invest in relationship-building with the contracting officers who issue task orders on your MACs.
Pursue sole-source opportunities at the higher limits. The increased sole-source thresholds mean a contracting officer can award your certified firm a contract worth up to $5.5 million (services) or $8.5 million (manufacturing) without competition. If you are not actively marketing sole-source capabilities to contracting officers, start now.
Monitor agency adoption. Check acquisition.gov regularly for deviation notices from the agencies you work with most. Knowing which version of Part 19 an agency uses helps you read solicitations correctly.
Review your FAR compliance foundation. If you are new to federal contracting, make sure you understand the FAR basics before diving into the overhaul changes. The fundamentals have not changed, even though the structure has.
Frequently Asked Questions
Does the Rule of Two still protect small businesses?
Yes. The Rule of Two at FAR 19.502-2 remains in effect for new contract awards. Contracting officers must reserve contracts for small businesses when they expect at least two qualified firms to compete at fair market prices. A September 2025 proposed rule would make set-aside decisions on MAC task and delivery orders discretionary and non-protestable, but that change has not been finalized as of FAC 2026-01 (May 2026).
When do the new acquisition thresholds take effect?
The inflation-adjusted thresholds took effect on October 1, 2025, under FAC 2025-06 (90 FR 41872). The simplified acquisition threshold is now $350,000 and the micro-purchase threshold is $15,000. The TINA and CAS threshold changes from the FY2026 NDAA apply to contracts entered into after June 30, 2026 (FY2026 NDAA Sec. 1804(c)).
Do these changes affect my existing contracts?
Existing contracts continue under the terms in place when they were awarded. The new thresholds apply to new solicitations and new contract actions after October 1, 2025. The September 2025 Part 19 proposed restructuring is not in current law — current FAR Part 19 retains its traditional structure.
Has any agency adopted the proposed Part 19 rewrite?
The September 2025 proposed rule has not been finalized. As of FAC 2026-01 (May 2026), the current FAR retains the traditional Part 19 structure. Track final rulemaking through acquisition.gov/far-overhaul and the FAC tracker.
How do the threshold changes affect set-asides?
The higher simplified acquisition threshold means more purchases fall into the simplified acquisition range, where set-aside procedures are less formal. The higher sole-source limits mean contracting officers can award larger contracts directly to certified small businesses without competition. Both changes create opportunities if you position your business accordingly.
What happened to the socioeconomic set-aside priority?
Under current FAR Part 19, the traditional set-aside framework remains in effect. The September 2025 proposed rule would eliminate any required sequence and give contracting officers discretion to choose any type of small business set-aside, but that change has not been finalized. Certifications remain valuable for accessing program-specific set-asides and sole-source awards regardless of how the final rule lands.
Next Steps
If you are new to federal contracting: Start with our FAR compliance guide to understand the foundation before focusing on the overhaul changes.
If you hold a small business certification: Review the new sole-source thresholds for your program. Contact contracting officers at agencies you work with and ask about sole-source opportunities at the higher dollar limits.
If you hold a MAC position: Strengthen your relationships with task-order contracting officers. The discretionary set-aside decision makes your reputation and past performance on the contract more important than the regulatory guarantee you used to have.
Bookmark acquisition.gov and check it monthly for agency deviation notices and FAR updates. The overhaul is still rolling out, and staying current on which agencies have adopted the new rules helps you read solicitations correctly and avoid bidding under outdated assumptions.
