The Small Business Administration suspended more than 1,000 companies in the 8(a) program. SBA made the decision after it deemed those small businesses non-compliant with its financial data request from December.
“Suspended firms have 45 days to appeal the suspension,” said Maggie Clemmons, an SBA spokesperson in an email to Federal News Network. “SBA will release further information on the suspensions in the coming days.”
The suspension comes after SBA sent a letter to more than 4,300 8(a) firms in December seeking 13 different data, ranging from a list of the company’s employees to bank statements for the last three fiscal years to a copy of all 8(a) contracts, as part of its ongoing audit of the program.
Data compiled by GovContractPros, an advisory services firm specializing in federal procurement, found that SBA admitted 753 companies into the 8(a) program in fiscal 2024. Of those 753 firms, the company says SBA suspended 156 of them.
In fiscal 2025, SBA says it admitted only 65 companies into the 8(a) firm. GovContractPros says SBA suspended 10 of those firms, including nine which joined the program after the Trump administration began leading SBA.
Lawyers that represent small businesses say SBA issued the suspensions on Wednesday based on the fact that the 8(a) firms either failed to submit their responses on or before the Jan. 19 deadline or submitted incomplete responses.
“At least some firms that submitted complete data call responses only one day late — on Jan. 20, and before any suspension notices were issued — often due to errors in the government-operated MySBA Certifications portal, nonetheless received suspension notices, indicating that SBA is taking a strict approach to alleged non-compliance with the filing deadline,” wrote Meghan Leemon and Matt Feinberg, partners with the law firm Piliero Mazza, on a blog post. “Firms subject to 8(a) suspension are not permitted to receive new competitive or sole-source 8(a) awards. However, firms are required to complete existing 8(a) contracts, and federal agencies may exercise options on those contracts, even while a firm is suspended, unless otherwise prohibited by statute or regulation.”
SBA’s new clarifying guidance
The suspensions are part of a broad Trump administration effort to audit the 8(a) program and address allegations of fraud and abuse. SBA’s data call was one of several ongoing audits to now include the Treasury Department, the General Services Administration and, as of last week, now the Department of Defense.
“The Biden administration expanded and then abused the 8(a) program to hand out billions in taxpayer-funded government contracts to favored minorities at the direct expense of honest small businesses, which is why we ended the practice on day one,” said SBA Administrator Kelly Loeffler in a press release. “Since then, the Trump SBA has been working to reverse the damage – and today, we’re reiterating one simple fact: the Biden-era practice of discriminating against white Americans is over, and reforms to enshrine that fact are well underway. The SBA is ending diversity, equity and inclusion (DEI) in federal contracting – and our programs will remain open to all eligible job creators in compliance with federal law.”
In addition to suspending nearly a quarter of the 8(a) program participants, SBA issued new guidance today clarifying that the small business development program “is open to job creators of every race – consistent with court orders, notices from the U.S Department of Justice (DOJ), and President [Donald] Trump’s broader effort to eliminate DEI across the federal government – and that any race-based presumptions of social disadvantage have been inoperative since 2023.”
The guidance outlines new ways the SBA will manage the program.
It says it will administer the 8(a) program based on race neutral requirements and there will be no presumptive preference given to anyone.
SBA also will no longer approve the use of “socially disadvantage narratives” as a way to get into the program. It removed from its website the Biden-era “Guide for Demonstrating Social Disadvantage.”
Finally, SBA will consider several factors when determining eligibility for the 8(a) program, including whether the individual has been a “victim of illegal or radical DEI policies or illegal affirmative action policies or has otherwise been the victim of discriminatory practices such as race-based quotas, set asides or hiring targets, in each case by government and non-government actors.”
SBA says these steps are in reaction to the “dramatic expansion” under the Biden administration of companies in the 8(a) program.
Since January 2025, SBA accepted just 65 new 8(a) firms into the program, compared to over 2,100 who were accepted during the four years of the Biden administration.
Undermining the 8(a) program?
Jackie Robinson-Burnette, a former SBA associate administrator in the Office of Government Contracting and Business Development during the Biden administration, wrote on LinkedIn that this change isn’t a small tweak, but it’s re‑anchoring of the program’s foundation.
“It’s important to reform the 8(a) program without crushing the firms the program was designed to help,” wrote Robinson-Burnette, who now is the CEO of Senior Executive Strategic Solutions. “Are we dismantling and putting a sledgehammer to the program to curtail spending $20 million-plus on 8(a) sole source contracts or is it about something else?”
John Shoraka, a former associate administrator of government contracting and business development at SBA and now the co-founder and managing director of GovContractPros, said the SBA and now DoD’s audits are part of a concerted effort to undermine the confidence in the 8(a) program.
“It seems to be one initiative after another initiative, sort of in a very sequenced flow of events to undermine the program and sort of put the brakes on the program,” he said. “I think there’s a perception, and, it’s the wrong perception, that the 8(a) program is, at its core, a DEI program. I honestly don’t think that the administration believes there is significantly more fraud in the 8(a) program than any other contracting program. In fact, the data shows, if you look at inspector general cases or if you look at Department of Justice cases, the instances of fraud in the set-aside programs and particularly the 8(a) program, are actually significantly lower as opposed to across the entire federal government. So when we focus on fraud, waste and abuse in the 8(a) program, I think it’s just raising the flag. They can’t really say we want to kill this program because it’s DEI, they need to identify some sort of red flag to point to and say, ‘Ah-a, we told you this program was fraudulent, and therefore we need to terminate or put the brakes on this program.’”
Leemon and Feinberg, from the law firm Piliero Mazza, said companies caught up in the suspension should consider sending an informal appeals to SBA to lift the suspension.
“If informal channels are unsuccessful, a suspended 8(a) company may — and should — appeal SBA’s decision within 45 days of the date of the Notice of Suspension to SBA’s Office of Hearings and Appeals. This process can be time consuming, and appeals decisions can be delayed for months or even years,” the lawyers wrote.
Terry Gerton Deltek has a new report out that’s looking ahead for federal contractor intelligence for 2026. But before we look forward, I want to look back a little bit. When you think of everything that happened in the contracting space in 2025, what stands out for you as the biggest trends?
Kevin Plexico Well, chaos reigns supreme this past year, for sure. And what I find just super interesting is that some companies happen to find themselves in really good places and align to the goals of the new administration and did really well. And others that happened to be in sort of the wrong place at the wrong time had profound impact. I think 2025 was a year where companies had to really take stock of the organizations that they’re selling to and their offerings to make sure they’re aligned to the goals of the administration and the mission that the government agencies have been asked to take on by that administration. That’s probably, to me, the biggest change. There’s been so much movement of money, in some cases money coming out of certain agencies. We’ve all heard about Agency for International Development and Department of State and Education. But then you look at organizations like the VA, DHS, and DoD that have continued to do really well. So, a lot of haves and have-nots this year, and I think for companies it’s just trying to figure out, based on this new administration, where should we really be aiming to be able to capitalize on it going forward?
Terry Gerton Every administration comes in with different priorities, but it seems like this one was able to make the pendulum swing really fast, and that may have caught companies off guard. What are some of the hard conversations that had to happen inside those boardrooms?
Kevin Plexico Well, early on, it was all about DOGE and the DOGE organization really putting some unprecedented pressure on some vendors. I mean, some of the letters I saw sent to professional services companies and some of demands that were made of value-added resellers were not anything I’ve seen a federal agency communicate to a vendor that was otherwise performing to the jobs that they were asked to do. And I think it’s, in some respects, a bit surreal that the administration was asking companies to identify wasteful spending. It’s just an awkward situation to be in if you have a customer, and the customer already hired you to do the work, and you’re now being asked to identify where there’s wasteful spending in that and sort of serve up cuts. So I think that was the early part of the year. We did see that start to sunset a bit and fade as we got into the summertime. But then all of a sudden, all eyes were turning to appropriations and funding for 2026. And we all know where that’s landed, which it hasn’t. We’re still waiting for full-year 2026, with just a couple agency exceptions. We bought some time ending the shutdown, which was, as you know, the longest on record. But there’s nothing to say that we might not have another shutdown here at the end of January. I still think where there’s that bit of uncertainty, the one silver lining this past year for the contracting community is the One Big Beautiful Bill, just because it had so much opportunity in it for contractors that really cut across the gamut of aerospace, defense, professional services, training, architecture, engineering, construction. There was literally something in there for everybody, but it does require really an honest assessment by a company to figure out, okay, how do we get after this? Because that might not be in the agencies that they’re used to doing business in.
Terry Gerton Right. And a lot of those funds haven’t been dispersed yet. So they’re still maybe in the RFP or RFQ stage. This unpredictability of funding flows is something you don’t normally see in government contracts. Everything from stop-work orders and termination notices earlier in the year to unpaid bills at the end of the fiscal year and the CR. Has that caused the GovCon community to sort of re-evaluate and re-adjust their planning for predictable cash flows?
Kevin Plexico I think this year, while it was a record-setting shutdown, is not an unusual year in that we don’t have a line of sight on what line appropriations are going to get done. I think industry has become used to that scenario. And while shutdowns are certainly not good for anyone, they’re usually relatively short-lived because of what happens. The pain gets so severe that finally Congress is like, we’re inflicting a lot of pain on rank-and-file Americans, we need to resolve this. I’m hoping that cooler heads will prevail the next time that this comes around. What I think is perhaps different this time versus what we’ve seen, say, the last decade or so is we’ve always had a bipartisan budget agreement or resolution that sort of set the top line that appropriators were negotiating towards. I think we’ve had that literally for about a decade, since back during the Budget Control Act, and we don’t have that for ’26. So there was no goalpost that Congress was working towards on a bipartisan basis that that they agreed on previously. And I think that’s the same for 2027. That’s what’s unique about this, is there’s nothing that says, here’s the goal that we’re working towards, and then how do we allocate it by the different appropriations bills that are negotiated?
Terry Gerton Kevin Plexico is senior vice president of information solutions at Deltek. Kevin, let’s turn our attention to the windshield and not the rear-view mirror now. With all of that disruption in 2025, what is at the top of Deltek’s intelligence report for 2026?
Kevin Plexico Well, I think 2026 is going to be a better year than 2025, thanks primarily to the One Big Beautiful Bill. As you pointed out, it’s not a single-year appropriation. The funding in that legislation lasts through, I think it has to be committed in contracts essentially by the end of 2029; then expenditures can take longer. So that gives us a bit of time and it certainly doesn’t mean that it has get rushed out the door like we’ve seen — some emergency supplemental appropriations have had that shape. And so that provides some longer-term opportunity and ability for companies to reposition, to get after some of that money. The biggest challenge on the base-level appropriations, we’ve got this ambitious goal of growing defense spending, paid for by significant cuts in civilian spending, and we saw that under the prior Trump administration. But they were never able to get appropriators to buy off on that. And I think that’s the dynamic that we have in the Senate, where it has to get 60 votes to get past the filibuster. It does really need a bipartisan-level agreement to get appropriations done. That’s particularly challenging in these contentious times, but I do think it helps prevent those draconian cuts that could be put in place for some civilian agencies that we’ve seen this and the prior Trump administration ask for that usually have not been enacted.
Terry Gerton One of the sectors that’s really struggled this past year is small businesses. What do you see in the future for them?
Kevin Plexico This is an interesting one, because on the one hand, the government has done a really good job of spending money with small business. But if you look at the level of participation in terms of prime contracts, it’s going down. The number of small businesses I think has declined by close to 30% over the last several years in terms of prime contracting. And I think that’s a problem that the administration really has to take a look at. Unfortunately, some of the things that we’re seeing them do around relying on best-in-class contracts, don’t create a new contract if there’s already an existing contract that you can place a task or delivery order under — those really favor the companies that already have those prime contracts. I think it makes it challenging for small businesses to enter the market. On the research and development side, we’re still waiting for Congress to extend the SBIR and STTR programs, which are Small Business Innovative Research-related work. So it’s a challenging market for all companies, but in particular for small businesses. They’re dependent on cash flow; shutdowns particularly impact small businesses. The rule changes that are being made in the FAR overhaul are pretty profound in terms of their impact on small business. I think it’s unpredictable to understand how much is it going to affect a service-disabled veteran-owned business versus an 8(a) company versus a women-owned business. It seems like they’re gravitating more towards a preference of just small business set-asides and trying to get away from sole-source awards. And that’s a big change for the small business community for sure. So I think getting smart about the new rules and how they’re going to be applied agency by agency is going to be super important for small businesses.
Terry Gerton Well, speaking about the FAR overhaul, let’s talk about GSA for a minute. They’ve really worked over this last year to centralize a lot of buying strategies, centralize lot of contracts. They’ve updated the OASIS contract. What are you seeing and what should contractors be expecting to hear from GSA?
Kevin Plexico Well, I think the thing that’s created a lot of confusion is the way they’re rolling it out. Usually when FAR changes are rolled out, they go through a rulemaking process, they issue drafts, take comments and then go to a final rule or interim rule. What they’ve done in this particular situation is instead of approaching it in that traditional way, they’ve rolled out the revised FAR and basically said that agencies can adopt it if they get a class deviation. So, you have to literally go to the FAR overhaul website and see which agencies have adopted these FAR clauses. And right now you basically have different agencies using different versions of the FAR. The DoD is still using the traditional FAR and DFAR. They don’t have any class deviations that I’m aware of, but many civilian agencies do. So it just puts a lot of onus on the contracting community to really be mindful of what regulations are being followed by the agency you’re selling to, because it’s not the same as everybody’s following the FAR anymore. Which version of the FAR? Is it this class deviation or is it the traditional FAR? And that’s just an example of the chaos that we talked about.
Terry Gerton If you could give contractors one piece of advice as they’re trying to put their 2026 business strategies together, what would it be?
Kevin Plexico I go to what we call the four Cs. Customers: Who are the right customers that you’re going to be focused on selling to? Contracts: What vehicles are they going to be using to get access to those providers? Compliance: What do you need to be able to comply with, and I know the CMMC is a big one, but even with all the FAR overhaul changes, I haven’t seen what I would call a deregulation of compliance requirements. There’s pressure on agencies to use more fixed-price; that would potentially take away some of the accounting requirements that come along with a cost-plus contract. I think I might have missed a C in that, but you get the gist of it, right? It’s really just being more strategic and being more thoughtful about how you’re going to go to market. You can’t just afford to live off the agencies you’ve been doing business with, because they might be starving for money going forward. So you really have to take an honest assessment of where you are today, where you want to play, and how are you going to position yourself to get there? Because it’s not a quick pivot by any stretch.
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)
Ed Forst never served in the Navy, but the metaphor he uses to describe the role the General Services Administration would make any admiral proud.
Forst, who has been at the helm of GSA since late December, believes agencies, like ships, have two distinct compartments. One is to focus on the mission. The other is the engine room that makes the mission run.
Ed Forst is the GSA administrator.
“I think in every business, every enterprise, every agency, every department, and what I think makes great sense, and I believe the President does too, is, let’s advance mission and let’s have the engine room, what’s behind the curtain, consolidate and get even better. That’s where I see GSA in the federal government. We’re the engine room,” Forst said at the Coalition for Common Sense in Government Procurement winter conference on Jan. 14. “Now, interestingly, GSA is its own agency, so we happen to have both. We’ve got mission and the engine room as well. So I think because of that, we really do appreciate the mission piece of that and serving our stakeholders and our constituents.”
For GSA, being that engine room in part means making acquisition less burdensome, cheaper and more agile so agency customers can meet their mission needs more quickly.
GSA has been pursuing several initiatives over the last year to fine tune the acquisition piece of the engine room.
Laura Stanton, the deputy commissioner of GSA’s Federal Acquisition Service, said between the Office of Centralized Acquisition Services (OCAS), the OneGov initiative and the implementation of changes from the Federal Acquisition Regulation rewrite, GSA is delivering speed to acquisition like never before.
For example, OCAS now centrally buys for three agencies: the Office of Personnel Management, the Small Business Administration and the Department of Housing and Urban Development. Stanton said GSA brought on OPM and SBA in about a month.
Stanton said OCAS is using an opt-in approach to help agencies and trying to relieve some of the burden on GSA’s Assisted Acquisition Service.
“We’re having conversations with a number of agencies about what are their needs. One of the things that we set up OCAS to be able to support is the buying of common goods and services,” Stanton said. “We also recognize that there are mission critical items that and there’s common things that are mission critical that can be used for governmentwide contracts, and then things where there are specialized contracts. So we’re having those types of conversations with a number of agencies at this point.”
Under the OneGov program, GSA has signed 18 agreements to reduce the price of commonly used software across government. Additionally, 45 agencies have taken advantage specifically of the enterprisewide agreements for artificial intelligence tools.
“This is a radical shift in how we think about it, and how we think about how we come to market, and also how we want you to treat us as a customer,” Stanton said at the conference. “This requires changes, not only on the government side, but it’s also going to require changes on the industry side to make that happen. We want to be better aligned when it comes to terms pricing and performance, when it comes to all aspects of that.”
Forst said he was especially focused on the performance aspects of the equation for GSA.
Measuring performance against peer groups
He said measuring performance, and holding organizations and people accountable are among his key focuses areas.
“We’re putting out some priorities for having deliverables. I’m committing every quarter and I’m going to report on ourselves on that,” he said. “I think we’re all better if we find a way to talk about measurement or metrics, whatever you want to call it. There’s a common language and vocabulary about that, so I am a big proponent.”
Forst said he will be looking at both the performance of FAS in terms of “revenue,” as well as their performance relative to peer organizations.
“If you had a record year, you’d probably beat plan. All that should be good. That’s absolute measurement. That’s you versus you. And I think that’s important. I think it’s also really important to accompany that with who’s in your peer group and how did they do? I think the relative performance matters a ton as well,” he said. “You could be down 7% and on an absolute basis, angst to death over down seven if your peer group’s down 15, that’s a home run. So I think it’s important. But if you had a record year and you’re up 6% and your peer group’s up 12%, I’d say good record, but you underdelivered versus the other side. I think we have to be honest with ourselves and look at both us versus us over the time series, and look at us versus a peer group. That seems to make sense.”
Forst said GSA plans to bring in a peer group analysis to raise their awareness and their overall performance.
The third piece of moving bringing speed to capability is the FAR rewrite. GSA will begin implementing the FAR changes within its own acquisition regulations in the coming weeks. It already issued deviations to the current FAR to begin the process.
Jeff Koses, GSA’s senior procurement executive, said in a post on LinkedIn that they have “limited the issuance of mandatory acquisition policies to my office, the Office of Acquisition Policy. Legacy mandatory policy will have to be reissued at the agency level, converted to discretionary guidance, or cancelled.”
Koses said GSA will begin culling down 500 pages of its acquisition manual, 300 pages of office policy, 500 pages of FAS policy and another 500 pages of Public Buildings Service policy and then 1,000 pages of real property leasing policy.
Reviewing the GSA schedule catalog of items
Larry Allen, the associate administrator in the Office of Governmentwide Policy, said at the CGP conference that GSA, in helping out the FAR Council, is working closely with OFPP to get all of the rulemaking completed by the end of the fiscal year.
“It may be delayed a little bit because we had a little shutdown in the fall, but that tells you exactly what type of timetable we are on. It’s aggressive, and you will see change, and we want you to be part of that change,” Allen said.
Stanton added that GSA understands the FAR rewrite has moved quickly and is addressing complex acquisition issues that will take time for government and industry to wrap their arms around.
“When we think about this year, it’s going to be a year of both adopting and adaptation, and acceleration all at the same time, and that becomes really challenging to do,” she said.
Stanton said another key initiative kicking into gear this year is GSA’s review of its multiple award schedule catalog. She said the driving theory is how can the agency operate it more efficiently and deliver more value to agency customers.
“I look at the at the catalog that we run for the multiple award schedule and it has over 100 million items in it. Only 1% or fewer of those items sell, and so this is putting burden on all of you, making sure that you’re meeting all of our terms and conditions, that those items are Trade Agreements Act (TAA) compliant, that they meet the government standards, and that the pricing is fair and reasonable,” she said. “We have contracting officers who have to evaluate those items, and what is the value that either you or the government is getting for that work? I think that this is a big opportunity for us to truly assess where is the government’s demand. As we’re also moving into making transactional data reporting mandatory, how do we effectively have a catalog that delivers on what the government needs? How do we meet those needs effectively? How do we move quickly if we have something that’s not in the catalog? It’s a lot easier to move quickly if we’re not burdened by putting things in there that are not actually being used.”
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.
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.
Comprehensive acquisition reform proposed by the Trump administration has broad and bipartisan backing. Designed to strengthen both the military itself and its supporting defense industrial base (DIB), the initiative as outlined in Defense Department documents issued in November has been long in gestation.
Among those championing the reforms: Mac Thornberry, the former chairman of the House Armed Services Committee and advisor to Amazon Leo for Government. The Texas Republican retired from Congress a few years ago but remains active in defense and procurement reforms – issues he pushed for during his congressional days.
Looking at the community of suppliers to the Defense Department, Thornberry said in a recent interview, reform must do more than ease a few Federal Acquisition Regulation rules. That’s because of the mass of what constitutes the DIB.
“I think that the defense industrial base is far broader than we’ve thought about before,” he said. That is, it goes wider and deeper than the large, prime contractors who make airplanes, ships and tanks.
“Now it includes everything from communications and batteries and minerals to space and cyber. There are more players than there have ever been before,” Thornberry said.
More than the breadth of the DIB favors reform, though, according to Thornberry. A perhaps more important factor is the innovation coming in so many technologies from the private sector – innovation often aimed at commercial use but which also proves essential for the deterrence and lethality of U.S. forces.
“It used to be that the government would be the leader in making the best tank or the best ship or the best fighter jet,” Thornberry said. “But now it’s often private industry that is the best at artificial intelligence or quantum or a lot of things in space.” Ergo, “If private industry is the best at making a lot of the stuff we need to protect the country, relationships have to evolve between government and industry and also among allies.”
Add in the speed at which the technology front is moving, and the need for faster, more streamlined acquisition becomes more pronounced. In the Cold War era, much innovation was sparked by defense needs in the first place – things like stealth coatings, radar guidance and revolutionary energetics. Now, Thornberry points out, innovations occur whether the Defense Department takes two weeks or two decades to acquire them and turn them into capabilities for troops.
Thornberry cited still another factor in favor of acquisition reform: “How interconnected it all is. We tend to think of the separate military services, separate domains, separate theaters around the globe,” he said. “In a way, it’s all interconnected, one global theater right now, especially when you talk about space and cyber.”
The result? “We can’t just fall back on the way we’ve done things in the past,” Thornberry said. “We’ve got to change. Partnership is the key word. It must not just be a label. It’s got to be a reality for us to take advantage of everything that the best in the country can produce.”
Make room for space
Among the policy updates the administration emphasizes is greater use of the very commercial technologies driving the economy. Much commercial innovation occurs in space, specifically in the burgeoning technologies of low earth orbit (LEO) satellites. Competing vendors, including Amazon Leo, have launched hundreds of small LEO satellites that robustly fill a missing link in the worldwide communications network.
As for defense, Thornberry said, “The only way we can do a lot of what needs to be done for the country’s national security is in and from space.” The LEO capacity stands as a case in point for the need to more readily adopt commercial technologies.
“If you’re going to provide the best that the whole country can produce for the benefit of the war fighter,” Thornberry said, “you’ve got to take advantage of that commercial part of space.”
He added, “I’ve been surprised, as I have left government, at how much investment is going into space, from both the companies and the investment community.”
Two advantages of technology pursued by multiple companies are the resulting levels of competition and the resiliency of not depending on a sole supplier.
“That is true in space as well,” Thornberry said. “If you’re going to rely on commercial space providers, as we must, then you’ve got to make sure you have the resilience of multiple providers.”
In fact, he said, the Defense Department needs greater supplier diversity in all of the domains in which it operates.
“We’re not going to have one company or two or three companies that are going to solve all our national security issues,” Thornberry said. “We need to have this diverse ecosystem with partnerships of various kinds.”
He added, “And that’s especially true, I think, in space.”
Within the ecosystem of suppliers and technologies in space, Thornberry said, the government will require disparate systems to interconnect. He cited Defense Secretary Pete Hegseth’s reference to modular, open systems architecture.
That means, Thornberry said, “you can have different capabilities, but they have an interface that means you can put a plug in whatever sort of capability you need to; and that interface is something that’s available to everybody.”
The open systems approach, which he said Congress tried and ultimately failed to codify a few years back, is now needed for projects such as the Combined Joint All-Domain Command and Control (CJADC2) project and the Golden Dome missile protection program. Both Defense initiatives are essentially integrations of multiple existing systems and capabilities.
Acquisition for speed
Space has become a highly contested environment, Thornberry said.
“Anything that is valuable is threatened and gets under attack,” he said, “and we see adversaries doing that. They have demonstrated anti-satellite weapons. We’re seeing a whole variety of capabilities to deny us the advantages of space.”
Moreover, this is happening “at an incredibly fast rate,” he said. It all gets to a key goal of acquisition reform. Hegseth “talked about the importance of speed, and I do agree that that is a characteristic we have not placed at the top of the pecking order, but we have to now.”
That includes the speed at which commercial technologies get adapted and turned into capabilities. Thornberry called Ukraine and its war with Russia a masterclass in agility afforded by speed of adaptation.
“Ukraine can adjust their drones with a week’s time,” he said. “We’ve got to get better at adapting to meet the circumstances and working through commercial providers is the only way that can happen.”
Ukraine shows what’s possible and needed everywhere.
“A few years ago, it became clear that adversaries were moving at an incredible rate to improve their capability,” Thornberry said. “At the same time, technology in general was advancing at an amazing rate.” He noted that the Pentagon had programs here and there to speed technology adoption. These include the Defense Innovation Unit and the Air Force’s Kessel Run.
Thornberry said those efforts produced results, but not systemically. He said there’s evidence of resistance deep within the bureaucracy then and now. Therefore, he said, the latest effort to reform acquisition throughout the Defense Department requires comprehensive adoption to succeed.
“The tendency is to do things the way we’ve always done them. If we do that, we will not be able to defend the nation,” he said.
Besides speed, the acquisition system must produce a market attractive to companies in the first place, Thornberry said.
The old-line defense companies have learned the existing system, “and they’ve done some pretty innovative things in limited spheres,” he said. “But they’re oriented towards the rules and requirements that the current process gives them.”
By expanding use of other transactional authority (OTA) and, as Thornberry put it, letting off some of the procurement shackles, more defense-focused innovation would flow from commercial companies and startups.
Equally crucial, the Pentagon must find a way to send clear and consistent demand signals to maintain the attractiveness of the defense sector to the investment world.
“They need to have some wins. It doesn’t mean everybody wins, but these folks need to see that there is the potential for a profit in making these investments,” Thornberry said.
He added, “The purpose of all this is to get the very best that the whole country can produce into the hands of the war fighters so they can defend the country.”
As for acquisition reform, Thornberry said, “Will the investors continue to invest? Will the commercial companies be willing to work in defense? Is there a chance for startups to earn enough business to stay in business? All of that is yet to be determined.”
If you only read the contract clause, you’re missing the playbook.
As of Nov. 10, the Defense Federal Acquisition Regulation Supplement (DFARS) 252.204-7021, also known as the “Cybersecurity Maturity Model Certification [CMMC] clause,” is now in effect. With implementation officially underway, contractors are under pressure to understand not only what 7021 demands of them, but also what contracting officers (KOs) are required to do behind the scenes. Those instructions, which are buried in DFARS subpart 204.75, tell KOs when to include 7021, when they cannot award, and what they must verify before exercising options or extending a period of performance.
Contractors often treat 7021 as a black box dropped into their contracts. Now that the clause is active across new awards, KOs are following explicit procedures you never see. Understanding those procedures gives you visibility into how requirements are determined, enforced and sustained over the life of your award.
Where 7021 really comes from — and what KOs must do
The CMMC clause doesn’t appear in your contracts out of nowhere. It’s part of a stack. At the top is 32 CFR Part 170, the Defense Department’s CMMC program policy (effective Dec. 2024). DFARS 204.75 translates that policy into concrete guidance for contracting officers: policy, procedures and instructions on when to use the clause. You see it in practice as DFARS 252.204-7021, paired with 252.204-7025. DFARS 204.7500-7501 set the scope and definitions. The point is that DFARS isn’t inventing anything new; it’s carrying out CMMC program policy and telling KOs how to enforce it.
The KO instructions are unambiguous. Under DFARS 204.7502, a KO shall insert the required CMMC level when the program office or requiring activity tells them to. The KO doesn’t decide the level, as that comes from the program office based on the data and mission, but they are responsible for putting it into your contract language. Just as clearly, KOs shall not award a contract, task order or delivery order to an offeror without a current CMMC status at the required level.
Two qualifiers matter. First, “CMMC status” doesn’t mean “in progress.” It means you’ve achieved the minimum required score for the assessment, and your status is recognized (self or third-party; final or — at Levels 2 and 3 — conditional). Second, “current” matters. Status is generally valid for three years, and you must maintain it for the life of the award.
To make sense of this, it helps to decode what “status” really means at each level:
Level 1: Only a final self-assessment counts and no plans of actions and milestones (POA&Ms) are allowed.
Level 2: Can be self- or certified third-party assessor organization (C3PAO)- assessed, in either final or conditional status.
Level 3: Always a government assessment — Defense Industrial Base Cybersecurity Assessment Center (DIBCAC) — which can be final or conditional.
KOs may award if your status is final or conditional at Level 2 or 3, provided it meets the required level in the solicitation and any open items are limited to those allowed by 32 CFR §170.21. But conditional status is time bound: 180 days from the status date. If you achieved conditional four months ago and bid today, you’ve only got about 60 days left to close those POA&Ms. There is no conditional path for Level 1.
The message is clear: While conditional paths exist, they are narrow and tightly limited.
The SPRS/UID reality check
Before a KO awards, extends or exercises an option, they verify your status in the Supplier Performance Risk System (SPRS) using your 10-character alphanumeric CMMC Unique Identifier (UID), which is tied to the specific system or enclave that was assessed. This binding matters. The government wants traceability from the contract to the exact enclave processing its data. If your UID points to System A, but CUI ends up in System B, you’ve created a mismatch with contractual — and potentially False Claims Act — implications. Keep your boundary, documentation and operational reality aligned to the UID you present.
This KO check isn’t one-and-done. KOs verify at initial award, again at option exercise or performance extensions, and again if you introduce a new UID mid-performance (for example, after a significant scope change requiring a new assessment). If your status isn’t current at any of those points, the instruction is simple: no award, or no option for extension.
When 7021 must be used — and when it isn’t
The rule is now active, placing us in the phased rollout period that runs through Nov.9, 2028. During this stage, DFARS 204.7504 requires KOs to insert 7021 whenever the program office identifies a CMMC level and no waiver applies. Waivers remain rare and are issued only at the contract level, not as carve-outs for individual contractors.
When the rollout ends on Nov. 10, 2028, the requirement broadens: 7021 must appear in any contract involving the processing, storage or transmission of federal contract information (FCI) or CUI, unless formally waived. Wherever 7021 is used, 7025 follows to ensure all offerors see the requirement before bidding.
What this means for the contractor
Contractors should assume that KOs are already verifying CMMC status in SPRS today, not at some future point. Here’s how the KO’s world translates into your action list:
Don’t “strategy-bet” on KO discretion: The KO isn’t picking your level. The program office is. The KO’s job is execution and verification under “shall” language.
Know your status category and the timeline: If you’re planning to bid with conditional Level 2, track the 180-day closeout window from your status date. Build that into proposal schedules and risk plans.
Engineer your scope and keep it stable: Your CMMC UID binds the assessment to the specific system that will handle DoD data. Avoid unnecessary “significant change” events mid-performance that would force a new assessment/UID, unless you’ve planned for it.
Keep status current through the entire period of performance (PoP): Treat the three-year validity like a maintenance interval. If your status expires during performance, you’ve put option exercises and extensions at risk.
Map data flows to the assessed system: Ensure your CUI boundary and your assessed enclave are the same in reality, not just on paper. Align your system security plan (SSP), network diagrams, asset inventory and boundary controls to the UID’s scope.
Bid packages should include UID clarity: Make it easy for the KO to verify SPRS entries. Label the UID, level, status (final or conditional), status date and expiration in your cover letter or compliance matrix.
Have a POA&M closure plan you can execute: If conditional, your plan should show who/what/when, procurement lead times and validation steps. Assume the government will ask for evidence of progress.
Prepare for options early: Six months before option exercise, review your status currency, any scope drift, and whether new UIDs have appeared. Give your KO a smooth verification path.
The KO’s lens
Now that 7021 is in effect and being applied to new awards, KOs are already following the same mandatory procedures across solicitations, evaluations and option exercises. From the KO’s perspective, 7021 is not subjective. It’s a procedure backed by “shall” language: Include the required level, verify status in SPRS by UID, and do not award or extend if the status isn’t current at the required level. Conditional Level 2/3 can win you work, but only within the 180-day window and only with allowable POA&M items per policy.
By understanding the KO’s checklist, contractors can predict how requirements will appear in your contracts, anticipate when status checks will occur, and avoid surprises that might otherwise cost you awards or option years.
Jacob Horne is the chief cybersecurity evangelist at Summit 7.
Terry Gerton We are in our first full week of January, and we’ve started it with big news over the weekend, the capture of Nicolas Maduro in Venezuela. What impact does that have on the government contracting community? Tell us what you’re hearing.
Stephanie Kostro We have started 2026 with a bit of a surprise for some of us, right? And in terms of contractors, you know, contractors have long been involved in U.S. engagements around the world. This is no different. And so as we move forward, whether it’s military operations or if it’s critical infrastructure protection for oil and gas lines in Venezuela, etc., depending on where the White House wants to go with this plan they have, contractors will be certainly a part of that. We’ve heard in the news media about the president talking to oil and gas companies. I would also say government contractors have a role to play in what’s coming up, and I hope that we can collaborate and cooperate with the White House, with the agencies involved, to make sure that contractors’ voices are being heard and that we’re being used effectively.
Terry Gerton We’re certainly going to hear more about that over the next few days as the operation unfolds, but let’s change topics a little bit; still looking forward to what you’re hearing in 2026. The Revolutionary FAR Overhaul was a big topic in 2025 and now it’s playing out in practice. What are you seeing in the Department of Defense’s class deviations?
Stephanie Kostro Well, we were seeing a lot of activity, Terry, over the holidays. To go back a little bit into the Revolutionary FAR Overhaul, which is this massive rewrite of the Federal Acquisition Regulations, we saw lots of class deviations released from the FAR Council last year, and there was direction from the president as part of this overhaul to undertake a rewrite of all the supplements of the FAR. And every agency has its own supplemental documentation regarding the acquisition regulations. The Department of Defense/Department of War, they have one of the largest supplements, if not the largest supplement, so undertaking a rewrite of that documentation is a massive effort as well. In mid-December, on December 19th, we saw coming out of the department 31 separate class deviations that would take effect on February 1st, which is not too far away, and they’ll guide contract writing until the formal rulemaking process can catch up. This was a large tranche of Phase 1 class deviations. We were unpacking the 31 pieces of language as we speak. In addition to the actual changes to the DFARS language are changes to non-statutory policies and procedures that are found in what’s called at the department procedures, guidance, and information, or PGI. This is the supplemental body of work to the supplement itself. As we go through all of these documents, it’s really important for contractors to look at them carefully, figure out how they’ll impact their work, their business, and the mission of the agency that they’re supporting, and to give feedback to the Department of Defense/Department of War regarding how these are going to play out.
Terry Gerton What are you seeing in the first 31? What stands out to you, at least in the initial look?
Stephanie Kostro There are several that do stand out to me. We’ve had this conversation before about this push in the government to go towards commercial products and commercial services. When you think about the Department of Defense, you think a lot of the very bespoke, military-focused products and services or solutions. But they do actually acquire lots and lots of commercial services and commercial products. And we heard this in the November 7th Arsenal of Freedom speech from Secretary Hegseth, about this need to incorporate more commercial components to what the department is acquiring. When I looked at the class deviations, I saw some of the subparts on applicability of certain laws for commercial products, commercial services and commercially available off-the-shelf items. I also saw a lot of activity there on simplified acquisition procedure, so they’ve retained rapid contracting for combatant commanders, authority within the DFARS, and some other special contracting methods. So this is really reflective of what we’ve seen in the FAR Overhaul, but more specific to the service members and the warfighters.
Terry Gerton I’m speaking with Stephanie Kostro. She’s president of the Professional Services Council. Stephanie, there are contractors who work across agencies. How are they keeping track of all these deviations if every agency has their own new rule book?
Stephanie Kostro It is such a challenge to think through. You’ve got the FAR, which is what governs so much of acquisition within the federal space, but every single agency does have its own supplement. They’re trying to make sure that they’re aligned, or at least not misaligned. That said, it is a challenge for your run-of-the-mill contractor, particularly for small businesses who don’t necessarily have the resources or the knowledge base to go, hey, this is tweaked in this way, but that other agency is tweaking it in a different way, and that’s what it means for my business. I understand that there will be training opportunities that the government’s putting together, not just for government employees and the contracting officer and the acquisition corps, but also for contractors. And I’m encouraged that it will be coursework that both the contracting officers in the government and the contacting folks outside the government can take together and understand what is going on. But you’ve put your finger on one of the major complications that we’re facing, which is, okay, the FAR is being changed, but all of the agencies are going to interpret changes differently for their own purposes, and what does that mean for industry?
Terry Gerton And you mentioned that the new DFARs deviations go into effect 1 February. Do contractors have an opportunity right now to provide feedback or is this a done deal?
Stephanie Kostro So the class deviations are out. We do have a line of communication open to folks at the department to say, hey, you know, this could be an unintended consequence of this particular phraseology or language, etc. They will take effect February 1st. I believe that they’re open to modifying them before the actual rulemaking process starts. And we’re hoping that as a trade association — PSC, we have 400 member companies — we’ll go out to them and say, hey, what is a burr under the saddle or what is real sticking point for you here? And we’ll convey that, or they can convey it themselves. There seems to be an openness to receiving that feedback, but again, not sure what they’ll do with it, particularly as different supplements from different agencies may be misaligned. And so again, it’s very complicated. I think we’ll be playing this out through all of 2026.
Terry Gerton Well, speaking of complications and burrs under the saddle, also over the holidays there was a leak of a draft executive order that might limit buybacks, dividends, and executive compensation for military and defense contractors. What are you hearing about that?
Stephanie Kostro So it’s been fairly quiet on that since last you and I talked Terry. There was an executive order, as you mentioned, in draft form that was being discussed in the media. We still haven’t seen the language, we haven’t heard much more about meeting with decision-makers about that. We are very hopeful that when language does come out or is shared, or if these conversations happen, that the White House and others will be open to contractor feedback regarding how this impacts industry. I would mention, PSC, we often highlight, as I did earlier in this discussion, we have 400 member companies. Collectively, our companies, between commercial and government contracts, contribute $1 trillion to the U.S. economy. And that’s just our 400 member companies. So we are a big player in the national economy between commercial and government contracts. So as we have these discussions, I hope that concerns will be taken under advisement.
Terry Gerton Even the leak of this executive order had immediate impact in the stock market. What are you hearing from your member companies about the potentially negative effects of these requirements?
Stephanie Kostro These new requirements, as I understand — again, haven’t seen the language — but as I understand they’ve been drafted, would have impacts on shareholders, would have impacts on the broader economy. Already the rumor of it had an impact on some share prices. I really hope that as we work together — we’ve had a long history of public private partnership and of collaboration with the government — and again, we are here to help with federal missions and making sure the taxpayers in America get what they’re paying for in terms of mission success, whether it’s Internal Revenue Service or Department of Defense/Department of War or Homeland Security, border security, etc. But these companies need to remain viable. They need to be able to pay their workers, able to do the work themselves. That is the conversation that we want to have about the longer-term impacts of some of these potential actions. And I hope, again, that the government will take that under advisement.
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.
Lawmakers said the fiscal 2026 defense policy bill that became law earlier this month would deliver “the most significant acquisition reforms in a generation.” But some of the more sweeping proposals introduced in the House and Senate versions of the bill were ultimately scaled back or dropped entirely from the final version of the legislation.
A similar dynamic played out inside the Pentagon. A draft acquisition memo circulated prior to Defense Secretary Pete Hegseth’s speech to defense executives and senior military acquisition officials outlined a far more aggressive overhaul of how the department would develop and buy military capabilities than what emerged in the final version of the memo and the Acquisition Transformation Strategy.
But a number of provisions from the House’s SPEED Act and Senate’s FoRGED Act that survived negotiations are still expected to be impactful, including measures aimed at streamlining prototyping, accelerating the transition of technologies into production and expanding opportunities for small businesses and new entrants.
Easing regulatory burdens for nontraditional contractors
The bill, for example, exempts nontraditional defense contractors from some of the Pentagon’s accounting, audit and compliance requirements, lowering barriers to entry for new defense technology companies. A nontraditional defense contractor is defined as a contractor that hasn’t held a Cost Accounting Standards-covered contract in the last year, which is the vast majority of the defense industrial base — George Mason’s Baroni Center for Government Contracting estimates that only 7.5 percent of the defense companies fall outside that definition. The Senate also pushed to expand the definition of nontraditional defense contractors, but the provision was dropped from the final version of the bill.
The legislation also expands the type of past performance that may be considered — the department is required to issue guidance on when it should accept a wider range of past performance, including commercial or non-government work as valid past performance. It also requires the Defense Acquisition Regulations Council to “identify and eliminate specific, unnecessary procedural barriers that disproportionately affect the ability of small business concerns and nontraditional defense contractors, to compete for contracts with the Department of Defense.”
Small and medium-sized Defense Department contractors will also gain access to an online platform offering digital resources, training and services aimed at increasing awareness of and facilitating compliance with defense acquisition requirements.
Faster paths from prototype to production
The bill also expands the Pentagon’s ability to use Commercial Solutions Openings — a competitive process used to acquire innovative technologies. CSOs are typically difficult to transition, but the legislation allows the department to move successful CSOs into production, including through sole-source contracts. The provision also expands CSOs to include commercial products, commercial services and nondevelopmental items instead of limiting their use to “innovative” technologies.
Another provision raises the minimum award for the Accelerate the Procurement and Fielding of Innovative Technologies program to $10 million.
The bill also gives combatant commanders the authority to experiment with, prototype and demonstrate new technologies and allows a successful experimentation to serve as justification for moving directly into production.
Stan Soloway, president and CEO of Celero Strategies and federal acquisition expert, said the provisions aimed at accelerating the transition to production and giving officials clearer authority to favor small businesses and new entrants reflect the department’s long-standing effort to work around traditional program processes and system integrators. But given the complexity of many programs, “it remains to be seen how much it actually changes on major systems, but it could definitely impact smaller ones” he told Federal News Network.
Data rights and IP
At the same time, there is a seeming contradiction in the bill.
Despite broad bipartisan support, right-to-repair provisions were stripped from the final version of the bill, but “provisions like the one that talked about DoD having the authority to re-engineer components when it thinks doing so will be quicker and less expensive than having additional units produced by the original equipment manufacturers, is sure to raise hackles,” Soloway said.
“IP and technical data rights are hugely important issues. And it is fair to say that both government and industry have tended to view them as zero sum games. But if DoD wants to build meaningful bridges to emerging (and existing) firms and technology, the answer lies in both sides being willing to negotiate, at the very beginning of a program, how those questions will be handled. It is hard … but simply stating that DoD can do this when they think it is in their best interests, is probably not the most balanced path forward,” Soloway said.
Workforce largely absent
Despite some of the significant acquisition changes, the legislation barely addresses the workforce — a gap Soloway said could undermine the reforms.
The success of these reforms will hinge on whether the department can equip its workforce with the skills needed to operate differently. Otherwise, the system can quickly revert to its old ways.
“Without an aggressive, broad-based and sustained workforce initiative, it is hard to see the workforce having the tools or the confidence to take the kind of reasoned risks the legislation, and Secretary Hegseth, claim to want them to take,” Soloway said
“Overall, workforce morale and trust in leadership is at a very low ebb. If change is going to happen, dealing with that reality is job one. But, to date, nothing this administration has done would suggest they have any plan on how to do that,” he added.
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.
FILE - The XQ-67A Off-Board Sensing Station unmanned aerial vehicle, one prototype of the future AI drone fleet developed under the USAF's Air Force Research Laboratory, is displayed at General Atomics' test facility at Gray Butte in Palmdale, Calif., on Wednesday, May 1, 2024. (AP Photo/Damian Dovarganes, File)
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?”
Stephen Bacon We’re seeing a lot more protests, particularly at the Government Accountability Office, in the last several months that have been filed using AI — a party that’s not represented by counsel using AI to generate the protest and then file it. But we’re seeing some problems with that in some of the decisions that are coming out of the GAO.
Terry Gerton So tell me more about how companies are using AI. You mentioned that they’re doing this without the help of legal counsel as well.
Stephen Bacon That’s right, at least the ones that we’ve seen so far in public decisions at GAO. It’s not entirely clear how the protesters are using it, but we can imagine that maybe they’re taking the debriefing information that they’re getting from the agency, they’re uploading that into an LLM like ChatGPT or Claude, and using it to develop a protest argument that they can file with the GAO. And what we’re seeing in the decisions is that many of the protests that have been filed using AI contain hallucinations. Case citations that don’t exist to actual cases that have decided by GAO. So the legal precedent that the protesters are relying on, in fact, don’t exist. And that’s one of the inherent limitations of LLMs is that they hallucinate. They come up with decisions, citations that don’t exist. To be clear, we’re not just seeing this by protesters that are not represented by counsel. This is happening in courts all across the country where attorneys are using AI to help generate legal filings and then getting in trouble with the courts when those citations don’t actually exist. Because when you file a protest or any kind of legal filing that has a citation in it, the court is relying on you to make an accurate representation that the legal authority that you’re relying on is in fact correct and is in fact a decision that has been issued in the past. And so both courts and the GAO now are saying that you can get in trouble, you can be sanctioned as a protester if you submit a protest that has some kind of fake citation that’s inaccurate.
Terry Gerton What does that mean to be sanctioned as GAO reviews the case?
Stephen Bacon At GAO, they have inherent authority to sanction protesters, and really the main sanction that they have is to dismiss a protest. If you happen to file a protest that contains fake citations, they reserve the right to dismiss your protest. Even if you have legally valid grounds to protest — maybe you have identified an error in the agency selection process — if GAO determines that you relied on fake citations in your protest, they could dismiss the protest, even if the actual merits of it may have some validity to it.
Terry Gerton So there’s some interesting intersections of situation going on here, I think. There’s a lot of uncertainty on the contractor side about the new FAR regulations and how those are going to be enforced, certainly across different agencies. We’ve had a reduction in the contractor workforce, so there are fewer contractors managing more acquisitions. And now we have AI coming in to sort of simplify, but potentially also make much more complex, the whole protest market. So do you expect all of this to be leading to an increase in protests? And what does that mean for GAO as they’re trying to sort out the validity of all the claims?
Stephen Bacon I think it certainly has the potential to, if what we’re seeing in the decisions is a trend towards more pro se protesters — pro se being parties that are not represented by counsel — using AI. To the extent that that trend continues, I think that there’ll be a lower barrier for protesters to file at GAO if they think that they can use an LLM to generate a protest without having to spend legal fees on outside counsel. Which is understandable, particularly for small businesses who may have resource constraints. If they feel like they can use an LLM to help them challenge an award decision, we may see more of that at GAO. I think what GAO is saying in these opinions that have come out…at first, they’re warning protesters that using LLMs that create fake citations is sanctionable. They didn’t actually take the step of issuing a sanction. But finally, in the last several months, we saw that they did, in fact, take that step of dismissing a protest, actually several protests that were filed by the same company, that contained fake citations. They actually took that step and dismissed those protests on the grounds that they misrepresented legal authority in their filings with the GAO.
Terry Gerton I’m speaking with Stephen Bacon. He’s a partner in the government contracts practice group at Rogers Joseph O’Donnell. You mentioned small businesses and their capacity constraints in terms of they may not have in-house counsel, they may have a lot of folks who can review all of this. But does this have the effect of sort of adding some equality into the protest market where they can use AI to submit? And do you think then that that’s going to change the protest space? Is this just the tip of the iceberg in terms of transformation?
Stephen Bacon It certainly lowers the barrier for companies. The GAO was set up to be a relatively informal forum to allow for the quick and efficient resolution of protests. I don’t think what GAO is saying necessarily is that AI cannot be used. But what they are saying is that we have a process to resolve bid protests and we want to maintain the integrity of that. And if you’re going to use AI, you need to be sure that you verify that what you’re filing is accurate. For anybody that is thinking about using AI to generate a protest, there needs to be some level of quality-checking of what is in the draft that’s generated by an LLM to be sure that you’re making accurate representations to the GAO in your protest. So that means checking the legal citations to make sure that the cases actually exist. That basic level of quality-checking needs to happen. Otherwise, GAO could just be flooded with protests that have no merit and that have lots of inaccuracies in them. And that’s not going to help them resolve protests in a way that’s efficient and achieves their ultimate goal.
Terry Gerton So where do you think we go from here, and what’s your guidance to the companies who are considering using AI to file their protests?
Stephen Bacon For any company that’s contemplating using an AI to generate protests, the basic point: If you’re going to do it, you have to verify that the citations are accurate. You have verify that what an LLM is generating is citing to a decision that has been published by GAO in the past. And that’s relatively easy to do. GAO has all of their decisions on their website, and you can go and check those and verify not only that the citations are accurate, but the legal proposition that you’re asserting is supported by the case that’s being cited. That’s important, too. That’s kind of table stakes. But the other thing I would say is that what we’re seeing in a lot of these decisions, where it’s obvious from the decision that AI has been used and that GAO is pointing out that there are these fake citations, is that oftentimes those protests are being dismissed for procedural defects as well. So things like timeliness and bid protest standing. Those kinds of procedural issues are being missed by the protesters who are using LLMs to generate the filings. And that’s because of another inherent limitation of an LLM; it often will tell you what you want it to say in a lot of ways. So if you tell the LLM, generate me a protest on this issue or that issue, it will do that and it might produce something that looks, on its face, credible and compelling. But if you don’t have the domain knowledge of the timeliness rules and the standing rules, you’re often going to overlook those things and the LLM is not going to catch it for you. And so you may be in a situation where you file something that looks on its face credible, but is in fact an untimely protest.
Terry Gerton I want to start by taking a look back. You took over at PSC this spring. What has been the most surprising thing you’ve encountered in your first year on the job?
Jim Carroll It’s hard not to look back on the first year and think of the disruption caused by the record-breaking shutdown as being something very, honestly, traumatic. The fallout from DOGE and the impact that has had — those two things stand out as the biggest opportunities and challenges to overcome. Certainly the shutdown and the duration of it was a surprise. I think everyone sort of expected two weeks out, or three weeks out, that it was going to happen, but the fact that it lasted so long. The wonderful surprise really has been the dedication of the companies that are members of PSC to fulfill the mission. I’ve spent my entire career in the government, with one stint in the private sector. Being able to work with these member companies, they truly feel that they are doing the best work for and on behalf of the country. The significance and seriousness with how they approach their job has been just a wonderful affirmation of the work that they’re doing.
Terry Gerton So Jim, coming off of that, one of the things that happened just before the Senate left town was the confirmation of 97 more political appointees. You’ve said this is really important to PSC and industry. Walk us through what you’re watching in terms of political confirmations.
Jim Carroll At the beginning of the administration, we did see members of the cabinet and the deputies confirmed very quickly and getting them through the process. Since then, it’s been bogged down getting these assistant secretaries and a few deputy secretaries confirmed. What that means with getting 100 more people on the job is what you would expect: They’re on the job, they are going to be the decision-makers. We’re excited because we believe that things are going to start moving a lot faster. And we sincerely appreciate the willingness of those people that were willing to serve in an acting capacity. But those people have some constraints on how they move, what decisions they can make; now getting the new political appointees in, it means that they’re really going to start moving faster. We’re hoping to be able to see more long-range and not just some of the short-term things, so we’re excited about that. We think it’s in the best interest of everyone to get these folks onboarded and get them moving. We are certainly going to take advantage of that and be coming to them to tell them exactly how these things impact the industry — and therefore impact the country.
Terry Gerton I’m speaking with Jim Carroll. He’s the CEO of the Professional Services Council. Jim, you mentioned up front the surprise around the government shutdown. Hopefully we won’t have another here at the end of January. But what, then, are the contractors in your community expecting in terms of procurement momentum? Is it going to pick up from what we’ve seen?
Jim Carroll Yes, we absolutely believe that. And I am not as worried about the shutdown of the end of January as I was back in the fall. Hopefully you feel the same way, Terry. I don’t think either side won. I think both sides lost during that shutdown. I’m hoping, and we’re certainly telling people, that that is the situation. With the these people on board, there’ll be renewed excitement. They are eager to get the job done. A lot of them have been waiting, really, a year since they were announced by the president, so they’re going to be incredibly motivated to work and to get decisions made, to get acquisitions going and really sort of set the policy for working with industry. We’ve heard from some of them already. We’re looking forward to meeting with some of them as they get settled in and find their office. We will be meeting with them and making sure that they understand the broad significance of what they’re doing and letting them know we’re a willing partner to achieve those objectives.
Terry Gerton Jim, one of the big challenges for the government contractors in 2025 was just the delay in terms of invoices, the disruption in contracts, terminations. Are you expecting that these backlogged invoices and stalled new awards and recompetes are going to pick up speed?
Jim Carroll Yes. We went in with some of our members to meet with the Chief of Staff, Susie Wiles, and the White House counsel. We told them — and this was while the shutdown was ongoing — that we needed, once it ended, to be able to move on these. We have followed up with the White house leading up to Christmas. The Chief of Staff, Susie Wiles, was very receptive to it and was, we believe, to be really on message with this. We talked about the communication and how to best achieve it through the departments and agencies. So we’re optimistic that these invoices will be paid. Because this is work that has been done, and for these companies, for the most part, they have been paying their employees. Some, sadly, had to put folks on the bench and furlough people temporarily. But a lot of them kept working, did what they needed to do, and now there’s cash flow issues for some of these companies. That’s what we’re pressing on to the White House. That is what we’re talking about with the members of the cabinet on some of the issues, is to get these invoices paid and get these companies up and running fully.
Terry Gerton Well, speaking of paying one of the few agencies that has a significant appropriation is Department of Defense. You’ve got a lot of your constituents, your member organizations, in the defense sector. What’s driving the agenda for defense in 2026?
Jim Carroll Certainly the meeting that the president announced with the top defense contractors, who are members of PSC, is that they do want to contain costs. What we’re doing now is explaining that they are containing costs and it’s just like anything. Change orders — if you’re building a home and submit a bunch of change orders while the contractor is building your house, that costs extra money. So we’re explaining the same thing is happening with government contracts. That the procurement process can be streamlined, there can be a focus more on deliverables as opposed to some of the issues of the contract that have no impact. We’re seeing some of those smaller things, companies were going to certain sections within the Department of War and saying, hey, we have a new way to do things, we can do this in a more efficient way and deliver results faster. We’re going to use, maybe it’s AI which obviously is going to be a continuing a big issue in ’26, and we can reduce the number of people that we have in seats by 20% or 30%. And the department would say, no, we contracted for 90 or 100 people and we want 90 and 100 people sitting in seats — without really focusing that we can deliver better, faster, cheaper results if we amend the contract. So it’s some of that we think we’re going to be able to overcome because Secretary Hegseth and the White House have been so focused on getting the results, that if we can work together with these new folks that have been confirmed, these new 97 people — not all of them in the [DoW], some are in the [DoW], some are in other key departments where we work — we really are optimistic that things are going to move much faster in ’26.
Terry Gerton Well, it sounds like with all of the new appointees, and perhaps some stability in terms of funding, that you’re hoping that 2026 is a more predictable year for government contractors. What exactly is PSC going to be focused on as you look into the new year?
Jim Carroll What we’re doing is focusing on meeting with not only the people that are just confirmed, as I said, a lot of these assistant secretaries. But now that things are a little more predictable, we’re going in, and we bring our members with us. It is important that our CEOs, our significant C-suite executives are with us when we’re going in to meet with members of the cabinet. And truly, we’re setting up meetings with secretaries and other key decision-makers so they can hear from us — and when I say “us,” I’m talking about the industry — about how to achieve the results that they want in 2026. That’s one of the things that we’re doing, now that there are more people in place, now that they want direction and want results, we are going in with our members and we are absolutely going to be leaning into explaining to them the best ways we can help drive the objectives that they want.
The hybrid and remote work paradigms spawned by COVID, coupled with the severe downsizing of the federal workforce, are resulting in a surfeit of federal office space, both owned and leased. Add the aging of the federal inventory and the growing cost and impact of decades of deferred maintenance, and literally hundreds of government properties nationwide have the potential to be vacated and disposed of. And yet, in the world of federal real estate, there persists the sense that despite all the alignment on the need for action, the federal government is still struggling to effectuate the changes everyone agrees it so desperately needs. A brief survey of the landscape underscores the challenges the government faces as it continues its halting efforts to modernize and right-size its real property portfolio.
The Office of Management and Budget’s Reduce the Footprint and Freeze the Footprint initiatives of 2012 and 2015, respectively, arguably began the process of reigning in government space requirements and were quite successful at the agency level. But the lack of meaningful change in the size of the portfolio led to great congressional disenchantment, particularly with the General Services Administration’s real property disposal program. That led to the Federal Assets Sale and Transfer Act of 2016, which expedited parts of the disposal process and established the Public Buildings Reform Board to facilitate the identification of properties for disposal. Following COVID, low levels of building utilization further spurred Congress to pass the USE IT Act in 2024, which required agencies to track their space utilization and gave GSA more authority to relocate agencies out of underutilized buildings.
Fast forward to today and there has been meaningful progress. Per USE IT and further direction from OMB, agencies are reporting their utilization data; agencies now are considering sharing space in each other’s buildings; GSA is accelerating the process of preparing buildings for disposal; and GSA now is using commercial real estate brokers, not only to market major properties for disposal, but to actually conduct the sales as well. All of these steps make great sense and represents marked change from past practice.
It seems clear that the structural imbalance between the size of the government’s owned portfolio and the funding available to maintain it now is widely recognized, and the shift of agencies to smaller, leased spaces will continue in earnest. This long-in-the-making alignment between Congress and the administration should be a harbinger of a long overdue, and potentially more rapid, realignment of the federal real estate portfolio.
Unfortunately, the typical headwinds remain. For example, even in the best of times, federal real estate has struggled to gain the attention and focus needed to effect meaningful change. Administrative matters typically take a back seat to program and policy issues, and staffing and funding, both for GSA and the agencies, are more challenging than ever.
But much hard-earned momentum has been built around the needed transformation of the federal real estate portfolio, and there are still opportunities to sustain it. Ideally, GSA, with support from OMB, would work aggressively with agencies to firm up strategic housing plans based on new staffing levels. Centralized funding, perhaps along the lines of a revolving fund paid back by agency rental payments, would enable agencies to conduct the GSA-directed relocations and consolidations necessary to adapt their real estate footprints to their new staffing needs. This would allow for the release of older, inefficient buildings and the acquisition of newer, leased space as necessary. With OMB’s focus and attention (and extensive contract support), GSA could greatly expand use of existing tools like its exchange authority, “administrator’s discretion,” ground leases, negotiated sales and more, to facilitate more private sector-like transactions and trim the portfolio more aggressively.
In this ideal world, GSA would also proactively expand its coordination with local governments, especially in Washington, D.C., to understand the likely future use and zoning of these now-surplus properties. That would enable GSA to address its statutory obligations for historic preservation and environmental mitigation from a “best value” standpoint. From there, GSA could then perform its due diligence to ensure that the sales maximize values while avoiding market saturation and other negative community impacts. With top-down direction, focus and resources, the potential exists to finally get to a leaner and more productive portfolio for government agencies, better outcomes for the communities, and better values for taxpayers.
Adam Bodner is a principal at ABodner Consulting and is vice president of the Federal Real Property Association. The views expressed are his own.
Nearly 85% of the CFO Act agency chief information officers left over the last 12 months. The turnover across the community is unprecedented.
But, generally speaking, federal technology and cybersecurity policy coming from the Trump administration has been relatively modest in calendar year 2025.
For a change, federal acquisition dominated the news cycle from the overhaul of the Federal Acquisition Regulations to the Senate confirmation of Kevin Rhodes to be the administrator of the Office of Federal Procurement Policy to the General Services Administration’s OneGov enterprise contract initiative and increased scrutiny of consulting contractors and value-added resellers.
With so much going on across the federal sector, Federal News Network asked a panel of former federal executives for their opinions about 2025 and what federal IT and acquisition storylines stood out over the last 12 months.
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 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 the 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 Financial Services Sector and a former IRS CIO.
Here are the 2024, 2023 and 2022 year in reviews as well, in case you were interested in comparing previous responses.
What are two specific accomplishments in 2025 within the federal IT and/or acquisition community? Please offer details about those accomplishments and why you thought they had an impact and what changes they brought.
MC: The administration’s concerted push to work more directly with commercial-off-the-shelf software leaders is one of the most significant changes in the federal acquisition landscape in a long time. Not only have these steps reduced costs, but direct relationships between enterprise software leaders and government customers has led to less confusion about product roadmaps and capability assessments, while providing opportunities for the government and American’s leading tech companies to solve problems in a collaborative way that improves both mission readiness and global competitiveness.
Matthew Cornelius is the managing director at Workday and former OMB and Senate staff member.
The Department of Energy became the first cabinet-level agency in the history of the U.S government to go live on a true human capital management software-as-a-service (SaaS) solution. This is an historic step forward for human resources transformation and showcases the ability of leading commercial SaaS solutions to meet stringent federal security and functional requirements at scale that will transform mission readiness for DoE and its agency peers.
MB: AI moved from “policy talk” to governed buying. OMB issued two major April memos that together pushed agencies from experimentation toward repeatable governance and acquisition patterns — what must be documented, who must be involved, and what vendors must provide. Why it mattered for acquisition is because it’s a forcing function for standard solicitation language, evaluation factors, data rights/lock-in protections, privacy involvement and risk controls in AI buys.
The late-2025 “AI procurement guardrails” conversation got louder, especially for large language model (LLM) providers. By December 2025, reporting highlighted OMB procurement guardrails focused on what agencies should demand when buying AI tools, including large language models, and set near-term timelines for agencies to update acquisition policies. Why it mattered is it signaled that LLM procurement is being treated as a special class of risk/assurance problem — not just another software buy.
KC: The FAR rewrite and FedRAMP 20x initiatives made a lot of progress. While the impact of the FAR overhaul and FedRAMP changes may not be felt immediately, these changes should make it easier for agencies to acquire technologies to better meet their missions. FedRAMP’s purpose is to accelerate cloud adoption, but it has become a barrier for commercial cloud companies that want to work with agencies. Even when agencies do have access to FedRAMP’ed cloud solutions, they tend to lag behind the latest versions sold to commercial customers due to the cost and time it takes to get authorizations to operate (ATOs).
MH: The GSA OneGov initiative stands out as one of the more significant things to have happened in federal IT and procurement this year, with more to come as we go into 2026. What started out as just a handful of companies participating has grown into something more significant with 15 OneGov deals having been announced and while we maybe haven’t yet seen the full extent of what it can do in terms of changing buying and selling habits, I suspect we will see those changes as we go into next year. The FAR overhaul is another significant and related piece of this puzzle, which we will again begin to see more from in the next year.
JD: Revolutionary FAR overhaul (RFO) and OneGov activities
NS: I’m watching closely how agencies move from basic zero trust architecture (ZTA) compliance to operationalizing mature, integrated zero trust capabilities across all five pillars: identity, devices, networks, applications and data. The 2025 accomplishments in zero trust adoption created a foundation. In 2026, it will become clearer which agencies can achieve the cultural transformation and cross-domain integration that true zero trust requires.
The real change this brought was cultural. IT professionals moved from viewing zero trust as a security mandate to recognizing it as an enabler of hybrid work and cloud adoption. This shift helped agencies reduce attack surface across government networks and establish replicable patterns that smaller agencies could follow, expanding access to advanced security capabilities across the federal enterprise.
In 2025, the federal government moved beyond AI policy development to actual governance implementation. OMB’s updated guidance, combined with agency-level chief AI officers and cross-functional AI governance boards, created accountability structures that didn’t exist before. What impressed me most was how Treasury and IRS established AI testing and validation protocols that balanced innovation with responsible use.
This brought tangible changes; agencies now have repeatable processes for AI risk assessment, bias testing and human oversight integration. It shifted the conversation from “should we use AI?” to “how do we use AI responsibly?” enabling mission delivery while maintaining public trust.
JA: 2025 was the year of agencies moving beyond AI pilot programs and onto large-scale deployment. As AI became embedded in day-to-day operations, it quickly became clear that success hinges on strong foundations — like high data quality, governance and scalable infrastructure. Agencies that invested in these core building blocks moved toward more sustainable and responsible AI implementations. The result was greater confidence in AI outcomes, improved interoperability and a clearer path for long-term innovation across government.
This shift in priorities is already delivering tangible results. One agency I worked with this past year consolidated 47 intake channels and five legacy platforms into a single system of record, improving data collection efficiency by 80%. By unifying data and workflows, the agency created a strong foundation for scaling AI across the mission and driving measurable outcomes.
This year also brought renewed momentum to enterprise acquisitions. Initiatives like GSA’s OneGov enabled agencies to move away from fragmented purchasing and toward coordinated, enterprisewide agreements. These agreements reduced friction, improved visibility and delivered better value for taxpayers, reflecting the growing demand for simpler access to modern IT solutions. Together, these changes signaled a cultural shift in federal AI adoption — one that prioritizes speed, collaboration and measurable outcomes over complexity.
MD: I think the most significant accomplishment is DoD’s launch of CMMC 2.0 because of how it will shape acquisition strategy, contracting practice and supply-chain resilience across the federal enterprise. As I said in a recent white paper on the subject, the acquisition impact of CMMC is systemic because it will influence how agencies define capable sources, how solicitations are written, how proposals are evaluated and how performance is monitored. Certification is now a qualification threshold for industry and a practical tool for risk reduction in government agencies. But it will also be a costly investment, especially for small businesses. However, I also think civilian federal agencies will eventually look to adopt portions of CMMC at some point, so it behooves any contractor looking to do business with the federal government to explore getting certified at the right time depending on where they’re at in their life cycle.
What technology, acquisition initiative or program surprised you based on how much progress it made or how the pieces and parts came together and why?
MB: FedRAMP tried to become faster and more outcome-oriented through its 20x pilot. GSA launched FedRAMP 20x in March 2025 and continued publishing implementation updates and pilot details through 2025. Separately, GSA reported record authorization pace in 2025 and linked progress to the shift toward modernization, including the 20x pilot. Why it mattered for acquisition is agencies and vendors saw real pressure to reduce authorization friction and move toward automation-based validation and a “security over paperwork” posture, as described in FedRAMP’s own updates.
DoD cybersecurity requirements for contractors hit a concrete implementation runway through the Cybersecurity Maturity Model Certification (CMMC) program. DoD’s CMMC implementation began Phase 1 in November with a multi-phase rollout plan over three years, as described by the DoD CIO and reflected in associated rulemaking discussion. Why it mattered is it moved CMMC from “coming soon” into real solicitation/award gating, changing competitive dynamics for federal suppliers supporting defense programs.
NS: What genuinely surprised me in 2025 was the bold reimagining of FedRAMP through the “FedRAMP 20x” initiative. After more than a decade of incremental changes, GSA’s new leadership assembled a federal technical team of security experts, platform engineers, and data scientists who fundamentally redesigned the authorization framework to be cloud-native and automation-driven with continuous security validation.
Nancy Sieger is a partner at Guidehouse Financial Services Sector and a former IRS CIO.
In my federal agency CIO role, I thought for years the FedRAMP authorization processes were bureaucratic and slow-moving, yet in 2025 the program demonstrated that radical transformation was possible. From Guidehouse’s perspective, what made this remarkable was the cultural shift toward transparency and genuine stakeholder collaboration. This demonstrated that even deeply entrenched federal compliance programs can evolve rapidly when there’s bold leadership, technical expertise and willingness to rethink established processes rather than just optimize them.
KC: The Department of Government Efficiency (DOGE) was surprising in almost every way and was far more impactful than I expected, even if some of its initial claims about government savings were overstated.
MC: I have been incredibly impressed with the reorganization across GSA’s key federal acquisition programs. Elevating the importance, competence, criticality and talent within GSA to drive true consolidation, efficiency, cost savings and standardization across the governmentwide technology procurement landscape has been a long overdue effort that has already delivered enormous outcomes. I’m not surprised that this has been successful, more so just heartened to see the pivot back to bolstering and strengthening GSA’s ability to be the true innovator and key negotiator in the federal technology acquisition landscape as a worthy and worthwhile sign of confidence in this vital agency.
MH: I was pleased to see progress made related to implementation of the Government Service Delivery Improvement Act, which was signed into law in January 2025. While there’s still a way to go toward full implementation, the federal CIO has been designated as the federal service delivery lead as required by the law, and the requirements of GSDIA were incorporated into the annual Circular A-11, Section 280 update, meaning agencies should account for the requirements of GSDIA in their fiscal 2027 budgets. Once we get the agency high impact service providers (HISP) service delivery leads in place, which should happen early next year, GSDIA, working together with 21st Century IDEA and a host of administration policies, should serve to accelerate the path to better, more efficient customer experience.
JD: The revolutionary FAR overhaul (RFO) was a huge effort to publish all the FAR model deviation text by the end of the fiscal year (Sept 30). The FAR Council and the GSA team deserve a lot of credit for getting that done.
The OneGov strategy was announced in April 2025. By the end of the year, GSA had announced 15 agreements. It’s unclear at this point how much agencies are able to leverage these agreements, but it’s impressive that GSA put together that group of agreements over the course of eight months. I’m sure there are more announcements to come.
JA: This year, it became clear that AI cannot scale securely without zero trust. I was struck by how quickly AI governance converged into a shared, nonnegotiable priority. As more agencies deployed AI, cybersecurity risks became impossible to ignore. Zero trust shifted from policy guidance to an operational must, forcing agencies to rethink both their architecture and procurement strategies as they work toward the 2027 mandate.
MD: I’m a bit biased on this one but I’m going to have to say State’s Evolve program. The request for proposals was issued three years ago in December 2022, and given the sheer complexity of the technical program and contract structure, a two-step advisory down select process associated with the highest number of proposals State has ever managed at one time, along with the ambitious size of the award pools, the fact that the department was able to start making contract awards this summer was a tremendous accomplishment.
What emerged as the biggest technology/acquisition challenge of 2025 that will have an impact into 2026 and beyond?
KC: Secretary of Defense Pete Hegseth has acknowledged that “our acquisition system is only as good as our workforce.” Yet we saw many experienced contracting officers leave the federal government in 2025 through the Deferred Resignation Program (DRP), Voluntary Early Retirement Authority (VERA) and other attrition. We also lost many of the newer, more tech-savvy feds who had been hired into places like the Cybersecurity and Infrastructure Security Agency (CISA) and GSA’s Technology Transformation Service (TTS). That will make it harder to successfully modernize government in 2026 and beyond. While some flashy, high-priority procurements may still speed along, more mundane federal IT upgrades will likely suffer.
MC: One of the key provisions of the FedRAMP Authorization Act was around collapsing and consolidating various security assessment frameworks to achieve greater reciprocity between agencies and create scale for critical technologies that can truly serve foundational missions in any agency. While much of the effort (rightly so) has been on automation and streamlining the authorization process so more innovative solutions can enter the federal market, for the “big bets” the administration is making on foundational infrastructure and platforms across both civilian and defense sectors, seeing how OMB (and GSA, DOD, etc.) better collaborate and consolidate on accreditation priorities and processes to speed reciprocity and time to value for these key investments should be a paramount priority.
JA: Growing complexity is a technology and acquisition trend that shows no signs of slowing. Agencies are trying to navigate AI adoption, massive amounts of data, cybersecurity mandates, procurement reform and workforce changes, all while delivering mission-critical outcomes.
Without strong governance, we risk repeating past mistakes like technology sprawl, duplication, and unmanaged threats — only at a much larger scale and with greater negative consequences. Moving into 2026, success will be defined less by the launch of new initiatives, and more by the ability to govern technology investments to deliver sustained value. The administration’s PMA objective to “eliminate data silos and duplicative data collection” will help.
MB: Late 2025 reporting described Pentagon efforts aimed at rapidly scaling small drone procurement and using competitive approaches to accelerate production—explicitly framed as overcoming traditional procurement friction. Why it mattered is it’s a visible example of the broader push to shorten cycles, broaden vendor bases, and buy more like the commercial market — especially for fast-evolving tech.
Melvin Brown is the vice president and chief growth officer at CANI and a former deputy CIO at the Office of Personnel Management.
MH: The personnel and related budget cuts that happened as a result of DOGE have been and will continue to be the greatest challenge as agencies look to prioritize IT modernization, but without a full staff and in many cases smaller budgets. While I feel we are on the backside of the cuts, the challenges associated with this will carry forward into 2026 as we look to rebuild our IT personnel and budgets.
JD: The acquisition workforce has been working through a lot of change this year from the RFO to reductions in force and retirements. We ask a lot of these folks so as we move into the new year, I hope these folks are given the tools and leadership support to drive forward with important initiatives like the RFO, buying commercial and expanding the industrial base. There will be a lot of uncertainty ahead, especially as agencies issue their supplements under the RFO process and they work through another uncertain appropriations process.
NS: DOGE’s push to consolidate IT infrastructure, eliminate redundant systems and mandate shared services will reach critical implementation phases in 2026. I’m watching whether the one-size-fits-all efficiency model can accommodate mission-specific requirements, particularly in national security, law enforcement and regulatory agencies.
The consolidation becomes more acute as consolidation efforts move beyond transactional systems and into complex operational environments such as cybersecurity operations centers, cloud platforms and data centers. These environments are tightly coupled with mission delivery. Bureaus such as the IRS have legitimate mission-specific technology requirements that commodity shared services may not address.
Potential trade-offs of the shared-services centralization that will need to be well designed may be first, impacts to agency/bureau agility both in timelines and innovation, as one-size-fits-all may not work with unique mission needs. Another trade-off is the concentration of risk to a single point; resiliency will be key! Lastly, I’ll say the distance from the customer and potential additional bureaucracy in governance with cross-agency coordination will need to be carefully managed to not suppress time to market on changes and innovation.
MD: In my opinion, the biggest technology/acquisition challenge has (and will be) the rush to adopt and use AI to support federal missions. While there is significant upside to leveraging AI in the government space, there still seems to be a readiness gap in terms of appropriate governance, well-defined use cases, proper training and workforce preparedness, the availability of clean data and policy ambiguity. These issues need to be addressed as agencies are testing out AI to ensure the adoption of new tools does not exacerbate existing friction or result in throwing money at problems by addressing symptoms versus the root causes.
At the recent Professional Services Council’s Vision Conference, one of the presentations on acquisition trends highlighted as many as 10 agency specific multi-award technology contracts that have been cancelled or put on indefinite hold.
These included COMET 2 from the General Services Administration, the Army’s Modern Software contract and the IRS’s digital services blanket purchase agreement.
The leaders of the vision team said agencies made the decision to cancel these and other contracts based on the requirements outlined in President Donald Trump’s executive order from March calling for the consolidation of contracts.
One of those acquisition programs that is bucking the cancellation trend is the Army’s huge multiple award contract for professional services.
The service said in a Dec. 19 posting on SAM.gov that it will proceed with the Marketplace for the Acquisition of Professional Services (MAPS) contract after all.
The Army had shelved the program back in March when the White House issued the EO.
“We are pleased to announce that after careful consideration the Government has decided to PROCEED forward with the MAPS acquisition!” the Army Contracting Command at Aberdeen Proving Ground wrote.
MAPS would bring together two existing contracts, IT Enterprise Solutions-3 Services (ITES-3S) and Responsive Strategic Sourcing for Services 3 (RS3), and would have a 10-year life with a $50 billion ceiling.
The Army planned to combine the two contracts in MAPS back in 2024. Instead of recompeting its RS3 as a vehicle called Ascend and moving to version four of ITES-3S, the Army wanted to create its own broad-based professional services contract. Baker Tilly says in a blog post that the Army awarded RS3 in multiple phases between 2017 and 2019, with 260 companies currently participating in the $37.4 billion vehicle. The advisory firm says the service awarded ITES-3S in 2018 and includes 135 companies, and it has a $12 billion ceiling.
The Army had considered moving its requirements that MAPS will address to OASIS+ since there is some overlap of professional services requirements. Under MAPS, the Army is looking for a wide variety of IT and engineering professional services, including program management, business process reengineering, cybersecurity and many others. Baker Tilly says while more details are coming, it believes “MAPS is currently proposed as a full and open competition with small business reserves. The government intends to make 100 awards in total, 20 awards per domain with an unknown number of small business reserves for each of the five domains.”
Now MAPS is back on tap and the Army will hold an industry day on Jan. 28 at Aberdeen Proving Ground in Maryland to discuss the rebooted solicitation.
The Army’s decision comes as the General Services Administration is opening an on-ramp and expanding its OASIS+ contract.
GSA to expand OASIS+
GSA said it will enter phase 2 of OASIS+ on Dec. 4. This means the updated multiple award professional services contract will add five new service domains across all six current contracts. OASIS+ eventually will have 13 total domains. The five news ones are:
Business administration
Financial services
Human capital
Marketing and public relations
Social services
GSA says this expansion is a direct response to the market research and feedback it received from federal and industry partners.
“Through in-depth spend analysis, customer engagement and a formal request for information (RFI) that was posted on June 17, 2025, GSA identified critical service areas that represent a significant portion of unmanaged government spending,” GSA said in a release.
GSA expects to release the RFP for OASIS+ phase 2 on our about Jan. 12. Additionally, on Dec. 16 the agency posted draft scorecards outlining the evaluation criteria for all 13 domains combined under the six solicitations.
In its first year, OASIS+ saw agencies obligate more than $366 million through 102 task orders, according to GSA’s data-to-decisions dashboard.
The Department of Homeland Security and the Air Force accounted for the biggest agency customers based on total task orders, awarding 31 and 29, respectively, in fiscal 2025.
Deloitte Consulting won the most task orders with four, and Leidos won the largest task order for $219 million.
And speaking of GSA contracts, its Polaris small business governmentwide acquisition contract is moving forward. As of Dec. 3, agencies can place task orders against Polaris service-disabled veteran-owned small business (SDVOSB) and Historically Underutilized Business Zone (HUBZone) pools.
Among the IT services included on Polaris are:
Artificial intelligence and automation
Cloud and edge computing
Distributed ledger technologies
Immersive and emerging technologies
“More awards in both pools are expected in Fiscal year 2026. Through this approach, GSA can ensure strong program oversight, manage vendor onboarding effectively and create room for additional opportunities,” wrote Larry Hale, GSA’s assistant commissioner in the Federal Acquisition Service’s Office of Information Technology Category (ITC), in a blog post. “Polaris was built from the start with flexibility in mind. The contract includes key features that help it stay current and responsive, such as on-ramps, no contract ceiling, and technology refresh capabilities.”
GSA still is reviewing bids for the small business and women-owned small business pools.
GAO dismisses AI contract protests
Another program that has garnered a lot of interest and attention received some good news last week as well.
The Government Accountability Office dismissed the protest by AskSage of GSA’s awards to artificial intelligence providers under its OneGov initiative.
GAO rejected the complaint not on its merits, but because it doesn’t have jurisdiction over contract modifications. GSA modified its schedule contracts with Carahsoft to offer access to AI providers for $1 or less.
“Under the Competition in Contracting Act (CICA) and our bid protest regulations, we review protests of alleged violations of procurement statutes and regulations by federal agencies in the award or proposed award of contracts for the procurement of goods and services, and solicitations leading to such awards,” GAO wrote in its decision. “Once a contract is awarded, our office will generally not review protests of allegedly improper contract modifications because such matters are related to contract administration and therefore not subject to review pursuant to our bid protest function.”
GAO says because AskSage challenges the reasonableness of the modification of the schedule contract between GSA and Carahsoft, “AskSage’s protest raises matters of contract administration and therefore is not subject to review pursuant to our bid protest function.”
GAO also determined that AskSage isn’t an “interested party” and therefore not in a position to challenge the modifications.
“To challenge the scope of a contract modification, a protester must demonstrate its direct economic interest with respect to its status as an actual or prospective offeror,” GAO stated. “Here, AskSage is a subcontractor or supplier to Carahsoft, not an actual or prospective offeror for the FSS contract between GSA and Carahsoft that has been modified.”
Nic Chaillan, the founder of AskSage, wrote LinkedIN that there are always loopholes when it comes to federal acquisition rules.
“We are obviously right on the merits. Sad day for America. Now [F]ortune 500 can build a $1 dollar unlimited offering in a contract modification for 12 [months], get agencies locked in and charge billions [in] year 2. Uncompeted. Sad day,” Chaillan wrote in response to others’ comments. “Sad to watch the administration letting those shenanigans happen.”
AskSage filed protests with GAO in August, claiming the awards for access to Anthropic and OpenAI tools violated several laws and regulations, including the commercial item pricing requirements under FAR Part 12 and CICA.
GSA said at least 43 agencies have taken advantage of the low-cost OneGov agreements for AI tools.
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