Rules Erased. Rights Lost.

The Prologue: A Decade of Decline

The crisis we face today did not begin with the 2025 Executive Orders. For over a decade, misguided policies like Contract Bundling and Category Management chipped away at the federal marketplace, making it harder for small businesses to compete. The result was a predictable and catastrophic decline.

While the U.S. small business economy grew significantly, the federal industrial base moved in the opposite direction. Between FY2008 and FY2024, the number of small businesses receiving federal contracts fell by an alarming 49%—a loss of over 70,000 unique vendors.^[1] This was not a market correction; it was a policy-driven purge that set the stage for the final blow.

The Final Blow: Annihilating the Rule of Two

The current assault on the Rule of Two is not merely a continuation of the slow decline; it is a radical accelerant. The previous policies made competition difficult; the Deviation Doctrine is designed to make it impossible. By removing the legal requirement for agencies to even look for small businesses, the new rules ensure that the primary trigger for competition in federal contracting can no longer be activated for a vast swath of procurements.

For nearly three-quarters of all U.S. congressional districts (325 out of 435), more than half of their small business federal contracting revenue comes directly from set-asides.^[2] The assault on the Rule of Two places this revenue, and the local jobs it supports, at immediate and profound risk.

The Consequences: What This Costs America

This is not just a small business issue. The consolidation of the federal marketplace into the hands of a few large, incumbent firms has devastating consequences for the entire nation:

• Harm to Local Economies: Billions of taxpayer dollars are being redirected away from local communities and into the pockets of a few select corporations, undermining regional economic stability and growth.^[3]
• Higher Costs for Taxpayers: Reduced competition invariably leads to higher long-term costs. Without the competitive pressure of a diverse supplier base, the government loses its negotiating power and taxpayers overpay.
• A Weaker National Security: A healthy Defense Industrial Base relies on a diverse network of agile and innovative suppliers. Market concentration creates a brittle, less resilient supply chain that poses a direct risk to our national security.^[4]
• Stifled Innovation: Small businesses are vital engines of innovation. Locking them out of the federal marketplace denies the government access to cutting-edge technologies and more efficient solutions, leading to technological stagnation.

The data is clear: the continued dismantling of small business protections is not "modernization"; it is a direct threat to America's economic prosperity and security.