Major Overhaul of Federal Acquisition Regulation Begins
The federal acquisition community is signaling the most significant overhaul of the Federal Acquisition Regulation (FAR) in decades, dubbed "FAR 2.0." The reforms will emphasize user-friendly digital interfaces and streamlined processes to lower barriers for new vendors. A new survey of contractors highlighted persistent pain points driving the changes, which will also include mandatory cybersecurity tabletop exercises for contractors by September.
- The "Revolutionary FAR Overhaul" (RFO) was initiated by Executive Order 14275, "Restoring Common Sense to Federal Procurement," to address long-standing industry complaints that the regulations are overly complex, inflexible, and outdated for a modern technology environment. Key changes are being implemented through agency-specific "class deviations" ahead of formal rulemaking, creating a transitional compliance environment for contractors. - A significant change in the overhaul is the restructuring of FAR Part 15, "Contracting by Negotiation," to align with the acquisition lifecycle and clarify terms such as replacing "discussions" with "negotiations" to address contractor confusion. Additionally, a new "FAR Companion" guide has been introduced to shift contracting officers from rigid compliance towards more judgment-based procurement. - The Department of Defense is operationalizing artificial intelligence through initiatives that create new opportunities for tech-focused contractors. Project Maven uses AI to analyze vast amounts of surveillance data, while the Joint All-Domain Command and Control (JADC2) system aims to connect sensors from all military branches into a single AI-powered network. To accelerate this, the Pentagon has launched Open DAGIR, a new acquisition model designed to allow different contractors to build interconnected parts of a larger AI system, avoiding vendor lock-in. - The authority for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs lapsed, creating uncertainty for small businesses reliant on this funding. Congress is debating several reauthorization bills; some propose a simple extension while others seek permanent authorization and changes to address concerns about foreign influence and program eligibility for multiple award winners. - The new mandatory cybersecurity requirements are part of the Cybersecurity Maturity Model Certification (CMMC) program, which was formally implemented through a Department of Defense final rule published on September 10, 2025. Compliance will be phased in over three years, beginning November 10, 2025, and will be a condition for contract awards, requiring contractors to maintain a specific CMMC level throughout the contract's lifecycle. - The General Services Administration's "OneGov" initiative centralizes procurement for software and technology, treating the entire federal government as a single buyer. This strategy leads to significant pre-negotiated discounts with major Original Equipment Manufacturers (OEMs) but shifts the role of small business resellers to that of subcontractors or channel partners rather than prime contractors. - The overhaul of FAR Part 19, which governs small business programs, retains the "Rule of Two" for contract-level set-asides, ensuring opportunities remain for small businesses. However, for orders under multiple-award contracts, the use of set-asides is now at the contracting officer's discretion. - For contractors involved in protests and disputes, the revised FAR Part 33 introduces a new requirement for agencies to provide protesters with a redacted source selection decision during a higher-level agency review. This change is intended to increase transparency, though the fundamental processes for protests and disputes remain largely the same.
