In the past year, we’ve seen several changes to government contracting regulations that affect small businesses specifically, including updates from the Small Business Administration (SBA) and amendments to the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS). Many of these changes benefit small business government contractors by increasing their government contracting opportunities and streamlining the acquisition processes.
In this blog, we’ll give you a synopsis of the recent policy changes and discuss how they’ll impact small businesses in 2025. We’ll also let you know which policies are proposed and which have already become effective.
This past December, the SBA proposed several revisions to its Small Business Subcontracting Program Regulations. These include the following key new rules:
These proposed rules benefit small business subcontractors by encouraging faster payments from their prime contractors. They also allow prime contractors to streamline subcontracting reporting and market research, indirectly benefiting subcontractors involved in these processes.
This proposed rule from the SBA aims to expand the “Rule of Two” to orders under Multiple Award Contracts, with the goal of increasing small business participation in government contracting. Per the proposed rule, if a Contracting Officer determines that there is a reasonable expectation of receiving offers that are competitive in price, quality, and delivery from two or more small business contract holders under the Multiple Award Contract, then the task order must be set aside for small businesses.
If this rule is passed, it would apply to all new Multiple Award Contracts, orders placed under those contracts, and new orders on existing Multiple Award Contracts that allow for a set-aside. The rule would not affect existing task and delivery orders. It also would not affect orders under the Federal Supply Schedule, including Multiple Award Schedule (MAS) orders, among other exceptions.
As a result of this rule, small businesses holding Multiple Award Contracts can expect to see more contracting opportunities — the SBA estimates that this rule could increase small business contract spending by $6 billion a year. However, there is some disagreement about whether the proposed rule will have positive long-term effects on small businesses.
On January 16, the SBA implemented HUBZone program revisions that clarify the requirements for participating in the HUBZone program. Small businesses must meet the requirements below to qualify as a HUBZone business and compete for the program’s set-asides:
These revisions don’t substantially alter the HUBZone program’s eligibility requirements. However, small businesses should be aware of even subtle changes to the requirements, to ensure they’re still eligible to take advantage of HUBZone contracting opportunities.
Effective January 17, this amendment to the Federal Acquisition Regulation (FAR) addresses changes in business size and socioeconomic status during the life of a Multiple Award Contract. Per the amended rule, businesses holding unrestricted Multiple Award Contracts must recertify their small business status at the task order level, for that particular order’s NAICS Code size standard.
Previously, businesses could retain their original small business status at the time of award for the life of their Multiple Award Contract. This amendment ensures that only small businesses qualifying at the time of the task order can receive a small business set-aside order. Businesses that lose their small business status due to a merger or acquisition would not be eligible to compete for set-aside task orders.
There are a few exceptions to this rule. Businesses holding Multiple Award Contracts that were originally set aside for small businesses can continue to compete for orders using their original size status. Businesses competing for orders placed under an FSS contract, such as a Multiple Award Schedule contract, don’t have to recertify their small business status at the task order level, either. However, Contracting Officers have the discretion to require recertification.
Effective November 15, 2024, this amendment to the Defense Federal Acquisition Regulation Supplement (DFARS) requires that Contracting Officers evaluate the past performance of small businesses’ proposed subcontractors, in addition to the offeror’s own past performance, for competitive procurements. The rule doesn’t affect contracts at or below the Simplified Acquisition Threshold (SAT) for commercial products or services.
This new rule may help small businesses become more competitive in the offer process if their proposed subcontractors can demonstrate strong past performance. Going forward, small businesses will want to be mindful of this new emphasis on subcontractors’ past performance when choosing subcontractors.
Proposed this past November, this amendment to the FAR will increase multiple acquisition-related thresholds. These increases include the following:
Acquisition thresholds such as the micro-purchase threshold and simplified acquisition threshold give small businesses access to government contracting opportunities without the time and expense of going through a competitive bidding process. The proposed increases above are intended to adjust for inflation and ensure that these thresholds continue serving their purpose of streamlining acquisition processes for small and large businesses alike.
However, since this is a proposed amendment and we have a new presidential administration, this could end in its tracks, or take longer to be made final.
While we’ve covered some important SBA, FAR, and DFARS updates specific to small businesses, small businesses should make sure they’re staying on top of all of the latest policy changes in government contracting, especially with a new administration. We recommend checking out our analysis of key Executive Orders impacting federal contractors and our breakdown of federal contracting trends to follow in 2025. Multiple Award Schedule (MAS) contractors may be curious to know how the new administration will affect the MAS program specifically.
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