Small business set-aside rules are back in the spotlight. On May 20, 2026, the House Committee on Small Business ordered H.R. 2804, the Protecting Small Business Competitions Act of 2025, to be reported by a 23-0 vote, according to the House committee repository. The bill would codify the Rule of Two in the Small Business Act, giving one of the most important small business contracting principles stronger statutory footing.

For GSA Schedule contractors, this is worth watching closely. The introduced version of H.R. 2804 covered contracts, task orders, and delivery orders above the simplified acquisition threshold. The version advanced by the committee was amended, and public legal analysis indicates that the amendment narrows the bill by excluding task orders and delivery orders. That distinction matters because much of the federal market now flows through multiple-award vehicles, including GSA Schedules and other governmentwide contract vehicles.

What Is the Rule of Two?

The Rule of Two is the small business set-aside principle that tells contracting officers to reserve certain procurements for small businesses when two conditions are met: the agency reasonably expects offers from at least two responsible small businesses, and award can be made at a fair market price.

The Congressional Research Service explains that the Rule of Two appears in both statute and regulation. For contracts above the simplified acquisition threshold, CRS notes that FAR 19.502-2(b) generally requires agencies to set aside acquisitions for small businesses when the two-offer and fair-market-price conditions are met. CRS also notes that Congress has considered whether to make broader Rule of Two protections a statutory mandate.

In plain English, the Rule of Two is one of the gates that can turn a full-and-open opportunity into a small business competition. It does not guarantee an award to any contractor, but it can determine who gets to compete.

What Changed in Congress

H.R. 2804 was introduced to amend the Small Business Act and codify the Rule of Two. The text posted by Congress.gov states that each contract, task order, or delivery order above the simplified acquisition threshold would be reserved for small businesses when a contracting officer reasonably expects at least two responsible small business offers and award at a fair market price.

The House Committee on Small Business scheduled H.R. 2804 for markup during the week of May 18, 2026. The committee repository later showed H.R. 2804, as amended, ordered to be reported by a 23-0 vote. That is meaningful momentum, but it is not the same thing as final enactment. The bill still must move through the broader legislative process.

The key watch item is scope. The House Committee amendment removed task orders and delivery orders from the Rule of Two coverage in the House committee version, while companion Senate legislation would apply to task orders and delivery orders. If the House and Senate versions continue to differ, contractors should expect more negotiation before any final bill becomes law.

Why GSA Schedule Contractors Should Care

GSA Schedule holders should care because the practical value of a Schedule often depends on task-order access, agency buying habits, and whether buyers treat small business capability as part of market research early enough to shape the acquisition strategy.

If Rule of Two protections are strengthened for standalone contracts but not for task orders, small businesses may see improved certainty in some procurements while still facing mixed treatment on orders under multiple-award vehicles. That is especially relevant for firms that rely on GSA MAS, GWACs, agency IDIQs, and other ordering vehicles as their main federal growth path.

This also connects to FAR reform. One of the drivers is to make it law so that the Rule of Two doesn’t disappear altogether under FAR reform, which could put non-statutory provisions under pressure. For contractors, the business issue is predictability: the more durable the rule, the easier it is to plan pipeline, teaming, capture, and compliance around it.

There is also a competitive positioning angle. If agencies face stronger documentation or set-aside expectations in certain buying situations, small businesses with clear capability statements, accurate SIN alignment, strong past performance, and well-maintained pricing will be easier for contracting officers to justify including in market research.

Keep in mind that recent increases to the Streamlined Acquisition Threshold for most purchases increased to $350,000, which means that even more acquisitions must be set aside for small business. Legitimizing the Rule of Two by making it law, regardless if it applies to task orders and delivery orders, will strengthen its use and benefit all small businesses.

What Contractors Should Do Now

This bill is not final law, so contractors should avoid overreacting. But they should use the moment to tighten the basics that make small business set-aside opportunities easier to pursue.

1. Review how your GSA Schedule tells your small business story. Make sure your SINs, capabilities, past performance, keywords, and pricing support the work you want agencies to set aside.
2. Track order-level opportunities separately from standalone contracts. The task-order question is the core issue to watch as the bill moves forward.
3. Document market research signals. If your company is one of several capable small businesses in a niche, keep evidence of agency demand, competitor capability, and comparable awards.
4. Refresh teaming and subcontracting plans. If more opportunities become set aside, primes and small businesses may need stronger partner networks to meet scope and performance expectations.
5. Monitor FAR and SBA updates. A statutory change, FAR update, or SBA implementation rule could change how contracting officers apply the rule in practice.

Contractors should also keep an eye on related GSA Schedule management issues. For example, recent Coley GCS coverage of GSA MAS Refresh 31 and Mass Mod A909 and TDR requirements reinforces the same point: growth opportunities and compliance obligations often move together. A company that wants to win more government work needs both a strong market position and a clean contract file.

How Coley Can Help

Coley GCS helps contractors understand, manage, and grow through the GSA Contracts, including MAS Schedules, GWACs, and IDIQs. If your company is watching the Rule of Two debate, now is a good time to review whether your contracts are positioned for the opportunities you want to pursue.

A practical review can identify whether your SINs and NAICS match your target work, whether your pricing and documentation are ready for contracting officer scrutiny, and whether your contract record supports the small business opportunities you plan to chase.

With over 25 years of experience, Coley GCS has helped thousands of companies successfully win and manage GSA MAS Schedules, GWACs, and IDIQ contracts. Our dedicated team of experts provides ongoing support to ensure your Schedule stays compliant, competitive, and positioned for long-term success in the federal marketplace. From initial acquisition to modifications and annual compliance, we make the process easy and efficient, so you can focus on growing your government business.

Need help maximizing return on investment? Coley GCS also provides Business Development support and training that has helped companies win over $26 Billion in new contracts.

Contact us at hello@coleygcs.com, call us at 210-402-6766, or book time with our team to speak with one of our contracting expert.