When it comes to federal contracting, understanding the nuances of FAR Part 19 simplified acquisition procedures and the Rule of Two can give your business a critical edge—especially within the Department of Veterans Affairs (VA). These procedures are designed to streamline the procurement process for government agencies, offering a quicker path to acquiring goods and services while “setting contracts aside” for small and socioeconomically disadvantaged businesses.

But there's more to it, particularly if you’re an SDVOSB (Service-Disabled Veteran-Owned Small Business) or VOSB (Veteran-Owned Small Business) competing for contracts in the VA.

What Are Simplified Acquisitions in Government Contracting?

Simplified acquisition procedures allow government contracting officers to expedite purchases with fewer hurdles, but they come with a spending limit. Previously capped at $150,000, the threshold was raised in 2018 to $250,000, and there’s even better news: the simplified acquisition threshold for commercial items is $7.5 million. Similarly, the micropurchase threshold jumped from $3,500 to $10,000, allowing agencies to buy small engagements like technical tests and prototypes on a government purchase card.

These expanded spending limits are game-changers for veteran-owned small businesses looking to break into the federal marketplace, offering more opportunities to secure contracts without the lengthy delays of traditional procurement processes.

Why Government Set-Asides Matter

Under federal acquisition regulations, contracts under the simplified acquisition threshold must be set aside for small businesses when possible. The VA takes this a step further with the Rule of Two: if there are two or more verified SDVOSBs or VOSBs capable of performing the work, the contract must be set aside for them. This is an incredible opportunity designed to encourage and grow the veteran-owned marketplace and can be a boon for your business.

Set-aside contracts offer several advantages:

1. Increased Opportunity: When a contract is set aside, government buyers are encouraged to actively seek out small businesses. And when VA does, the stakes are even higher for SDVOSBs and VOSBs because of the mandate to consider veteran ownership before all other socioeconomic designations.
2. Fair Competition: Contracting officers must take steps to encourage small business participation, such as allowing ample time for bid preparation and providing detailed solicitation materials. Additionally, price adjustment techniques can be applied to level the playing field for small businesses that meet specific criteria.
3. Agency Goals: The Small Business Administration (SBA) sets annual goals for federal agencies to allocate a certain percentage of their contracting dollars to small businesses. The VA, for instance, prioritizes contracts for SDVOSBs above all other set-aside categories, giving these businesses a significant advantage.

Competitive Edge: Leveraging the Rule of Two in VA Contracting

The Rule of Two in federal contracting, particularly within VA acquisitions, mandates that if market research finds two or more SDVOSBs or VOSBs can meet the requirements of a contract at a fair and reasonable price, it must be set aside for these businesses. Even more importantly, VA contracting officers are not required to defer to the typical FAR order of required sources when applying Rule of Two, giving them greater flexibility to prioritize veteran-owned businesses in their procurement decisions.

If you’re a VOSB or SDVOSB, the Rule of Two gives you a distinct advantage in VA contracting. By mandating that VA contracting officers must set aside a contract if two or more SDVOSBs or VOSBs can deliver the best value to the government, it dramatically lowers the field of competition and creates a significant competitive advantage for veteran-owned firms. And earlier this year, that competitive edge became even stronger.

In January 2024, the Office of Federal Procurement Policy (OFPP) expanded the Rule of Two to apply to multiple award contracts, further strengthening opportunities for small businesses. This expansion ensures that small businesses, particularly those owned by veterans, continue to have greater access to federal contracting opportunities in competitive environments involving multiple award contracts.

Not a Veteran-Owned Business? Consider Subcontracting

If you’re not a veteran-owned business and you suspect that a contract will be set aside under the Rule of Two, you’ll need to make a strategic decision: wait for another opportunity or subcontract under an SDVOSB or VOSB. Subcontracting might be your best (or only) option if you want to stay relevant within the VA, because once these contracts get set aside they don’t often return to full and open market opportunities.

Conduct your own market research to evaluate whether two or more SDVOSBs or VOSBs offer your supplies and services at a reasonable price. If you determine there are, then consider the following factors when deciding whether to subcontract:

• Contract Duration: How long is the contract term? Does it have the potential to evolve into a longer-term contract or a Blanket Purchase Agreement (BPA) or Indefinite Delivery/Indefinite Quantity (IDIQ) contract?
• Market Flexibility: Can you offer your product or service to other agencies, or is the VA your primary market?

If the contract is a key part of your business strategy and you can’t afford to wait for another opportunity, finding the right SDVOSB or VOSB to partner with is crucial. Remember, once a contract is awarded, the incumbent has a strong hold on it, possibly for years. Subcontracting allows you to stay in the game and build valuable relationships that could lead to future opportunities.

Final Thoughts: Positioning Your Business for Success

Whether you’re a veteran-owned business or not, understanding the intricacies of simplified acquisitions and the Rule of Two can significantly impact your success in VA contracting. By staying informed and strategically positioning your business, you can maximize your chances of securing these valuable opportunities.

Ready to streamline your proposal process and get high-quality pink team drafts in just 48 hours? Schedule a demo with GovPro AI today to see how we can help you win more VA contracts.

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