12/06/2024

SBA Mulls Expansion of Contracting ‘Rule of Two’

If enacted, the rule would increase contracting opportunities for small businesses

Experienced defense contractors are likely familiar with the Small Business Administration's (SBA) "Rule of Two," which often requires federal agencies to set aside an acquisition for small businesses whenever there is reasonable expectation that offers will be obtained from at least two small businesses that are competitive in terms of fair market prices, quality and delivery.

On Oct. 25, 2024, the SBA issued a proposed rule that would extend the reach of this rule by applying it to orders issued under many multiple-award contracts. As such, under the SBA’s proposal, agencies would be required to set aside an order under a multiple-award contract when there is a reasonable expectation of obtaining competitive offers from two or more small business contract holders, unless an exception — including an exception for Federal Supply Schedule contracts — applies.

SBA believes that this rule, if adopted, would: align multiple-award contract purchases with the Small Business Act’s requirement that a fair proportion of the total purchases and contracts for goods and services be awarded to small businesses; resolve confusion created by contradictory interpretations of the Rule of Two; and increase contracting opportunities for small businesses, particularly small disadvantaged businesses.

Please select this link to read the complete article from National Defense.