Sweeping Federal Contracting Overhaul Enters Formal Rulemaking With First Proposed Rules

WASHINGTON — The federal government’s ambitious “Revolutionary FAR Overhaul” took a major step forward this week, moving from a year-long phase of agency-specific directives to the formal rulemaking process with the planned publication of its first four proposed rules on Tuesday.

The initial tranche of proposals, which spans more than 1,000 pages, will begin the process of codifying sweeping changes to 20 sections of the Federal Acquisition Regulation (FAR), the rulebook that governs the nearly $700 billion in goods and services the U.S. government buys each year. The move signals a critical new phase for an initiative aimed at dramatically simplifying federal procurement.

For small and mid-sized businesses that contract with the government, this shift from temporary deviations to permanent rules creates both opportunities and challenges. While the goal is simplification, the transition period itself introduces a new layer of complexity. We've observed that many companies struggle to keep pace when regulations are in flux, as they have been for the past year. Adapting internal workflows and compliance checks to a constantly moving target is a significant operational burden. This is precisely the kind of scenario where expert guidance in business process reengineering becomes essential for maintaining compliance and competitiveness.

Initiated by a presidential executive order in April 2025, the overhaul is the first comprehensive rewrite of the FAR in 40 years. The Federal Acquisition Regulatory Council was tasked with streamlining the regulations, retaining only provisions mandated by statute or deemed essential for sound procurement. According to the Office of Management and Budget (OMB), the effort has already trimmed 500 pages and eliminated 3,000 mandates from the regulations.

“As we celebrate 250 years of independence and the revolutionary spirit of our founders, it’s only fitting that we implement this bold and truly revolutionary overhaul,” Kevin Rhodes, Administrator of the Office of Federal Procurement Policy, said in a statement.

For the past year, these changes have been implemented through a unique “adopt first, finalize later” strategy. The FAR Council issued model deviation guidance, which federal agencies were directed to adopt within 30 days. This allowed the new procurement standards to take effect before the conclusion of the formal notice-and-comment rulemaking process, a move that some in the industry found unsettling.

An OMB official, speaking on condition of anonymity, noted that because of this process, the substance of the proposed rules should not be a surprise. “Industry and government have largely seen these changes in the deviations, but there are additional differences or changes from what we have in deviations,” the official said. “The general premise for each of the rules should already be familiar to most people. This is now to tell us where we missed something or how to refine a particular area.”

The four proposed rules published this week cover a wide range of procurement activities. Affected FAR parts include Part 1 (FAR System), Part 7 (Acquisition Planning), Part 33 (Protests, Disputes, and Appeals), and Part 49 (Termination of Contracts). Part 52, the FAR’s extensive library of contract clauses, is referenced in all four proposed rules.

Several significant changes are embedded in the proposals. One of the most notable is a plan to move the bid protest system, which handles disputes over contract awards, from the Government Accountability Office to the individual agencies involved in the procurement. Another key theme is granting more discretion to federal contracting officers by converting many previously mandatory requirements into optional actions.

Other specific updates include the consolidation of market research rules (formerly Part 10) into the section on acquisition planning (Part 7). The rules also formally delete clauses related to A-76 public-private competitions, which have been under a congressional moratorium since 2008. Part 40, which covers information and supply chain security, is being updated to harmonize security requirements, including those for controlled unclassified information and the government's “Do Not Buy” list of prohibited vendors and products.

The shift to empower contracting officers with more discretion is a double-edged sword for businesses. On one hand, it could accelerate procurement and allow for more flexible, common-sense solutions. On the other, it introduces unpredictability and makes the strength of a company's relationships and its reputation for performance more critical than ever. In our experience, navigating this less-codified environment requires a proactive strategy for engagement and a deep understanding of agency-specific priorities. Companies that fail to adapt their approach may find themselves at a disadvantage. For guidance on recalibrating your government contracting strategy, contact C&S Finance Group LLC at csfinancegroup.com.

Once the rules are officially published in the Federal Register, the public will have a 30-day window to submit comments, a period some industry observers consider the bare minimum for a change of this magnitude. The OMB has stated an ambitious goal of finalizing this first batch of rules by the end of the 2026 calendar year.

This is only the beginning of the formal overhaul process. The FAR Council is expected to release at least two more batches of proposed rules in the coming months. These future releases will address some of the most frequently used sections of the FAR, including Part 19 (Small Business Programs), Part 12 (Acquisition of Commercial Products and Commercial Services), and Part 16 (Types of Contracts), which will be of particular interest to the small and mid-sized business community.

Stakeholders will be closely watching the public comment period for this first set of rules to see how industry feedback shapes the final text. The government's response will set the tone for the subsequent rulemakings and determine whether the final, codified overhaul truly simplifies the federal marketplace or creates new unforeseen complexities for contractors.