How does the 'Rule of Two' apply to small business set-asides above the simplified acquisition threshold?

The Rule of Two applies to small business set-asides above the simplified acquisition threshold when the contracting officer determines there is a reasonable expectation of offers from at least two responsible small business concerns and that an award can be made at fair market prices, as stated in FAR 19.502-2(b).

This means that simply responding to a sources sought notice is not enough; the contracting officer must assess whether those small businesses are capable of performing the work and will offer competitive pricing. The agency is not required to set aside the contract just because two small businesses respond. The contracting officer needs to see evidence of capability, such as through past performance, technical proposals, and financial viability, to make a determination that two small businesses are both responsible and can provide fair market prices. For state and local procurements, the specific rules for set-asides and vendor response requirements are found in the state's procurement code and the relevant portal's vendor guide, which can vary by jurisdiction.