House Small Business Panel Urges Plain‑Language Solicitations and Warns Erosion of “Rule of 2” Could Shrink Contractor Pool

The House Committee on Small Business heard testimony Wednesday on barriers that keep small businesses from competing for federal contracts, with lawmakers and industry witnesses urging plain-language solicitations, stronger enforcement of small-business protections and concern about consolidation that pushes smaller firms out of the market.

Committee Chair Laloda opened the hearing by saying, “Small businesses are the economic engine of America,” and argued that solicitations written in dense legal and technical jargon deter bidders. He told the panel he had introduced the bipartisan Plain Language Contracting Act and said, "The House has already passed this bill with strong bipartisan support," calling on the Senate to take it up.

Why it matters: Witnesses described several concrete costs and market effects that, they said, reduce competition and the industrial base. Small firms said regulatory compliance, cybersecurity standards and procurement practices favor large incumbents; lawmakers warned that fewer rivals mean less innovation and higher taxpayer costs.

Testifying, Michael Ramos, president of Raymond Global, said compliance requirements are already expensive and uncertain: "Compliance with a level 2 certification will cost approximately a half million dollars," he said, referring to Department of Defense cybersecurity rules (CMMC). Ramos also urged that a FAR rewrite preserve small-business protections, including codifying the "rule of 2," which requires agencies to set aside procurements for small businesses when there are at least two qualified small firms.

Sue Tellier, president of JETCO Federal, described shrinking participation by small firms: "Since 2010, the number of small businesses winning federal contracts has decreased by 50%," she said, arguing that simplified market research and retention of set‑aside rules such as the rule of 2 are key to keeping small companies engaged. Tellier and other witnesses warned that consolidation and category management — combining multiple small contracts into a single, larger vehicle — can create “zombie” vehicles that lock out small vendors.

Longtime contractor Raoul Anomalou, president and CEO of ASR International Corporation, described operational hurdles for small firms bidding against large primes, including perceived favoritism and procedural complexity. He urged better training for contracting officers and clearer Service Contract Act (SCA) coding, and said banks and relationship managers need more training to support contract performance and financing.

Committee members pressed witnesses on several themes raised in opening statements and testimony: - Plain language: Members repeatedly cited studies showing very few DOD solicitations are written in plain English, and said clearer solicitations would reduce the need for expensive outside counsel and increase competition. - Rule of 2 and set‑asides: Multiple members and witnesses warned that weakening or removing the rule of 2 would accelerate consolidation and shrink the pool of small contractors; witnesses urged codification of the rule into law rather than leaving it to agency guidance. - Regulatory and compliance costs: Witnesses described large regulatory burdens and how modern cybersecurity and contracting reforms (CMMC, FAR revision) impose new fixed costs that disproportionately affect small firms and may deter them from bidding. - SBA/OSDBU capacity: Witnesses and members said cuts to SBA and to agencies’ OSDBU offices reduce the offices that help with market research, post‑award problems and advocacy for small firms.

Quantitative context cited at the hearing included: committee statements that fewer than 30% of federal contractors are small businesses and testimony that federal agencies obligated about $755 billion in contracts in fiscal 2024, with roughly $183 billion awarded to small businesses. Panelists also cited that fewer than 3% of reviewed DOD solicitations were written in plain English and described example compliance costs (CMMC level‑2 cited at about $500,000 for a firm). Where figures were not supplied in detail at the hearing, witnesses or members noted them as "not specified."

No formal votes or committee actions were taken during the hearing. Members asked for written follow‑up and additional materials from witnesses; the chair said members would have five legislative days to submit questions for the record.

The hearing illustrated bipartisan agreement on the objective of increasing small-business access to federal contracts, but disagreement remained over the best way to balance efficiency reforms, category management and protections designed to preserve a broad small‑business industrial base.

Looking ahead, several lawmakers said they expect follow‑up oversight or legislative proposals to ensure that procurement rewrites preserve set‑aside protections and to encourage adoption of plain‑language requirements in solicitations.