The State Department is retroactively promoting hundreds of additional Foreign Service employees, after unilaterally changing the criteria and the panels of individuals who oversee this process.
The American Foreign Service Association said the department recently carried out these retroactive promotions, as part of “targeted administrative actions.”
Earlier this year, the State Department eliminated an employee’s contributions to diversity, equity, inclusion and accessibility (DEIA) goals from the criteria for promotion within the Foreign Service. Instead, the department said it would vet Foreign Service employees on their “fidelity” to the Trump administration’s policies.
AFSA President John Dinkelman said the State Department retroactively promoted 200 Foreign Service employees, based on these new criteria.
In a departure from past practice, Dinkelman said the State Department isn’t sharing the names of employees receiving these promotions, or the names of those who served on Foreign Service promotion boards.
“We have no idea who made these decisions,” Dinkelman said, adding that the State Department made these “unprecedented changes to the process” without consulting AFSA.
Dinkelman said that the level of transparency is important to ensure the promotion recommendations are unbiased.
The State Department’s inspector general’s office reported in May 2022 that human resources employees frequently gave spots on Foreign Service promotion boards to family members and friends. According to the report, several employees raised concerns that certain board selections amounted to “nepotism and favoritism.”
State Department spokesman Tommy Pigott said in a statement that the Biden administration “imposed ideological litmus tests on civil servants, penalizing competent and deserving government employees in the process.”
“Under President Donald Trump and Secretary of State Marco Rubio, the State Department rewards excellence, which is the right thing to do for our workforce, for our country, and for the American people,” Pigott said.
In July, the State Department unveiled new criteria for promotions and career advancement in the Foreign Service. Among the changes, the department will assess employees on their “fidelity” to the Trump administration’s policy goals.
The department’s newly released “core precepts” for tenure and promotion will grade Foreign Service on five criteria — fidelity, communication, leadership, management and knowledge.
Previous versions of this scorecard placed greater emphasis on subject matter expertise and assessing an employee’s contributions to DEIA goals.
“The derivative effects of this mean that some poor individual, who actually played by the rules and who fairly demonstrated their adherence to principles that are now distanced by the government, was not promoted, and somebody else has been now placed in front of them in the line,” Dinkelman said.
The department no longer recognizes AFSA as a union, following executive orders that scaled back collective bargaining rights for a majority of the federal workforce.
The State Department’s human resources bureau releases new precepts every three years, outlining the most important qualities Foreign Service officers must demonstrate to advance to higher ranks.
As part of a newly added “fidelity” standard, Foreign Service employees across all ranks will be evaluated on their contributions to “protecting and promoting executive power.”
The fidelity portion of the scorecard links to a White House webpage listing President Donald Trump’s executive orders and presidential actions.
The Bureau of Global Talent Management says that mid-level Foreign Service officers should be able to demonstrate how they are “zealously executing” U.S. government policy.
AFSA also raised concerns in August, when the State Department promoted several Foreign Service officers who received reduction-in-force notices earlier that summer.
The union said the promotion of laid-off diplomats suggested the department may have dismissed some of its top performers.
The State Department sent RIF notices to nearly 1,350 employees in July.
Of those, nearly 250 were Foreign Service officers currently stationed in the U.S. A federal judge in San Francisco has temporarily blocked the State Department from officially separating these employees.
Shortly after sending those layoff notices, the Foreign Service resumed hiring. By the end of January, the Foreign Service will have made enough hires to replace those who received RIF notices.
In September, it brought on a class of more than 100 new Foreign Service officers. This month, another 70 new hires were brought on to serve a five-year appointment as non-career consular fellows.
In January, the Foreign Service is scheduled to hire another class of 160 new Foreign Service officers.
The Department of Homeland Security is again moving to rescind a collective bargaining agreement with Transportation Security Administration employees, despite an ongoing court case over DHS’ prior move to eliminate the TSA union agreement.
In a Dec. 12 press release, TSA announced that a new “labor framework” would be implemented starting Jan. 11, 2026. The framework rescinds the 2024 CBA between TSA and the American Federation of Government Employees, the agency said.
TSA said the decision is based on a Sept. 29 determination by Homeland Security Secretary Kristi Noem, “Eliminating Collective Bargaining at TSA Due to its Incompatibility with TSA’s National Security Mission and its Adverse Impact on Resources, Flexibility, Mission Focus, Security Effectiveness, and Traveler Experience.”
TSA said Noem’s determination — which it did not release — “establishes that employees performing security screening functions … have a primary function of national security and shall not engage in collective bargaining or be represented for any purposes by any representative or organization.”
Noem also determined that collective bargaining for TSA officers “is inconsistent with efficient stewardship of taxpayer dollars and impedes the agility required to secure the traveling public,” according to the agency statement.
“Our Transportation Security Officers (TSOs) need to be focused on their mission of keeping travelers safe not wasting countless hours on non-mission critical work,” Adam Stahl, senior official performing the duties of TSA deputy administrator, said in the press release. “Under the leadership of Secretary Noem, we are ridding the agency of wasteful and time-consuming activities that distracted our officers from their crucial work.”
AFGE quickly criticized TSA’s announcement. AFGE represents approximately 47,000 airport screeners under the CBA.
“Merely 30 days ago, Secretary Noem celebrated TSA officers for their dedication during the longest government shutdown in history,” AFGE National President Everett Kelley said as part of a statement. “Today, she’s announcing a lump of coal right on time for the holidays: that she’s stripping those same dedicated officers of their union rights.”
In granting the preliminary injunction in June, the judge presiding over the case wrote that Noem’s previous attempt to dissolve the CBA “appears to have been undertaken to punish AFGE and its members because AFGE has chosen to push back against the Trump Administration’s attacks to federal employment in the courts.”
That ongoing case is currently scheduled to go to trial next September.
Kelley said AFGE “will continue to challenge these illegal attacks on our members’ right to belong to a union.” He also urged the Senate to pass the Protect America’s Workforce Act “immediately.”
TSA staff don’t have the same statutory rights as other federal employees under Title 5 of U.S. Code. But in response to longstanding concerns about TSA attrition, then-TSA Administrator David Pekoske in 2022 issued a determination that expanded collective bargaining at the agency to mirror the bargaining rights under Title 5.
TSA and AFGE then negotiated and signed a seven-year collective bargaining agreement last year. The agreement established a streamlined process for grievance and arbitration, expanded official time, fewer restrictions on sick leave, increased uniform allowances and opportunities for local collective bargaining.
In a statement today, AFGE Council 100 President Hydrick Thomas called the decision to revoke the CBA a “slap in the face” to TSA employees
“Prior to having a union contract, many employees endured hostile work environments and workers felt like they didn’t have a voice on the job, which led to severe attrition rates and longer wait times for the traveling public,” Thomas said. “Since having a contract, we’ve seen a more stable workforce, and there has never been another aviation-related attack on our country.”
In its statement, TSA said that agency policy will govern “employment matters previously addressed by the 2024 CBA, and TSA policy will provide for alternative procedures to ensure that employee voices are heard and that legitimate concerns are resolved quickly.”
FILE - Transportation Security Administration agents process passengers at the south security checkpoint at Denver International Airport in Denver on June 10, 2020. The chief of the TSA said Tuesday, May 10, 2022, that his agency has quadrupled the number of employees who could bolster screening operations at airports that become too crowded this summer. (AP Photo/David Zalubowski, File)
Against the backdrop of Ukraine, growing East/West geopolitical tensions, and persistent cybersecurity attacks by nation-state threat actors, defense organizations are accelerating their efforts to harden digital infrastructure, including secure data exchange across borders and federated environments.
At its 2025 summit, for instance, NATO leaders agreed that future defense budgets must rise, and for the first time, the alliance’s spending target formally incorporates cybersecurity alongside more familiar priorities, including personnel and equipment. As a result, cyber resilience is now treated as a defined component of the broader defense investment framework.
Domestically, the U.S. military is also significantly raising its game. Announced earlier this year, the Army’s Unified Network Plan sets out a data-centric approach to modernizing networks, in an approach designed to create a secure backbone that links tactical units to command centers while embedding zero trust principles throughout. Among various other key priorities, it emphasizes resilience, interoperability with allies, and the implementation of a standardized data exchange through frameworks such as the Unified Data Reference Architecture.
The Department of the Navy’s Zero Trust Blueprint takes a similar path, laying out a phased strategy to integrate zero trust across enterprise IT and tactical systems. In particular, it mandates continuous verification of users, devices and files, and also identifies secure cross-domain transfers between classified and unclassified environments as a critical priority.
The Navy is also preparing to operate in contested environments where connectivity is unreliable, which is often referred to as denied, degraded, intermittent and limited (DDIL) scenarios. For instance, a submarine with no signal access must still operate securely, a challenge the Navy is aiming to address head-on.
The risks of reactive technologies
Despite this clear domestic and international commitment to zero trust strategies, however, an important security blind spot remains in the infrastructure of many defense organizations: file security. To explain, traditional approaches to file security were designed around perimeter control and reactive detection, technologies that remain crucial to a comprehensive approach.
A big part of the challenge, however, is that these tools, including antivirus, sandboxing and signature-based analysis, struggle to identify new or modified threats, leaving organizations particularly exposed to zero-day exploits and advanced persistent attacks. In practice, this means adversaries can exploit vulnerabilities in common formats such as PDFs, Office documents and email attachments to bypass defenses and gain a foothold inside sensitive networks.
In defense environments that require immediate and frictionless collaboration across complex domains and jurisdictions, these limitations present potentially serious risks. Specifically, files move constantly between classified and unclassified systems, between sovereign networks, and across cloud environments that host shared mission data. Once a file crosses the boundary, legacy controls cannot provide reliable security assurance, and consequently, a reliance on implicit trust or the absence of sufficient sanitization can allow hidden threats to spread laterally, with obvious consequences.
The zero trust data format
These initiatives indicate a clear direction of travel: defense organizations are moving toward architectures where data must be trusted only when verified, shared on common standards, and protected consistently across domains. The challenge lies in enforcing these principles in practice when information crosses networks, jurisdictions and classifications.
This is where Zero Trust Data Format (ZTDF) provides an essential foundation by extending zero trust to the file itself and ensuring that protection and policy travel with the data wherever it goes. It applies zero trust principles directly to individual data objects, including files, emails and structured datasets, by embedding encryption, access controls and auditability inside the data itself.
Instead of relying on the security of the network it passes through, each file carries its own protection, ensuring that policy and assurance travel with the data wherever it goes. ZTDF is also gaining traction in defense circles, having been ratified by NATO’s Combined Communications-Electronics Board as an interoperable standard for cross-border use. The underlying point is that nations need assurance that sensitive information can be shared with allies without losing control over how it is handled or exposing it to unnecessary risk.
On a broader level, these issues are indicative of a more general move towards comprehensive zero trust architectures across both public and private sectors. Civilian organizations that don’t already have adequate measures in place would be well advised to take note, particularly in light of the extremely damaging ransomware attacks that continue to make headlines.
Paul Farrington is chief product officer at Glasswall.
Cyber attack, system under threat, DDoS attack. Camera flies frough HUD blue hexagons and padlocks, but one of them hacked. Cyber security and hacking concept. Vector illustration.
Earlier this year, the Government Accountability Office shared a report on AI agents as policymakers look to balance the promise of the new capabilities with concern about potential misuse and other unintended consequences.
The report will help support a shift that’s already happening related to AI agents. We’re no longer asking what generative AI can create, but what autonomous AI can do. These systems are no longer simply responding — now, they sense, plan and act.
The GAO’s report isn’t an “AI 101,” but rather sets a baseline for government to make informed, mission-driven choices before AI agents become haphazardly embedded in critical operations. The message is clear: Don’t just adopt AI, adopt it smart.
There are steps agencies can take to facilitate smart adoption from the start of their AI journey. To prepare, they will need to increase digital literacy, recognize and understand the shift from genAI to agentic AI and identify where they are on the spectrum of autonomy.
Increasing digital literacy
AI systems can create great efficiencies, but they also require a significant shift in thinking, skill sets and workflows for federal employees.
A major part of this is understanding the data. Government wants to move away from rigid systems of record and into an approach where data can move around freely. Users who were hired to become experts on one tool for a particular mission need to increase their understanding of all aspects of the project and the tools that touch it.
Workers who use government datasets require a deeper knowledge of this information. Government datasets are particularly complex, requiring an understanding of nuances around source, frequency of updates, data quality and legal constraints.
These users need to understand what’s available, how it’s structured and its limits in order to ask AI the right questions and receive valuable responses. Poorly framed questions can result in incomplete, inaccurate or misleading answers.
At a basic level, there are some skills all government employees need to prepare for a workplace that benefits from agentic AI.
Even non-technical staff need to understand the data landscape, enabling collaboration with IT and data teams to accelerate problem-solving and innovation. All government employees must be able to navigate dashboards and basic tools, ask sharper, more targeted questions of data and AI, recognize limitations like bias, gaps or outdated info, and make decisions informed by facts, not assumptions.
Shifting from GenAI to agentic AI
Overall, we’re seeing a major shift from AI pilots to solutions. Within that, we’re seeing an overall transition from generative to agentic AI. This requires both understanding the limits of agentic AI and how to show results and deliver return on investment.
As the GAO’s report recognizes, use of agentic AI in government is currently limited to software development and autonomous vehicles — but it ultimately will enable more complex tasks and support all federal agencies.
As government use of agentic AI expands, we’ll see increased efficiency and greater overall support for the workforce. Agentic AI shines by performing rules-based, repeatable tasks that slow humans down — ideally, it will amplify, not replace humans.
When looking to identify prime candidates for agentic AI projects, agencies should prioritize routine but labor intensive workflows that follow clear rules. These can include tasks like document processing, data entry and compliance checks.
AI is also valuable in situations where it can triage, recommend or surface insights, then passing final decision making on to a human. Knowledge management and retrieval is also an ideal function for agentic AI, helping government workers to quickly find accurate, relevant information.
There are a few ways agencies can prepare for this shift, beginning with an inventory of automation-ready workflows and investment in data readiness and workforce upskilling.
Understanding the spectrum of autonomy
Like the move from cloud-first to cloud-smart, agencies need to understand the spectrum of autonomy.
The question is not whether to use AI agents. It’s how to match the right level of autonomy to the mission, with governance scaled to the risk. As a guideline, less agentic AI is the right fit for routine, low-risk, high-volume tasks. Overall, for these types of programs, agencies should be thinking about efficiency with guardrails.
For example, cyber defense functions like detecting anomalies, auto-triaging alerts, isolating compromised assets and generating response playbooks for security analysts do not require much agentic AI support. On the other hand, tasks like autonomously containing active intrusions, dynamically adjusting network defenses and escalating only edge cases or ambiguous threats to human operators greatly benefit from the use of agentic AI.
Similarly in the realm of logistics and supply chain, tasks like anticipating demand surges using predictive analytics, automatically initiating replenishment and suggesting optimized delivery routes for approval only require a low level of agentic AI, while it plays a more significant role for dynamic rerouting shipments in response to disruptions or coordination of cross-agency assets.
Through reports like the recent one from GAO and other guidelines and efforts by the federal government, agencies are positioned for significant progress and increased efficiencies in the years to come. Agentic AI will undeniably become a core piece of agencies’ technology toolsets — now is the time to prepare.
Laura Stash is executive vice president of solutions architecture at iTech AG.
Federal retirement numbers at the Office of Personnel Management are continuing to skyrocket. In November, OPM took in another 23,000 applications from retiring employees. That’s on top of more than 20,000 that entered OPM’s systems in October. Together, those numbers mean retirement applications are triple the volume they were at this time last year. In total, OPM’s retirement inventory is now closing in on 50,000 applications that are still awaiting finalization.
A group of lawmakers found the Pentagon has diverted at least $2 billion intended for barracks repairs, school upgrades and training programs to support the southern border mission. The department shifted approximately $1.3 billion to pay for the deployment of troops to the border. About $420 million was moved to assist with immigration detention operations and over $40 million was used to pay for military deportation flights. The diverted funds were meant to support projects including elementary schools at Fort Knox, an ambulatory care center and dental clinic, a jet-training facility in Mississippi and Marine barracks in Japan. DoD also sent the 10th Mountain Division, which was trained to conduct large-scale combat operations, to the border.
Next week marks the busiest week of the year for the Postal Service. USPS said it’s prepared to handle millions packages and pieces of mail during its peak season. But it’s also setting deadlines to ensure delivery before Christmas. USPS generally recommends sending first-class mail and Ground Advantage packages no later than Dec. 17 to ensure delivery by Dec. 25. USPS said customers should also allow addition time for shipping to or from Alaska, Hawaii, Puerto Rico and U.S Territories.
The Defense Department is accelerating its preparation for post-quantum cryptography. The Pentagon's CIO is preparing a new requirement for all military services and defense agencies to identify, inventory and report all cryptography used in any type of system. But before the CIO releases that policy, Katie Arrington, who is performing the duties of the DoD CIO, said in a new memo that each component must identify key personnel who will be responsible for migration to PQC and associated coordination. These leads will oversee the creation and maintenance of the system inventory, as well as several other responsibilities including PQC acquisition requirements within the component, quantum-attack risk management plans and the tracking of all tests, evaluation and PQC readiness efforts relevant to the component's systems.
Tenable became the third contractor to sign a OneGov agreement with the General Services Administration this month. Under the deal announced yesterday, Tenable will offer its cloud security enterprise solution to agencies at a 65% discount off its list price on the GSA schedule. The prices are good through March 2027, but agencies would see 3% annual increase in their prices on multiple-year task orders. GSA also signed OneGov deals with Palo Alto Networks and SAP in December. In all, 17 vendors now have OneGov deals.
A bill to restore collective bargaining for federal employees has cleared the House. All House Democrats, along with 20 Republicans, voted in favor of the Protect America’s Workforce Act, resulting in a vote of 231-195 to pass the legislation. If enacted, the bill would nullify President Donald Trump’s executive orders to cancel collective bargaining agreements at most agencies. Federal unions are now urging the Senate to take up the companion bill.
Service members will see a 4.2% average increase in their basic allowance for housing in 2026. But the actual increases military households will receive will vary depending on where they are stationed and their pay grades. The calculation of the allowance is built to cover approximately 95% of average costs for off-base housing and utilities, leaving a roughly 5% out-of-pocket expense for service members. In 2026, these amounts range from $93 to $212. The new housing allowance rates will take effect Jan. 1, 2026. The department estimates it will pay $29.9 billion in housing allowances to approximately one million service members.
Hundreds of federal office space leases were terminated this year, but still far from targets set by the Department of Government Efficiency. GSA carried out 260 lease terminations, saving about $112 million in annual costs. That’s about 30% of the approximately 900 lease terminations it sent to landlords earlier this year. GSA began its mass termination of governmentwide leases in the early days of the Trump administration. But by March, the agency began walking back hundreds of them. Former DOGE leader Elon Musk said in a recent interview that DOGE’s cost-cutting efforts were “somewhat successful.”
Terry Gerton It has been a tough year for the federal workforce. I don’t think that’s an understatement, but here on the Federal Drive, we focused a lot on the impacts on individuals. And with you I want to take it up a level and really talk about leaders and managers. What have been the biggest challenges for federal managers throughout this year?
Laurin Parthemos I would say without a doubt, it’s the uncertainty that people are seeing within the day to day. As a leader, having to navigate a field where you don’t know what is going to come next is increasingly difficult, especially in times where you don’t have necessarily the number of resources that you truly need to get the job done. And we’re seeing that really play out in terms of both performance, in terms of how things are getting produced, how quickly they’re getting produced, but also just on the health from a psychological standpoint of the individual employees that are within the workforce and especially on the federal side. And how do we really make sure that we create, as leaders, a space where we can allow them to thrive as much as possible in this particular scenario? And how do we suppress that survive response to all the uncertainty and all of the nuance that is happening in the day to day that we’re seeing?
Terry Gerton We have talked a lot here about organizational health and how organizational health depends on individual worker health and how that health often depends on mental health. Seems like all of those connection points are under a lot of stress.
Laurin Parthemos I, Yeah, unequivocally agree with that. Realistically speaking, at Kotter, our research validates that point that organizations that are anchored in adaptability and resilience are those ones that outperform. And as we see, especially in the federal space, it’s difficult to build that resiliency consistently because of the amount of uncertainty that we’re seeing. And so because there’s that pull dragging people down, the level of anxiety, the lack of ability to actually meet your day to day needs as we’re seeing shutdowns happen, there’s an end-level performance there that’s happening at the department and agency level that as leaders, it’s [about] trying to figure out how we can give as much stability as possible to our teams without necessarily knowing what we’re capable of promising. And how do we make sure that we’re communicating in a way that we’re not just waiting until we have a definitive answer, but we’re walking alongside our team saying, I also don’t know. But here’s what we’re going to do.
Terry Gerton You mentioned a term earlier, psychological safety. Can you break that out for us and tell us what it means both from the employee perspective and the leader-manager perspective?
Laurin Parthemos Absolutely. From that psychological safety perspective, we see the massive erosion in the sense that as people are showing up to work, what was once seen as an incredibly stable job and a mission-driven job working for the federal workforce. Some of those tenets about why people joined the service are no longer there because that stability is no longer there. Don’t know if layoffs are coming. We don’t know if we’ll be in another shutdown. And what that really boils down to is how do I feed my family? How do I make sure that I can pay my own bills? And without that level of safety, of knowing that I have stability in my job and I can think through how do I perform and I can think through creative, innovative ways to get things done. Without that, you won’t see any level of performance. And it’s really been a sticking point for many people that I’ve been speaking to within the agencies.
Terry Gerton Are you seeing that agencies have groups of employees maybe pitted against each other? We had furloughed and accepted folks. So many people worked but without pay and others didn’t work and, you know, are there internal issues that leaders and managers are going to need to deal with?
Laurin Parthemos None that anyone has openly admitted to me. I will leave it at that. But it is a natural feeling to say, if we’re working on a skeleton crew, so to speak, and some of our team is furloughed while others are not, what does that look like when we all rejoin together? There’s going to be those who are frustrated because they’ve had to work so hard during that furlough time without pay. There’s those that are — that were not furloughed that had to depend on each other that maybe their teammates weren’t showing up in a way that they necessarily resonated with because they might not have been giving their full selves because of the frustration of what they were dealing with. So I wouldn’t say it’s necessarily that people are pitted against each other, but more so that there’s an understandable level of frustration given the ecosystem that they were subjected to. And how do you work through that as a leader saying, for this time, we are all together. There is a potential that we will be in another shutdown. And what does that look like? And how can you really work with your team to make sure that you’re front-running any of those issues and thinking through the scenario planning to make sure that you have what you need and your team members understand the purpose and what we’re really trying to accomplish at its core so you can prevent any of those frustrations as they bubble up.
Terry Gerton I’m speaking with Laurin Parthemos. She’s a principal and public sector lead at Kotter. Laurin, the shutdown has come up a couple of times in our conversation. We’re deep into the holiday season that comes with its own kind of stress. And when everybody’s sort of fully back in January, they’ll be staring potentially at another shutdown across several agencies. So if you’re a leader in this scenario, maybe what’s on your New Year’s resolution list to think about how do you reset for the work beginning in January?
Laurin Parthemos I think that’s a great question because as I’ve talked to many leaders throughout this time, a lot of people are talking through what does Q1 look like or what does it immediately look like for what I need to accomplish? But we really need to be thinking longer term than that. And we really need to be thinking through what are our priorities and what are we deprioritizing? Because as we think about the impact that the shutdown had, I believe it was the Professional Services Council that has a statistic that it takes three to five days, not business days, but days to reset for each day of shutdown in terms of an agency’s performance, considering that it was 43 days. That’s up to seven months in order to get back to a stable state. So we’re going to be working in an environment that is over capacity and behind with significant backlog. So making sure that if you’re anchoring on a, why are we doing what we do, what is our goal as a team and anchoring each task underneath that to that why, it will help prioritize what needs to be accomplished while simultaneously actively advocating for what no longer needs to be done during this time of prioritization. And that act of advocating needs to happen within your own team. Across teams and also going up the chain as well to make sure that there’s a consistent understanding of what are we trying to accomplish? Because if you only focus on one small group, there’s going to be a lack of understanding more broadly. And that will help teams as they go into January with the potential of another shutdown. So knowing what are we trying to accomplish, what happens if we do, what happens if we do not shut down? And how can we come together to make sure that despite the headwinds, we are going to accomplish whatever we can. And I will say a key for this is it’s not just the priorities that we need to accomplish, but it’s also how do we, as leaders, implant short-term wins, as we like to call them at Kotter. So what are some small things to show that we’ve accomplished something? We’ve been successful. No matter how big or small, it does not matter, but it’s something that you can celebrate around and rally around to get people energized. So it’s not just a heavy weight of a continual backlog, but saying we did something and we’re making progress.
Terry Gerton What might be one or two things that a team leader or a mid-level manager could actually do to get their team refocused on the why, on the priorities, on the outcomes? Should they have a potluck? Should they like have a team day? What are some things that you recommend, actual steps?
Laurin Parthemos What I would say is it’s very team dependent, to be quite honest with you, because you could say, let’s do a pizza party. And that will resonate so well with some groups, and others will see it as tone-deaf in a way, saying, that’s great that there’s food here, but do you not see what’s happening around us? And so I would say, first and foremost, as you’re thinking about the state that individuals are in, it’s that heavy survive of freeze, likely. And it’s making sure that as you think through what state these individuals are in, you’re going on a listening tour, so to speak, to figure out what they actually need and want and then respond in kind to the culture of that particular group. So it very much could be a potluck. It could be that part of your planning as you’re thinking about going into January, you know your team will have heavy amounts of furloughs. And realistically speaking, the median federal employee only has about a week of pay in their bank account. So is it that we know this team is going to be furloughed? So let’s think about meal trains. Let’s think about how we can support each other in ways that are not just from a work perspective, but from a human element, because we are here for a mission. You’re not joining the federal service to become the most rich and famous. You’re doing it because you believe in the cause. So come together around that cause and find ways to truly support your people in the ways that you’ve find that they need to be supported as a leader.
Terry Gerton I’ve been speaking with Laurin Parthemos. She’s a principal and public sector lead at Kotter. Laurin, thanks so much for grounding us back in what’s really important. Absolutely. Thank you for having me. We’ll post this interview at federal newsnetwork.com slash Federal Drive. Listen to the Federal Drive on your schedule and on your device. Subscribe wherever you get your podcast.
Terry Gerton We’re going to talk about the National Defense Authorization Act. It’s in its final stages. It’s not a short read, 3100 pages. But there’s a lot of particular detail in there, especially around changes to cost and pricing rules. Start kind of at the headline level. What’s the big news that you want people to know?
Zach Prince Sure. So we’re still digesting this. So, you know, I wanna caveat that, you know, it is 3,100 pages and there’s a lot here, and it might not become final. But I think Congress has been listening while industry over the past many years has been saying that they’re reluctant to invest too heavily in defense when Congress makes programs subject to annual appropriations that might, for seemingly no apparent reason, go away after major investments have been made, when huge regulatory burdens can get imposed, like the cost accounting standards, which deviate substantially from generally accepted accounting principles or GAP, and things like certified cost of pricing data are required and just a slew of regulatory requirements that come with doing business with the government. These are real burdens to industry and real burdens to investors thinking about getting involved in the space. So listening to all of that, Congress took quite a bit of action in this NDAA.
Terry Gerton Let’s talk about some of those. You mentioned cost accounting standards. One of the biggest shifts is bumping that threshold from $50 million to $100 million. Who does that help? And what kind of burden does it remove?
Zach Prince So just as a bit of background, the cost accounting standards are accounting rules that apply to certain contractors, contractors that have contracts over size thresholds when otherwise exemptions don’t apply. They were imposed starting in the late ’60s, an effort spearheaded by the late Admiral Rickover and this I think mistaken belief that contractors were using accounting practices to get something over on the taxpayer. And so all these rules mostly came into effect in the ’70s and have stayed essentially the exact same since then, with some slight tweaks around the edges. But they deviate substantially from the accounting practices that most companies would otherwise have implemented. So they require really sweeping shifts in the way that you do a lot of your basic accounting as a company, and they apply on a contract by contract basis. So you might only have one or two contracts that are subject to CAS as opposed to your general gap rules. But because it’s very challenging to have two different sets of books and records, you might just have to implement these very annoying onerous rules across your entire organization, at least across your segment. I don’t want to go too far into the weeds. There’s a lot of complication here. It’s a burden and It doesn’t apply to small businesses, but it does apply to quite a lot of companies that would have large government contracts. And companies don’t want to trigger the threshold that gets them into CAS-covered contract performance because of the burden.
Terry Gerton And so by raising it to a $100 million, more folks will not have to worry about that conversion, right?
Zach Prince Yeah, that’s right. But the — I’d say the bigger item here that’s kind of buried, and if you look at the congressional report that they issued from the conference, it kind of ignores this, even though I think it’s a much bigger deal. It raises the exemption floor. So there are two different types of CAS coverage. There’s modified CAS coverage and there’s full CAS coverage. The full is the much more onerous one, but a contract is entirely exempt from CAS, full and modified if it’s below certain dollar threshold. So the $100 million, formerly $50 million, that’s for full CAS. But a contract is totally exempt from CAS no matter what under the previous rules, if it was below $2 million or $2.5 Million, with the threshold changed. Now they’re raising that to $35 million. So huge, huge difference. And it makes a difference not just for modified CAS, but also for full CAS, because full CAS coverage is triggered by either a single contract of $100 million or greater, or net $100 million in the prior cost accounting period. So if you had $200 million in contracts in the prior year, none of which exceeded $35 million under this new regime, you still are not going to have a contract subject to full CAS. So I don’t know what the numbers exactly are in terms of impacted contractors, but I have to imagine that this is gonna exempt. A whole slew of contracts that previously would have been subject to CAS.
Terry Gerton I’m speaking with Zach Prince. He’s a partner at Haynes Boone. So some people may be wiping their brow and thinking they’re gonna get a reprieve here. But Congress has asked for a report on how many of these changes are gonna play out. What would success look like? What do you think they’re hoping the impact of some of these changes will be?
Zach Prince So I think that they’re hoping this is going to spur greater investment, particularly by successful commercial technology companies and by successful investors in the defense space and particularly cutting edge defense tech. If you look at the multi-year appropriation provisions that are part of this NDAA, I mean they touch on some of the really interesting and important areas for advancement, like material composition issues, hypersonics, things along those lines, autonomous programs of various sorts, that we really are concerned that we could lose an edge to competitors overseas and that there needs to be substantial private sector money to go into because there needs to be huge scientific breakthroughs and that stuff’s costly.
Terry Gerton Tell us a little bit more about the multi year provision because you mentioned up front that companies are reluctant to invest if they’re gonna be on an annual appropriation cycle.
Zach Prince Yeah, and we’ll see how some of this plays out. But I think we all are familiar with major defense programs over the years that have been abruptly cut back for various reasons. But if you look at the Zumwalt class destroyer, for example, where there was a huge buy that was initially authorized and that was then cut back, which of course means that suddenly the R and D costs that were distributed over, say 20 ships, are now bunched into three or four. And now the program looks like it costs way more than initially was planned on a ship by ship basis, which technically is true, but is not really true overall and it results in scrutiny and program cancelation. So yeah, I think from my experience talking to folks in the private sector, they hear about programs like that where there’ve been huge investments that things are then abruptly cut, and they don’t want to get involved in the ecosystem that has those problems. And they know that, especially recently, when we’ve got CR after CR, you can’t rely on Congress necessarily to provide funding in a timely fashion, even for pretty important programs.
Terry Gerton There’s another newsy bit in here. You and I talk quite a bit about contract protests. There’s a provision that allows DoD to withhold payments during protests. Spin that out for us a bit.
Zach Prince Yeah, this is one that I’ve been watching pretty closely for a while, and we’ll see how it plays out, but there’s been a concern I continue to maintain that this concern is not supported by the data, but concern that incumbent contractors will protest at GAO, which has a mandatory stay that kicks in, in order to take advantage of a bridge contract that might be issued. Then the government says, Okay, well, you’ve lost the contract, but you’re still doing the work, we need the work to continue. We can’t go ahead and override the stay without some scrutiny. So we’ll just give you a 100-day bridge contract while this plays out. You’ll get whatever revenues you’re gonna get from that period, and continue. You know, I do think that this is a non-issue. it ignores the fact that protests are very expensive. The revenues you might get over a 100-day period are really not particularly significant in the grand scheme of things, especially when you’re irritating your customer. The data don’t show that this is abused very much, other than the idea that incumbents do protest more, but they also win more, which suggests that they’re in a better position to know when their problems in a procurement. But set all that aside, DOD in prior years has said, Well, Congress, we can’t require disgorgement of profits for these bridge contracts, which is what Congress had considered before as something that might remedy the situation because we don’t track the data. How do you calculate what a profit is for this period of time? So in response, Congress has come back and said, okay, so we’re just going to authorize contracting officers to withhold payments, period, under these bridge contracts up to 5 percent of total amounts that would be owed, and that those amounts up to that 5 percent threshold, which I think they established because it’s a rough order of magnitude of what profits might be, that could be deemed forfeit if there’s a decision ultimately that the protest lacked any legal or factual basis. So there are a lot of terms here that are gonna need careful definition and a lot of uncertainty of who’s implementing this, how you’ll challenge it, where you’ll challenge it. I mean, I think that this is a can of worms to address a problem that’s not real, but nonetheless, this is this is what Congress ended up doing.
Early in the Trump administration, the Department of Government Efficiency directed the General Services Administration to cancel hundreds of leases for governmentwide office space.
GSA officials say they successfully terminated hundreds of leases this year, but far fewer than goals set by DOGE.
The latest data from the Government Accountability Office shows GSA carried out 260 lease terminations, saving about $112 million in annual costs. GAO’s findings match up with data available on DOGE’s website. Several sources, including employees at GSA’s Public Buildings Service, told Federal News Network that overall, the agency finalized about 30% of the approximately 900 lease terminations it sent to landlords earlier this year.
GSA began its mass termination of governmentwide leases in the early days of the Trump administration. But by March, the agency began walking back hundreds of those lease terminations, after officials discovered that closing down these offices would impact public-facing benefits and services.
These updated figures come at a time when government officials are taking stock of DOGE’s impact, and whether agencies came close to achieving the Trump administration’s government efficiency goals.
Former DOGE leader Elon Musk told former DOGE spokeswoman Katie Miller in a recent interview that DOGE’s cost-cutting efforts were “somewhat successful,” but said he wouldn’t do it over again.
“We were a little bit successful. We were somewhat successful,” he told Miller.
Andrew Heller, GSA’s acting Public Buildings Service Commissioner, told members of the House Transportation and Infrastructure Committee that the agency disposed of 90 properties owned by the federal government in fiscal 2025, eliminating 3 million square feet from the government’s real estate portfolio.
Heller told lawmakers that GSA has identified another 45 properties for “accelerated” disposal. But GSA hasn’t updated its list of properties since May.
“The government no longer needs, nor can it afford to maintain the amount of real estate it currently owns. With your support and with the necessary resources, GSA is well-positioned to right-size the portfolio to support this shared goal,” Heller said at a public buildings subcommittee hearing.
Republican and Democratic lawmakers praised GSA for its cost-cutting efforts, but agreed it still faces major work in shrinking the federal government’s massive real estate portfolio.
“That’s an achievement, but there was also significant chaos and mixed messaging surrounding the disposal of buildings and the termination of leases,” Committee Ranking Member Rick Larsen (D-Wash.) said at Thursday’s hearing.
Subcommittee Ranking Member Greg Stanton (D-Ariz.) called DOGE a “textbook example of what happens when you chase cuts without understanding value.”
“It drove federal property decisions at a speed and scale that outran planning operational needs and basic due diligence. Agencies were told to vacate buildings before replacement space was ready. These decisions were driven by targets and assumptions, not by reliable, validated information about how federal space was being used or which functions depended on it,” Stanton said.
Subcommittee Chairman Scott Perry (R-Pa.) said GSA is “taking aggressive action to reduce costs,” but said GSA needs to address its growing maintenance backlog.
“Shaving off excess, however, will not unilaterally rectify the numerous challenges we face in federal property, as the maintenance of the buildings is becoming increasingly costly to keep up,” he said.
Under the USE IT Act that former President Joe Biden signed into law at the end of his term, all agencies, starting in January 2026, must be able to show that their buildings meet at least a 60% utilization rate, or come up with plans to relocate. Next month, GSA and the Office of Management and Budget will submit plans to consolidate federal agency headquarters in the national capital area to meet the minimum 60% building occupancy rate target.
More broadly, GSA is trying to move more agencies to leased office space, because the agency faces a multi-billion-dollar maintenance and repair backlog on buildings it owns.
Michael Capuano, a member of the Public Buildings Reform Board, which advises GSA on underutilized federal properties it should sell, told the subcommittee that about $50 billion is needed to address a backlog of deferred maintenance and repairs in federal buildings. GSA currently receives about $600 million annually to address those needs. Given those spending levels, Capuano said GSA’s portfolio would have to shrink by about 80% to keep up with its maintenance backlog.
“Everyone realizes this is unrealistic and undesirable,” he said.
Capuano said shifting agencies out of government-owned buildings and into leased office space “does solve many problems.” Agencies, he said, can more easily expand or shrink the amount of office space they need with leased space, and “taxpayers are not forced to pay for empty space that needs maintenance.”
GSA is asking Congress for $365 million for an “optimization” fund that would help it dispose of more underperforming buildings.
“We need to get access to this funding to make some of these improvements happen,” Heller said.
GAO added federal real estate to its list of high-risk federal programs this year, citing a ballooning backlog of maintenance and repair needs. According to GAO, the backlog more than doubled between fiscal 2017 and 2024, from $170 billion to $340 billion.
“Right-sizing the federal government’s real property holdings is long overdue,” Heather Krause, GAO’s manager director of physical infrastructure, told lawmakers.
GSA is trying to manage its governmentwide real estate portfolio with a smaller workforce. The agency started this year with more than 5,600 employees, but cut its workforce by about 45% under the Trump administration. Heller said GSA rescinded layoffs for about 400 PBS employees, and that almost 300 employees agreed to return to work. He told lawmakers the agency is taking a closer look to see if there are any “additional gaps in our workforce.”
Del. Eleanor Holmes Norton (D-D.C.) said there are some federal buildings in D.C. that GSA should offload, but said the agency “has not been coordinating closely enough with D.C. on the disposal of federal buildings.”
“These disposals would save the federal government money, generate tax revenue for D.C., increase housing supply and lead to new mixed-use neighborhoods,” Norton said. “I am deeply concerned that the Trump administration has not developed a plan to dispose of federal buildings in D.C. in a manner that benefits both federal taxpayers and D.C.”
Capuano said that incomplete data makes it harder for the board to identify underutilized federal buildings. GAO reported in 2020 that 67% of addresses in the Federal Real Property Profile were incorrectly formatted or incomplete.
“None of us are in favor of leaving empty buildings in the portfolio. However, it is difficult to locate them,” he said.
The PBRB is set to disband in May 2026. Capuano recommended that Congress either reauthorize the board to continue its work, or pass legislation to create a similar entity, “if for no other reason, to keep the other agencies’ feet to the fire.”
A bill to restore collective bargaining rights for a majority of federal employees cleared the House in a floor vote Thursday afternoon.
House lawmakers voted 231-195 to pass the Protect America’s Workforce Act. The entire Democratic Caucus, along with 20 Republicans, voted in favor of the legislation.
The bill’s passage this week came after a discharge petition on the legislation reached the required 218-signature threshold in November, forcing the House to hold a floor vote on the bill. On Wednesday, the legislation cleared an initial voting hurdle, teeing it up for its final passage Thursday afternoon.
The Protect America’s Workforce Act, led by Reps. Brian Fitzpatrick (R-Pa.) and Jared Golden (D-Maine), aims to nullify two of President Donald Trump’s executive orders this year that called for most agencies to end their union contracts. The legislation, if enacted, would restore collective bargaining for tens of thousands of federal employees.
“This is a bipartisan effort to protect federal workers in this country,” Rep. Robert Garcia (D-Calif.), ranking member of the Oversight and Government Reform Committee, said Thursday on the House floor. “We’re talking about our federal nurses, our firefighters, law enforcement, medical professionals, the men and women that are working across our airports, that are taking care of our nuclear reactors in this country. They deserve the right to organize.”
In March, Trump ordered most agencies to cancel their agreements with federal unions, on the grounds that those agencies work primarily in national security. The president signed a second executive order in August, expanding the number of agencies instructed to bar their unions from bargaining on behalf of federal employees.
Combined, Trump’s two orders impact an estimated two-thirds of the federal workforce.
Prior to Thursday afternoon’s vote, several Republicans spoke on the House floor in opposition to the legislation.
“The president has been fighting back against the deals that public sector unions have negotiated for themselves, at the expense of the American taxpayer, by invoking an existing legal authority,” said Rep. James Comer (R-Ky.), chairman of the Oversight committee. “[This bill] directly threatens that progress by overturning the president’s executive order that exercises one of the few tools available to him under the law to more effectively manage the federal workforce.”
Many federal unions, however, have called Trump’s orders nixing collective bargaining illegal. A union coalition, led by the American Federation of Government Employees, sued the Trump administration earlier this year over its rollback of collective bargaining rights. The lawsuit alleges that the administration took an overly broad interpretation of agencies that work primarily in national security, and argues that many of the agencies impacted by Trump’s orders have nothing to do with national security.
Following AFGE’s lawsuit, a federal judge in April blocked the administration from enforcing the executive order. An appeals court later overturned that decision, allowing agencies to move forward with “de-recognizing” their unions. Several agencies have since rescinded their collective bargaining agreements.
Federal unions, including the National Federation of Federal Employees, lauded the House’s passage of the bill on Thursday.
“This is an incredible testament to the strength of federal employees and the longstanding support for their fundamental right to organize and join a union,” said Randy Erwin, NFFE’s national president. “In bipartisan fashion, Congress has asserted their authority to hold the president accountable for the biggest attack on workers that this country has ever seen.”
Despite the House’s passage of the legislation, it would still require approval in the Senate to be enacted. The companion bill for the Protect America’s Workforce Act, first introduced in September by Sen. Mark Warner (D-Va.), has one Republican cosponsor, Sen. Lisa Murkowski (R-Alaska).
“We need to build on this seismic victory in the House and get immediate action in the Senate,” AFGE National President Everett Kelley said Thursday. “And also ensure that any future budget bills similarly protect collective bargaining rights for the largely unseen civil servants who keep our government running.”
A former Accenture employee has been charged with allegedly misleading federal officials about the security of a cloud platform used by the Army and other agencies.
In an indictment secured by the Justice Department this week, Danielle Hillmer was charged with multiple counts of fraud over allegations that she concealed a cloud platform’s noncompliance with security controls required by the General Services Administration’s Federal Risk and Authorization Management Program (FedRAMP).
DoJ’s press release on the indictment states GSA’s Office of the Inspector General has been involved in the investigation.
The indictment doesn’t identify the cloud platform or company that Hillmer worked for at the time of the alleged fraud and obstruction. DoJ’s allegations cover a period between March 2020 and November 2021.
But Hillmer’s LinkedIn shows that during the time in question, she worked for Accenture Federal Services as “lead, cloud managed services” and “business and system owner, cloud management platform services.”
A copy of Hillmer’s LinkedIn profile, which was taken offline this week, shows she left Accenture in December 2021 and was most recently a “senior product manager for public sector” at SentinelOne.
“As previously disclosed in our public filings, we proactively brought this matter to the government’s attention following an internal review. We have cooperated extensively with the government’s investigation and continue to do so,” an Accenture spokeswoman told Federal News Network. “We remain dedicated to operating with the highest ethical standards as we serve all our clients, including the federal government.”
In an Oct. 12, 2023, filing with the Securities and Exchange Commission, Accenture referenced how it made a voluntary disclosure to the government that initiated a DoJ investigation “concerning whether one or more employees provided inaccurate submissions to an assessor who was evaluating on behalf of the U.S. government an AFS service offering and whether the service offering fully implemented required federal security controls.”
“AFS is responding to an administrative subpoena and cooperating with DOJ’s investigation,” AFS wrote at the time.
A spokesman for SentinelOne noted that Hillmer left her position at the company this past August and said DoJ’s allegations have “nothing to do with her work at SentinelOne.”
“In her previous role at SentinelOne, she was not involved in any compliance related work for FedRAMP or any other program,” the spokesman added.
The indictment alleges that in March 2020, Hillmer sought to “uplift” the cloud platform in question from a FedRAMP Moderate to a High authorization, driven by recently awarded Army contracts that required FedRAMP High.
DoJ alleges that Hillmer ignored warnings from a fellow employee and an outside firm that the cloud platform wasn’t compliant with security controls required for a FedRAMP High authorization.
For instance, the indictment alleges that Hillmann was aware that system administrators could access the cloud platform without “necessary” multifactor authentication controls in place.
DoJ alleges Hillmer “concealed known issues” from assessors and authorizing officials, as well as submitted materials to FedRAMP and the Joint Authorization Board “knowing they contained materially false and misleading representations about the platform’s architecture, implementation of security controls and risk posture.”
In July 2021, the FedRAMP program granted the cloud platform a FedRAMP High provisional authority-to-operate (P-ATO), according to DoJ’s indictment. It says at least six departments and agencies, including the Army, used or planned to use the P-ATO to obtain authorizations for cloud products and services. The contracts or subcontracts involved were valued at more than $250 million, according to DoJ.
The criminal charges against Hillmer carry heavy weight, with the wire fraud charge alone carrying a maximum of 20 years in prison.
Lawyers representing Hillmer didn’t respond to an emailed request for comment.
The case is notable, as DoJ has increasingly pursued legal action to enforce federal cybersecurity requirements. DoJ’s Civil Cyber-Fraud Initiative has resulted in multiple False Claims Act settlements with companies for allegedly failing to meet contractual security requirements.
However, a criminal case targeting an individual employee for allegedly misrepresenting security controls will be closely watched in the FedRAMP community.
After a failed attempt earlier this year, President Trump is poised to sign an executive order that would pre-empt states from enacting their own forms of AI regulation. While the exact text is unknown today, a draft was previously leaked that outlines how the Trump administration would leverage the Justice Department to challenge state AI laws, in an attempt to cast regulation of AI as both an issue of interstate commerce — solidly in federal jurisdiction — and a blocker to innovation needed to maintain a strong national security posture. However, signing this EO will only inject further uncertainty into the regulatory landscape, spur prolonged legal battles, and undermine the Trump administration’s goals to unleash AI innovation.
The EO will make the AI trust gap worse
An EO that punishes states for attempting to introduce trust and oversight into the ecosystem will actually have the inverse intended effect. A KPMG study from Spring 2025 showed that 59% of Americans surveyed simply do not trust AI systems. This sentiment has been registered in similar studies, which translates to a majority of Americans distrusting AI systems, or at the very least, remaining skeptical.
Implementing the EO would further exacerbate the distrust because there will be fewer barriers to prevent bad actors from entering the ecosystem. The threat of bad actors manipulating and harnessing AI with malintentions can further degrade trust in AI systems, which can slow AI investment and innovation, in addition to impacts on consumer and business confidence in AI. However, even when bad actors can be properly contained, the perception of AI being unregulated could erode trust, especially in highly regulated sectors like the public sector, healthcare or finance. Lower trust means lower AI adoption rates at a time when AI companies may need it most. There is an existing ‘adoption and revenue gap’ in the AI space, which has led to legitimate fears of an AI bubble. A burst in this bubble could be disastrous for AI investment and slow the growth of US AI companies.
In addition, regulation itself functions as a form of risk transference. Without clear regulatory guardrails, organizations, especially those in highly regulated sectors, must assume full responsibility for evaluating, validating and monitoring AI systems. This significantly increases the perceived liability of deploying AI. For example, the CIO of a large hospital system is far less likely to approve a new AI tool if their organization must shoulder the entire burden of due diligence and potential downstream harm.
We believe in a balanced, shared responsibility model on risk. Well-designed, evidence-backed regulations shift part of this burden to regulators, who establish baseline safety, transparency and accountability requirements. When some categories of risk are managed at the regulatory level, individual organizations face lower overhead, less uncertainty, and fewer barriers to adoption. This risk-sharing effect reduces friction in the market and can meaningfully accelerate AI procurement decisions.
Without such regulatory scaffolding, every enterprise must reinvent its own governance framework, often at great cost, which slows adoption and contributes to the current “adoption and revenue gap” facing AI companies. At a time when confidence in AI markets is fragile, the absence of regulation can amplify uncertainty, reduce investment appetite, and heighten the risk of an AI bubble contraction.
Inevitable lawsuits will further fragment AI ecosystem
According to the leaked draft, the EO’s main order directs the DOJ to establish a task force to evaluate state AI laws for any onerous impacts and sue states for enacting “unconstitutional” AI laws. States have been preparing for this and will almost immediately sue the Trump administration once the EO is signed. While the states and the federal government fight it out in the courts, companies will be caught in the crossfire as they wait for judges to decide whether enforcement deadlines can come into effect while litigation is pending. Compliance with existing state laws, some of which address AI in critical sectors such as insurance and healthcare, would also be thrown into disarray as the courts decide whether the executive branch can unilaterally pre-empt state legislatures.
If the regulatory ecosystem was already messy and difficult to navigate, then a nationwide legal battle over AI and federalism will only intensify the problem. Companies are already struggling to understand their obligations under laws in places like California, Colorado, Utah and Texas. Pulling the rug out from under these companies means that countless dollars will be spent trying to anticipate whether their compliance programs will be relevant or necessary in a couple of years.
A solution in search of a problem
A key complaint about state laws is that they miss the mark on addressing critical issues through the AI supply chain. Issues such as allocating liability, workforce displacement, and training data sources remain largely untouched by state laws. Instead, state lawmakers have prioritized high-level rules for frontier models providers, which have left companies struggling to answer these legal questions on their own. The EO would not offer much help and would actually hinder progress towards fixing these gaps. Leaving the questions unanswered makes it difficult for companies to confidentially invest in trustworthy AI products and services.
What needs to happen next?
Sidelining state legislatures is not the answer to accelerating AI innovation and improving AI adoption. In some respects, having a federal AI law to set the floor on how AI technologies can be developed with trust and security in mind will calm the uncertain regulatory seas. However, states also have a vital role to play when it comes to how AI can be used in certain instances. For instance, states handle insurance regulations and it would make sense to allow them to pass laws that speak to their unique markets. At the end of the day, the best outcome for AI innovation is when states and the federal government work in tandem to build a robust, common sense regulatory safety net that provides companies with clear and simplified rules of the road.
Andrew Gamino-Cheong is co-founder and CTO of Trustible.
President Donald Trump holds a signed executive order after speaking during an AI summit at the Andrew W. Mellon Auditorium, Wednesday, July 23, 2025, in Washington. (AP Photo/Julia Demaree Nikhinson)
Terry Gerton Deloitte’s got a new report out that suggests that inefficiencies and mission support functions are diverting resources from war fighting. Can you start by walking us through the central argument there? How do you connect those dots?
Tom Muir Sure, it’s a great topic, and certainly one that’s timely, not just for the Department of War, but other federal agencies. We think we’re at a unique point in time for government agencies, particularly with artificial intelligence, machine learning, an empowered and upskilled workforce to deliver on the promise of back office services. We won’t call them back office services in this report. We call them mission support services. Because at least when they’re the Department of War, Department of Defense, it is absolutely critical that they make the most of their budget and their priorities to focus on the mission of the department and the priorities to meet the national defense strategy and to enable our national security. We think we have a unique period of time for the department to deliver at speed and scale. They’re doing this in their mission. Secretary Hegseth talked about this about a week ago about acquisition transformation. And they can do that, take that same approach to mission support services that enable the mission of war fighters, improves readiness, enables the department to do their mission, and from an employee perspective, improves the ability of employees to leverage new technologies to deliver on their tasks in support of the mission.
Terry Gerton So you and I both spent some time wandering the halls of the Pentagon on the OSD stack. Many enterprise reform efforts have failed or come up short when it comes to being deployed in DOD. Talk us through some of the cultural difficulties and the organizational difficulties in doing this kind of reform.
Tom Muir Well, as you and your listeners know well, the department is budgeted and funded through appropriations under Title X, right? Military departments are funded to drive the performance of their military departments aligned with Department of War, Department of Defense priorities and national defense strategy. So part of the budget process would argue against this, but in order for them to achieve the efficiencies and effectiveness that the department needs to drive its mission capabilities, there’s a consolidation that’s critical for them to achieve that speed and skill we talked about earlier. We think that this is a unique opportunity because for the first time in, at least in my experience working in the Pentagon and agency supporting the Pentagon, they have a number of private sector leaders that are present in key leadership positions across the Department of War and Department of Defense that this be this is second nature to them. Improving performance, delivering on customer experience, reducing costs, recapitalization and empowering and upskilling the workforce is what they have done in private sector. And they’re bringing that same experience and insights to their government positions now inside the Pentagon. So we think because of technology, leadership and the current environment of cost savings and delivery on mission, this is the right time to have this conversation.
Terry Gerton People have said for years that Fortune 100 global companies can do this and are incentivized to do this, but the military operates under different constraints. So all of those private sector folks sometimes run up against some real obstacles in the military. What are some of the lessons that you think from the corporate world get that can realistically be applied inside DoD?
Tom Muir That’s a great point. You know, we cannot expect to apply all the lessons from private sector to the Department of Defense or Department of War. It’s just, it — particularly not carte blanche. It is a unique mission. It is critical to our national security. It is critical to our economic security globally. And so the Deloitte team has significant experience throughout the years working with Fortune 100 companies to stand up technology-driven multifunctional back offices. So this brings together HR, IT, finance, and acquisition of the four that we’ve specifically focused on in terms of our mission support services in this paper. And our work in private sector, we enable that consolidation, centralization, and mission focus of these cross-functional teams. Many agencies in private sector or companies in private sector call this a global business service. We tend to refer to it in Deloitte as sort of a center office concept, not a back office, because these offices and functions are critical to the mission of the performance of government agencies. For the private sector, we call them business units. Critical in the performance of business units, lowering cost, driving efficiencies, delivering on profit and loss statements to enable shareholder interest. In government, we think it’s more critical. It’s delivering on mission. This is not just about cost effectiveness and performance and efficiencies, it’s delivering on mission.
Terry Gerton I’m speaking with Tom Muir, he’s a specialist executive with Deloitte. So Tom, one of the big recommendations in your report is that all of this can be AI enabled, taking an AI-first approach. Talk us through how that would work. Is that sort of a way to bridge what kind of have been long running cultural differences between the services and the DOD staff? And what safeguards need to be in place if you’re going to deploy AI in a defense sector?
Tom Muir That’s a great question. You know, the Department of Defense is accelerating the adoption of advanced AI right now and machine learning in support of military capabilities to address their national security challenges. That same approach applies for these functional areas of HR, IT, finance, and contracting. Many of us employ AI routinely in our daily lives, and the workforce ought to be able to employ AI in their workforce lives to deliver on mission. We think AI can immediately apply to a wide range of DoD missions. But when we think about AI to improve audit readiness, right? The Department of Defense is under a statutory requirement to get a clean audit by December of 2028. And the Department truthfully has struggled with that remediation projects over the previous years. There’s a unique ability right now with the technologies available in AI and machine learning to drive that audit readiness, audit remediation, enterprise data management, acquisition of common goods and services at a lower cost point, at greater efficiency and greater performance. There’s an ability for them to gain significant momentum in some of these projects that they’ve already undertaken and pilots that they have advanced for the use of AI and ML technologies and deliver those tools to their workforce and upskill this workforce to use those tools to deliver better performance. We think we’re at a unique point, rather, for our agencies to do this within the Department of Defense, within the Pentagon.
Terry Gerton So Tom, I looked at the back of the report and there’s a ‘what DOD can do today’ page and I thought we could have pulled this from 1990 or 2000 or 2010 or 2020. What makes today’s environment different where Deloitte thinks that this is actually achievable?
Tom Muir The delight team has taken this approach, particularly with the Department of War, Department of Defense, because we think it’s based on three things. The first is, it is a tech forward approach to solving some of these pervasive problems that you and I just talked about, Terry, that have been very difficult for government agencies to move forward over decades. Right? We’ve done a bunch of shared services initiatives that have not gotten the department very far, not just the Department of War, Department of Defense, but other agencies as well across the federal government. We think there’s a second piece to this, and that is it’s a show not tell. We think there’s an ability for AI and ML to deliver to workers and workforce to not study the problem, but to demonstrate very rapidly in matters of weeks and months, not six months to a year, and implement technologies and, as you mentioned earlier, safeguard those technologies, right? There’s a cybersecurity discussion and an ethical use of AI discussion to this to this challenge. And we think the department is putting together policies that do just that. And the third piece is focus on outcomes, not processes, not business processes, but transforming business processes to deliver outcomes for the war fighter in the Department of Defense, Department of War’s discussions. But for other agencies, it’s deliver outcomes for their departments, agencies and bureaus. In business, it’d be deliver, you know, outcomes for the business units and profit and loss statements. That same discussion applies just to the bureaus and the agencies across the federal government.
Terry Gerton So let’s assume that DoD takes Deloitte’s recommendations and moves out on them and implements them. Five or 10 years down the road, what would look different and how would you measure or demonstrate that the efficiencies have actually improved readiness?
Tom Muir The great question. You know, in our minds, at least as we discuss this amongst our teams and as we share this with our clients in the Pentagon and in other federal agencies, we think looking back, right, 10 years from now, what does success look like? We think success is a consolidated mission support focused organization that delivers and manages standardized processes at speed and scale, leveraging technology to upskill the workforce, to allow them to live, to focus on cost and performance. We think when you look at the memorandums and the guidance that has come out recently from the Pentagon about recapitalization of the workforce, about acquisition transformation, it’s about delivery of the skill necessary to defend our nation, to deter threats and defeat them if necessary. We think that that’s critical when you look back, you know, from where we are today to that journey that they’re gonna undertake. And they’ve already taken many actions that’ve already begun. As you and I, who both worked in the Pentagon together, many of these actions are already in place. It’s just a matter of bringing that capacity and a consolidated, multifunctional mission support organization that allows them to deliver on the mission of supporting war fighters more effectively, more efficiently, at higher performance and lower cost. And then those cost savings can be put into critical capabilities necessary for war fighters at the front lines.
Terry Gerton How much of this can DoD do on its own without asking permission from Congress and how much does Congress officially need to support?
Tom Muir I believe that the Department has had an ongoing conversation with Congress, you know, particularly the oversight committees, both the HASC and the SASC in particular, and the appropriations committees on their outcomes that they’re looking to achieve by their transformation plans. We saw the first one just brought forward by the secretary of war last week. Secretary Hegseth discussed where he thought the department needed to move with acquisition transformation. I think we’re starting to see more of those in terms of direct report program portfolio management offices and how the department is tackling some of these large national security challenges. That dialog is ongoing. I think the department can do all of this within its budget and take that budget and put it back towards war fighting missions, right? The cost savings that come from this multifunctional shared service delivery services in support of their mission can be put towards that frontline war fighting mission. So I think that this is savings to the department that they can then put against mission and delivery for war fighters.
Engineer working on a laptop, utilizing advanced AI technology for data processing. Concept of AI-driven tech control, showcasing cutting-edge innovation in engineering and artificial intelligence.
Over the years, few concerns have reached my ears and inbox more than those related to federal retirement.
Retirement, from a distance of years, to mid-career toilers, looks like a future Eden. The closer you get, though, the more you realize how much you need to plan for whatever paradise looks like to you. Planning encompasses both the financial and what-to-do components of your post-work life. Here we’re concentrating on the money side of retirement.
People experienced in retirement planning strongly emphasize the need to establish a plan. If the weekly breakfasts with other retired codgers get boring after a couple of months, you can simply do something else. But you’ll find the effects of financial decisions made carelessly much harder to rectify.
That’s why the Federal Employee Benefit Advisors (FEBA) recommends a structured planning process for retirement. It starts three months from your planned date.
At 90 days out, it’s time to take advantage of the resources the government offers to employees approaching retirement. Contact your agency’s human resources office and make sure they know and acknowledge the date you’ve chosen.
It’s also a good time to attend one of FEBA’s free federal retirement webinars. These free sessions will give you a great deal of insight into what’s ahead, based on the experience of many thousands of people who have gone ahead of you. The sessions elaborate on information the Office of Personnel Management offers online. OPM even has videos to help you with what to expect once you apply for retirement.
Among the most important 90-day-out steps: confirming your service computation date, known as your SCD, and your creditable service. It’s a mouthful, but these computations account for the details of your career, including military service, to come up with a net length of time of your federal service. That’s essentially the basis for your annuity pay.
Therefore, at this point you should also gather your own documentation, including your federal service summary, eligibility for health benefits and life insurance, and verification of sick leave balance. Don’t forget, accrued, unused sick leave adds to your service time for purposes of annuity determination.
Of course, with any federal process, you’ll have forms to fill out. If you are a Federal Employee Retirement Systems (FERS) employee, get SF 3017, “Application for Immediate Retirement.” Oldsters who joined under the Civil Service Retirement System (CSRS) must use the SF 2801.
In reality, 90 days for all of this is last minute. Keep in mind it takes at least 90 days for OPM to calculate your final annuity amount, and is often longer. Things have slowed appreciably thanks to the recent 43-day government shutdown and reduced staffing throughout the government.
60 days: Nail down flight plan
You’ve spent lots of time gathering stuff and evenings at the desk filling out forms. This effort should have netted you the documents you need for filing out the retirement application itself.
An application package should include the application form, along with any relevant military paperwork, extra documents or forms your agency wants, plus, if applicable, court orders and even your marriage certificate if you plan on electing a survivor benefit.
Like many defined benefit pension plans, federal annuities come with a few choices. Namely, full survivor benefit, partial survivor benefit or no survivor benefit. They come with increasing monthly payments, on the theory that if your spouse outlives you, payments will continue until his or her death. But you’ll need the consent of your spouse if you choose anything but full survivor benefit. No surprising your spouse from the beyond.
After your annuity, the next most important decision concerns your Federal Health Benefits Plan provider. Basically, you must have five years of continuous coverage before retiring to qualify. As for the type of plan, as you did during working years, you’ll have to choose self, self-plus-one or family plan.
Also keep in mind that you’re eligible for FEHB coverage for life only if you never let it lapse. Once you’re out, you’re put for good. Keeping FEHB might be the wisest decision you can make. You can still switch providers during open seasons.
Given that your Thrift Savings Plan is likely to form a significant portion of your retirement income, now you should consider your TSP strategy.
The TSP offers several options for retirement withdrawals. You can find much of this information online. The basic decision is whether to stick with the TSP or roll your savings over into an IRA, or a 401(k) if you find private sector employment after leaving government. Some retirees opt for what’s known as a life annuity. You surrender your TSP to a provider that pays you a set amount for the rest of your life. This typically also includes a benefit plan for surviving spouses or other people you designate.
The 60-day window is also the point at which you should review your Federal Employees Group Life Insurance, or FEGLI. Everyone has a different situation, so you’ll need to choose whether to continue with full coverage and rising premiums, or with varying degrees of reduced and ever less inexpensive coverage.
As with FEHB, you need to be enrolled in FEGLI while employed to retain it in retirement.
At a month before retirement, you might be sorting your desk knickknacks and finding a home for your potted cactus. Whiffs of retirement parties might drift by your ears.
But you still have things to do on the practical front. These mainly include making sure your forms have been received and are in process. Don’t take this for granted; after all, it’s paperwork tossed into the mysterious machinery of the government!
Also check your Leave and Earnings Statements (LES). You can also verify from OPM what to expect for any lump sum payout from unused vacation.
You still have time to update beneficiary forms, including the TSP-3, FEGLI SF-2823, unpaid compensation SF 1152 and FERS (SF-3102) and CSRS (SF-2080) for contributions refund. These forms might seem routine, but keep in mind that beneficiaries override what might be in your will. So, it’s an important step.
14 days out: Final countdown
With two weeks to go, take some time to confirm your retirement as spelled out in your SF-50 is in fact scheduled.
Also stay in close contact with your supervisor and colleagues. You’ve all got ongoing work, and you’ll want to make sure that part of your transition goes smoothly.
Yes, everything is online but you should also download and store on your own cloud account (and also print out if you’re even a bit paranoid) these documents: eOPF (official personnel folder), LES history, W2s, TSP statements, and any FEHB and FEGLI documentation. It’s probably worth retaining training and service history records,
Also prepare for a financial gap period. Actually two gap periods. The first occurs between retirement and the two to three months until OPM starts your estimated annuity payments. Then there’s a gap until OPM finally figures out your final annuity. This could take one to several more months. If you will have ended up receiving less than the full amount, you’ll receive back pay.
Retirement day: blast off to your new life
Having done the requisite preparations for your financial life, you can arrive at your last day of work with a light step. You’ll turn in your badges and your government-issued computer and any other gear.
As the days of post-retirement roll on, you’ll begin monthly TSP withdrawals. These are mandatory starting when you reach 73, or 75 for those born in 1960 or later. Review the many options for withdrawal.
Having your financial life in order will let you concentrate on the joys of retirement, unique to each individual. Expect moments of regret, or even the blues in the first few. This is normal. Just remember this: While you’ve left one phase of life, you’re launching a brand new one.
If you have questions about how to navigate your upcoming federal retirement, we urge you to join FEBA for their last free webinar of 2025:
Service members will see a 4.2% average increase in their basic allowance for housing in 2026 — a smaller boost than the 5.4% increase they received in 2024 and 2025.
But the actual increases military households will receive will vary depending largely on where they are stationed and their pay grades. While the increase is higher in some areas, the rates decrease in several areas, including Phoenix, Arizona, and Brownsville, Texas. Service members stationed in areas where rates go down are protected and get to keep their existing BAH.
The Defense Department calculates the annual rates based on surveys of rental costs and utilities in each market. Data sources include Census Bureau surveys, the Bureau of Labor Statistics’ Consumer Price Index, commercial subscription rental cost databases, major online rental listing websites, and input from the services and local installation housing offices.
The calculation of the allowance is built to cover approximately 95% of average costs for an off-base housing and utilities, leaving roughly a 5% out-of-pocket expense for service members. In 2026, these amounts range from $93 to $212.
Since the annual rates are based on 2025 data, they may not fully reflect rapid increases in actual rental costs.
The new housing allowance rates will take effect Jan. 1, 2026.
The department estimates it will pay $29.9 billion in housing allowances to approximately one million service members in 2026.
Basic Allowance for Housing is one of the largest components of cash compensation for service members, second only to basic pay. The fiscal 2026 defense policy bill, passed by the House on Wednesday, requires the Defense Department to “conduct a study to improve the calculation of BAH to ensure it keeps up with rising rental costs.” The bill also extends the Defense Department’s authority to issue temporary increases to BAH for one more year in areas hit by disasters or where housing costs differ from current rates by more than 20%.
The 2026 BAH increase comes as service members are also poised to receive a pay raise — the legislation approved a 3.8% increase in basic pay for service members. The must-pass legislation now heads to the Senate. The bill will then go to President Donald Trump for his signature.
In 2023, BAH rates went up an average of 12.1% after housing costs had spiked the previous year.
Terry Gerton We’re gonna talk about military supply chain and logistics. A lot of defense leaders are still warning that supply chains are fragile despite some modernization, despite post pandemic recovery. From your perspective, how can AI play a role in building the resilience of those defense supply chains?
Jon Garrity I think AI plays a critical role. And the reason is that supply chains are intrinsically very complex. There’s a lot of information. It’s hard to grapple with all of it. You have end users who have some visibility into what they might have at a Ford supply point. And you’ve got the manufacturers who are receiving signals from higher level commands and from headquarters. And there’s a lot of latency between those different points of signal. And so AI presents an opportunity to effectively coordinate and orchestrate across that supply network, optimize decisions on everything from purchasing to stocking to mobilization, transportation, all different elements of supply chain logistics operations. So it really is a new paradigm the way that supply chain logistics can be orchestrated.
Terry Gerton The Defense Logistics Agency tells us that they’re now rounding dozens of AI models to monitor supplier risk and to forecast disruptions. When you think about the options out there, what do you think the most promising AI-driven approaches are to identifying vulnerabilities early and fixing them before they become problems?
Jon Garrity So a lot of the traditional approaches to using machine learning and supply chain applications come into things like demand forecasting or identifying patterns in the data. And obviously the zeitgeist now is all around large language models and how those can be applied. But the challenge is when you look at the initial attempts, you know, you’re focused on a very small set or subset of the logistics enterprise, which again could be demand forecasting, but that’s just a piece of the puzzle. And on the flip side, you have these very general models like a large language model that can answer very general questions in incredible ways. But they aren’t grounded in the realities of supply chain. They don’t have ways to reason over or optimize over such a large-scale system. So the the new opportunity and one we’re focused at with Tagup is building a world model, it’s called. So basically providing structure such that you can reason effectively over these large scale systems, right? What is the relationship between the receipt of materials and the the use of those materials, of transportation from a manufacturer and expiration of material downrange, right? Hard questions to reason about at scale for humans and even for legacy approaches. But now with these world models, you can effectively reason at that scale.
Terry Gerton We’re talking about supply chain here, but we’re also hearing from the Air Force and the Army who are investing heavily in AI-enabled predictive maintenance to cut down on downtime and improve readiness. How do predictive analytics, sort of like what you were just talking about, your world model and supply chain, how can that apply to traditional maintenance models?
Jon Garrity Yeah, very directly. So predicting a specific component failure on a specific asset is is very difficult, right? Even if you have it very well instrumented, it’s a hard problem. But it’s a useful demand signal. And certainly when you aggregate it over a fleet, you can get very high levels of accuracy and understanding, okay, in aggregate, how many replacement transmissions will we need for this program, right? As an example. And the reason is it’s it’s similar to you know picking stocks. It’s hard to pick the one stock that’s going to get you 100x returns. So you buy a portfolio and you’re going to have one that’s going to give you that high return. Similarly, if you have a fleet of vehicles or or a fleet of aircraft, you don’t know which one is going to have that catastrophic engine failure, but you know across the fleet that prediction that of that event will occur with some level of certainty, and that can inform upstream in the world model what decisions are being made. So, in short, it’s a very useful input to the overall optimization, but it’s just a piece of the puzzle.
Terry Gerton When you think about the array of military equipment, I mean everything from water filtration units to F-35s and aircraft carriers, how complicated is it to scale an AI model to cover that scope of inventory?
Jon Garrity Yeah, great question. The answer is that there are, regardless of what asset or platform you’re looking at, there’s a lot of commonality, right? They all have parts that are installed on them, the replacement parts, they have distribution around the world, they have certain patterns of utilization, maintenance requirements. So the world model can encode these basic rules that relate these elements and then can take the data that exists today. And I think that’s a big, big opportunity, right? When you look even at predictive maintenance, there’s so much data that exists in existing IT systems related to service requests, parts required, requisition, all kinds of things. And there’s a lot of signal in it. But to employ that signal effectively, you need to be able to provide that structure. And so in short, in spite of the scale, it actually is the strength for these AI models, because if you can apply that structure, the models can get better much faster because of the scale of the enterprise. So that’s that’s the opportunity with that scale.
Terry Gerton I’m speaking with John Garrity. He’s the founder of Tagup Inc. One more maintenance question just because maintenance is near and dear to my heart. Congress and DOD are pushing right to repair provisions to let service members fix their own equipment using digital manuals and 3-D printing. How do you see AI intersecting with that approach?
Jon Garrity In a couple of important ways, right? One we’re we’re looking at now is changing the way that you — so take 3-D printers as an example. Where do you put 3-D printers? Right. There are now platforms where they have 3-D printers and containers, that can be moved around the world. But where should you put those sources of supply, right? And so if you have data from maintainers as to what parts are required, you can ensure that, via an optimization, you locate the sources of supply, the advanced manufacturing, other capabilities close to the point of use. And so I think that’s one way that AI will improve the maintainer experience is making sure they have the tools and the parts that are necessary closer to the point of use and and basically ultimately reduce non-mission capable rates due to supply and and and maintenance.
Terry Gerton Okay, let’s take one step back from the military units themselves and talk about manufacturing capacity. Companies are using AI and advanced manufacturing to compress production timelines and reduce parts counts. How do you see these technologies then changing surge capacity, industrial base opportunities? Sort of, what’s next on the front there?
Jon Garrity And actually I think it is intimately tied in with military as the ultimate customer, right? What’s what’s critical is avoiding whiplash effect and having visibility upstream so that manufacturers have access to what demands are they and how can they be satisfied. And I think the opportunity is and it’s coming to play now where if you can track use of equipment, of parts at the tip of the spear, you know, downrange and provide visibility back to the manufacturers across the enterprise. Now the OEMs, the manufacturers, can understand how their equipment that they manufacture is being used, where it’s being used, where there are issues, and that can inform their investments. if you could — right now the purchasing for these programs is done in the current fiscal year, right? There’s not visibility over many years into the future. That’s a huge lost opportunity, both for negotiating better prices with the manufacturing base, but also ensuring that the capacity exists into the future. So I think that’s one of the most exciting opportunities for these sorts of systems at scale is giving visibility to the manufacturers as to what are the demands in out years.
Terry Gerton And that seems to take us right back to where we started, which was with supply chains and making sure that not only the military supply chain, but the commercial supply chain stays safe, secure, predictable.
Jon Garrity [The] most interesting applications in my view of these new AI systems is the ability to identify systematically what links in the supply chain provide the most risk against readiness or other operational requirements. And so you can be very systematic in identifying, okay, how can we store up capacity or ensure that we have redundancy and supply to avoid getting just hammered on our readiness rates. And I think that’s one of the, again, the ultimate aim, in my view, from these sorts of systems is to be able to tie tactical use of the end users, aggregated at its scale, and provide that visibility and signal back to the industrial base all the way back to the supply chain. And by doing that, we can strip out a lot of the inefficiency in the system and drive higher quality service to the end customer.
Terry Gerton Real time decision making inside the system that you just described has always been sort of the holy grail of military logistics. As you think about the future of integrating AI into each of those pieces and parts, are there any concerns that you have about the cultural obstacles or individual training obstacles that might make it difficult to optimize the value?
Jon Garrity I think there’s been — it’s certainly a paradigm shift in sort of the user experience, right? So yeah, I’m sure you’ve long, history and experience, Terry, in military logistics and and in the private sector too. You know, ERP systems have been with us for many years, right? Enterprise resource planning systems, they track what we have and where we have them. And you know, you have to know a lot of different codes and keyboard shortcuts to be able to efficiently navigate these systems and then ultimately, you know, you put those into reports that you can summarize up to your commanding officers. And what’s changing now is that, as you’ve maybe seen with ChatGPT related technologies, now you can you can just ask questions directly and get answers. The challenge of course, operationalizing those for defense applications and supply chain is grounding it in the reality of the situation, making sure you you’re not hallucinating, right? You can’t just ask chat GPT for docking policies. So there there is risk that needs to be mitigated to make sure, and that’s something we provide explicitly by providing that structure in the world model that you can make sure that the answers you’re getting, the COAs that are recommended are grounded in reality. But I do think there’s going to be a bit of a learning curve that I think will be tempered by the fact that a lot of people are using large language models now. There’s a familiarity in private use with these sorts of technologies. I think in many ways it will be a more intuitive user experience, but it will be a transition from the historical way of interacting with IT systems and log IT systems specifically.
Army professional employing AI tech to improve military combat systemsArmy professional employing AI tech to improve military combat systems and missiles monitoring. African american IT admin uses neural networks to enhance combat operational capabilities, camera B
The House has passed a $900 billion defense policy bill, which includes a 3.8% pay raise for service members. The must-pass legislation now heads to the Senate. Once it clears the chamber, the bill will go to President Donald Trump for his signature. The bill seeks to streamline the way the Pentagon buys its capabilities. Congressional leaders said the legislation would deliver “the most significant acquisition reforms in a generation.” It also fully supports Trump’s priorities, including banning all diversity, equity and inclusion programs at the Defense Department and fully funding the department’s border security efforts.
The Office of Federal Procurement Policy wants to hear from you. As part of its rewrite of the Federal Acquisition Regulation, OFPP Administrator Kevin Rhodes is asking acquisition experts in and out of government for help in identifying acquisition practices that agencies should start, stop, continue, adjust or scale. Rhodes said in a new post on the Ideascale platform that the ideas should focus on strengthening stewardship, speeding up buying, reducing costs, increasing competition and supporting better outcomes. He hopes these ideas will better inform regulatory drafting of the streamlined FAR and the operational practices agencies will rely on going forward. OFPP wants suggestions by Jan. 7, 2026.
The top official at the Office of Personnel Management is pushing back against warnings from the agency's inspector general. A recent OIG report found that staffing reductions at OPM this year have created gaps in the agency’s ability to operate effectively. In response, though, OPM Director Scott Kupor argued that the agency's past workforce size was inflated. He called the current staffing levels “appropriate,” after the agency lost one-third of its employees this year.
More than a dozen federal statistical agencies are falling behind on producing high-quality data sets that shape the U.S. economy and government policy. Most statistical agencies lost 20% to 30% of their staff this year, which has led to some public-facing data sets being delayed, suspended or canceled. That’s according to an annual report from the American Statistical Association. President Trump fired the head of the Bureau of Labor Statistics this summer after the agency produced a monthly jobs report that showed hiring had slowed. The Department of Government Efficiency oversaw the elimination of five surveys at the Census Bureau that DOGE deemed "wasteful."
The Agriculture Department said it received mostly negative feedback on its reorganization plans. USDA plans to relocate more than half of its D.C.-area employees to five regions across the country. The agency said it received more than 14,000 public comments about its relocation plans. More than 80% of them criticized elements of the plan. About 5% expressed positive sentiment and about 7% were neutral.
One agency got a boost of funding for IT modernization before the Technology Modernization Fund expires. The TMF officially expires on Friday, meaning the board can only continue to oversee and fund existing awards. But the TMF Board made one more investment before the impending deadline. The National Nuclear Security Administration earned $28.3 million for three separate, but interrelated, modernization projects. Most of the funding, about $23 million, will go to modernizing the AI infrastructure for NNSA’s classified environment. Additionally, NNSA will use the remaining $5 million to update two other systems, FireGuard and the Turbo Federal Radiological Monitoring and Assessment Center (FRMAC) radiological assessment tool.
The Cybersecurity and Infrastructure Security Agency wants to deepen its engagement with industry. Companies can sign up to share information with CISA through the agency’s new Industry Engagement Platform. The goal of the online platform is to allow CISA staff to more easily engage with companies, nonprofits and academia on new innovations and technology developments. CISA is particularly interested in IT and security controls, data analytics, artificial intelligence and post-quantum security. The cyber agency eventually wants to move to just one account for engaging across all of its services and information sharing platforms.
Several key acquisition provisions, including measures on pricing transparency, oversight of major programs and Other Transaction Authorities, were dropped from the final version of the fiscal 2026 defense policy bill. Both the House and Senate sought to close the loophole that allows companies to submit cost and pricing data after a contract price is agreed upon, but the proposal was removed from the final bill. House-led efforts to rein in cost overruns and strengthen oversight of major defense acquisition programs were also blocked during negotiations. Also left out is a House proposal to curb the outsized influence of tech giants over the cloud computing and artificial intelligence defense contracting space.
Terry Gerton You’ve got some new guidance out that says procurement is where AI’s potential becomes reality. Talk to us about what you mean there and why the buying process is so critical to make sure that we have successful AI adoption in government.
Kathrin Frauscher Absolutely, and what a great question. Thank you so much. We really think that flexible and responsible procurement will make AI work for the public. So if you care that artificial intelligence delivers for your government workforce or for the residents that you serve, it really matters that you pay attention how you purchase AI and how you implement AI.
Terry Gerton Tell me more about flexible procurement practices. What are you suggesting?
Kathrin Frauscher What I’m suggesting is using a non-technical term to mean that you can adjust your procurement processes to what you’re buying, that you can make them short and quick, so that they work for your specific purpose. Experts sometimes call that agile, but I think we in the normal world just would call it flexible.
Terry Gerton And why is the speed piece of that so important?
Kathrin Frauscher Speed matters because procurement has the reputation, but also indeed often is rather slow and bureaucratic. But technology moves fast. So if you want something, you know, quickly or something that can remain adaptable to your environment, you need to make sure that your purchasing methods and vehicles are equally fast and flexible.
Terry Gerton Well, speed comes into play in another aspect of this because there’s a lot of hype maybe and a lot of attention around building custom AI solutions, but that is not fast. And your research shows that most agencies want to buy off the shelf tools. So talk to us about what that might mean then for the procurement teams and the processes.
Kathrin Frauscher Yeah, I would love to. That was actually one of the big surprises. We did this research project for about a year. And when we went into it, we also expected that we would find out that there are a lot of custom products out there, a lot of what they call requests for proposals, where you really take time to buy the technology that you need for a specific purpose. What we found out is that most people buy technology through existing platforms, vehicles at the central level. So that changes the game of how both I get my AI technology, but also what I need to pay attention to along the way.
Terry Gerton One of the reasons that a traditional procurement process is so slow is because it’s pretty risk averse. And there are a lot of risks associated with AI, we hear about them all the time, bias, hallucination, all kinds of things. So how can leaders, especially procurement leaders, then, balance caution and risk aversion with the need to move quickly to make sure that they’re getting current AI technology?
Kathrin Frauscher Absolutely, you said it there yourself. I think the key word is balance. You have to balance caution and urgency. I like to say you … can’t move too slow so that you’re missing out on things, but you can’t move too fast so that you’re not ready. So it’s all about the balance of being fast enough so that you get what you need, but slow enough so that you’re ready.
Terry Gerton Is there a governance role involved in that and what would you suggest?
Kathrin Frauscher Absolutely. One of the things that our research found is that being AI ready and having the needed governance frameworks is one of the most important things that governments can do. And a good governance framework is clear, you know, it’s written in plain language. It balances this level of risk of being fast but also being prepared. And then I would say the key thing is to train your people on those frameworks. So don’t just have it on a piece of paper, but make sure that people know how to use it.
Terry Gerton We’re talking specifically about buying AI tools, but what about using AI tools in the process of buying AI tools?
Kathrin Frauscher Absolutely. We see an equal hype about that than we see about everything around AI. We also see a similar trend that honestly for now a lot of the use cases are still pretty boring, I would say, you know, in terms of, help me write an RFP, help me work faster but don’t make the decisions. But as I like to tell my kids, you know, boring things are very important too. So we are paying attention to how that is unfolding and how governments again can get the best use of AI while making sure it delivers the best outcomes for their residents.
Terry Gerton I’m speaking with Kathrin Frauscher. She’s deputy executive director at the Open Contracting Partnership. Kathrin, one of the things that you also talk about is that the procurement, the IT, and the project teams often struggle to work together, especially when it comes to AI procurement. What recommendations do you have to improve that relationship?
Kathrin Frauscher Yeah, great question. We really think procurement is a team sport and you need an extra strong team when you’re purchasing AI technology. So the biggest advice is to come together early throughout the process and make sure that all of you are AI ready.
Terry Gerton What does AI ready mean to you in that sense?
Kathrin Frauscher Yes, one of the biggest requests that we actually got from our procurement partners was, we want to learn more about AI. We don’t think we know enough yet to make good purchasing decisions. And I think that is true for many government officials.
Terry Gerton The general services administration is trying to centralize some of this. Do you feel like they’re doing a good job in defining AI and what the tools might be for the procurement and IT teams to be able to use?
Kathrin Frauscher Yeah, they are following a trend. centralized purchasing of AI is definitely something that we see around the world. It has the advantage of giving you speed and standards. What you need to pay attention to is that the implementation and the use is still effective and adapted to each agency and that each agency has the capacity to use AI well.
Terry Gerton Well, speaking about not knowing enough about AI, one of the other issues that has come to light is vendors sometimes exaggerate a little bit about what their AI products can do. So if you were coaching procurement teams around this, what sort of questions should they be asking to kind of cut through the hype there and make sure they’re getting real value that they understand what they’re buying?
Kathrin Frauscher Absolutely. We have some great questions for that in our guide. And I think one — the main thing I would ask my vendor counterpart to do is show me where you have done it successfully. Let me try first. So we are big believers in prototypes, demonstrations. Sometimes they have fun names like “bake offs” because if you see it work, then you know that it might help you better.
Terry Gerton Tell us more about the specifics in your guide.
Kathrin Frauscher The guide. Yeah. The guide is really driven by many, many questions we got from governments around the world, especially procurement teams, that said we have this need to buy AI, you know, sometimes because we are curious, because we need it, or because we’re being told to buy it. But how do we do it well? How do we do it in such a way that it serves our government workforce and maybe most importantly our residents and our citizens? So that’s really what the guide is about. It starts with telling procurement officers, procurement directors, the foundations about AI, because like I said before, they really wanted to learn more about that. And then how you can be a good team player, what we already also talked about. How can procurement have this role of bringing everyone together so that they can align around the goals and the use cases, the terms, the payments and what you’re getting.
Terry Gerton It’s got some really interesting scenarios I think in there that walk people through the process. Tell us maybe about one of those.
Kathrin Frauscher Yeah, absolutely. So we have these pathways because it does depend on what you’re trying to achieve with your technology, but also what purchasing vehicles are available to you, right? We sometimes like to think, if you think about it like a car, right? Oh today, I need, you know, the minivan or my small car or the bus, but in reality procurement teams are often being told you have to use the bus. So we also have in the guide some hacks that if you use the bus but you actually wanted to use a Jeep, what you can still do to get there?
Terry Gerton It sounds like folks will find something in there that relates in some way to every situation that they’re facing.
Kathrin Frauscher We hope so. We really wanted to make it practical and not, you know, a theoretical piece of work.
Terry Gerton So Kathrin, we’re really just at the dawn of folks buying AI for government application. If you transport yourself five years down the road, what do you think will be different and what do you think the lessons learned at that point will be?
Kathrin Frauscher Yes, great question. Honestly, I think we don’t know what it will be like in five years from now. I think AI is changing and evolving at a speed that we haven’t seen that often before. But I think that also means that your procurement process needs to be ready to evolve and like we said in the very beginning, it needs to be flexible so that if AI evolves, you can still get what you need and you’re not stuck with something from two or three years ago.
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For months, congressional leaders have been working to deliver what they have described as “the most significant acquisition reforms in a generation.” But several key provisions — including measures on pricing transparency, oversight of major programs and Other Transaction Authorities — were ultimately dropped from the final version of the fiscal 2026 defense policy bill.
Both the House and Senate sought to close the loophole that allows companies to submit cost and pricing data after contract price is agreed upon.
The House version of the defense bill included a provision that would prohibit contractors from using cost or pricing data that is more than 30 days old as a defense against defective pricing allegations. Lawmakers backing the proposal said it would “empower the Defense Department to enter into contracts with sufficient pricing information.”
The Senate version of the bill contained a similar provision, but both proposals were removed from the final bill.
Instead, lawmakers directed DoD officials to examine whether late disclosures of cost or pricing data is a systemic problem and recommend ways to fix it.
“We note that the sweeps process under the Truth in Negotiations Act is a post-price agreement review requiring contractors to disclose any updated cost or pricing data in their possession for certification before contract award. We are aware of concerns that contractors may not be providing disclosures of cost or pricing data in their possession prior to a price agreement, opting to disclose such data only after agreement and immediately before contract award,” the lawmakers said in the joint explanatory statement. “This practice may result in upward adjustments to contract pricing without providing time for sufficient review due to factors such as the expiration of funds or urgent military needs for the products or services.”
House-led efforts to rein in cost overruns and strengthen oversight of major defense acquisition programs were also blocked during the conference process. The proposal would have accelerated the Pentagon’s reporting timeline, requiring the department to alert Congress within 30 days of any significant or critical cost overruns.
Also omitted is a House proposal to curb the outsized influence of tech giants over the cloud computing and artificial intelligence defense contracting spaces. The measure would have directed DoD to ensure there is a competitive award process when procuring cloud computing, data infrastructure and AI capabilities.
OTA reforms
While other transactions are intended to move innovative technologies out of the lab and into production, lawmakers said it remains unclear how often these agreements actually lead to follow-on production contracts.
But a House proposal that would have required Pentagon officials to provide a report on detailing use of follow-on agreements made under Other Transaction Authorities between 2022 and 2025 did not make it into the bill.
Instead, the Government Accountability Office was directed to conduct a review of how OTAs are used, including whether follow-on agreements deliver long-term capability.
The House also sought to require large OTA-funded projects to follow the same oversight rules as major defense acquisition programs, but that proposal was ultimately dropped from the final bill as well.
Small business and workforce provisions left out
A House provision aimed at expanding opportunities for veteran-owned small businesses was stripped from the bill — the measure would have required DoD to set annual contracting goals for small businesses owned by veterans. Moreover, it would have allowed the Pentagon to use noncompetitive procedures when awarding certain contracts to veterans.
“We note that veteran-owned small businesses are an important part of the defense industrial base and we encourage the Secretary of Defense to continue supporting veteran-owned small businesses,” the lawmakers said.
The House’s proposal to create a standardized Schedule V for reporting veteran employment and retention data across all DoD contracts and grants was also dropped from the final bill.
Another House provision would have required the department to ensure contractors are meeting the federal 7% disability hiring requirement.
Portfolio management reforms
While the move to a more portfolio-centric approach to acquisition is a feature of the defense policy bill, negotiators dropped a Senate proposal to establish “capstone requirements” for future portfolio acquisition executives. The shift in strategy for defining needs aimed to improve speed and innovation by revising programs in consultation with the Joint Requirements Oversight Council.
The House also tried to address DoD’s longstanding high turnover in key acquisition leadership roles by requiring a six-year minimum assignment for bosses formerly known as program executive officers, but the effort failed to advance. Instead, the final bill directs the Pentagon to brief Congress next year on “actions taken to strengthen stability in program management and tenure for critical acquisition positions.”
Legislators did endorse the spirit of the foiled measure.
“Stable, milestone-aligned tenure is essential to program continuity, accountability, and cost and schedule performance. Short-term assignments can incentivize short-sighted decision-making by officials who will not be present to manage long-term consequences,” they said. “Longer tenure strengthens accountability by ensuring that the same leaders who initiate major acquisition decisions remain responsible for their execution and outcomes. Frequent rotations disrupt long-term planning, erode institutional knowledge, and hinder the Department’s ability to deliver capabilities to the warfighter on time and within budget.”
The House passed the annual defense bill on Wednesday. The legislation now heads to the Senate.
The 43-day partial government shutdown left us all bereft of information technology news and updates on program progress. Now that agencies are funded at least through Jan. 31, the conference circuit is in its end-of-the-year sprint and lawmakers are working on the final touches of the defense authorization bill, there are some interesting IT news items that have emerged over the last week or so. Here are three of them that deserve highlighting.
TMF Board beats deadline
The Technology Modernization Fund officially expires on Friday, meaning the board can only continue to oversee and fund existing awards.
While the House was attempting to add a provision to the fiscal 2026 defense authorization bill to extend the TMF, the board quietly made at least one new award before the impending deadline.
The National Nuclear Security Administration earned an investment of $28.3 million for three separate, but interrelated modernization projects.
The agency will use the funding “to modernize the foundational technology infrastructure supporting its nuclear security missions through an integrated cloud and artificial intelligence transformation. Current systems have critical vulnerabilities: the FireGuard wildfire monitoring activity requires intensive manual analysis across classification barriers; the Turbo Federal Radiological Monitoring and Assessment Center (FRMAC) radiological assessment tool cannot communicate with other emergency response applications; and limited AI development infrastructure prevents rapid evaluation of models for nuclear security threats. These vulnerabilities hamper data aggregation, slow emergency response, and leave gaps in the agency’s ability to assess evolving technological risks.”
A government source with knowledge of the TMF award said most of the funding — about $23 million — will go to modernizing the AI infrastructure for NNSA’s classified environment.
For example, NNSA recently implemented AskSage’s platform to access secure AI tools through the Army’s tenet.
The source said through the TMF investment, NNSA can more quickly implement its own version of AWS, Microsoft and Google clouds with AI tools built in.
NNSA expects to create a centralized AI infrastructure for its classified users to make it easier for them to access these tools more quickly.
This was NNSA’s second TMF award. It won $3.8 million in July 2024 to modernize its Radiological Response Data Portal.
The source said the other two projects, for which NNSA will receive about $3 million for FRMAC and $2 million for FireGuard, were grouped together as part of the overall modernization initiative because they will rely on AI and machine learning tools.
“Through the TMF, FireGuard aims to use machine learning to automatically track fire boundaries and move data between computing systems. This automation would allow analysts to spend their time verifying maps instead of drawing them from scratch, which is particularly critical as wildfires pose growing risks to nuclear sites,” the TMF states on its website. “Through the TMF, NNSA plans to shift the Turbo FRMAC radiological assessment tool from its legacy desktop software to a cloud‑based platform, providing emergency teams with the speed, accuracy, and collaborative capability they need to protect the public and critical infrastructure during radiological crises.”
The source said while much of the work to modernize the systems and to develop the AI infrastructure was already underway, the TMF money certainly will help NNSA move faster.
And that idea of moving faster brings us back to Congress failing to extend the program’s authorization. While plenty of programs operate without authorization, it seems like this type of investment, at least for the short term, is on hold.
There still is some hope, as the Senate did allocate $5 million for the TMF in fiscal 2026 in its version of the Financial Services and General Government appropriations bill. This is the first time in three years lawmakers didn’t zero out new funding for the TMF.
Commerce, USDA race for AI
The departments of Commerce and Agriculture are in a friendly race to see who can implement the new USAi platform first.
Brian Epley, Commerce’s chief information officer, said at ACT-IAC’s Executive Leadership Conference last week that, hopefully within the next few weeks, employees at all bureaus will be able to begin using the different large language models for their use cases.
Meanwhile, Tony Brannum, the chief information security officer at Agriculture, said deployment of the AI shared service across the agency is imminent as well.
These would be the first agencies to take advantage of the USAi platform, which GSA launched in March and expanded this summer to provide generative AI chatbot tools for other agencies.
“The code base is the same as GSAi. It is just a copy for our agency partners to use so that they can do that deep exploration across a broad portfolio of generative AI technologies and large language models, but most importantly, capture the observability telemetry data so that they can make informed decisions about how they’re going to buy well into this disruptive space in the future,” GSA CIO Dave Shive said at the ELC conference.
GSA says the USAi platform is part of how it’s providing agencies the opportunity to try out AI tools that previously would’ve either been cost prohibitive to roll out across the agency or included too much risk.
Zach Whitman, GSA’s chief AI officer, said USAi has become an interagency project in terms of developing and learning from its use.
“With a tool like USAi, you can really get practical, hands-on data to suggest these are the ways in which we’re seeing this adoption curve today. And the telemetry that we’re gathering in terms of how frequently do people use the thing is an important step for the program development,” Whitman said. “But then also, what are they asking of this tool? What kinds of mission functions are they using this tool for? That true fidelity on how the thing is being used is, I would argue that the real value proposition of a tool like USAi is to be able to see inside how the workforce is truly adopting this new technology to such granularity, and then shape policy and workflows to maximize that utility has been an eye opener for us, as well as our partners.”
As for Commerce, Epley said it will use the chat prompt tools to answer specific questions that arise in each bureau based on their individual use cases.
“We have an AI use case inventory of more than 300. USAi will bring Commerce to life when it comes to AI tools,” he said. “We looked at what we were doing on our own when it came to AI and decided it was best to partner with GSA. The majority of our workforce doesn’t have a working knowledge of AI, so now they will have tools at their fingertips. We expect USAi to increase our productivity for our employees and for the mission.”
Epley added that Commerce will use its lessons from implementing USAi and create a playbook for other agencies to ease their move to the shared service.
This is a multi-year effort for Commerce, as Epley expects they will have to optimize the value of the LLMs and figure out which tools are best for which mission area.
As for USDA, the implementation of USAi is the culmination of a decade-long journey to improve its data tagging.
Brannum said knowing what data the agency has, where it’s located, and who has access to it will make the application of AI tools easier.
“There is a lot of interest in AI across the agency. We are asked why something is blocked, or once they see something out there from GSA, they ask to use it,” he said.
JWCC-Next, JOE and more from DISA
The Defense Information Systems Agency will continue to run its own multiple award contracts for the foreseeable future. DISA’s Procurement Services Executive Doug Packard, who will retire in January after more than 35 years in government, said the agency has no immediate plans to consolidate acquisition programs into GSA.
That means the Joint Warfighting Cloud Computing Contract-Next (JWCC-Next) and several other high profile programs will remain in play for 2026.
At DISA’s annual industry day on Monday, executives said JWCC-Next, Olympus, the Joint Operational Environment (JOE) and several other major IT programs are positioned for significant progress over the next year.
Byron Stephenson, the J-9 vice director for the Host and Compute Center at DISA, said DISA has been working with the DoD CIO’s office to collect requirements for the new contract.
“We are still looking at all the requirements that were collected across the department to ensure we bring the best cloud capable contract for the future,” Stephenson said.
He expects DISA to issue the JWCC-Next solicitation during the third quarter of fiscal 2026 and make an award about a year later.
Additionally, DISA will issue a solicitation in the second quarter of fiscal 2026 for technical support for the JWCC engineering program office.
As for the current iteration of the contract, which DoD awarded in November 2021, Stephenson said the use by the services continues to grow.
“In 2025, had over $3.9 billion in total orders. We are actively seeing increases as the Air Force onboards to the contract now,” he said. “We had large Army orders last year, so it is continuing to see progress.”
Aside from JWCC-Next, DISA J-9 is busy implementing several large scale technology programs. Stephenson said the joint operational environment is operational in multiple theaters with active workloads, including the Indo-Pacific Command. Through JOE, DISA is bringing commercial cloud services to commands located outside the continental United States.
Meanwhile, DISA’s Olympus, which is its infrastructure-as-code initiative, is active in two environments, AWS and Microsoft, and military services and agencies can take advantage of the tools through DISA’s working capital fund.
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