What's Happening?
The Federal Acquisition Regulation (FAR) Council has published a second batch of four proposed rules in the Federal Register, marking Phase Two of the Revolutionary FAR Overhaul (RFO). This initiative, launched by Executive Order 14275 from President
Trump in April 2025, aims to simplify and streamline the FAR, which has been in place for over 40 years. The current set of proposed rules addresses various FAR Parts, including 8, 9, 12, 13, 14, 15, 16, 17, 27, 28, 35, 36, 38, 44, 47, and 51. Key changes include the removal of FAR Part 38 as duplicative of the General Services Administration Acquisition Regulation and the streamlining of Part 44. Notably, FAR Part 51 will be removed, with its content relocated to Part 8. The proposed rules also introduce significant shifts in contracting officer discretion, moving away from prescriptive mandates towards a framework that emphasizes the contracting officer's authority to apply policies and practices. The comment period for these proposed rules is 31 days, closing on October 19, 2026.
Why It's Important?
This second round of proposed rules for the FAR overhaul is critical for federal contractors, in-house counsel, and procurement professionals. The shift towards increased contracting officer discretion, while potentially leading to faster and more innovative acquisitions, also introduces the risk of inconsistency and reduced predictability in the procurement process. Contractors will need to adapt to a new environment where the focus may move from strict regulatory compliance to the reasonableness of individual judgment calls. The alignment of FAR data rights with the Defense Federal Acquisition Regulation Supplement (DFARS) framework is expected to yield significant cost savings by allowing contractors to operate under a single data-rights system across all agencies. Furthermore, the overhaul strengthens intellectual property protections for small businesses involved in Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs by replacing the extendable four-year protection period with a single, non-extendable 20-year term. These changes will necessitate a thorough review of current practices and strategies for all stakeholders in federal contracting.
What's Next?
Interested stakeholders, including contractors, in-house counsel, and procurement professionals, have until October 19, 2026, to submit comments on the proposed rules. Given the compressed comment period, it is crucial for these groups to promptly assemble cross-functional teams to analyze the proposed changes, identify potential impacts on risk allocation and acquisition strategies, and develop concrete drafting recommendations. The FAR Council will then review these comments as part of the formal rulemaking process. The implementation of these rules, once finalized, will require agencies to adapt their procurement procedures and contractors to adjust their bidding and operational strategies. The broader RFO framework also includes a four-year regulatory sunset for non-statutory FAR sections, meaning that implementation will remain dynamic even after these cases are finalized, requiring continuous monitoring and adaptation from all parties involved in federal contracting.
Beyond the Headlines
The Revolutionary FAR Overhaul represents a fundamental shift in the philosophy of federal procurement, moving from a highly prescriptive model to one that grants greater discretion to contracting officers. This change has deeper implications beyond mere procedural adjustments. It reflects a broader effort to enhance efficiency and innovation in federal contracting, potentially fostering a more agile and responsive procurement ecosystem. However, it also places a greater emphasis on the judgment and documentation practices of individual contracting officers, which could lead to increased scrutiny and potential for protest disputes if not managed effectively. The integration of new executive and statutory requirements, such as those related to promoting efficiency, accountability, and performance, and addressing DEI discrimination by federal contractors, underscores the evolving priorities of federal procurement. The overhaul's impact on small businesses, particularly regarding intellectual property rights, could stimulate innovation and participation from a wider range of companies in federal projects, contributing to a more diverse and competitive contractor base.
