Deep Dive: FAR Part 10 - Disabling the Rule of Two
The changes to FAR Part 10 (Market Research) represent the most direct operational assault on the "Rule of Two." By removing the legal requirement for contracting officers to use market research to identify capable small businesses at the start of the acquisition process, the new rules make it nearly impossible to ever trigger a small business set-aside. This change effectively neuters the law at its point of origin.
The "Before" Picture: Market Research as a Gateway to Opportunity
The original FAR Part 10 was clear: market research was not just about understanding the marketplace, it was a proactive tool for implementing public policy. The regulations explicitly mandated that agencies conduct market research to:
- Determine if capable small business sources exist to fulfill the agency's requirements.
- Consult with Small Business Administration (SBA) specialists and other small business experts.
- Use the results of this research to structure acquisitions to facilitate small business participation.
This was the foundational step for the Rule of Two. The law required agencies to look for small businesses first. If the market research identified two or more capable small businesses, the contracting officer was legally required to set the contract aside.
The "After" Picture: A Mandate Deleted
The overhaul of FAR Part 10 surgically removed these key requirements. The new text deletes the explicit mandate to use market research to find small businesses.
Instead of a clear, protestable duty, contracting officers are now guided by vague, unenforceable "principles." They are encouraged to be "commercially aware," but are no longer legally obligated to take the specific actions that would lead to a small business set-aside. The legal requirement has been replaced by professional discretion.
Detailed Impact Analysis
The impact of this change is immediate and devastating:
- It Makes the Rule of Two Inapplicable: The Rule of Two is predicated on the government first identifying at least two capable small businesses. By removing the requirement to look for them, the new rule ensures that, in many cases, they will never be officially "found."
- It Allows for Early-Stage Exclusion: Contracting officers can now structure an acquisition for a large business or a consolidated contract vehicle from the very beginning, without ever having to perform the market research that might have proven a small business set-aside was required.
- It Removes Grounds for Protest: A small business can no longer file a successful protest on the grounds that an agency failed to conduct adequate market research to identify small business sources. The legal duty to conduct that specific research has been erased.
This is the core operational mechanism for circumventing small business law. While the Rule of Two remains on the books, the changes to FAR Part 10 remove the regulatory machinery required to ever set it in motion.