The FAR Overhaul 2026: What Small Businesses Need to Know

TL;DR: The federal government is rewriting the FAR — the rulebook for all government purchasing. 31 class deviations took effect February 1, 2026, with Phase 2 rulemaking underway. The micro-purchase threshold is now $15,000, the simplified acquisition threshold is $350,000, and commercial buying rules are being streamlined. Small businesses benefit from higher thresholds and less paperwork.

Executive Order 14275, signed in April 2025, launched the most significant overhaul of the Federal Acquisition Regulation since the FAR was created in 1984. The stated goal: "Restoring Common Sense to Federal Procurement."

The overhaul is happening in two phases. Phase 1 — class deviations that take effect immediately — went live on February 1, 2026. Phase 2 — formal notice-and-comment rulemaking to make changes permanent — is underway now, with the DoD actively soliciting industry input through a February 13, 2026 letter from the Under Secretary of Defense for Acquisition and Sustainment.

Here's what's changed, what's coming, and what you should do about it.

What is the FAR and why does this matter

The Federal Acquisition Regulation is the 1,900+ page rulebook that governs how every federal agency buys goods and services. Every federal contract — from a $500 office supply order to a $50 billion weapons system — follows FAR procedures.

For small businesses, the FAR determines how you find contracts, what paperwork you submit, how your proposals are evaluated, and what compliance requirements you must meet. When the FAR changes, the rules of the game change.

The FAR hasn't had a structural overhaul in four decades. It has accumulated layers of regulations, clauses, and procedures that even experienced contracting officers find difficult to apply. The overhaul aims to simplify the process — which, in theory, benefits small businesses the most.

What changed on February 1, 2026

Phase 1 delivered 31 class deviations affecting multiple FAR parts. Here are the changes that matter most for small businesses:

FAR Part 12 (Commercial Products/Services) was streamlined. The number of required provisions and clauses dropped from 154 to 108. If you sell commercial products or services to the government, your proposals and contracts will have fewer compliance requirements.

FAR Part 19 (Small Business Programs) was reorganized. The small business section was restructured around the acquisition lifecycle — Presolicitation, Evaluation and Award, and Postaward — instead of its previous topic-based organization. The rules haven't changed much, but they're easier to find and follow.

Clause renumbering. The government renumbered FAR and DFARS clauses. For example, the basic safeguarding requirements moved from FAR 52.204-21 to FAR 52.240-93. The DFARS equivalent moved from 252.204-7020 to 252.240-7997. If you use templates that reference specific clause numbers, update them.

Threshold changes (October 2025)

While not technically part of the FAR overhaul, the October 2025 inflation adjustments raised key thresholds that directly affect small businesses:

The micro-purchase threshold increase from $10,000 to $15,000 is the most impactful change for new contractors. Government Purchase Card (GPC) purchases up to $15,000 don't require competitive bidding — contracting officers can buy directly from you. More purchases fall into this streamlined category now.

The SAT increase to $350,000 means more contracts qualify for simplified acquisition procedures — shorter timelines, simpler proposals, and reduced paperwork. This is the sweet spot for small businesses.

What's coming in Phase 2

On February 13, 2026, the DoD published a letter soliciting industry input on Phase 2 changes. While the final rules haven't been published, the direction is clear:

More consolidation of commercial buying rules. FAR Part 13 (Simplified Acquisition Procedures) is being renamed to "Simplified Procedures for Non-commercial Acquisitions," while FAR Part 12 will handle all simplified procedures for commercial items. This means one set of rules for commercial products instead of two.

CMMC 2.0 integration. The Cybersecurity Maturity Model Certification program is being woven into the FAR/DFARS framework. If you handle Controlled Unclassified Information (CUI), expect new contract clauses related to CMMC certification levels.

Further clause reduction. The government has signaled it wants to cut the total number of FAR clauses significantly. Each eliminated clause is one less compliance requirement for contractors.

Permanent rulemaking. Phase 1 class deviations are interim — they can be changed or withdrawn. Phase 2 will make the structural changes permanent through the formal Federal Register rulemaking process.

How this helps small businesses

Higher micro-purchase threshold = more direct sales. The jump from $10,000 to $15,000 means more government purchases happen through GPC cards without formal solicitations. If you sell products or services in that price range, make sure you're registered on SAM.gov and visible in the SBA's Dynamic Small Business Search.

Higher SAT = more simplified acquisitions. Contracts up to $350,000 now use simplified procedures. These have shorter proposal requirements, faster evaluation timelines, and are frequently set aside for small businesses. The old threshold of $250,000 excluded many mid-sized service contracts — the new threshold captures them.

Fewer clauses = less compliance burden. The reduction from 154 to 108 clauses for commercial products means your compliance department (or your owner-operator who also handles compliance) has less to track. For small businesses bidding on their first contracts, this lowers the learning curve.

Faster awards = better cash flow. Simplified procedures generally produce faster contract awards. For small businesses that can't afford to wait 6-12 months for a contract decision, this matters.

What small businesses should do right now

1. Update your SAM.gov profile. Make sure your SAM.gov registration is current. Verify your NAICS codes, capability descriptions, and certifications reflect what you actually do today. Contracting officers search SAM.gov when making micro-purchases and simplified acquisitions.

2. Review your proposal templates. If you use standard templates for responding to solicitations, update all FAR clause references to the new numbering system. Referencing old clause numbers signals that you're not paying attention to the regulatory environment.

3. Know the new thresholds. Memorize these numbers: micro-purchase at $15,000, SAT at $350,000, commercial simplified at $9 million. When you see a contract value, you should immediately know which procedural rules apply.

4. Monitor for new solicitations. Higher thresholds mean more contracts are flowing through simplified channels. The volume of opportunities in the $10,000-$350,000 range is increasing. Sign up for daily alerts to catch new opportunities as they post.

5. Prepare for CMMC. If you handle CUI or work with DoD, start your CMMC readiness assessment now. Phase 2 will likely make CMMC requirements contractual obligations, and certification takes months.

What hasn't changed

The overhaul simplifies process, not standards. These fundamentals remain:

• Set-aside programs still exist. The 23% small business goal, 8(a), WOSB, SDVOSB, and HUBZone programs are untouched. If anything, the reorganization of FAR Part 19 makes them easier to find.
• Competition requirements still apply. Above the micro-purchase threshold, contracts still require competition (with set-aside and sole-source exceptions).
• Past performance still matters. Evaluators still weigh your track record on similar work.
• Buy American rules are tightening independently. The domestic content threshold rose to 65% in 2026 — this is a separate regulatory track from the FAR overhaul.
• Full and open competition still governs contracts above the SAT that aren't set aside.

The bottom line

The FAR overhaul is real and already in effect. The combination of higher thresholds and simplified procedures makes 2026 one of the most accessible years for new government contractors. The micro-purchase and simplified acquisition threshold increases alone open up billions in contract dollars to streamlined competition. If you've been considering government contracting, the regulatory barriers just dropped.

Further reading

• SAM.gov Beginner's Guide — Registration and search walkthrough
• What Is a Government RFP? — RFP, RFQ, IFB, and RFI explained
• How to Bid on Your First Contract — Step-by-step bidding guide
• Government Set-Aside Contracts — Programs that reduce competition