This Q1 Regulatory & Policy Newsletter provides a brief review of selected federal acquisition, regulatory, and oversight developments affecting government contractors during the first quarter of FY 2026.
Overview of Topics
Defense Acquisition Policy & Executive Action
FY 2026 NDAA and Procurement Policy
Cost Accounting Standards (CAS) and TINA Thresholds
Small Business Administration – 8(a) Program Enforcement
Defense Contract Audit Agency (DCAA)
General Services Administration (GSA)
Small Business Innovation Programs (SBIR/STTR)
Defense Acquisition Policy & Executive Action
Executive Order Prioritizing the Warfighter
In January 2026, the Trump Administration issued Executive Order No. 14372, “Prioritizing the Warfighter in Defense Contracting,” directing the Department of War (DoW) and supporting agencies to reorient acquisition and industrial base decision-making around direct warfighter needs. The order emphasizes production capacity, delivery speed, innovation, and mission reliability as central acquisition priorities, reinforcing concerns that existing processes have prioritized financial performance and procedural compliance at the expense of operational readiness.
The Executive Order instructs the DoW to actively assess whether contractor behavior, including capital investment decisions, workforce allocation, and prioritization between government and commercial programs, aligns with national defense requirements. While the order does not introduce new statutory authorities, it formalizes an expectation that the government use existing regulations and methods/audits to address underperformance more aggressively. Major defense contractors should expect heightened oversight of delivery schedules and production capacity as the DoW incorporates these priorities into future solicitations and contract administration.
FY 2026 NDAA – Procurement Policy
Expanded Commercial Procurement and Approval Thresholds
The FY 2026 National Defense Authorization Act (“NDAA”) advances Congress’s multi‑year effort to modernize defense acquisition by strengthening commercial procurement pathways and restructuring acquisition oversight around portfolio‑based management. The Act directs portfolio acquisition executives to manage capability portfolios emphasizing commercial products and services, reflecting Congress’s intent to accelerate adoption of “innovative commercial solutions. The NDAA also raises the approval threshold for certain noncompetitive or sole-source awards requiring Justification & Approval (J&A) documents under FAR 6.3 from $75 million to $500 million, reducing the number of large sole-source awards requiring senior‑level departmental reviews.
These changes are intended to accelerate acquisition timelines, reduce internal bottlenecks, and empower contracting teams to move more quickly when procuring commercially derived capabilities. For contractors, the shift toward commercial pathways and higher J&A thresholds may translate into faster award cycles but also increased expectations for performance discipline.
FY 2026 NDAA – Cost Accounting Standards (CAS) and Truthful Cost or Pricing Data (TINA) Thresholds
Updated Statutory Thresholds Take Effect
Revised CAS applicability thresholds and updated Truthful Cost or Pricing Data thresholds are identified in the FY2026 NDAA. These statutory updates adjust the threshold for when contractors must submit certified cost or pricing data, demonstrate CAS-compliant accounting systems, and/or submit CAS disclosure statements. The revised thresholds are $35,000,000 for modified CAS coverage, $100,000,000 for full CAS coverage, and $10,000,000 for TINA.
These updated changes to TINA are expected to take effect June 30th, 2026, when the FAR is revised pursuant to section 1804 of the FY2026 NDAA, while the CAS thresholds must be implemented within 180 days of the NDAA’s signing. For some contractors, the changes will reduce compliance burden by exempting future awards from cost or pricing data certification and CAS/disclosure requirements.
Small Business Administration (SBA) – 8(a) Program Enforcement
Large-Scale Suspensions and Terminations Continue
As of January 28, 2026, SBA confirmed that 1,091 firms were suspended from the 8(a) Business Development Program for failing to provide the requested three years’ worth of financial documents. Over 620 contractors were terminated from the 8(a) Program as of early March.
The number of removals suggests a structural change to the 8(a) program rather than ad hoc enforcement. Agencies and contracting officers are approaching 8(a) awards with increased caution, which may result in procurement delays and heightened scrutiny during responsibility determinations.
Defense Contract Audit Agency (DCAA)
New Audit Programs Released
DCAA issued updated versions of several audit programs in early 2026, including those covering post–year‑end incurred cost audits (small and large contractors), uniform audit guidance, claim audits, CAS 403 and CAS 414 compliance, forward‑pricing rate proposals, and contract terminations. A review of recent DCAA audit program updates indicates that the 2026 revisions were largely clarifying and streamlining rather than substantive. Contractors should still review the updated versions of these audit programs.
DCAA Report to Congress
DCAA recently released its annual Report to Congress, providing an overview of audit activity, questioned costs, sustained audit findings, and trends in contractor compliance across the defense industrial base. The report highlights areas of continued audit focus, including incurred cost audits, business systems, and Cost Accounting Standards (CAS) compliance, and describes DCAA priorities for the coming year.
General Services Administration (GSA)
Multiple Award Schedule (MAS) Refresh 31 Expands Transactional Data Reporting (TDR)
GSA issued MAS Refresh 31 in early April, extending Transactional Data Reporting requirements to all Special Item Numbers. This marks a significant expansion of data reporting obligations for MAS contractors, many of whom were previously exempt. As GSA increasingly relies on transactional data to assess pricing reasonableness, controls supporting data accuracy and completeness are becoming increasingly important and represent areas of greater compliance risks.
The refresh officially went live on April 2nd, and per Mass Mod A909, TDR reporting will begin in the following quarter after the Mass Mod has been accepted by contractors who were not already under TDR.
Small Business Innovation Programs (SBIR/STTR)
Senate Advances Long-Awaited Program Refresh
During Q1, the Senate advanced the Small Business Innovation and Economic Security Act, which was signed by the President on April 13th, to refresh both the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs following an extended period of uncertainty surrounding program authorization and funding. The refresh adds national-security and due diligence requirements, introduces new limits on proposal volume, and accelerates award timelines.