The House Committee on Small Business voted unanimously on May 20, 2026 to advance H.R. 2804, the Protecting Small Business Competitions Act of 2025. The bill passed 23 to 0 and now heads to the full House of Representatives.
H.R. 2804 would write the so-called “Rule of Two” into the Small Business Act, turning it from a regulation into permanent law. The Rule of Two requires federal agencies to set aside contracts for small businesses when a contracting officer reasonably expects at least two qualified small firms will submit bids at fair market prices. It applies to contracts above the simplified acquisition threshold, which is currently $350,000.
Right now, the Rule of Two lives in the Federal Acquisition Regulation (FAR Part 19) and SBA regulations. That means it could be weakened or removed through regulatory rewrites without an act of Congress. The ongoing FAR modernization effort has raised concern among small business advocates that the rule could be diluted or dropped altogether.
Making the Rule of Two a statute would give small government contractors a stronger legal footing. If an agency ignored the set-aside requirement, a business would be able to challenge the decision based on federal law, not just a regulation.
The committee did adopt one notable amendment. The version that passed excludes task orders and delivery orders from the statutory Rule of Two. That is significant because many agencies buy large volumes of work through multiple-award indefinite-delivery/indefinite-quantity (IDIQ) contracts, and task orders are how individual jobs flow from those vehicles. A companion Senate bill, S. 2656, does not include that exclusion, so the two chambers will need to reconcile the difference if both versions pass.
Small businesses that rely on federal set-asides as a revenue channel should track this bill as it moves to a House floor vote and eventually to the Senate. Firms competing for contracts above $350,000 stand to benefit most from statutory protection. Now is also a good time to confirm that your SAM.gov registration, size status, and any socioeconomic certifications such as 8(a), HUBZone, or SDVOSB are current and accurate.
According to PilieroMazza’s analysis, the bipartisan 23-0 vote signals strong momentum, but committee passage does not guarantee enactment. The bill still needs a floor vote in the House, Senate consideration, and a presidential signature before becoming law.
