This Q2 Regulatory & Policy Newsletter provides a brief review of selected federal acquisition, regulatory, and oversight developments affecting government contractors during the second quarter of FY 2026.
Overview of Topics
CAS Conformance – Final Rulemaking
FAR Part 30 – Cost Impact Changes
FAR Part 49 – Proposed Rule to Implement Changes
Executive Order – Fixed Price Contracting
OMB Memorandum M-26-12 – Commercial Acquisition Enforcement
GSA Acquisition Regulation (GSAR) Overhaul – Q2 Launch
SBA Administrative False Claims Act
Updates from Q1
TINA and CAS Thresholds Arriving as Scheduled
Several policy changes identified in Q1 took effect in Q2. The Truthful Cost or Pricing Data (TINA) threshold increase, from $2.5 million to $10 million, took effect June 30, 2026 through the 2026 NDAA. Contracts awarded before that date remain subject to the $2.5 million threshold, resulting in a temporary dual-threshold environment; however, all new contracts are subject to the updated threshold.
Cost Accounting Standards (CAS) thresholds also increased. The basic contract-level threshold for CAS applicability rose from $2.5 million to $35 million, thereby exempting many contracts that would have been CAS covered. In addition, the threshold for full CAS coverage increased from $50 million to $100 million.
GSA Refresh Becomes Effective
GSA MAS Refresh 31, effective April 2, 2026, extends Transactional Data Reporting (TDR) requirements across all Special Item Numbers, which requires contractors to submit detailed, monthly, line-item sales data in the online portal. Under Mass Mod A909, which was only issued to contracts not already participating in TDR, reporting begins in the first full quarter following contractor acceptance of the modification, making acceptance timing a key determinant of initial reporting obligations. If the Mass Mod was not accepted by June 30th, your contract be canceled at the CO’s discretion. New TDR participants have a grace period through December 31, 2026, during which they will not be penalized for noncompliance while they adjust to the reporting requirements.
CAS Conformance – Final Rulemaking
CAS Conformance Continues, Several Standards Rescinded
On July 8th, 2026, the CAS Board published a final rule that will take effect on August 7th, 2026, which wholly rescinds CAS 408 and 411. The CAS Board also rescinded the majority of CAS 404 and 409, while keeping requirements from CAS 404-50(d)(1), CAS 409-50(e)(5), CAS 409-50(j)(1), and CAS 409-50(j)(4), but relocating them to new paragraphs in CAS 405. This was done in an effort to continue conformance with GAAP and remove redundancy.
FAR Part 30 – Cost Impact Changes
FAR Part 30/CAS Cost Impact Changes
Implementation of FY 2026 NDAA changes to Cost Accounting Standards continues. The legislation amended 41 U.S.C. §1503 to reduce the role of fixed-price contracts and address increased costs in the aggregate in CAS cost-impact calculations associated with accounting practice changes and CAS noncompliance. The Cost Accounting Standards Board is going to evaluate the need for additional clarity of the Board’s definition of “increased costs in the aggregate” as required by 41 U.S.C 1503(b) and the handling of cost impacts for unilateral cost accounting practice changes. These developments will significantly affect how contractors calculate and resolve CAS cost impacts going forward.
FAR Part 49 – Proposed Rule to Implement Changes
FAR Council Proposed Rule to Significantly Impact Termination Settlements
On June 23rd, as part of Phase II of the FAR Overhaul, the FAR Council proposed a rule to make changes to FAR Parts 3 and 49. The deadline for public comment on the proposed rule is July 23rd. Most of the proposed changes to FAR Part 3 are minor changes to the language, including the removal of obsolete and duplicative sections. All statutory requirements are retained.
FAR Part 49 on the other hand, has very significant proposed changes that will significantly impact contractors. One significant proposed change is to replace the mandatory termination settlement proposal audit requirement with a permissive, risk-based approach. Removed is the certified cost or pricing data threshold as a trigger for an audit, and the discretion to determine whether audit support is appropriate is granted to the termination contracting officer.
Furthermore, the rule proposes revisions to the timeframes for the submission of termination settlement proposals and inventory schedules in FAR Part 49 and the corresponding contract termination clauses in FAR Part 52. The revisions will shorten the timeframe for submission of inventory schedules from 120 days to 60 days following the termination, and shortens the timeframe for extension requests to within 30 days of termination notice rather than 120 days. Further, it alters the timeframe for submission of termination settlement proposals from 1 year to 90 days and shortens the contractor extension request timeframe from 1 year to 60 days. These are significant proposed alterations that contractors should actively track.
Executive Order – Fixed Price Contracting
Administration Establishes Fixed-Price as Default Contract Type
On April 30, 2026, President Trump signed Executive Order “Promoting Efficiency, Accountability, and Performance in Federal Contracting,” establishing fixed-price contracting as the default method of procurement for executive branch agencies.
The Order designates cost-reimbursement, time-and-materials, and labor-hour contracts as exceptions, requiring written justification by the contracting officer and additional approval for higher-value actions. This formalizes fixed-price contracting as the baseline contract type rather than a discretionary selection under existing FAR guidance.
The Order also directs each agency head to review the agency’s ten largest non-fixed-price contracts by dollar value within 90 days of issuance and, to the maximum extent practicable and consistent with law, pursue modification or restructuring toward fixed-price or performance-based arrangements. This places the review deadline at approximately July 29, 2026. Research and development, pre-production development of major systems, and contracts supporting emergency or contingency operations are exempt.
Contractors with existing cost-type or time-and-material portfolios should monitor solicitations and program activity for early indications of contract restructuring or conversion efforts.
OMB Memorandum M-26-12 – Commercial Acquisition Enforcement
Preference for Commercial Products and Services Moves to Active Oversight
On April 17, 2026, OMB Director Russell Vought issued Memorandum M-26-12, “Increasing the Acquisition of Commercial Products and Services,” implementing Executive Order 14271. The memorandum directs agencies to prioritize commercially available products and services where they can meet requirements and introduces enhanced oversight of non-commercial procurement decisions.
The memorandum required agencies to submit a report to OMB by May 4, 2026 detailing non-commercial procurement activity, including the number of pre-award non-commercial actions as of March 31, 2026 and, for actions exceeding $10 million, descriptions of the requirement, planned contract type, and senior procurement executive oversight. It also requires agencies to establish controls ensuring senior-level review of non-commercial awards and to strengthen the role of competition advocates and commercial acquisition benchmarking data in federal systems.
For contractors, this marks a shift from policy preference to active enforcement, with agencies now accountable to OMB for non-commercial procurement decisions.
GSA Acquisition Regulation (GSAR) Overhaul – Q2 Launch
Regulatory Streamlining Extends to GSA’s Agency Supplement
In January 2026, GSA’s Senior Procurement Executive issued memorandum RGO-2026-01 initiating the Revolutionary GSAR Overhaul (RGO) alongside the broader FAR overhaul effort. The GSAR, which governs acquisition policies within the GSA Acquisition Manual, directly affects contractors and offerors on GSA vehicles.
Consistent with the FAR overhaul model, GSA is implementing GSAR changes through class deviations issued throughout FY 2026 in advance of formal rulemaking. These deviations remove non-statutory requirements, reduce redundant or outdated provisions, and align GSAR language with the standardized framework being adopted across the FAR. Contracting officers are directed to follow applicable RGO deviation text in place of existing GSAR provisions as updates are released.
GSA maintains a rollout schedule through its Office of Acquisition Policy, and contractors should monitor the GSAR Overhaul page for new deviations. Because these changes may affect contract terms, solicitation requirements, and internal processes on GSA vehicles, contractors should ensure that compliance practices, proposal approaches, and standard subcontract language remain aligned with updated deviation text as it is issued.
SBA Administrative False Claims Act
Expanded Enforcement Authority Takes Effect
On March 19, 2026, the Small Business Administration issued a direct final rule amending 13 CFR Part 142 to implement the Administrative False Claims Act of 2023 (AFCA), enacted December 23, 2024. The rule is effective as of May 4, 2026.
The rule renames the prior Program Fraud Civil Remedies Act framework and incorporates updated statutory provisions expanding SBA’s administrative enforcement authority. Most notably, the claim threshold for administrative false claims actions increased from $150,000 to $1 million.
The updated framework also introduces “reverse false claims” liability and expands the scope of conduct subject to administrative enforcement, allowing SBA to pursue certain claims through agency-level proceedings without initiating federal court litigation. These changes broaden SBA’s ability to address false claims involving contractors, grantees, and program participants.
For 8(a) participants and other SBA program contractors, the rule is particularly relevant in the current enforcement environment. Contractors should ensure that representations and submissions associated with SBA programs are accurate, complete, and fully supported, as the expanded administrative framework increases potential exposure in compliance reviews.
For further information on any of the developments discussed in this newsletter, please contact Chess Consulting.