DoD Overhauls Acquisition and Supply Chain Rules
The Department of Defense is advancing significant acquisition reforms. New FAR/DFARS class deviations altering contract clauses are now in effect, and the FAR Council has proposed a ban on microelectronics from adversary-linked nations in all federal contracts. The DoD is also actively seeking industry input for the second phase of its broader FAR overhaul, signaling major changes for contractors.
- The proposed ban on microelectronics extends to products and services from China, Russia, Iran, and North Korea, with the restriction set to take effect on December 23, 2027. - This initiative is part of a broader "Revolutionary FAR Overhaul" launched in May 2025 under Executive Order 14275, which aims to remove regulations not explicitly required by statute. - The DoD's Phase 2 input request, issued by Under Secretary of Defense for Acquisition and Sustainment Michael Duffey, seeks to place the entire acquisition system on a "wartime footing". - These changes build upon Section 889 of the 2019 National Defense Authorization Act, which already prohibits federal agencies from contracting with entities that use "covered telecommunications equipment or services" from specific Chinese companies. - The overhaul emphasizes a "commercial-first" policy, prioritizing the acquisition of commercially available solutions over custom government-developed systems to increase speed and agility. - To combat "vendor lock," the reforms will require at least two qualified sources for critical components and maximize the use of Modular Open System Architectures (MOSA). - A newly established Economic Defense Unit will utilize grants, loans, and other commercial-like investment strategies to expand the defense industrial base's capacity. - The reforms also replace Program Executive Offices (PEOs) with Portfolio Acquisition Executives (PAEs) to consolidate authority and allow for more flexible funding and trade-offs between cost, schedule, and performance.
