FAR 19.202-1—Encouraging small business participation in acquisitions.
Plain-English Summary
FAR 19.202-1 explains how contracting officers must actively encourage small business participation in federal acquisitions. It covers the Government’s general policy of giving small businesses an equitable chance to compete, and then lists specific planning and pre-solicitation actions: breaking supplies and services acquisitions into reasonably small lots, structuring work so more than one small business can perform when feasible, setting realistic delivery schedules, encouraging prime contractors to subcontract with small businesses, and giving advance notice and information to the SBA Procurement Center Representative (PCR) in certain acquisitions. It also addresses acquisitions involving existing small business suppliers, construction packaging or consolidation, consolidated or bundled requirements, and acquisitions subject to PCR review at the PCR’s discretion. The section requires the contracting officer to explain why small-business-friendly structuring is not practicable when those opportunities are not used, and to provide the same information to the agency Office of Small and Disadvantaged Business Utilization when applicable. In practice, this rule is about acquisition planning: it forces the Government to consider small business participation early, document why barriers cannot be avoided, and coordinate with SBA before issuing the solicitation when the acquisition may limit small business competition.
Key Rules
Equitable small business access
Small business concerns must be given a fair opportunity to compete for all contracts they can perform, to the extent consistent with the Government’s interest. This is the overarching policy that drives the rest of the section.
Break work into small lots
For supplies and services other than construction, the contracting officer should divide acquisitions into reasonably small lots, but not below economic production runs, so offerors can compete for less than the total requirement. The goal is to make the requirement more accessible to small firms without creating inefficient or uneconomic procurement units.
Structure work for multiple small firms
If the work exceeds the amount for which SBA can guarantee a surety against loss under 15 U.S.C. 694b, the acquisition should be planned, if practicable, so more than one small business can perform the work. This helps avoid overconcentration of risk and opens the door to broader small business participation.
Use realistic delivery schedules
Delivery schedules must be based on actual Government needs and, where practicable, should encourage small business participation. Unrealistic schedules can effectively exclude small firms even when the requirement is otherwise suitable for them.
Encourage subcontracting
Contracting officers should encourage prime contractors to subcontract with small business concerns, consistent with FAR subpart 19.7. This supports small business participation even when the prime contract is not awarded directly to a small business.
Provide advance notice to SBA PCR
At least 30 days before solicitation, the contracting officer must provide the proposed acquisition package and reasonably obtainable related information to the SBA PCR, or follow 19.402(a) if no PCR is assigned, when the acquisition meets specified conditions such as likely exclusion of small businesses, construction packaging/consolidation, or consolidated or bundled requirements. The same information must also go to the agency OSDBU.
Explain why small-business structuring is not feasible
For covered acquisitions, the contracting officer must provide a written statement explaining why the acquisition cannot be broken into small lots, scheduled realistically, structured to allow small business competition, separated into discrete construction projects, or otherwise avoided from consolidation or bundling. This documentation is central to showing that the agency considered small business participation and rejected alternatives for valid reasons.
Process notice concurrently
The 30-day SBA notification must be processed at the same time as other pre-solicitation steps. This means the notice is not an afterthought; it is part of the acquisition planning timeline and should not delay or be skipped because other reviews are underway.
Document rejection of SBA recommendations
If the contracting officer rejects an SBA PCR recommendation made under 19.402(c)(2), the basis for the rejection must be documented and the PCR notified under 19.502-8. This creates accountability when the agency does not follow SBA’s small business advocacy position.
Responsibilities
Contracting Officer
Plan acquisitions to maximize small business participation where practicable; divide supplies and services into reasonably small lots; structure work so multiple small businesses can perform when feasible; set realistic delivery schedules; encourage subcontracting to small businesses; provide the required acquisition package and related information to the SBA PCR and OSDBU at least 30 days before solicitation for covered acquisitions; prepare and submit the required written explanations when small-business-friendly structuring is not used; process the notice concurrently with other pre-solicitation actions; and document and communicate any rejection of SBA PCR recommendations.
SBA Procurement Center Representative (PCR)
Review covered proposed acquisitions, receive the acquisition package and supporting information, and provide recommendations under the SBA’s small business advocacy role. The PCR may also review acquisitions at its discretion, and its recommendations must be considered and, if rejected, addressed with documented reasons.
Agency Office of Small and Disadvantaged Business Utilization (OSDBU)
Receive the same acquisition information provided to the SBA PCR for covered acquisitions. The office uses this information to monitor and support agency small business participation efforts.
Prime Contractor
When awarded a contract, subcontract with small business concerns as encouraged by the contracting officer and consistent with subcontracting requirements and the contract’s small business participation framework.
Agency Acquisition Planners
Support early acquisition planning by identifying opportunities to break requirements into smaller lots, avoid unnecessary consolidation or bundling, and develop realistic schedules and acquisition strategies that preserve small business competition.
Practical Implications
This section is a planning and documentation rule as much as a competition rule: if the acquisition is structured in a way that limits small business participation, the file should show why that was necessary.
A common pitfall is treating small business consideration as a late-stage compliance check; the 30-day PCR notice and the required explanations mean the analysis must happen before the solicitation is issued.
Another frequent issue is over-consolidation or bundling without a strong written justification. If the requirement could have been separated into smaller pieces or discrete projects, the contracting officer must be able to explain why that was not done.
Realistic delivery schedules matter. Even when the scope is suitable for small business, compressed or operationally unnecessary timelines can effectively exclude them and undermine the intent of the rule.
Contracting officers should also watch for the distinction between direct competition and subcontracting opportunities: even when a small business is unlikely to win the prime contract, the acquisition may still need to support small business participation through subcontracting and agency review processes.
Official Regulatory Text
Small business concerns shall be afforded an equitable opportunity to compete for all contracts that they can perform to the extent consistent with the Government’s interest. When applicable, the contracting officer shall take the following actions: (a) Divide proposed acquisitions of supplies and services (except construction) into reasonably small lots (not less than economic production runs) to permit offers on quantities less than the total requirement. (b) Plan acquisitions such that, if practicable, more than one small business concern may perform the work, if the work exceeds the amount for which a surety may be guaranteed by SBA against loss under 15 U.S.C. 694b (see definition of “Applicable Statutory Limit” at 13 CFR 115.10 ). (c) Ensure that delivery schedules are established on a realistic basis that will encourage small business participation to the extent consistent with the actual requirements of the Government. (d) Encourage prime contractors to subcontract with small business concerns (see subpart 19.7 ). (e) (1) Provide a copy of the proposed acquisition package and other reasonably obtainable information related to the acquisition to the SBA PCR (or, if a PCR is not assigned, see 19.402 (a)) at least 30 days prior to the issuance of the solicitation if— (i) The proposed acquisition is for supplies or services currently being provided by a small business and the proposed acquisition is of a quantity or estimated dollar value, the magnitude of which makes it unlikely that small businesses can compete for the prime contract; (ii) The proposed acquisition is for construction and seeks to package or consolidate discrete construction projects and the magnitude of this consolidation makes it unlikely that small businesses can compete for the prime contract; (iii) The proposed acquisition is for a consolidated or bundled requirement. (See 7.107-5 (a) for mandatory 30-day notice requirement to incumbent small business concerns.) The contracting officer shall provide all information relative to the justification for the consolidation or bundling, including the acquisition plan or strategy, and if the acquisition involves substantial bundling, the information identified in 7.107-4 . The contracting officer shall also provide the same information to the agency Office of Small and Disadvantaged Business Utilization: or (iv) The acquisition will be reviewed at the PCR's discretion. (2) For acquisitions described in paragraph (e)(1)(i) through (iii) of this section, provide a statement explaining why the— (i) Proposed acquisition cannot be divided into reasonably small lots (not less than economic production runs) to permit offers on quantities less than the total requirement; (ii) Delivery schedules cannot be established on a realistic basis that will encourage small business participation to the extent consistent with the actual requirements of the Government; (iii) Proposed acquisition cannot be structured so as to make it likely that small businesses can compete for the prime contract; (iv) Consolidated construction project cannot be acquired as separate discrete projects; or (v) Consolidation or bundling is necessary and justified. (3) Process the 30-day notification concurrently with other processing steps required prior to the issuance of the solicitation. (4) If the contracting officer rejects the SBA PCR’s recommendation made in accordance with 19.402 (c)(2), document the basis for the rejection and notify the SBA PCR in accordance with 19.502-8 .