The Federal Acquisition Regulation (FAR) just went through its largest rewrite in decades. Part 19, the section that governs how federal agencies award contracts to small businesses, was restructured from the ground up in September 2025. New acquisition thresholds took effect on October 1, 2025. And agencies are adopting the changes at different speeds.
If you bid on federal contracts, these changes affect your business. The Rule of Two (the requirement that protects small business set-asides) survived the rewrite, but with a significant exception for task orders. Sole-source dollar limits went up across every certification program. And the priority system that used to favor socioeconomic set-asides over general small business set-asides is gone.
This guide explains every change in plain language and tells you what to do about each one.
What You’ll Learn
- Identify which FAR Part 19 changes affect your set-aside eligibility
- Apply the new acquisition thresholds to your bids
- Understand how the Rule of Two changed for task orders
- Track which agencies have adopted the revised Part 19
- Adjust your business development strategy for the new rules
What Is the FAR Part 19 Overhaul?
The FAR Part 19 overhaul is part of the broader FAR 2.0 initiative, the most significant restructuring of federal acquisition rules since the FAR was created in 1984. Part 19 is the section that controls how contracting officers decide whether to set aside contracts for small businesses. It also governs which certification programs qualify for set-asides and how agencies meet their small business contracting goals. The overhaul was released on September 26, 2025, and renamed Part 19 from “Small Business Programs” to simply “Small Business.”
The restructuring reorganized the entire section around the acquisition lifecycle:
- Subpart 19.1: Presolicitation covers market research, small business coordination, and set-aside decisions made before a solicitation goes out
- Subpart 19.2: Evaluation and Award covers how small business factors are evaluated during source selection
- Subpart 19.3: Postaward covers subcontracting plans, compliance monitoring, and contract administration
This is not a cosmetic rename. The restructuring changed where rules live within the FAR, which means solicitation references and internal agency procedures all need updating. That is why agencies are adopting the changes through class deviations at their own pace rather than switching all at once.
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. The trigger: a reasonable expectation that at least two qualified small firms will 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, now redesignated as FAR 19.104-1 in the revised Part 19). Before the overhaul, many contractors feared this rule would be weakened or eliminated.
It was not. The Rule of Two survives intact for new contract awards above the micro-purchase threshold.
The change is for task and delivery orders issued under existing multiple-award contracts (MACs). Under the previous rules, the Rule of Two applied to individual orders. Under the revised Part 19, contracting officers have discretion to set aside orders for small businesses, but they are no longer required to do so.
| Contract Type | Before the Overhaul | After the Overhaul |
|---|---|---|
| New contracts above MPT | Rule of Two required | Rule of Two required (no change) |
| Task/delivery orders on MACs | Rule of Two required | Discretionary, non-protestable |
| Orders under General Services Administration (GSA) Schedule | Small business consideration required | Discretionary, non-protestable |
What this means for your business: If you hold a position on a multiple-award contract, you can no longer count on automatic set-asides for individual task orders. Contracting officers may still set orders aside for small businesses, but the decision is now at their discretion and you cannot protest if they choose not to. Building relationships with contracting officers and demonstrating strong past performance on the MAC matters more now than it did under the old rules.
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:
| 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 / Economically Disadvantaged Women-Owned Small Business (WOSB/EDWOSB) | $4,500,000 | $5,500,000 |
Manufacturing sole-source limits:
| 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 take effect around June 30, 2026.
Truth in Negotiations Act (TINA): The threshold for submitting certified cost or pricing data increases from $2.5 million to $10 million. This means contractors on awards under $10 million will no longer need to provide certified cost data, which reduces a significant compliance burden.
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: Eliminated
Under the previous FAR Part 19, contracting officers followed a specific priority order when deciding which type of set-aside to use. They had to consider socioeconomic programs first: 8(a), HUBZone, SDVOSB, and WOSB set-asides before a general small business set-aside.
That priority order is gone. Under the revised Part 19, contracting officers can choose any type of small business set-aside without following a required sequence. They may still issue socioeconomic set-asides and sole-source awards, but they are not required to consider them first.
How to act on this: Socioeconomic certifications remain valuable because they open doors to set-asides and sole-source awards that non-certified firms cannot access. But the automatic advantage of being considered first in the set-aside decision process is gone. Your certifications still matter. The way contracting officers use them has changed.
How to Track Agency Adoption
The FAR Part 19 overhaul does not apply uniformly across all agencies on a single date. Agencies adopt the revised Part 19 through class deviations, and each agency moves on its own timeline. This means the solicitation you read today might reference either the old or new Part 19 structure.
Where to check:
- Acquisition.gov publishes agency-specific deviation notices. Check the “Recent Changes” section for class deviation memos from specific agencies.
- SAM.gov solicitations will reference specific FAR sections. If a solicitation cites the old Part 19 subpart numbers (e.g., FAR 19.5 for set-asides), that agency has not yet adopted the overhaul. If it references the new subparts (FAR 19.1, 19.2, 19.3), the agency has transitioned.
- Agency procurement websites often post transition guidance, implementation memos, and FAQs. The Department of Defense, NASA, and GSA have historically been early adopters of FAR changes.
Practical example: You find a solicitation on SAM.gov that references “FAR 19.502-2” for the set-aside determination. That is the old Part 19 numbering. The same rule now lives at FAR 19.104-1 in the revised structure. The citation tells you the agency is still using the previous version. Your proposal should reference the FAR sections the solicitation uses, not the new ones.
What to watch for: When reading a solicitation on SAM.gov, check whether it references the old Part 19 structure (Subpart 19.5 for set-asides, Subpart 19.8 for 8(a)) or the new lifecycle structure (Subpart 19.1, 19.2, 19.3). The references tell you which version of the rules that agency is using.
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 previous SAT or MPT as decision points, update to the current amounts (see the threshold table above). 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 and relied on set-aside orders, recognize that those orders are now 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 (see the program-by-program tables above) mean contracting officers can now award larger contracts directly to certified firms 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. For new contract awards, the set-aside requirement is unchanged. Contracting officers must still reserve contracts for small businesses when they expect at least two qualified firms to compete. The only change is for task and delivery orders under existing multiple-award contracts, where set-aside decisions are now discretionary and cannot be protested.
When do the new acquisition thresholds take effect?
The inflation-adjusted thresholds (SAT, MPT, and others in the table above) took effect on October 1, 2025, under FAC 2025-06 (90 FR 41872). See the threshold table above for the exact before-and-after amounts. The TINA and CAS threshold changes from the FY2026 NDAA take effect around June 30, 2026.
Do these changes affect my existing contracts?
Existing contracts continue under the terms in place when they were awarded. The new thresholds and Part 19 structure apply to new solicitations and new contract actions after October 1, 2025. If you hold a position on a multiple-award contract, the change to set-aside discretion on task orders could affect future orders issued under that contract.
Which agencies have adopted the new FAR Part 19?
Agencies are adopting the revised Part 19 through class deviations at their own pace. Check acquisition.gov for agency-specific deviation notices and watch for updated solicitation language on SAM.gov. Some agencies moved quickly after the September 2025 release. Others are still operating under the previous Part 19 structure.
How do the threshold changes affect set-asides?
The higher SAT means more purchases fall into the simplified acquisition range, where set-aside procedures are less formal. The higher sole-source limits (see the program-by-program tables above) 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?
The previous Part 19 required contracting officers to consider socioeconomic set-asides (8(a), HUBZone, SDVOSB, WOSB) before general small business set-asides. That priority order is eliminated. Contracting officers can now choose any type of small business set-aside without following a required sequence. Certifications are still valuable for accessing program-specific set-asides and sole-source awards.
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.
