The 8(a) small business contracting program is coming under the microscope of its biggest user.
The Defense Department is joining a growing list of agencies auditing the use of sole source contracts through the 8(a) program.
Experts warn that DoD’s decision to launch this new audit signals that this 40-year-old small business development program is teetering further on the edge.
“It’s not a death knell, but it’s absolutely going to leave a mark. It’s absolutely going to hinder our ability to bring some of that new technology, that new manufacturing capability to the federal marketplace. That’s probably my bigger concern,” said Norm Abdallah, executive vice president at Hui Huliau, a Native Hawaiian-owned firm in the 8(a) program, in an interview with Federal News Network. “We’re behind in terms of the ability to manufacture here in the U.S., and have outsourced that beyond what one should in the defense of their own country, and so hindering the ability for us to help bring some of that to bear in the U.S. marketplace is probably the biggest concern.”
Abdallah said the 8(a) program is an avenue for companies to enter the market, obtain past performance experience in the federal sector and learn the ropes so DoD, and really every agency’s, ongoing distrust and scrutiny of the program is likely going to impact the government in bigger ways than expected.
Secretary Pete Hegseth posted a video on X on Friday explaining that the Pentagon is worried about two main things: The 8(a) program is a diversity, equity and inclusion (DEI) program, and it’s wrought with fraud.
We are taking a sledgehammer to the oldest DEI program in the federal government—the 8(a) program. pic.twitter.com/c9iH8gcqG7
“Providing these small businesses with opportunities is a laudable goal, but over the decades, as it happens, the 8(a) program has morphed into swamp code words for DEI, race-based contracting. And here’s the worst part, in many, many instances, these socially disadvantaged businesses, they don’t even do work. They take a 10%, 20%, sometimes 50% fee off the top, and then pass the contract off to a giant consulting firm, commonly known as beltway bandits. For decades, this program, 8(a) has been a breeding ground for fraud, and this administration is finally doing something about it,” Hegseth said. “Effective immediately, I’m ordering a line-by-line review of every small business sole source, 8(a) contract that is over $20 million, and we’ll look at everything smaller than that too. The Department of War has the biggest chunk of 8(a) spending by far, 10 times more than any other agency. So our cleanup, it’s going to be 10 times tougher.”
DoD’s audit will include two phases. Hegseth said if a contract doesn’t make meet the DoD’s goal of increasing lethality, they will terminate it.
“We have no room in our budget for wasteful DEI contracts that don’t help us win wars, period, full stop. Second, we’re doing away with these pass through schemes. We’ll make sure that every small business getting a contract is the one actually doing the work, and not just some shell company funneling your money to a giant consulting firm,” he said. “This approach is, of course, not meant to hurt small businesses, and that’s not the point. America is full of great, amazing small businesses. This is part of a larger effort to transform our acquisition ecosystem into one that makes sense for the threats we face in the 21st century.”
An email to DoD seeking more details about the audit and a timeline for the audit wasn’t returned.
Experts say Hegseth’s decision to review sole source contracts worth at least $20 million is directed at Native American, Alaskan Native, Hawaiian Native and other tribal companies. Congress raised the sole source threshold for these firms to $100 million from $22 million in 2020. Firms not belonging to one of these groups have a sole source threshold of $5.5 million for manufacturing and $8.5 million for non-manufacturing contracts. These non-tribal or native firms can receive a sole source contract up to $20 million with certain justifications and approvals.
While experts say Congress may not act to change the law, the ongoing audits by the Small Business Administration, the Treasury Department, the General Services Administration and now DoD are sending signals that, at least for sole source contracts, the program doesn’t work.
A former DoD acquisition executive, who requested anonymity because their current company still does business with DoD, said he believes federal small business goals are at risk across the board, and while they may not be affected this year, in two to four years, agencies will see a huge reduction in their industrial base.
The former DoD executive said the administration is sending an inconsistent message to the federal contracting community. The audits and the reduction of staff in small business offices are sending one message that small businesses aren’t important. But then the White House, and DoD particularly, are expressing the desire to attract new participants to the federal market, including non-traditional companies. The executive said these companies typically depend on small business offices and programs like 8(a) to help them get a foot in the door.
John Shoraka, a former associate administrator of government contracting and business development at SBA and now the co-founder and managing director of GovContractPros, an advisory services firm specializing in federal procurement, said DoD’s audit is part of a concerted effort by the administration to undermine the 8(a) program.
“I think if you look at the dollars in the 8(a) program, especially at DoD, some will point to the fact that they actually went up in 2025. But the challenge that we saw across a lot of our clients was that offer letters that have to go through the district office in order for a sole source award to happen were being held up and or never being processed. So we saw a slowdown in sole source awards,” he said. “I think given what we’ve seen with respect to the SBA audit, given what we’ve seen with respect to the number of 8(a)s being approved, in 2024 there was something like 500 plus 8(a)s approved. In 2025, I think the last count I saw was 66 approved. So given the audits, the slowdown in processing, I think contracting officers are looking over their shoulders. I think in the short term, given the current administration and the current congressional makeup, if you will, we will see a trend away from the 8(a) program.”
DoD’s decision to audit the 8(a) program comes after Treasury and SBA announced similar audits earlier this fall. SBA is looking at the entire program and companies had to submit data to the agency by Monday.
The SBA general counsel’s office is driving the audit, which is unusual because usually these things are either done by the inspector general or program office.
Fraud, DEI concerns unfounded
Shoraka said while the questions being asked by SBA, and now eventually DoD, are legitimate questions, the approach is causing some chaos.
“A lot of our clients reached out to their district office and the district office was actually unaware that those letters had originally gone out with respect to the audit, so there was a disconnect there. The field offices aren’t sure how the data is going to be used, or who’s going to use it, or what they’re looking at,” he said. “From my perspective, given the types of questions that were asked, I think it leads to the question, are there pass throughs happening? Because there was a lot of questions with respect to, who are your subcontractors, who are your vendors, et cetera. So the question is, and I think what SBA was looking at is, are there pass throughs and who’s really in control? Is the disadvantaged individual really owning, operating and benefiting from the 8(a) company? And I think those are legitimate questions. But again, there are legitimate processes and mechanisms to monitor that, including the annual review, which occurs every year on every single 8(a) company.”
The former DoD acquisition executive said while there are concerns about the use of sole source awards over $20 million to tribal companies, the allegations of fraud and the belief that the 8(a) program is a DEI program are unfounded. He said DoD should go to Congress and change the law to reduce the risk of large sole source contracts turning into pass throughs.
Experts agreed that while no program is perfect and there probably are some challenges, the 8(a) program is typically well overseen and maintained.
In fact, Abdallah, from Hui Huliau, said most 8(a) firms spend a lot of time meeting the compliance requirements. But he said it’s also a shared responsibility for oversight with the government.
“There are several folks that have responsibility in there. The first one is the contracting officer. In some cases, they’ve got to approve subcontracts. But more basically, with SBA, we go through a review every year where we have to submit our financials, what work did we do and what work happened?” he said. “They worry about the business mix, how much of your work was set aside versus not set aside? Quite honestly, what means you got the work by some means other than the 8(a) program, be that a subcontractor to another straight commercial, et cetera. So there are lots of hooks to watch it. Do they audit the books, per se, to check for percentages? That’s less common. But it’s part of your overall review.”
Shoraka added there are a significant number of regulations or requirements to mitigate the risk of pass throughs, and most rules allow for legitimate subcontracting.
One thing all of the experts pointed out is that the program is set up to help the 8(a) firm grow and learn, but they still have to do at least 51% of the work under services contracts and 15% of the work under construction contracts.
Shoraka said what is being lost in this entire discussion is there is more fraud in non-small business socio-economic programs across government than there are in the 8(a) and other small businesses initiatives.
Defense Secretary Pete Hegseth stands outside the Pentagon during a welcome ceremony for Japanese Defense Minister Shinjirō Koizumi at the Pentagon, Thursday, Jan. 15, 2026 in Washington. (AP Photo/Kevin Wolf/)
Congressional appropriators are backing the Pentagon’s push to speed up weapons buying, but warn that speed “must be factored alongside cost, performance, lethality and scalability.”
The House released the final 2026 minibus funding package early Tuesday, which includes money for the Departments of Defense, Homeland Security, Labor, Education, Housing and Urban Development, Transportation and Health and Human Services. If passed, the bill would increase defense spending to more than $839 billion — roughly $8.4 billion above the White House’s fiscal 2026 request. House leaders plan to vote on the package later this week.
Congressional negotiators said they “strongly support” the Defense Department’s acquisition reforms, but pushed back on the Pentagon’s efforts to seek additional authorities or changes to its budget and appropriations framework until it fixes its internal processes.
“Rapid delivery of ineffective weapon systems at exorbitant cost will not serve the warfighter well,” the appropriators wrote.
Lawmakers also raised concerns about joint requirements process reform and deep cuts to the department’s acquisition workforce that could jeopardize its ability to carry out Defense Secretary Pete Hegseth’s acquisition reform agenda.
At the very end of the document, Hegseth instructed the department to “improve budget flexibility.”
“Where additional authorities are required, the [undersecretary of defense for acquisition and sustainment], in coordination with the military departments, shall develop a legislative engagement plan to ensure Congress is informed of and aligned with proposed reforms requiring any statutory change,” Hegseth wrote. “All actions will comply with applicable statutes, appropriations law, and procurement integrity requirements.”
That language was likely to become a friction point with Congressional leaders, and now appropriators are saying that reforms laid out in Hegseth’s memo are “internal in nature,” and that the Defense Department needs to “demonstrate progress on these internal procedures and administrative measures” before pursuing additional budget flexibility.
For instance, lawmakers said above-threshold transfer and reprogramming requests are often slowed because “a significant amount of the subcommittees’ time is consumed by waiting for the department to provide requested additional details and justification for these requests.”
“Providing this information alongside the submission of the request would accelerate consideration and create a nimbler process without altering existing authority or reprogramming thresholds,” the appropriators said.
Congressional leaders urged the department’s comptroller and the services’ assistant secretaries to work with the House and Senate Defense Appropriations Subcommittees to improve the amount of detail and justification provided in reprogramming submissions.
Congress gave the department some budget flexibility in 2024 but stopped short of granting broader authorities the department and reform advocates have been seeking that would allow DoD to move money more freely within its accounts without explicit congressional approval.
The Defense Department has also been pushing to change the hardware-centric budgeting model Congress uses to plan and execute the Pentagon’s spending by moving away from the traditional “colors of money” tied to different phases of weapons development. And while DoD has run several pilot projects to test the idea, lawmakers have been hesitant to authorize broader adoption of the approach due to the department’s inability to provide Congress with sufficient data showing the new approach would be more effective than traditional appropriation practices.
“To date, the agreement observes no new or compelling justification or quantitative analysis to support proposals that would alter the current appropriations framework, including with respect to reprogramming thresholds, notification requirements, new start guidelines, or consolidation into a single color of money,” the appropriators said.
“Consideration of legislative changes to the appropriations structure is premature until the Department has demonstrated full and effective use of its existing flexibilities and addressed persistent internal delays,” they added.
Army’s agile funding request rejected
While appropriators approved all 13 budget line-item consolidations requested by the Army in its fiscal 2026 budget, they flatly rejected the Army’s “agile funding” request to raise notification threshold for reprogramming or transfers from $15 million to $50 million for procurement programs and to $25 million for research and development efforts.
“The Department already has sufficient authorities to restructure its internal programming and budgeting processes, and many current challenges with execution can be solved by actions within the Department and do not require statutory change or congressional intervention … Increasing reprogramming thresholds alone is unlikely to improve program execution. Decisions to unilaterally move funding in the year of execution without sufficient oversight introduce uncertainty to both the programs impacted and the industrial base, increasing the risk of development and procurement delays,” the appropriators said.
“The House and Senate Defense Appropriations Subcommittees discourage the secretary of defense and the service secretaries from submitting future requests of this nature,” they added.
Joint requirements reform risks
The Defense Department kicked off the process of dismantling its decades-old Joint Capabilities Integration and Development System (JCIDS) process last year — and Hegseth ordered the Joint Requirements Oversight Council (JROC), which oversees the process, to stop validating service-level requirements to the “maximum extent permitted by law.”
House and Senate appropriators said they support the reform but want more detail on how defense officials plan to mitigate potential risks, such as the military services potentially prioritizing service-specific solutions over joint ones or top-down decision-making stifling bottom-up innovation.
The deputy secretary of defense, vice chairman of the Joint Chiefs of Staff and service secretaries have 60 days to brief appropriators on how they plan to address those risks.
Workforce is the linchpin of acquisition reform
DoD leaders have long warned that the depth of this administration’s workforce cuts could cripple the department’s ability to execute Hegseth’s acquisition reforms.
Appropriators echoed those concerns, saying they are “concerned that recent reductions to the acquisition workforce, the effects of which have yet to be realized, will negatively affect the Department of Defense’s ability to achieve the initial speed and agility sought by this reform effort.”
Lawmakers directed the defense secretary along with service secretaries to submit an acquisition workforce strategy, including a comprehensive assessment of the personnel needed to execute Hegseth’s and Congress’ proposed acquisition reforms.
If you would like to contact this reporter about recent changes in the federal government, please email anastasia.obis@federalnewsnetwork.com or reach out on Signal at (301) 830-2747.
Terry Gerton I want to start with Secretary Hegseth’s Arsenal of Freedom tour. He’s taking his pitch on the road and recently spoke at the Lockheed Martin Air Force plant in Fort Worth, Texas. I know you’ve been following this, the developments in defense procurement for quite a while. What are you hearing at this point?
Stephanie Kostro So Terry, this “Arsenal of Freedom” is a month-long tour, and it really is Secretary Hegseth going around to various places. He started out in Newport News, here in Virginia, talking with shipbuilders about what it means to be part of the team, right? Being part of the arsenal of freedom and in making things faster, more efficiently, etc. He then went out to California and spoke with folks, and then most recently, just last week in Texas, visiting Lockheed Martin as you mentioned, but also SpaceX. And so talking to folks about, what does it mean to be part of the arsenal of freedom? This is building on his November 7th Arsenal of Freedom speech that he gave here at Fort McNair in the D.C. area. And it is really about reviving this team mentality of, “we are in this together.” Against that backdrop, of course, we have recent activity in acquisition transformation, but also an executive order that came out earlier this month about limiting executive compensation for defense contractors, limiting dividends and also share repurchases or stock buybacks. And so this is a very interesting time to be in the defense industry.
Terry Gerton Stephanie, with all of the changes in the FAR and the DFAR and now the Defense Appropriation Act that’s in law, do you think that DoD has the policy tools it needs and wants to accomplish its transformation?
Stephanie Kostro There are two elements of the answer here. One is, with the fiscal year 2026 National Defense Authorization Act, which was just signed into law last month, they received a lot of new authorities, a lot of a sense from Congress about the ways in which this should be tackled. There is language there about technical data rights and intellectual property. There were things in there about how to define a nontraditional defense company, etc. But I don’t think that was sufficient; we still have work to do. And so does the department have all of the authorities and resources it needs to move forward? I think we’re going to see a lot of legislative proposals come out of the department for this next round of the NDAA, the fiscal year ’27 NDAA. And I think we’ll see things about acquisition workforce. We’re going to see things about working outside of the Federal Acquisition Regulation way of doing contracts. That is code for things like Other Transaction Authority or commercial solutions openings, etc. I don’t think they have everything they need. Part of the Arsenal of Freedom tour and the rollout of this acquisition transformation is to look at how the department can buy things more effectively and more efficiently. That’s time, not having cost overruns, etc. And so all of this is sort of coming together, in a way, to ultimately really transform the way the department buys. And I’m very excited to be part of this.
Terry Gerton Having the rules and authorities is only one piece. What’s your sense of whether the acquisition culture and workforce are aligned to actually accomplish the goals?
Stephanie Kostro Culture is the hardest element of any kind of transformation, right? I do think they’re trying to empower contracting officers and other key members of the acquisition workforce, program managers, contracting officer representatives, etc. This is a longer-term issue, and I think they are trying to tackle it through training programs, etc., letting folks know tools are at their disposal and giving them the authority to go ahead and use those tools. Now, folks don’t get into acquisition within the civil service because they’re risk-loving. A lot of times they get into it because they want to do things very smartly, very efficiently and oftentimes they look back on precedent to see how things were done before. Layer over that, Terry, the fact that we lost a lot of contracting personnel through deferred resignation programs, voluntary early retirement programs and reductions in force. So we are trying to rebuild the workforce in numbers as well as in training. I don’t think they’re there yet; I do think there’s a path to get them there. I’m eager for industry to work with the Department of War and others about how to train effectively and to let industry folks sit in the same training as the government folks, so everyone’s hearing the same thing.
Terry Gerton Stephanie, before we leave this topic, you touched on the executive order about defense contractors and compensation and buybacks. There’s a lot of unknowns still in how that will play out, but what are you hearing from your members?
Stephanie Kostro Our members were very eager to hear how the Professional Services Council would summarize that EO. So we did put out — based on the fact sheet from the White House, based from some interactions we’ve had with administration officials — our interpretation of it. That said, we’ve also asked our member companies, and we have 400 member companies and the majority of them do business with the Department of War and the intelligence community, “hey, what questions for clarification would you like us to ask?” And that list is growing. It is very long. It’s things like, is this really just for publicly traded companies? What about privately owned, or S corps and LLCs? The reason I mentioned that, Terry, is S corps and LLCs will often pay out a dividend to an executive at the company so that executive can pay taxes. They pay out of dividend, so it’s not only a dividend payment, it’s executive compensation, but it’s really just to go ahead and pay federal taxes. What do people do in that regard? How do they explain this? If they have a parent company that is overseas in Europe or elsewhere, how do they explain this executive order to those folks? And that executive compensation, there’s a limit if the company is underperforming, and all of this is predicated on the company’s underperforming — either cost overruns or schedule overruns. How do they explain this to folks? And is it really just about government contracts, or what if you’re a commercial and a government company and your executive compensation is based usually on both elements, commercial and government? So how do you go ahead and limit compensation there? This is a fascinating area to be engaged with the government on. We are all learning this together.
Terry Gerton As Secretary Hegseth tries to walk this tightrope between encouraging defense contractors to be on the team and work with us, and at the same time kind of tightening the screws on enforcement and compensation, the president has said he wants to spend $1.5 trillion on defense next year. That’s a lot of money. How is that going to get spent, do you think?
Stephanie Kostro Oh, it is an eye-catching number, right? $1.5 trillion when we are roughly $1 trillion now are just under, and it is a huge increase. Now, we’ve had large increases in the defense budget in other times in U.S. history. In the early 1950s with the Korean War, the Reagan buildup that some of us remember from the ’80s. Some of us who are listening may not remember it. They may not have been born yet, and that’s okay too. You know, there is some precedent for huge increases in the defense spend. The question here becomes, if the department and the military services are going for commercial-first mentality to prioritize speed of award and innovation, etc., they certainly can spend that money throughout the defense ecosystem. The question that we have is really, what is the organizing construct for this? What would we be spending the money on? Would it be shipbuilding, combat aircraft, the logistics piece, which always tends to be an issue? We also know operations and maintenance accounts are sometimes used and reprogrammed away if they’re not spent by a certain time, because it’s one-year money at the department, it gets reprogramed away. It’s going to be an interesting mathematical problem to tackle. In addition, I would mention, we had the reconciliation bill, the One Big, Beautiful Bill Act that passed and was signed into law last July. That infused a bunch of cash into both the Department of Defense and the Department of Homeland Security. I understand some of that money hasn’t been apportioned and provided to the departments yet, but we are now at this point in January of 2026 talking about, what would a reconciliation bill look like for 2026? Congress can pass one per fiscal year. The one that was passed last July was the one for fiscal ’25. What happens this year? There are a lot of different mechanisms to get that money through Congress and over to the government to apportion to the department.
Terry Gerton Well, speaking of 2026 appropriations, it looks like Homeland Security and Defense will be two of the last bills out, hopefully before the end of this month. What are you hearing from folks on the Hill?
Stephanie Kostro I’m hearing that they’re trying really, really hard to avert a shutdown. And I think we’re going to get there. I’m not a betting person, Terry, you know, I’ve talked about that in the past. And I’m not in this case, either. The chance for a shutdown is never zero. That said, the experience that we all had back in October and November last year would indicate that there really is no appetite for a shutdown this year. The National Defense Appropriations Act and the DHS [bill] I think are probably the last because they want to get everything done before they tackle those. Those are the two departments that received the lion’s share of the money from the reconciliation bill, One Big Beautiful Bill Act last year, and they are looking to get more money in a reconciliation bill this year. So I’m not surprised to hear that those are last, but I actually don’t think that indicates that they’re very far apart on the numbers.
Terry Gerton And on those two departments, PSC is sponsoring a trip in January to the border to do some on-site research. Tell us about that plan.
Stephanie Kostro I am so excited about this. PSC has not typically done this. I do know other entities have done this, I used to be at a think tank where we would do things like this. We are bringing almost 30 different companies out to California next week, Jan. 28 and 29, to do a behind-the-scenes access with the Customs and Border Protection folks who are out there. And the ports of LA and Long Beach, the ports at entry, the land ones over at San Ysidro and Otay Mesa, really talking with folks on the ground there about what their requirements are. This is really focused on technology. How do we use technology and the art of the possible to protect our borders? Now, I would hasten to add, Terry, border security is not a partisan issue in many, many ways. The Biden administration, the Obama administration, the previous Trump administration all focused on border issues in different ways. Our companies really want to mention to folks on the ground, here is technology that you may not have experience with that is up-and-coming. How can we leverage it to better secure our borders? Talking about cargo screening, etc. I think this is a really good opportunity for companies to sit down with folks who are in the field and hear about what they need.
FILE - Containers with Yang Ming Marine Transport Corporation, a Taiwanese container shipping company, are stacked up at the Port of Los Angeles with the the Long Beach International Gateway Bridge seen in the background on Wednesday, April 9, 2025 in Los Angeles. (AP Photo/Damian Dovarganes, File)
Terry Gerton There’s been a lot of controversy around polygraphs in government over the past few months. So let’s start with some of the basics. Why do agencies like CISA and DoD continue to rely on polygraphs for certain positions?
Dan Meyer So that’s a great starting point. The first thing we have to recognize is that polygraph technology is so questionable that it’s generally not admissible in courts. So as evidence, it’s pretty thin, and that’s been a generational trend. It used to be accepted far more back in the 1930s and 40s than it is now. So we use polygraphs in the United States for counterintelligence. That’s what it’s for, reliability of the workforce. We want to be able to test and employ statements, various questions against some empirical basis of truth. The challenge with the polygraph is that it measures not truth, but physiology. It measures the way the body reacts. And science, over the years, has started to show that women and men, for instance, don’t react the same. They don’t have the same physiology. That’s why we have to do different types of medical research now, because women were traditionally ignored, because we always thought that men were the baseline, and everybody would be the same as men. Well, that turned out not to be true. The same situation exists with polygraphs, and there can be differences across the board which polygraphers can never accept, and they can’t accept because that starts to undermine their position within the professional community. So that’s the challenge, is that it measures physiology and not actual truth or veracity of the individual. At some point we’ll be out of this problem because we’ll have a tool that’s better than the polygraph and I do think that artificial intelligence will create it, but we in the United States use the polygraph to catch spies, other countries don’t. And that’s our only tool we really have. We’re not good at actually doing assessment of human potential from other types of analysis. So we’re stuck with it. It’s the only tool that we’ve got and it’s the one we use. And if you’re in the intelligence community or if you are in law enforcement, the chances are you’re going to be under a polygraph at some point in your career, if not your entire career.
Terry Gerton There was a recent controversy around the acting CISA director’s failure of a polygraph test. Can you fill us in a little bit on what went on there?
Dan Meyer I’m not privvy to the exact details of his particular case, but the alarming part of that is it was CISA. CISA is the heart of our cyber defense, and for much of the Biden administration, it was under very, very close scrutiny from a variety of congressional oversight authorities. Senator Grassley, at one point, was doing an inquiry. So there was concerns that CISA was being used politically. So on top of that concerns, the Trump administration came in with a commitment to reform it. And then you have this problem. And the problem seems to have developed around two questions. One is, did the individual fail a polygraph? You really don’t fail a polygraph, either there’s a detection or a non-detection. It’s really not like a test you can fail. But clearly did not pass, to use the vernacular, according to the reports. And then there’s the open question about whether that individual should have been under a polygraph, and there’s this allegation out there in the press that somehow he was set up. And so those are the two concerns there. The second one is kind of unique in that polygraphs are given based on the position and what’s called the criticality of the position. So it’s really about the classification of one’s job that determines whether you get a polygraph. So there really should be no question as to whether a person should have a polygraph or not have a polygraph, so if there was an open question, that should have been elevated to the appropriate authority to decide that. My understanding is that’s the DNI, is the DNI is in charge of reliability issues, security clearance issues across the board for the president in her capacity as the DNI, but not as the spymaster in the United States. It’s a collateral duty. That should have been resolved and it should not be at the point now where employees are being accused and somebody who’s now being seen as a victim of a wrongful polygraph process, that’s ugly. We should have never gotten to that point. That should have been raised and clarified before the polygraph went forward. The second use goes back to my original comment about physiology. People can fail polygraphs for a variety of reasons. There’s the famous guilt-grabber complex, which is that an individual is very at attention in their thoughts, very self-reflective, very self-aware. People who are that way about events in their lives may start to have feelings of guilt. Feelings of guilt can trigger physiology. And sometimes your feeling of guilt that you didn’t feed the cat on time this morning can bleed over into a question that when you were asked whether you committed an act of terrorism against the United States. Well, let’s put it this way. If you’re a sociopath, the chances are you’re going to pass a polygraph because the way you’re constructed in your behavioral mental health diagnosis is ideally suited to not triggering the physiology cues that exist for the polygraph. But if you’re a deeply religious person or spiritual person, it’s in the community, this is known as the Jewish and Catholic issue. People who are Jewish and Catholic all had a Jewish or a Catholic mother. You were taught to always think you were doing something wrong. I’m laughing because I was raised by a Catholic mother, and so I was always looking at my behavior and always questioning my behavior. That can be a disaster on a polygraph.
Terry Gerton I’m speaking with Dan Meyer, he’s an equity partner at Tully Rinckey. With all of the challenges with the polygraph that you’ve just articulated for us, if an employee or a contractor is facing one for their position, what are the best practices to prepare and protect themselves?
Dan Meyer Okay, so on the big picture, let’s talk about from the administration perspective. We ought not to have separate rules for separate people about polygraphs, we’ve got to stick with the structure. If the position requires it, it has to be performed. There should not be special exceptions. I know you always want to have special exceptions, but that’s a bad idea. For the individual, the first thing you do is do not watch videos and do not study the polygraph because you are going to be asked questions that ask you if you did that, and then you’re going to be in the awkward situation of trying to explain whether you adopted countermeasures to make it look like you’re telling the truth when you’re not telling the truth. Do not try to game the polygraph because if the polygraph has trouble figuring out truth or falsity, it does not have trouble figuring it out whether you’re gaming it, and that’s a huge reason why people fail polygraphs. It’s good to retain a law firm to get advice on your security profile to help you understand where your liabilities are and how to accurately report them. The whole key to the security paradigm is you’ve got to be comfortable with the way you resolve the issues in your life so that when you talk to security officials and you talk about those issues, you’re open and candid and there’s a complete and transparent flow of information between those people about that situation. Then you won’t fail the polygraph, then you’re going to do fine on your security review. The challenge we have in American culture at this point in time is everybody thinks you have to withhold information to game the process. Game the process in our commercial lives as consumers, game the process in our private lives as family members. This is an evil that has drifted into American culture, and it really is harmful on the polygraph. So you’ve got to think through about whether you’re open and honest about your life, and you’ve got to incorporate that principle into your job application.
The Army is updating its software directive and scrapping its existing policy on software funding that has routinely hindered software projects across the service.
Michael Obadal, the service’s undersecretary, said the new software directive will be released “in the coming weeks.” The service plans to revise the document annually to keep pace with the rapidly changing environment.
Meanwhile, canceling its existing policy governing how the service pays for software will allow the Army to “apply the appropriate type of money to the applicable use case.”
“For many years, as many of you know, we’ve been trapped by the color of money. We try to buy modern, agile software with rigid funding authorities. Predictably, it doesn’t work,” Obadal said during the AFCEA NOVA Army IT Day event on Thursday.
This shift will give the Army greater flexibility in how it uses its operations and maintenance, procurement and research, development, testing and evaluation funds for software.
While flexible use of different colors of money will offer the service some relief, it is still not “the most effective method” for funding software. Obadal said the Army ultimately plans to pursue Budget Activity 8 (BA-8), which will allow program managers to move away from the hardware-centric budgeting model and instead draw funding from an appropriations category specific to software.
“We’re going to pursue Budget Activity 08 for our software, which would realign funding from various appropriations to new software and digital technology in its own budget activity,” Obadal said.
The Defense Department has long struggled with software acquisition for a number of reasons, but the rules that govern how the department pays for software have possibly been one of its major obstacles. The model Congress and the Pentagon have used to plan and execute the Pentagon’s spending was originally built for long-term hardware acquisition. But this structure doesn’t apply well to the agile software development model.
The department has been experimenting with using a separate appropriations category for software. The idea started to gain traction in 2019, when the Defense Innovation Board found that “colors of money tend to doom” software programs. “We need to create pathways for “bleaching” funds to smooth this process for long-term programs,” the board wrote in its report.
But lawmakers have been hesitant to authorize broader adoption of this pathway beyond a small number of pilot programs until the Defense Department is able to produce data comparing this approach to traditional appropriation practices.
“Agile funding … we have to have that in the right focus area to be able to apply it to modern software, and it’s a little more difficult than we think because it involves Congress … But these are the steps we’re taking,” Obadal said.
Obadal also urged industry to “build [systems] to scale, don’t build it to demo.”
“What we’re asking from industry as we tackle those things is the confidence in your solution to scale, not just demo … That means that you have to take extra steps, and you have to think about what happens in a year or two years for you. Open architectures, interoperable designs, secure by design software, not bolted-on cybersecurity. That’s another incredibly important one, is your design and a willingness to align with Army timelines and with our operational realities,” he said.
The Defense Department has long tried to simplify and reform the reserve duty status system, which has expanded to more than 30 separate statutes scattered across about 20 different titles of federal law.
This complex system has created pay and benefits inequities and frequent administrative delays when National Guard members and reservists shift between duty statuses.
A new bipartisan bill now seeks to consolidate dozens of duty statuses under which National Guard members and reservists are called to service to just four.
If passed, the Duty Status Reform Act would ensure service members performing assignments in the same category receive the same pay and benefits.
Rep. Gil Cisneros (D-Calif.), the bill’s sponsor, said the effort is his “number one priority returning to Congress.”
“With the current duty status system, service members doing similar jobs often receive significantly less benefits due to them being under different duty statuses. Currently, at any point during activation, a Guardsman can go between up to 10 different duty statuses, resulting in lapses of pay and administrative hurdles. This bipartisan bill fixes existing problems like this and puts active duty under our one category,” Cisneros, a Navy veteran who returned to the House in 2025 after serving from 2019 to 2021, said at a Jan. 8 press conference.
The current system is a product of decades of patch fixes done by Congress spanning from World War II to the Global War on Terror. And while the Defense Department has attempted to overhaul the system over the last two decades, most efforts have failed to gain traction.
“It’s been a very gradual build up process, and so over time, there have been these gaps that have been developed where a reserve component member may be doing duty of one sort right next to reserve component duty person doing that kind of duty right next to them and they’re receiving potentially different pay and benefits. Or it could be the case where they’re on one sort of duty, they come to do their next day of duty, and they’re on a different status, and their underlying pay and benefits may change,” Lisa Harrington, senior operations researcher at RAND, told Federal News Network in August.
The bill builds on a Defense Department–commissioned RAND report that recommended consolidating the reserve duty status system into four categories, including contingency duty, training and support, reserve component duty and remote assignments.
Contingency duty covers deployments and mobilizations where reservists and National Guard members are called to serve, usually involuntarily, for combat operations, national emergencies, disaster response or other missions requiring additional manpower.
Training and support assignments include required training, administrative assignments or support to other units.
Reserve component duty, which is most commonly associated with traditional reserve service, includes training periods, administrative assignments and support activities.
Remote assignments are designed to account for duty that can be completed virtually, such as online courses.
“Let me be clear about what this bill does and what this bill does not do. It does not create new entitlements, new pay or new benefits. It does align existing benefits so service members performing the same mission alongside their active duty counterparts receive the same rights, protections and predictability. This is about parity and fairness, not expansion,” retired Maj. Gen. Francis M. McGinn, president of the National Guard Association of the United States, said at the press conference.
It is unclear what strategy the lawmakers plan to pursue to pass the measure, but Cisneros said he has spoken with Rep. Adam Smith (D-Wash.), ranking member on the House Armed Services Committee, and plans to meet with HASC Chair Mike Rogers (R-Ala.).
“I think now is the time to move it forward, and we’re going to keep working to make sure that it does get over across the finish line,” Cisneros said.
Rep. Jack Bergman (R-Mich.), the bill’s cosponsor, said he is “more than cautiously optimistic on the timing that we have here.”
“When you think of a defense dollar, we don’t talk about the totals, but how do we spend a defense dollar in the right way without overspending? But also the very subtle part of this — in the end, if we do it right, it’s about our readiness, but it’s also about the recruiting and retention of those men and women who have not even yet thought about serving,” Bergman said.
Harrington said the potential cost of the reform might be one of the concerns since accurately predicting how much the reform would ultimately cost is difficult.
“The costs we think are not something that would stop the reform from happening when people understand exactly how the costs play out,” she said.
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As the Defense Department moves to meet its 2027 deadline for completing a zero trust strategy, it’s critical that the military can ingest data from disparate sources while also being able to observe and secure systems that span all layers of data operations.
Gone are the days of secure moats. Interconnected cloud, edge, hybrid and services-based architectures have created new levels of complexity — and more avenues for bad actors to introduce threats.
The ultimate vision of zero trust can’t be accomplished through one-off integrations between systems or layers. For critical cybersecurity operations to succeed, zero trust must be based on fast, well-informed risk scoring and decision making that consider a myriad of indicators that are continually flowing from all pillars.
Short of rewriting every application, protocol and API schema to support new zero trust communication specifications, agencies must look to the one commonality across the pillars: They all produce data in the form of logs, metrics, traces and alerts. When brought together into an actionable speed layer, the data flowing from and between each pillar can become the basis for making better-informed zero trust decisions.
The data challenge
According to the DoD, achieving its zero trust strategy results in several benefits, including “the ability of a user to access required data from anywhere, from any authorized and authenticated user and device, fully secured.”
Every day, defense agencies are generating enormous quantities of data. Things get even more tricky when the data is spread across cloud platforms, on-prem systems, or specialized environments like satellites and emergency response centers.
It’s hard to find information, let alone use it efficiently. And with different teams working with many different apps and data formats, the interoperability challenge increases. The mountain of data is growing. While it’s impossible to calculate the amount of data the DoD generates per day, a single Air Force unmanned aerial vehicle can generate up to 70 terabytes of data within a span of 14 hours, according to a Deloitte report. That’s about seven times more data output than the Hubble Space Telescope generates over an entire year.
Access to that information is bottlenecking.
Data mesh is the foundation for modern DoD zero trust strategies
Data mesh offers an alternative answer to organizing data effectively. Put simply, a data mesh overcomes silos, providing a unified and distributed layer that simplifies and standardizes data operations. Data collected from across the entire network can be retrieved and analyzed at any or all points of the ecosystem — so long as the user has permission to access it.
Instead of relying on a central IT team to manage all data, data ownership is distributed across government agencies and departments. The Cybersecurity and Infrastructure Security Agency uses a data mesh approach to gain visibility into security data from hundreds of federal agencies, while allowing each agency to retain control of its data.
Data mesh is a natural fit for government and defense sectors, where vast, distributed datasets have to be securely accessed and analyzed in real time.
Utilizing a scalable, flexible data platform for zero trust networking decisions
One of the biggest hurdles with current approaches to zero trust is that most zero trust implementations attempt to glue together existing systems through point-to-point integrations. While it might seem like the most straightforward way to step into the zero trust world, those direct connections can quickly become bottlenecks and even single points of failure.
Each system speaks its own language for querying, security and data format; the systems were also likely not designed to support the additional scale and loads that a zero trust security architecture brings. Collecting all data into a common platform where it can be correlated and analyzed together, using the same operations, is a key solution to this challenge.
When implementing a platform that fits these needs, agencies should look for a few capabilities, including the ability to monitor and analyze all of the infrastructure, applications and networks involved.
In addition, agencies must have the ability to ingest all events, alerts, logs, metrics, traces, hosts, devices and network data into a common search platform that includes built-in solutions for observability and security on the same data without needing to duplicate it to support multiple use cases.
This latter capability allows the monitoring of performance and security not only for the pillar systems and data, but also for the infrastructure and applications performing zero trust operations.
The zero trust security paradigm is necessary; we can no longer rely on simplistic, perimeter-based security. But the requirements demanded by the zero trust principles are too complex to accomplish with point-to-point integrations between systems or layers.
Zero trust requires integration across all pillars at the data level –– in short, the government needs a data mesh platform to orchestrate these implementations. By following the guidance outlined above, organizations will not just meet requirements, but truly get the most out of zero trust.
Chris Townsend is global vice president of public sector at Elastic.
President Donald Trump took aim at defense contractors Wednesday, announcing new restrictions on executive pay and stock buybacks as part of the administration’s push to speed procurement and revitalize the defense industrial base.
In an executive order issued late Wednesday, Trump said companies “are not permitted in any way, shape, or form to pay dividends or buy back stock, until they are able to produce a superior product, on time and on budget.”
The order directs Defense Secretary Pete Hegseth to identify defense contractors providing critical weapons, supplies and equipment that are “underperforming, not investing their own capital into necessary production capacity, not sufficiently prioritizing U.S. government contracts, or whose production speed is insufficient as determined by the Secretary,” while simultaneously engaging in stock buybacks or corporate profit distributions.
Contractors identified under the review must be notified and given an opportunity to submit a remediation plan within 15 days to address performance issues.
If disputes over underperformance issues cannot be resolved within 15 days or the remediation plan is deemed inadequate, the defense secretary “may initiate immediate actions to secure remedies for the secretary that will expedite production, prioritize the U.S. military and return the contractor to sufficient performance, investment, prioritization and production, to the maximum extent permitted by law.”
The executive order also directs the Defense Department to ensure that future contracts with new or existing defense contractors include provisions prohibiting stock buybacks and corporate profit distributions during periods of underperformance, contract noncompliance, insufficient investment, or “insufficient production speed as determined by the secretary.”
The government already has a whole set of tools in its toolbox to incentivize, reward or penalize companies based on their performance, and the executive order relies in part on mechanisms the Defense Department already uses. What is different, however, are the remedies the administration is focusing on — and the main challenge in implementing this executive order will be defining the key parameters contractors are going to be held accountable for, Protorae Law member Alan Chvotkin said.
“The remedies of no stock buybacks and caps on executive compensation — that’s not a remedy that the government already has available to it,” Chvotkin told Federal News Network. “It’s not so binary to say it’s 100% of contractor’s problem or zero of the contractor’s problem, and that’s where the hard work is going to come on each of these major programs — defining the specific parameters that the department is expecting.”
Stan Soloway, president and CEO of Celero Strategies and federal acquisition expert, said the executive order seems to presume that any cost overrun is the fault of the contractor without recognizing that “not all cost overruns are created equal.”
“The [executive order] is full of vagaries and ambiguity. It is going to be very interesting to determine how they measure whether a company is performing … There’s no mention about the responsibility the Defense Department has for cost overruns and program delays. While companies are far from perfect, all too often, the delays are driven by changing requirements, by requirement rigidity, lack of flexibility in the requirements and by budget uncertainties,” Soloway told Federal News Network.
Back in 2007, the Defense Science Board, for instance, examined three troubled programs — the Littoral Combat Ship, the presidential helicopter and the Army’s Comanche helicopter — and found that constantly changing government requirements were a major driver of cost overruns and schedule delays. The Packard Commission reached the same conclusion two decades before the Defense Science Board issued its report.
“Accountability is key here, but there is a shared responsibility between the government and contractors. There are many tools to hold contractors accountable, but way fewer tools to hold the government accountable. This EO doesn’t do anything to make the government more accountable,” David Berteau, former president and CEO of the Professional Services Council and now president of David Berteau & Associates, told Federal News Network.
“The disconnect of this EO is if the desired outcome is better contract performance, how can implementing this EO produce better results? That isn’t clear to me. Someone will have to write implementation guidance that does that. I spent a lot of my career writing implementation guidance, and I have a hard time seeing implementing this in such a way that it produces better performance quickly,” he added.
If the goal of the executive order is to push companies to invest in production capacity and capability rather than shareholder returns, that approach only works if there are returns on that investment, Berteau said.
Lockheed Martin’s recent deal with the Pentagon to increase Patriot missile interceptor production to about 2,000 missiles a year is a significant step toward that approach, Berteau said. Lockheed agreed to fund an expansion of its Patriot missile factory in exchange for a seven-year commitment from the Pentagon.
“We have to wait to see the implementation guidance to get a sense of what the real goal is, better contract performance leading to faster deliveries or what,” Berteau said.
“It is critical that the relationship between the government and contractors be one of shared responsibility and partnership, particularly around defining and deciding what the contract will give you and the structure of the contract to make sure the government will get what it needs. There is a lot about this EO that doesn’t seem to be about strengthening that partnership. It seems to be more about punishing one side of the equation,” he added.
The Defense Department did not respond to questions about whether contractors should expect formal guidance in the coming weeks or how many underperforming contractors it has already identified.
“After numerous years of failing to meet contractual obligations, under President Trump’s order, defense contractors will no longer be allowed to leave our warfighters behind while giving themselves massive payouts from stock buybacks. This will give Department of War the ability to meet national security objectives and ensure efficiency and accountability. Our obligation is to our warfighters; not Wall Street,”Chief Pentagon Spokesman Sean Parnell told Federal News Network in a statement.
Executive pay
In one of his Truth Social posts, Trump said no executive should be allowed to make more than $5 million, but the figure did not make it into the executive order.
Instead, the president directed the defense secretary to ensure future contracts require executive compensation to be tied to performance — such as on-time delivery, increased production and “all necessary facilitation of investments required to rapidly expand the United States stockpiles and capabilities” — rather than short-term financial metrics like cash flow or earnings per share driven by stock buybacks.
If a contractor has “engaged in underperformance, non-compliance, insufficient prioritization of the contract, insufficient investment, or insufficient production speed,” the department could cap executive base salaries at current levels.
Executive compensation was a contentious issue in 2013, when President Barack Obama called on Congress to cap executive pay at $400,000.
A cap on executive compensation already exists in some form — contractors can pay their executives whatever they choose, but the government only reimburses costs up to a certain limit.
The executive order, however, goes a step further — it’s shifting from how much the government will reimburse the contractor to limiting how much the company can pay its executives.
“Pretty significant difference, but maybe they’ll fall back on the same mechanisms. I don’t know that yet. Nobody in the department is talking yet about how they’re going to implement this. I’m sure they’re still trying to work that out,” Chvotkin said.
“I think there’s a fair question, broadly speaking, in commerce, generally, not just in the government market, about executives having the right incentives to drive long-term performance and excellence. But I don’t know what the standards are going to be, what the metrics are going to be. There’s a ton of ambiguity in here,” Soloway said.
Who does the EO apply to?
While the executive order targets contractors that provide “critical weapons, supplies and equipment,” it doesn’t clearly define the term “critical.”
Chvotkin said new contracts could easily specify which vendors qualify as critical suppliers or require all new contracts to include the provisions laid out in the executive order.
And while the executive order is broadly aimed at “all contractors,” Chvotkin said its likely target is traditional defense contractors rather than the commercial firms the Pentagon has been trying to attract.
“I think it’s all contractors, but fixed-price contractors — less likely, they’re going to have binary decision. Commercial contractors, where the effort is to bring more of them in, but probably not as many of them have the triggers, the buyback, the sort of where the government is reimbursing for executive compensation as they do for many of the traditional defense contractors,” Chvotkin said.
What’s next?
Chvotkin said the Defense Department is likely to issue general guidance to programs on how to carry out the secretary’s review.
“I think they’ve already done quite a bit of that, but I would expect [the undersecretary for acquisition sustainment office] to lead a fair amount of that responsibility to describe what those contracting provisions are relating to critical weapon systems and supplies and equipment. They’ve got to identify those first, then catch up with everybody else on a rolling basis,” Chvotkin said.
“From the contracting folks, I would expect a broad set of contract provisions, both modifications to existing contracts, as well as provisions to go into new solicitations and new contracts to be awarded. That includes the identification of the key performance parameters for each solicitation and new award, the requirement for the company if notified by the Department of Defense or the contracting officer of the failure to adequately meet the performance objectives, the requirement for the remediation plan and then the additional remedies that the department might ask for as part of either the failure of the contractor to meet the original contract performance of projections or the remediation plan,” he added.
Jason Miller contributed to this report.
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A government watchdog found that the Defense Department has never formally evaluated telework and remote work programs against agency goals. DoD officials, however, reported “perceived” benefits and challenges. The Government Accountability Office said without formal evaluation of these programs, DoD cannot determine whether these programs help meet agency goals. While defense officials told GAO that their use of these flexibilities improved productivity, efficiency, and recruitment and retention, some officials said that telework reduced opportunities for collaboration and information sharing and decreased morale. The watchdog also found that the data on the number of teleworkers and remote workers DoD previously reported is likely inaccurate.
The Defense Department is putting additional safeguards around the research it funds. The Pentagon is telling the military services and defense agencies to review fundamental research awards to ensure there is no foreign influence, intellectual property theft or any other form of exploitation that could threaten the security and economic interests of the country. A new memo from Under Secretary of Defense for Research and Engineering Emil Michael establishes additional oversight requirements to protect government funded research. Along with the reviews of awards, DoD will establish a department-wide Fundamental Research Risk Review Repository to improve information collection and sharing across all components. It also will develop automated vetting and continuous monitoring capabilities to help detect and mitigate foreign influence risks.
The Labor Department recovered more than a quarter billion dollars in back wages for American workers last year. That’s the most money the department’s Wage and Hour Division has recovered in a single year since 2019. Those back wages went out to nearly 177,000 employees. On average, that's more than $1,400 per employee. The department has launched new tools aimed at helping employers stay informed of their obligations.
The Air and Space Forces are "aggressively" implementing Defense Secretary Pete Hegseth’s acquisition reforms. The services are replacing program executive offices with new organizations called portfolio acquisition executives. The Air Force has already redesignated five program executive offices as portfolio acquisition executives, including those overseeing Command, Control, Battle Management and Communications (C2BMC) and Nuclear Command, Control and Communications (NC3). Meanwhile, the Space Force has designated its first tranche of mission areas to be overseen by portfolio acquisition executives, including space access and space based sensing and targeting.
Cohesity became the 22nd company to sign up for an enterprise software deal under GSA’s OneGov program. Under the agreement, GSA said agencies can buy Cohesity’s cybersecurity data protection and replication tools at a discount of more than 72% off the company's GSA schedule price. Agencies also have access to other Cohesity offerings, such as its FedShield tool bundle at discounted prices. The prices are good through September 2027. GSA’s contract with Cohesity is the third OneGov deal with a cybersecurity firm since December.
Clearer numbers on the federal workforce are coming into view from the Office of Personnel Management. A new OPM website contains a far more detailed and modernized view on the federal workforce, compared with its predecessor, FedScope. The new platform also reaffirms the significant reshaping the federal workforce experienced over the last year. OPM’s numbers reveal a major drop in workforce size, a decline in federal union representation and far fewer telework hours.
The Federal Bureau of Prisons is offering retention bonuses to correctional officers and other frontline positions, in an effort to address staffing challenges. The size of the pay incentive depends on the employee’s position and the staffing level at their facility. The retention bonuses will take effect in February, and will be reviewed annually, according to the agency. But federal union officials are urging a more permanent pay fix for the BOP, which has faced years of significant understaffing.
The Social Security Administration is rolling out nationwide systems in the coming months that will impact how the agency triages its workload to employees. Someone applying for SSA benefits in California could soon be speaking to an employee in Maine. The agency is rolling out systems in March that will allow employees to tackle a nationwide inventory of cases. SSA employees say they’re used to processing claims submitted locally and that these changes could make their work much more complicated. The agency lost about 7,000 employees through voluntary incentives last year.
A bipartisan group of lawmakers wants the Defense Department and the Department of Veterans Affairs to use a single credentialing and privileging system for medical providers, which would allow clinicians to move between DoD and VA facilities without having to go through months-long approval processes.
Currently, the DoD and the VA rely on separate credentialing and privileging systems to approve their clinicians. But those approvals don’t transfer between the two agencies, forcing providers who switch facilities to restart the approval process from the beginning. The process can take several months, during which clinicians are unable to see patients, which delays access to care and leaves facilities understaffed.
The legislation, introduced by Sens. Jacky Rosen (D-Nev.) and Marsha Blackburn (R-Tenn.), would require DoD and VA to provide Congress with a report on the medical provider credentialing and privileging systems they currently use. The report would assess what data each system stores, how portable provider’s credentialing and privileging information is, how interoperable the systems are and where gaps or limitations exist in their interoperability. It would also require recommendations for scaling those systems with the goal of establishing a single, uniform credentialing and privileging system across both departments.
Under the bill, the Pentagon and the VA would have to jointly select a single credentialing and privileging system by January 2027 and notify Congress that the system is operational by 2028.
“Health care providers shouldn’t be hindered by bureaucratic red tape when caring for the men and women who have bravely served our nation. Our bipartisan legislation would end unnecessary duplication so that medical providers can move between the DoD and VA more quickly, ensuring service members and veterans get the high-quality care they need without delay,” Blackburn said in a statement.
The credentialing process ensures that providers treating service members and veterans meet required qualifications. Meanwhile, privileging determines the medical services a provider can deliver based on their qualifications and experience.
Reps. Greg Murphy (R-N.C.) and Susie Lee (D-Nev.) introduced a companion bill in the House titled the “Department of Defense and Department of Veterans Affairs Medical Credentialing Integration Act of 2025.”
“This legislation is a strategic opportunity for the advancement of healthcare priorities throughout the federal sector healthcare system that strengthens workforce recruitment and retention, refines effective government health agency practices and provides for service members and veterans, all while safeguarding and better utilizing Americans’ hard-earned tax dollars,” Murphy said in a statement.
It is unclear what strategy the lawmakers plan to pursue — while it’s a bipartisan effort, standalone bills often face political hurdles, and lawmakers frequently try to attach such proposals to larger legislative packages like the annual National Defense Authorization Act to increase their chances.
The DoD only recently streamlined its privileging process, which now allows medical providers to move between military treatment facilities with minimal administrative delays.
As of October, providers no longer have to reapply for their clinical privileges when moving within the enterprise, including across stateside and overseas military hospitals and clinics.
“Health care providers should be able to focus on their patients. With portable privileges, they can do so more quickly,” Stephen Ferrara, acting assistant secretary of defense for health affairs, said in a statement. “Enterprise-wide privileging is just one of many efforts to make the Military Health System more agile. Previously, our health care providers renewed their privileges every two years. With this expanded policy, we have extended the renewal window to three years to reduce their administrative load.”
The Military Health System said the process of obtaining clinical privileges remains the same under the new policy.
Kirsten Davies has officially taken over the role of the Defense Department's chief information officer. She was sworn in right before the Christmas break. Congress confirmed Davies on Dec. 18 as part of the final tranche of nominees from President Donald Trump. Davies succeeds Katie Arrington, who has performed the duties of DoD CIO since March. Arrington spearheaded a number of major initiatives during her tenure, including an overhaul of the department’s legacy processes for buying software.
The Marine Corps has stood up the Family Member Travel Screening Cell to address long-standing delays and coordination issues with overseas and remote-duty assignments. For many Marines and their families, one of the most challenging parts of moving overseas is the suitability screening process, which has long been complex and confusing. The new office will serve as a central help desk, providing information about the screening process, connecting Marines and families with the appropriate medical screening offices and offering support to ensure screenings are completed on time. Officials say the lack of a coordinating office has led to missed deadlines, gaps in manning and added stress for families.
A Navy contractor has agreed to pay $1.5 million over allegations that it sold the service parts that didn’t meet their contract’s specifications. The Justice Department claims Teledyne Electronic Safety Products violated the False Claims Act when it delivered critical ejection seat components that turned out to have been sourced from an unauthorized broker. The components, part of what’s called Digital Recovery Sequencer, were sold between 2011 and 2012.
Congressional appropriators are rejecting some of the most severe agency budget cuts proposed by the Trump administration. The latest spending package seeks modest spending reductions for most agencies. But it departs from the Trump administration's calls for major budget cuts. It would cut the EPA’s budget by about 4% in fiscal 2026, a far cry from the 55% budget cut the Trump administration proposed. It also rejects the administration’s proposals to cut NASA’s science budget by nearly half. The spending package seeks additional guardrails on unilateral agency reorganizations that could further shrink the federal workforce.
A Democratic holdout on plans to keep the FBI’s headquarters in Washington, D.C., said there’s a compromise in the works. Sen. Chris Van Hollen (D-Md.) said a spending deal for fiscal 2026 allows the FBI to tap into funds previously approved for an FBI campus in Maryland. But first, the FBI must provide congressional appropriators with a plan for a new headquarters in the Ronald Reagan Building. Van Hollen said this plan would help address longstanding security concerns.
The National Institute of Standards and Technology would get a funding bump under the minibus spending agreement. The appropriations agreement released by House and Senate lawmakers yesterday includes $1.8 billion for NIST, well above the cuts proposed by the Trump administration. The bill would include $55 million for NIST’s artificial intelligence research efforts. And it would allocate $128 million in construction funding for NIST to upgrade outdated facilities, including at its main campus Gaithersburg, Maryland.
UL Solutions has withdrawn as lead administrator for the FCC’s Cyber Trust Mark program. The company notified the FCC of its decision in a Dec. 19 filing. That comes after the FCC last summer launched a probe into the company’s potential ties to China. The voluntary Cyber Trust Mark program was started late in the Biden administration to certify whether digital consumer products like smart TVs and refrigerators are cyber secure. The FCC has not said whether it picked a new company to serve as a testing lab for the Cyber Trust Mark program.
The Defense Information Systems Agency isn’t just talking about meeting Secretary Pete Hegseth’s goal of “speed to capability.” It’s holding contracting officers and program managers accountable.
By March, at least 40% of all task or delivery orders let through the General Services Administration’s schedules program or an agency blanket purchase agreement must use at least one “acquisition accelerator.” By September, 80% of all task and delivery orders issued through GSA or their own BPA must use these tools to speed up the acquisition process.
“It’s oral proposals or presentations. It is confidence ratings. It’s about reaching consensus as soon as a presentation is provided instead of waiting a couple [of weeks]. It’s saying, ‘No, you’re doing it now and you have an hour,’” said Doug Packard, DISA’s procurement services executive, at the recent Forecast to Industry day. “It’s best suited where you have 20 firms submit an offer and you get the two that are best suited to meet that requirement. You have a couple of things to talk to them about that aren’t minor. You can pick the firm and talk with just them, not the other 19, and that saves us months in trying to get us to who is the awardee.”
While Packard didn’t have any specific metrics, he estimates that DISA is shaving weeks off acquisitions timelines, specifically during the source selection phase.
DoD issues 31 FAR deviations
DISA is receiving some additional policy support to expand the use of these accelerators. The Defense Department’s Office of Pricing, Contracting and Acquisition Policy issued the first set of deviations to the Federal Acquisition Regulation to begin implementing the Office of Federal Procurement Policy and the FAR Council’s overhaul of the 40-year-old regulations.
On Dec. 18, John Tenaglia, the principal director of DPCAP, signed 31 class deviations that will be effective on Feb. 1.
“[T]hese class deviations retain DoD-specific statutory direction and direction determined necessary for sound procurement within the new, streamlined RFO structure,” Tenaglia wrote in the Dec. 19 memo. “The [revolutionary FAR overhaul] Phase 1 changes represent actions we can take unilaterally, in advance of formal rulemaking, to reduce regulatory and procedural burden on both our workforce and on industry. Issuing this first tranche of class deviations now provides a preview of the kinds of changes you can expect to see next month once we release the remaining class deviations.”
Among the 31 deviations DoD initially issued are updates to FAR Part 6, competitive procedures, Part 10 for market research and Part 12 for commercial products and services.
“Each class deviation reflected below consists of the revised DFARS part with its associated solicitation provisions and contract clauses, followed by the revised procedures, guidance and information (PGI),” DoD wrote on its FAR deviation website. “The line out documents reflect the current DFARS and PGI with markings to identify high level changes to the official versions at 48 CFR chapter 2 and published on the DPCAP DARS website. The portions of the regulation and PGI that are proposed for removal are struck through. Regulatory text and guidance that have been revised are retained in their original form.”
DoD plans to issue a second tranche of deviations later this month and throughout 2026.
In the coming months, the Pentagon will issue the deviations for FAR Parts 8 and 16. DISA is applying its acquisition accelerators to contracts under these sections.
So far, 23 civilian agencies have issued FAR Part 8 deviations and 18 have issued Part 16 updates.
OFPP seeking feedback through Jan. 12
OFPP and the FAR Council also have issued FAR Companion guides and practitioner albums to help the training and education of the acquisition workforce on the new rules.
Additionally, OFPP Administrator Kevin Rhodes held a series of roundtables with contractors, industry associations and others to gain their perspectives of the FAR overhaul. OFPP says these contractors and associations “shared feedback on five priority goals: increasing competition, reducing costs, accelerating the acquisition system, changing cultural norms and deploying best practices.”
Rhodes said in a statement that “the feedback we received will help inform our efforts for the next phase of the RFO.”
OFPP is accepting more feedback through Jan. 12 through its IdeaScale on ways to continue to improve the FAR across the five priorities.
“Please share a specific buying practice that should start, stop, continue, adjust, or scale in the new era of federal acquisition. Your idea does not need to be new, it only needs to address a real issue or practice that matters to you or your organization that can improve federal buying today,” OFPP wrote in asking for feedback.
As of Jan. 6, public and private sector stakeholders have submitted 86 ideas, ranging from ensuring the “rule of two” remains in place to expanding oral presentations and streamlined source selection beyond IT acquisitions to limiting the flow down requirements to small business subcontractors.
The use of streamlined source selection and oral presentations are examples of what DISA is requiring of its contracting officers in 2026.
Packard said DISA tested out these about 11 different accelerator tools over the last 18 months and determined they worked for both the agency and industry.
Carlen Capenos, the director of the Office of Small Business Programs at DISA, said at the DISA event that the accelerators don’t just benefit the agency, but contractors too.
“We hear often from small and large business that if they’re not going to win, they want to know that fast, the idea of failing fast. So we see step things where you have to provide X, Y and Z, and if you don’t have that, well, then we don’t need you to put together a full-blown proposal because you don’t have the ability to ever win. Or if there’s somebody that’s so much better that has a better solution that we’re talking about, instead of all the check marks, we can eliminate the rest of it and go fast,” she said. “There’s a lot of those things that are really great for small business when they just want to get in front of folks to say, ‘I have the solution. Let me articulate it for you.’ So there are those that really like that point. Our office has done a couple trainings with the contracting folks that have set these up, and they run through it once a year, twice a year, where they provide it to anybody who wants to sign up for it.”
Packard said now that DISA has tested out these accelerator concepts, even winning a protest, it’s time to apply them to increase the “speed to delivery” and attract more commercial companies into DoD.
Let’s start with the good news: artificial intelligence may NOT be the buzzword for 2026.
What will be the most talked about federal IT and/or acquisition topic for this year remains up for debate. While AI will definitely be part of the conversation, at least some experts believe other topics will emerge over the next 12 months. These range from the Defense Department’s push for “speed to capability” to resilient innovation to workforce transformation.
Federal News Network asked a panel of former federal technology and procurement executives for their opinions what federal IT and acquisition storylines they are following over the next 12 months. If you’re interested in previous years’ predictions, here is what experts said about 2023, 2024 and 2025.
The panelists are:
Jonathan Alboum, federal chief technology officer for ServiceNow and former Agriculture Department CIO.
Melvin Brown, vice president and chief growth officer at CANI and a former deputy CIO at the Office of Personnel Management.
Matthew Cornelius, managing director of federal industry at Workday and former OMB and Senate staff member.
Kevin Cummins, a partner with the Franklin Square Group and former Senate staff member.
Michael Derrios, the new executive director of the Greg and Camille Baroni Center for Government Contracting at George Mason University and former State Department senior procurement executive.
Julie Dunne, a principal with Monument Advocacy and former commissioner of GSA’s Federal Acquisition Service.
Mike Hettinger, founding principal of Hettinger Strategy Group and former House staff member.
Nancy Sieger, a partner at Guidehouse’s Financial Services Sector and a former IRS CIO.
What are two IT or acquisition programs/initiatives that you are watching closely for signs of progress and why?
Brown: Whether AI acquisition governance becomes standard, templates, clauses, evaluation norms, 2026 is where agencies turn OMB AI memos into repeatable acquisition artifacts, through solicitation language, assurance evidence, testing/monitoring expectations and privacy and security gates. The 2025 memos are the anchor texts. I’m watching for signals such as common clause libraries, governmentwide “minimum vendor evidence” and how agencies operationalize “responsible AI” in source selections.
The Cybersecurity Maturity Model Certification (CMMC) phased rollout and how quickly it becomes a de facto barrier to entry. Because the rollout is phased over multiple years starting in November 2025, 2026 is the first full year where you can observe how often contracting officers insert the clause and how primes enforce flow-downs. The watch signals include protest activity, supply-chain impacts and whether smaller firms get crowded out or supported.
Hettinger: Related to the GSA OneGov initiative, there’s continuing pressure on the middleman, that is to say resellers and systems integrators to deliver more value for less. This theme emerged in early 2025, but it will continue to be front and center throughout 2026. How those facing the pressure respond to the government’s interests will tell us a lot about how IT acquisition is going to change in the coming years. I’ll be watching that closely.
Mike Hettinger is president and founding principal of Hettinger Strategy Group and former staff director of the House Oversight and Government Reform Subcommittee on Government Management.
The other place to watch more broadly is how the government is going to leverage AI. If 2025 was about putting the pieces in place to buy AI tools, 2026 is going to be about how agencies are able to leverage those tools to bring efficiency and effectiveness in a host of new areas.
Cornelius: The first is watching the Hill to see if the Senate can finally get the Strengthening Agency Management and Oversight of Software Assets (SAMOSA) Act passed and to the President’s desk. While a lot of great work has already happened — and will continue to happen — at GSA around OneGov, there is only so much they can do on their own. If Congress forces agencies to do the in-depth analysis and reporting required under SAMOSA, it will empower GSA, as well as OMB and Congress, to have the type of data and insights needed to drive OneGov beyond just cost savings to more enterprise transformation outcomes for their agency customers. This would generate value at an order of magnitude beyond what they have achieved thus far.
The second is the implementation of the recent executive order that created the Genesis Mission initiative. The mission is focused on ensuring that the Energy Department and the national labs can hire the right talent and marshal the right resources to help develop the next generation of biotechnology, quantum information science, advanced manufacturing and other critical capabilities empower America’s global leadership for the next few generations. Seeing how DOE and Office of Science and Technology Policy (OSTP) partner collaboratively with industry to execute this aspirational, but necessary, nationwide effort will be revelatory and insightful.
Cummins: Will Congress reverse its recent failure to reauthorize the Technology Modernization Fund (TMF)? President Donald Trump stood up the TMF during his first term and it saw a significant funding infusion by President Joe Biden. Watching the TMF just die with a whimper will make me pessimistic about reviving the longstanding bipartisan cooperation on modernizing federal IT that existed before the Department of Government Efficiency (DOGE).
I will be closely watching how well the recently-announced Tech Force comes together. Its goal of recruiting top engineers to serve in non-partisan roles focused on technology implementation sounds a lot like the U.S. Digital Service started by President Barack Obama, which then became the U.S. DOGE Service. I would like to see Tech Force building a better government with some of the enthusiasm that DOGE showed for cutting it.
Sieger: I’m watching intensely how agencies manage the IT talent exodus triggered by DOGE-mandated workforce reductions and return-to-office requirements. The unintended consequence we’re already observing is the disproportionate loss of mid-career technologists, the people who bridge legacy systems knowledge with modern cloud and AI capabilities.
Agencies are losing their most marketable IT talent first, while retention of personnel managing critical legacy infrastructure creates technical debt time bombs. At Guidehouse, we’re fielding unprecedented requests for cybersecurity, cloud architecture and data engineering services. The question heading into 2026 is whether agencies can rebuild sustainable IT operating models or whether they become permanently dependent on contractor support, fundamentally altering the government’s long-term technology capacity.
My prediction of the real risk is that mission-critical systems are losing institutional knowledge faster than documentation or modernization can compensate. Agencies need to watch and mitigate for increased system outages, security incidents, and failed modernization projects as this workforce disruption cascades through 2026.
Sticking with the above theme, it does bear watching how the new federal Tech Force hiring initiative succeeds. The federal Tech Force initiative signals a major shift in how the federal government sources and deploys modern technology talent. As agencies bring in highly skilled technologists focused on AI, cloud, cybersecurity and agile delivery, the expectations for speed, engineering rigor and product-centric outcomes will rise. This will reshape how agencies engage industry partners, favoring firms that can operate at comparable technical and cultural velocity.
The initiative also introduces private sector thinking into government programs, influencing requirements, architectures and vendor evaluations. This creates both opportunity and pressure. Organizations aligned to modern delivery models will gain advantage, while legacy approaches may struggle to adapt. Federal Tech Force serves as an early indicator of how workforce decisions are beginning to influence acquisition approaches and modernization priorities across government.
Dunne: Title 41 acquisition reform. The House Armed Services Committee and House Oversight Committee worked together to pass a 2026 defense authorization bill out of the House with civilian or governmentwide (Title 41) acquisition reform proposals. These reform proposals in the House NDAA bill included increasing various acquisition thresholds (micro-purchase and simplified acquisition thresholds and cost accounting standards) and language on advance payments to improve buying of cloud solutions. Unfortunately, these governmentwide provisions were left out of the final NDAA agreement, leaving in some cases different rules the civilian and defense sectors. I’m hopeful that Congress will try again on governmentwide acquisition reform.
Office of Centralized Acquisition Services (OCAS). GSA launched OCAS late this year to consolidate and streamline contracting for common goods and services in accordance with the March 2025 executive order (14240). Always a good exercise to think about how to best consolidate and streamline contracting vehicles. We’ve been here before and I think OCAS has a tough mission as agencies often want to do their own thing. If given sufficient resources and leadership attention, perhaps it will be different this time.
FedRAMP 20x. Earlier this year, GSA’s FedRAMP program management office launched FedRAMP 20x to reform the process and bring efficiencies through automation and expand the availability of cloud service provider products for agencies. All great intentions, but as we move into the next phase of the effort and into FedRAMP moderate type solutions, I hope the focus remains on the security mission and the original intent to measure once, use many times for the benefit of agencies. Also, FedRAMP authorization expires in December 2027 – which is not that far away in congressional time.
Alboum: In the coming year, I’m paying close attention to how agencies manage AI efficiency and value as they move from pilots to production. As budgets tighten, agencies need a clearer picture of which models are delivering results, which aren’t, and where investments are being duplicated.
I’m also watching enterprise acquisition and software asset management efforts. The Strengthening Agency Management and Oversight of Software Assets (SAMOSA) Act has been floating around Congress for the last few years. I’m curious to see whether it will ultimately become law. Its provisions reflect widely acknowledged best practices for controlling software spending and align with the administration’s PMA objective to “consolidate and standardize systems, while eliminating duplicative ones.” How agencies manage their software portfolios will be a crucial test of whether efficiency goals are turning into lasting structural change, or just short-term fixes.
Derrios: I’ll be watching how GSA’s OneGov initiative shapes up will be important because contract consolidation without an equal focus on demand forecasting, standardization and potential requirements aggregation may not yield the intended results. There needs to be a strong focus on acquisition planning between GSA and their federal agency customers in addition to any movement of contracts.
In 2025, the administration revamped the FAR, which hadn’t been reviewed holistically in 40 years. So in 2026, what IT/acquisition topic(s) would you like to see the administration take on that has long been overlooked and/or underappreciated for the impact change and improvements could have, and why?
Cummins: Despite the recent Trump administration emphasis on commercialization, it is still too hard for innovative companies to break into the federal market. Sometimes agencies will move mountains to urgently acquire a new technology, like we have seen recently with some artificial intelligence and drones initiatives. But a commercial IT company generally has to partner with a reseller and get third-party accreditation (CMMC, FedRAMP, etc.) just to get access to a federal customer. Moving beyond the FAR rewrite, could the government give up some of the intellectual property and other requirements that make it difficult for commercial companies to bid as a prime or sell directly to an agency outside of an other transaction agreement (OTA)? It would also be helpful to see more FedRAMP waivers for low-risk cloud services.
Cornelius: It’s been almost 50 years since foundational law and policy set the parameters we still follow today around IT accessibility. During my time in the Senate, I drafted the provision in the 2023 omnibus appropriations bill that required GSA and federal agencies to perform comprehensive assessments of accessibility compliance across all IT and digital assets throughout the government. Now, with a couple years of analysis and with many thoughtful recommendations from GSA and OMB, it is time for Congress to make critical updates in law to improve the accessibility of any capabilities the government acquires or deploys. 2026 could be a year of rare bipartisan, bicameral collaboration on digital accessibility, which could then underpin the administration’s American by Design initiative and ensure important accessibility outcomes from all vendors serving government customers are delivered and maintained effectively.
Derrios: The federal budgeting process really needs a reboot. Static budgets do not align with multi-year missions where risks are continuous, technology changes at lightning speed, and world events impact aging cost estimates. And without a real “return on investment” mentality incorporated into the budgeting process, under-performing programs with high sunk-costs will continue to be supported. But taxpayers shouldn’t have to sit through a bad movie just because they already paid for the ticket.
Brown: I’m watching how agencies continue to move toward the implementation of zero trust and how the data layer becomes the budget fight. With federal guides emphasizing data security, the 2026 question becomes, do programs converge on fewer, interoperable controls, or do they keep buying overlapping tools? My watch signals include requirements that prioritize data tagging/classification, attribute-based access, encryption/key management and auditability as “must haves” in acquisitions.
Alboum: Over the past few years, the federal government has made significant investments in customer experience and service delivery. The question now is whether those gains can be sustained amid federal staffing reductions.
Jonathan Alboum is a former chief information officer at the Agriculture Department and now federal chief technology officer for ServiceNow.
This challenge is closely tied to the “America by Design” executive order, which calls for redesigned websites where people interact with the government. A beautiful, easy-to-use website is an excellent start. However, the public expects a great end-to-end experience across all channels, which aligns directly with the administration’s PMA objective to build digital services for “real people, not bureaucracy.”
So, I’ll be watching to see if we meet these expectations by investing in AI and other technologies to lock in previous gains and improve the way we serve the public. With the proper focus, I’m confident that we can positively impact the public’s perception and trust in government.
Hettinger: Set aside the know and historic challenges with the TMF, we really do need to figure out how to more effectively buy IT at a pace consistent with the need of agencies. Maybe some of that is addressed in the FAR changes, but those are only going to take us so far (no pun intended). If we think outside the box, maybe we can find a way to make real progress in IT funding and acquisition in a way that gets the right technology tools in the hands of the right people more quickly.
Dunne: I think follow through on the initiatives launched in 2025 will be important to focus on in 2026. The formal rulemaking process for the RFO will launch in 2026 and will be an important part of that follow through. And now that we have a confirmed Office of Federal Procurement Policy administrator, I think 2026 will be an important year for industry engagement on topics like the RFO.
Sieger: If the administration could tackle one long-overlooked issue with transformative impact, it should be the modernization of security clearances are granted, maintained and reciprocally recognized for contractor personnel supporting federal IT initiatives.
The current clearance system regularly creates 6-to-12 month delays in staffing critical IT programs, particularly in cybersecurity and AI. Agencies lose qualified contractors to private sector opportunities during lengthy adjudication periods. The lack of true clearance reciprocity means contractors moving between agency projects often restart the process, wasting resources and creating knowledge gaps on programs.
This is a strategic vulnerability. Federal IT modernization depends on contractor expertise for specialized skills government cannot hire directly. When clearance processes take longer than typical IT project phases, agencies either compromise on talent quality or delay mission-critical initiatives. The opportunity cost is measured in delayed outcomes and increased cyber risk.
Implementing continuous vetting for contractor populations, establishing true cross-agency clearance reciprocity, and creating “clearance portability” would benefit emerging technology areas such as AI, quantum, advanced cybersecurity, where talent competition is fiercest. From Guidehouse’s perspective, we see clients are repeatedly unable to staff approved projects because cleared personnel aren’t available, not because talent doesn’t exist.
This reform would have cascading benefits: faster modernization, better talent retention, reduced costs and improved security through continuous monitoring rather than point-in-time investigations.
If 2025 has been all about cost savings and efficiencies, what do you think will emerge as the buzzword of 2026?
Brown: “Speed to capability” acquisition models spreading beyond DoD. The drone scaling example is a concrete indicator of a broader push. The watch signals for me are increased use of rapid pathways, shorter contract terms, modular contracting and more frequent recompetes to keep pace with technology change.
Cornelius: Governmentwide human resource transformation.
Julie Dunne, a former House Oversight and Reform Committee staff member for the Republicans, a former commissioner of the Federal Acquisition Service at the General Services Administration, and now a principal at Monument Advocacy.
Dunne: AI again. How the government uses it to facilitate delivery of citizen services and how AI tools will assist with the acquisition process, and AI-enabled cybersecurity attacks. I know that’s not one word, but it’s a huge risk to watch and only a matter of time before our adversaries find success in attacking federal systems with an AI-enabled cyberattack, and federal contractors will be on the hook to mitigate such risks.
Cummins: Fraud prevention. While combating waste, fraud and abuse is a perennial issue, the industrial scale fraud revealed in Minnesota highlights a danger from how Congress passed COVID pandemic-era spending packages without the same level of checks and balances that were put in place for earlier Obama-era stimulus spending. Federal government programs generally still have a lot of room for improvement when it comes to preventing improper payments, such as by using better identity and access management and other security tools. Stopping fraud is also one of the few remaining areas of bipartisan agreement among policymakers.
Hettinger: DOGE may be gone, or maybe it’s not really gone, but I don’t know that cost savings and efficiencies are going to be pushed to the backburner. This administration comes at everything — at least from an IT perspective — as believing it can be done better, faster and cheaper. I expect that to continue not just into 2026 but for the rest of this administration.
Derrios: I think there will have to be a focus on how government needs and requirements are defined and how the remaining workforce can upskill to use technology as a force multiplier. If you don’t focus on what you’re buying and whether it constitutes a legitimate mission support need, any cost savings gained in 2025 will not be sustainable long-term. Balancing speed-to-contract and innovative buying methodologies with real requirements rigor is critical. And how your federal workforce uses the tools in the toolbox to yield maximum outcomes while trying to do more with less is going to take focused leadership. To me, all of this culminates in one word for 2026, and that’s producing “value” for federal missions.
Sieger: Resilient innovation. While 2025 focused intensely on cost savings and efficiencies, particularly through DOGE-mandated cuts, 2026’s emerging buzzword will be “resilient innovation.” Agencies are recognizing the need to continue advancing technological capabilities while maintaining operational continuity under constrained resources and heightened uncertainty.
The efficiency drives of 2025 exposed real vulnerabilities. Agencies lost institutional knowledge, critical systems became more fragile, and the pace of modernization actually slowed in many cases as talent departed and budgets tightened. Leaders now recognize that efficiency without resilience creates brittleness—systems that work well under ideal conditions but fail catastrophically when stressed.
Resilient innovation captures the dual mandate facing federal IT in 2026: Continue modernizing and adopting transformative technologies like AI, but do so in ways that don’t create new single points of failure, vendor dependencies or operational risks. It’s about building systems and capabilities that can absorb shocks — whether from workforce turnover, budget cuts, cyber incidents or geopolitical disruption — while still moving forward.
Alboum: Looking ahead, governance will take the center stage across government. As AI, data and cybersecurity continue to scale, agencies will need stronger oversight, greater transparency and better coordination to manage complexity and maintain public trust. Governance won’t be a side conversation — it will be the foundation for everything that comes next.
Success will no longer be measured by how much AI is deployed, but by whether it is secure, compliant and delivering tangible mission value. The conversation will shift from “Do we have AI?” to “Is our AI safe, accurate and worth the investment?”
As a tumultuous year for the federal workforce comes to a close, many employees are in a much different position now than they were at the start of 2025.
The Trump administration’s efforts to reduce staffing across agencies resulted in the loss of more than 317,000 federal employees governmentwide. It’s a 13.7% decrease compared with September 2024 workforce numbers, Office of Personnel Management data shows.
At the same time, 68,000 new federal employees joined the civil service during 2025, according to OPM Director Scott Kupor. Combining both attrition and hiring data, the administration’s changes over the course of 2025 amounted to a net staffing decrease of about 10.8%.
Kupor touted the results as exceeding the administration’s goals, saying relatively few losses were due to reductions in force (RIFs) and firings of probationary employees. Out of all employees who left their jobs in the last year, “over 92% did so voluntarily,” he said, mainly via the deferred resignation program (DRP).
“None of this is to minimize the impact of anyone losing a job, but the ‘mass firing’ headlines do not in fact tell the full story,” Kupor wrote in a Dec. 10 post on X.
But some federal workforce experts argue that the administration’s reductions in 2025 amounted to a “forced exodus.” Max Stier, president and CEO of the Partnership for Public Service, pointed to what he said have become “dangerous gaps” in key federal services, like food safety inspection, Social Security processing, veterans’ healthcare and disaster response.
“This loss of expertise directly harms Americans’ access to critical services and will take decades to repair,” Stier told Federal News Network.
Rep. James Walkinshaw (D-Va.) also pushed back against the idea of the administration’s DRP being “voluntary.” He said many feds who left government felt they had no choice — they felt threatened they would be fired anyway, if they did not leave through the DRP.
“Federal workers were hit with DOGE, watched agencies shutter, were threatened with imminent reductions in force, demagogued and bombarded with those mindless ‘5 things’ emails,” Walkinshaw said Dec. 11. “Nothing about that was voluntary — the ‘fork in the road’ was coercion.”
Still, the workforce cuts so far align with the Trump administration’s overall goal to “downsize the federal workforce,” as the Office of Management and Budget recently laid out in the new President’s Management Agenda. Specifically, the administration said it is targeting cuts of “unnecessary positions” and “poor performers,” while emphasizing more efficiency.
“We’ve seen significant success in right-sizing the federal workforce and addressing performance issues,” Eric Ueland, OMB’s deputy director for management, said during a Dec. 9 Chief Human Capital Officers (CHCO) Council meeting.
The workforce reductions hit some agencies harder than others. The top three agencies facing staffing reductions are the departments of Defense, Agriculture and Treasury — with Treasury’s reductions mostly concentrated within the IRS, according to research from the Partnership for Public Service.
By scale, DoD has seen the largest staffing reduction across government. The department lost over 61,600 employees during 2025 — a total of about 8% of its total workforce.
Following just behind DoD, the Treasury Department lost more than 31,600 employees, yielding a staffing reduction of nearly 28%.
And at USDA, the loss of more than 21,600 employees over the last year amounted to a roughly 22% staffing decrease overall.
But other agencies, such as USAID and the Education Department, saw even deeper cuts to their workforces, despite being smaller agencies by volume.
Governmentwide, the loss of more than 300,000 federal employees has shown up in a multitude of ways. At the IRS, for instance, an agency watchdog warned there will likely be issues with the 2026 tax filing season, as a direct result of the 25% cut to the IRS workforce. And at USDA, the staffing reductions are affecting the work of some of the department’s underlying agencies.
The Partnership for Public Service said the cuts are harming communities as well. An analysis of more than 530 stories on the federal government throughout 2025 shows the impacts of the federal workforce reductions across the country.
“Notably, more than 45% of these stories involve harms to science-related sectors, including agricultural research, healthcare and public land management,” the Partnership said. “Together, they show the direct, tangible consequences these changes are having on individuals, organizations and communities.”
Over the course of 2025, the impacts also continued to spread. In a survey the Partnership conducted in September, 46% of respondents said they or someone they know had been impacted by the government cuts. That’s up from 29% of respondents who said the same in March.
Still, there are many who view the Trump administration’s changes positively. About 80% of those who are supportive of the federal workforce overhauls said they believe the changes will make their communities and lives better, the Partnership’s September survey found. But even among those who were supportive of the changes, 41% still expressed concerns about a loss of experience and knowledge in the federal workforce in the short term.
The changes are impacting many who have stayed in their jobs as well. Federal employees are experiencing disruptions in the workplace at a rate far higher than the national average, according to a recent Gallup survey.
Close to one-third — about 29% — of federal employees say their workplace has been disrupted “to a very large extent.” That’s nearly triple the 10% of U.S. employees who say the same, Gallup found. Across the federal workforce, it’s leading to increases in stress and loneliness, as well as a decline in employee engagement.
Robert Shea, a federal workforce policy expert and former OMB official from the George W. Bush administration, said the workforce changes have had a “chilling effect” on leaders across the career civil service — something he believes will continue into 2026 and beyond.
“Many career officials are now more cautious about how, when and whether they offer professional advice,” Shea told Federal News Network. “That’s particularly when that advice could be perceived as resistance rather than implementation.”
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