The rulebook that governs how federal agencies buy is changing and the implications for the government contracting industry will be historic and systemic.
Businesses that work with the federal government have seen significant shifts in their customers’ personnel, preferences, and funding in the past 14 months. This has been a shock to firms whose focus is largely weighted to delivering services and products, and not potential macro changes in their marketplace.
The recent transformations in government contracting have come from Congressional legislation, White House Executive Orders, and federal agency policy directives alike. Still in process is a major pivot in regulations.
The Revolutionary FAR Overhaul (RFO), initiated under White House Executive Order 14275 ("Restoring Common Sense to Federal Procurement") and guided by the Office of Federal Procurement Policy (OFPP) and the FAR Council, represents the most comprehensive rewrite of the Federal Acquisition Regulation (FAR) in over 40 years. Implemented via agency class deviations (with formal rulemaking ongoing in 2026), the RFO strives to shift the FAR from rule-based to principle-based. When finalized through the rule-making process, changes initiated by the RFO will be a major philosophical shift in federal regulations.
Our analysis shows that the RFO rewrite of the FAR proposes key changes in four basic categories:
I. Contracting Officer Discretion
II. Program Office Discretion
III. Advantage to Businesses with Commercial Offerings
IV. Shifts within Regulations Concerning Small Business
As with any meaningful changes, there are likely to be ramifications, including both intended and unintended consequences.
In general, the RFO seeks to afford new flexibility to Contracting Officers. The impact is likely to be greater variance among agency decisions with regard to policy, negotiations, BPAs under IDIQs, contract types, competitions, on/off ramping from IDIQs, and contract modifications. This variance between agencies and among Contracting Officers will have implications for government contractors and their customers.
Likewise, the RFO intentionally advantages firms that offer commercial solutions and increased technological capabilities. The RFO also adjusts the established approach to leveraging small businesses for government contracts. These two moves reward innovation and competition.
Outcomes of the RFO are likely to be uneven across the federal government’s myriad offices in the immediate term. The regulation rewrite represents a shift away from broad skepticism concerning the roles played by career agency staff and agencies, and towards a broad empowerment and reliance on the discretion of career Contracting Officers. Equally, the revision shows a shift of emphasis from assisting socially and economically disadvantaged businesses to a new focus on adopting and integrating advanced technology developed by firms previously outside the government contracting marketplace.
Below is our assessment of the RFO’s proposed major changes which have the most business-oriented impacts for buyers and sellers.
I. Contracting Officer Discretion
Shift to Permissive Framework Overall (Parts 1 & General Policy): The FAR now emphasizes "permissive" language (more "mays" and "shoulds" vs. rigid "shalls"), with explicit CO discretion encouraged unless statutorily prohibited. Non-statutory policies have been moved to non-regulatory guides.
- Impact: The shift to permissive language reinforces the policy in FAR Part 1 that innovation is paramount and that if the FAR does not prohibit a course of action, it should be entertained. Contractors face less rigid compliance checkboxes, more tailored solicitations, but potential variability across agencies/contracts.
Negotiation-Focused Rewrite in Part 15 (Contracting by Negotiation): "Discussions" replaced by "negotiations"; "communications" eliminated; clarifications broadened/discretionary (including adverse past performance); and no required discussions with all in competitive range.
- Impact: More Contracting Officer discretion in exchanges, and potential for fewer pre-competitive range interactions. This will affect contractor proposal strategies and protest risks. Determining the boundaries between permissible clarifications and negotiations will require strong legal analysis and guidance.
Enhanced Best Value Continuum and Evaluation Flexibility (Part 15): Tailored source selection (e.g., phased/down-selects, oral presentations/demos as stand-alone factors, and on-the-spot consensus evaluations).
- Impact: Faster/more efficient source selections may be possible. Contractors will face less predictable processes.
Permissive Innovative Contract Types and Structures (Part 16): Contracting Officers can use novel/hybrid types (e.g., Firm-Fixed Unit Price (FFUP); Consumption-Based or Pay-for-What-You-Use Contracts; performance-based hybrids; custom technical performance incentives).
- Impact: Encourages tailoring to business strengths (e.g., outcome-based models for innovative services); firms can propose creative structures. While protest risk may decrease on procedural grounds, it could increase due to unequal treatment or abuse of discretion. Contractors need strong documentation and compliance best practices to withstand scrutiny in follow-on protests.
Authorization for Blanket Purchase Agreements (BPAs) under multiple-award indefinite-delivery/indefinite-quantity (IDIQ) contracts (Part 16): Procedure alignment across different multiple-award vehicles, eliminating the prior distinction where BPAs were routinely used under Federal Supply Schedules (FSS/MAS) but not broadly permitted under other multiple-award IDIQs (e.g., agency-specific, GWACs, or MACs).
- Impact: Agencies can now use BPAs as a streamlined vehicle for ongoing, predictable needs (e.g., IT services, supplies, advisory support) under their IDIQs, reducing the need for repeated individual task order competitions or new procurements. Holders of multiple-award IDIQs gain new opportunities if BPAs are authorized in the base contract. Winning a BPA spot can lead to more predictable tasking, but non-BPA holders lose access to those calls. Small businesses can benefit from set-aside/reserve flexibilities that bypass some fair opportunity hurdles.
II. Program Office Discretion
Written acquisition plans are no longer required except for high-risk contracts (Part 7): Agencies must still perform acquisition planning for all acquisitions, but they can determine when a written or oral acquisition plan is required. Agency heads now establish their own criteria for identifying “high-risk” contracts and procedures for when increasingly greater detail/formality is needed.
- Impact: Reduction in administrative burden and paperwork for acquisitions (especially firm-fixed-price, commercial, simplified, or repetitive orders). Plans become “living documents” that are updated as needed rather than static compliance exercises. Faster start to acquisitions and fewer approval bottlenecks. Contracting Officers and Program Managers will need updated guidance, new decision-support tools, and added training to exercise this expanded judgment consistently and defensibly. Government contractors must be alert to distinctions among planning approaches across different customers.
Streamlined Competition Requirements (Part 6): Focus on statutory full/open competition; removes prescriptive socioeconomic mandates; and encourages lifecycle competition via tools like on/off ramping.
- Impact: Easier justifications for other-than-full-and-open; more sole-source/exceptions possible.
On/Off-Ramping Explicitly Codified on Multiple-Award IDIQs (Part 16): Mandatory on-ramps for contracts >5 years (open seasons to add vendors/increase max quantity); and off-ramping for underperformance/non-participation.
- Impact: Opens doors for new businesses to join established vehicles mid-life. Risks include potential protests from incumbents due to new contractors having the advantage of hindsight, pricing disparities between new and old contract holders, operational integration challenges on long-term programs, and increased administrative burden to manage open season periods.
Major System Acquisition and ICT Changes (Parts 34 & 39): Reduced burden and updated accessibility for information/communication technology competitions and contractors. Streamlined post-award task/delivery order accessibility. The Earned Value Management System (EVMS) is now required only when OMB Circular A-11 explicitly triggers it for major development acquisitions.
- Impact: Less prescriptive for IT buys. IT contractors will see streamlined planning/evaluation.
Contract Modifications Standards (Part 43): Focused on risk limitation; simpler availability-of-funds rules.
- Impact: Easier bilateral mods. Contractors will face fewer bureaucratic hurdles for contract changes.
III. Advantage to Businesses with Commercial Offerings
Massive Expansion of Simplified/Streamlined Procedures Thresholds (Part 12): Simplified solicitation/evaluation procedures (e.g., RFQs to POs, minimal documentation, no formal plans/competitive ranges) now apply up to $9M standard (or $15M for emergencies/ contingencies/cyber defense). Pre-RFO, these flexibilities were more limited and often tied to SAT ~$250K–$350K via old Part 13.5.
- Impact: Lower barriers for small businesses entering via commercial lanes but reduced mandatory set-aside application in these tiers (no automatic Rule of Two in Part 12 streamlined processes). Small firms benefit from speed but face more competition in non-set-aside zones.
Stronger Emphasis on Commercial Solutions and Market Research Flexibility (Parts 10 & 12): Market research techniques broadened (no mandatory lists; allows innovative methods like reverse industry days/expert panels); stronger mandate to prioritize commercial products/services first.
- Impact: Easier entry for commercial contractors; faster non-developmental buys.
Broader Encouragement of Commercial Solutions and Priority Sources (Parts 10/12): Stronger mandate to use commercial products/services (e.g., GWACs/BICs) and priority sources (e.g., Part 8 schedules).
- Impact: Businesses offering commercial items are advantaged.
Increased Contracting Officer Discretion in Commercial Offerings Evaluations and Late Submissions (Part 12): No required evaluation plans/scoring/competitive ranges; broad discretion to accept late quotes using good judgment; explicit push for innovative approaches to cut costs/lead times and boost small business participation.
- Impact: Advantages agile small businesses (e.g., via oral presentations/demos) but reduces predictability.
Two new competitive source selection approaches (Part 15): Previously, Lowest Price, Technically Acceptable (LPTA) and Best Value (BV) tradeoff were the competitive source selection approaches. Two have been added: Highest Technically Rated with a Fair and Reasonable Price (HTRFRP) and Phased Acquisitions, including multi-stage/phased evaluations with progressive down-selects.
- Impact: Greater Contracting Officer discretion. (a) In HTRFRP procurements, maximizing technical scores is the priority; price is secondary (in contrast to LPTA). Risk of elimination if not technically top-rated, even with competitive pricing. (b) In phased acquisitions, early phases allow smaller/innovative firms to compete without full proposals upfront; progressive down-selects reward strong performers advancing. Taken together, (a) and (b) promote quality/innovation-focused awards.
IV. Shifts within Regulations Concerning Small Business
Rule of Two Maintained, but with Greater Contracting Officer Discretion and Scope Adjustments (Part 19): The "Rule of Two" (set-aside if ≥2 capable small businesses at fair prices) is preserved above the micro-purchase threshold (MPT) to SAT, and for larger actions with a reasonable expectation. The Rule of Two (or any mandatory set-aside requirement) is not directed for orders under MACs. Set-asides at the order level remain discretionary, and the Contracting Officer’s decision to set aside (or not set aside) an order is an explicit exercise of agency discretion and not a basis for protest. This resolves prior interpretive conflicts (e.g., between GAO and COFC on whether the Rule of Two extended to orders) by codifying discretion and protest immunity.
- Impact: Reduces mandatory set-asides, especially for repetitive or follow-on work under MACs. Contracting Officers can more readily place unrestricted, full and open, orders when small business capability is uncertain, market dynamics shift, or mission needs prioritize speed/innovation. Explicit non-protestability of order-level set-aside decisions likely lowers bid protest volume/risk on MAC orders.
Elimination of Order-Level Size Rerepresentation on Multiple-Award Contracts (Part 19): Small business size status determined at base contract award; no routine re-representation at task/delivery order level (novation, mergers, and acquisitions still trigger mandatory rerepresentation).
- Impact: Helps incumbents retain status in IDIQs/GWACs despite their corporate growth beyond the small business definition. No longer requires small businesses to either stay small or become a subcontractor to another small business.
Exception to fair opportunity (Part 16): Sole-source orders and Blanket Purchase Agreements (BPAs) under multiple-award indefinite-delivery contracts do not require every awardee a fair opportunity to be considered for task orders to small businesses. Above MPT but ≤ SAT, the Contracting Officer documents the basis for the exception in writing, with no higher-level approval or GPE posting required. Above SAT: full written justification (detailed elements like agency ID, description, rationale, fair/reasonable price determination, actions to overcome barriers, certifications) and escalating approvals (CO certification for ≤$900K; advocate for competition or higher for $900K–$20M; head of procuring activity or equivalent for $20M–$90M/$150M DoD/NASA/CG; senior procurement executive above that) as well as GPE posting.
- Impact: Contracting Officers have discretion to tailor procedures: no formal J&A format, approvals, or public posting. More predictable sole-source opportunities where exceptions fit. Small businesses benefit from set-aside flexibility without extra hurdles.
Automatic release of follow-on requirements from the 8(a) Business Development Program (Part 19): Ends the “once 8(a), always (8a)" rule. Follow-on requirements (i.e., a successor contract or renewal to an incumbent 8(a) contract) are automatically released from the 8(a) Program without any formal SBA release request or approval if the agency intends to set aside the follow-on under one of the other socioeconomic small business programs: HUBZone Small Business Program; Service-Disabled Veteran-Owned Small Business (SDVOSB) Program; Women-Owned Small Business (WOSB) Program, including Economically Disadvantaged WOSB/EDWOSB. This automatic release applies specifically when the follow-on will be restricted (set aside) for competition or sole source under those programs. It does not apply to unrestricted, full and open, follow-ons or set-asides solely for total small business (non-socioeconomic) or other categories.
- Impact: Eliminates the time-consuming SBA release process (previously often requiring justification and SBA coordination under 13 C.F.R. § 124.503(d)(1)). Agencies can more easily transition follow-on work to align with changing small business goals, market conditions, or other socioeconomic priorities (e.g., shifting from 8(a) to HUBZone if HUBZone firms show stronger capability). Incumbent 8(a) firms may lose automatic "right of first refusal" on follow-ons if the agency opts for HUBZone/SDVOSB/WOSB set-aside. HUBZone firms, holding an advantage over SDVOSB and WOSB in being without an income ceiling or personal identity category, may gain new access to follow-on opportunities previously locked in 8(a). This expands the pool of potential awards, especially for repetitive or renewal work and will increase competition.
Not One and Done
All FAR sections not required by statute must expire 4 years after the effective date of the section, unless renewed by the Federal Acquisition Regulatory Council (Part 1): Automatic expiration applies to non-statutory rules remaining after the overhaul and to any new non-statutory rules added in the future. The FAR Council must periodically re-evaluate and actively choose to retain every non-statutory rule. This language replaces the old FAR 1.109, which addressed inflation adjustments to statutory dollar thresholds.
Impact: Businesses rely on stable rules for long-term strategies. This language moves against that stability. The FAR Council must actively review and vote to renew hundreds of provisions on a rolling four-year cycle to prevent the elimination of rules. In turn, contractors and Contracting Officers face a world where regulatory clauses may disappear mid-solicitation or mid-performance. This raises questions about contract modifications, pricing adjustments, disputes, or even protests/claims if a clause sunsets during a contract. This proposed language means that regulation and deregulation may be fluid, rendering the FAR as a constant focal point into the future. Ultimately, if upheld through the rule-making process, this rewrite of 1.109 could, by generating additional uncertainty in government contracting, accelerate the shift of federal acquisition toward procuring commercial solutions subject to fewer government-unique rules.