How the FAR Overhaul Benefits Small Businesses

The Revolutionary FAR Overhaul benefits small businesses by shrinking what it takes to register, compete and win a federal contract: it cuts more than half the information required for a SAM.gov registration, collapses the small-business set-aside test into one rule that applies to every contract above the micro-purchase threshold, and rewrites all 53 parts of the Federal Acquisition Regulation in plain language. As of August 2026 the effort has moved out of temporary agency deviations and into formal rulemaking.

What Is the Revolutionary FAR Overhaul?

The Federal Acquisition Regulation has governed how the federal government buys goods and services since 1984. It tells agencies how to plan an acquisition, choose a contract type, run the competition and manage the resulting contract. Every executive-branch agency works from it, which is why a change to the FAR changes the rules for every business selling to the government.

The Revolutionary FAR Overhaul, usually shortened to RFO, began with Executive Order 14275, “Restoring Common Sense to Federal Procurement,” signed in April 2025 and implemented through OMB Memorandum M-25-25 on 2 May 2025. Its instruction was blunt: strip the FAR back to what statute actually requires, delete the rest, and say it in plain language.

Where Does the FAR Overhaul Stand Right Now?

This is the part that has changed most since the overhaul began, and it is where most published guidance is out of date. The work has run in two distinct phases:

The four proposed rules cover roughly twenty parts between them: FAR Case 2026-001 (Parts 1, 2, 4, 33, 39, 40 and 53), FAR Case 2026-002 (Parts 6, 7, 10, 18, 26, 37 and 41), FAR Case 2026-005 (Parts 5, 24 and 29) and FAR Case 2026-007 (Parts 3 and 49). The remaining parts are still operating under class deviation text while their rules are drafted.

The practical consequence for a small business bidding today: you are already working under the overhauled rules on most solicitations, because the deviations are live even though the regulation is not yet final.

How Does the FAR Overhaul Benefit Small Businesses?

Four changes matter more than the rest if you are a small business trying to break into federal work.

1. A much shorter SAM.gov registration. FAR Case 2026-001 keeps only entity-level representations and certifications in SAM and removes the procurement-specific ones, including Section 889 supply-chain attestations. The FAR Council's own estimate is that this removes over half of the information previously required to register. If a stalled registration has kept you out of federal bidding, this is the change to act on — our guide to registering on SAM.gov walks through what is still required.
2. One set-aside rule instead of two. See the next section — this is the single biggest structural change for small business.
3. Higher sole-source approval authority. Contracting officers can approve larger sole-source awards without escalating: up to $10 million at the Department of Defense, NASA and the Coast Guard, and up to $900,000 at other agencies. More awards can be made quickly to a capable incumbent or a specialised supplier.
4. Plain language throughout. The rewrite strips duplicated and non-statutory material from every part. That does not change what you must do, but it makes the requirement legible without a compliance consultant — which disproportionately helps businesses without one.

Does the Rule of Two Survive the Overhaul?

Yes — and this was the open question that worried the small-business community most. The overhauled FAR Part 19 keeps the Rule of Two: a contracting officer must set an acquisition aside for small business when there is a reasonable expectation of receiving offers from two or more responsible small business concerns at fair market prices.

What changed is the structure. The old FAR drew a line between purchases above the micro-purchase threshold but under the simplified acquisition threshold and those above it, with different rules for each. The overhauled Part 19 applies one unified rule to everything above the micro-purchase threshold, and requires the contracting officer to document the reason whenever a contract is not set aside.

One caveat worth knowing before you plan around it: the Rule of Two does not apply to orders under multiple-award contracts. A contracting officer may set aside such an order for small business but is not required to. If most of your pipeline runs through task orders on a GWAC or an IDIQ, the Rule of Two is not protecting you there.

Which Dollar Thresholds Changed?

Separately from the overhaul, the FAR Council's five-year inflation adjustment raised the core thresholds effective 1 October 2025. These are the numbers that decide which rules apply to a given buy:

Raising the simplified acquisition threshold to $350,000 widens the band in which small-business set-asides and streamlined procedures apply — by one estimate around 5,000 additional awards a year now fall inside it.

The Part 19 sole-source ceilings for socioeconomic programmes are unchanged: $8.5 million for manufacturing NAICS codes and $5.5 million otherwise for HUBZone, WOSB and 8(a), and $8.5 million / $5 million for SDVOSB. If you are not yet certified, small business certifications remain one of the highest-leverage moves available.

What Should Your Small Business Do Next?

1. Refresh your SAM.gov registration against the shorter requirement. If you abandoned a registration because of the reps-and-certs burden, the burden is now materially smaller.
2. Re-check solicitations you previously screened out. A higher simplified acquisition threshold and a unified Rule of Two mean opportunities that were open competitions last year may be set aside this year.
3. Read the deviation text for the parts that govern your work, not just the final rules. The deviations are what contracting officers are applying today.
4. Review your compliance posture against the new language. Simplification is not deregulation — statutory requirements survive intact. Our comparison of public and private sector compliance covers what does not change.
5. Start bidding while competitors are still reading. Periods of regulatory change reward businesses that move first, and responding to federal bids is more approachable now than it has been in a decade.

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