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. The bipartisan bill aims to strengthen the position of small businesses in federal contracting by codifying the Rule of Two, a policy that requires federal contracts valued above $250,000 to be set aside for small business competition if at least two small businesses are expected to submit competitive bids.
The legislation seeks to formalize a practice that has existed for decades but is not fully protected by statute. Under current law, only contracts above the micro-purchase threshold but below the simplified acquisition threshold are guaranteed coverage under the Rule of Two, while larger contracts rely on Federal Acquisition Regulation policies that can change.
“In Massachusetts and across the country, protections like the Rule of Two are critical for small businesses to effectively compete for federal contracts,” said Ranking Member Markey. “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.”
Senator Booker added: “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 to the nearly $700 billion in federal contracting that is awarded each year, bringing new opportunities for small businesses to grow, increasing competition in the marketplace, and empower underserved entrepreneurs, including minority, woman, and veteran-owned businesses, to thrive.”
The bill has received support from 25 organizations and 230 businesses nationwide. In a letter backing the measure, over 200 groups wrote: “While the Rule of Two has been in place for decades and confirmed by the courts, 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. In a marketplace that consistently uses large buying vehicles, protecting and empowering small businesses is good policy and essential for their continued participation.”
National Veteran Small Business Coalition CEO Scott Jensen 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.”
Jon Panamaroff and Haven Harris of the Native American Contractors Association Board noted: “The Rule of Two requirement within the Federal Acquisition Regulation is a foundational policy of small business participation within the federal marketplace, and has been in place for over half a century. This legislation would codify this important rule and ensure small businesses remain a priority for the federal government to use when acquiring its goods and services.”
National Small Business Association President & CEO Todd McCracken explained: “For decades, the Rule of Two has been a critical policy enabling small businesses to compete in the federal procurement process. However, while the Rule of Two has become a key standard, it is only partially guaranteed by statute. 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, task or delivery orders in excess of the SAT do not have similar guarantees. Instead, small companies seeking to bid on these opportunities rely on the Federal Acquisition Regulation (FAR), which is subject to change at any time,” said National Small Business Association President & CEO Todd McCracken. “Rule of Two review process and guarantees are crucial to maintaining a robust pipeline of small businesses in the federal procurement process, which ensures government agencies maintain access to the innovative solutions small businesses are uniquely capable of providing. The Protecting Small Business Competitions Act of 2025 formally codifies this longstanding rule, and makes it possible for small companies to operate with the certainty that the federal government wants to do business with them, and that it will treat them fairly - regardless of the size of their contract. By ensuring that the Rule of Two would apply government-wide lawmakers can provide stability to those contractors."
Liseth Velez from LJV Development commented: “As a federal contractor I’ve seen how critical The Rule Of Two can be opening doors For Small Businesses It Has For Us But Because It Has Only Been A Suggested Policy It Hasn’t Always Been Followed 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 For Woman-Owned Veteran-Owned HUBZone And Other Small Businesses This Is About More Than Access It’s About Being Included In The Federal Marketplace”
