A significant shift is on the horizon for small businesses seeking opportunities in the federal contracting space. Ranking Member Edward J. Markey (D-Mass.) and Senators Cory Booker (D-N.J.), Lisa Murkowski (R-Alaska), and Dan Sullivan (R-Alaska) have introduced the Protecting Small Business Competitions Act of 2025, aimed at bolstering the ability of small enterprises to compete equitably with larger firms for federal contracts.
The proposed legislation focuses on codifying the "Rule of Two," a crucial policy designed to ensure that federal contracts valued above the simplified acquisition threshold of $250,000 are set aside for small businesses, provided there is reasonable confidence that at least two small firms will present competitive bids.
Senator Markey highlighted the importance of this bill, stating, “In Massachusetts and across the country, protections like the Rule of Two are critical for small businesses to effectively compete for federal contracts. By writing this essential protection into law, we can ensure this long-standing requirement continues to give small businesses a seat at the table to compete for contracting opportunities, grow their business, and thrive.”
With the federal government awarding nearly $700 billion annually in contracts, this legislation aims to expand the reach of small businesses within the federal marketplace. In this regard, Senator Booker remarked, “Small businesses in New Jersey and across the country deserve a fair shot at competing for government contracts. This bipartisan legislation would expand small business’ access… bringing new opportunities for small businesses to grow, increasing competition in the marketplace, and empowering underserved entrepreneurs, including minority, woman, and veteran-owned businesses, to thrive.”
The act is already gaining traction, receiving endorsements from 25 organizations and over 230 businesses nationwide. A coalition of over 200 small business organizations and advocates noted in a supportive letter, “While the Rule of Two has been in place for decades… we believe this legislation is necessary and timely to ensure the government’s acquisition rules continue to allow small businesses to compete for and win a fair proportion of government contracts.”
One of the notable expected benefits of the Protecting Small Business Competitions Act is its potential to strengthen America’s industrial base. Scott Jensen, CEO of the National Veteran Small Business Coalition, stated, “Codifying the Rule of Two strengthens America’s industrial base by ensuring fair competition for Veteran-owned small businesses. This legislation is a smart, bipartisan step toward preserving innovation, growing local economies, and protecting the long-term health of the federal supply chain.”
However, small business owners should be aware that while the Rule of Two has been a guiding principle, it currently lacks full statutory guarantees for larger contracts. Todd McCracken, President & CEO of the National Small Business Association, explained, “Under current law, contracts above the micro-purchase threshold (MPT) but below the simplified acquisition threshold (SAT) are subject to the Rule of Two; but any contracts… in excess of the SAT do not have similar guarantees.” By shifting this rule into a formal statute, businesses could operate with greater assurance that the federal government is committed to fair competition.
For small business contractors, the letter of support from the advocates underscores an essential truth: providing equal opportunities for small firms is critical for fostering communities. Liseth Velez, Founder & CEO of LJV Development in Boston, observed, “As a federal contractor, I’ve seen how critical the Rule of Two can be in opening doors for small businesses… Putting it into statute ensures that small businesses have a piece of the pie—not just setting a goal but making a commitment to building equity in our communities.”
While the Protecting Small Business Competitions Act of 2025 offers tangible benefits, small business owners should also consider the challenges. Ensuring compliance with new regulations and understanding the shifting dynamics of federal contracting could require additional resources or adjustments in business operations.
This legislation represents a forward step toward providing small businesses with the support they need to thrive in a competitive federal marketplace. As the bill progresses, small business owners will be watching closely to gauge the impact of these changes on their ability to secure government contracts and expand their opportunities.
For more details, you can read the original press release here.
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