Cost, Compliance & Risks

Given the slew of Executive Orders (EOs) last year focusing on diversity, equity, and inclusion (DEI) and roiling the funding and operations of recipients of federal financial assistance such as universities and nonprofits, recipients may be forgiven for passing over EO 14398, dated March 26, 2026. As we’ve been covering (here and here), EO 14398 marks a second phase of the administration’s focus on “racially discriminatory DEI activities.” Where EOs from 2025 focused on broad policy shifts and internal agency operations, 2026 EOs seek prospective operationalization of the administration’s policy preferences by baking restrictions on DEI activities into federal contracts.

Continue Reading Recipients of Federal Financial Assistance Can Look to the New DEI Clause to Prepare for Potential Increased Scrutiny of Their Own Awards

The Department of Defense’s proposed rule implementing Section 847 of the FY 2020 NDAA could fundamentally reshape how foreign ownership, control, or influence (FOCI) is monitored across the defense industrial base. Through proposed DFARS Part 240, the rule would extend recurring FOCI disclosure, National Industrial Security System (NISS) reporting, and Defense Counterintelligence and Security Agency (DCSA) oversight far beyond the traditional facility-clearance context and into ordinary government contracting. For foreign-owned contractors, allied-country suppliers, private equity sponsors, and federal subcontractors, the proposal signals the emergence of a permanent compliance regime built around continuous visibility rather than one-time vetting.

Friends, Romans, contractors, lend me your ears;
I come to disclose your owners, not to debar them.
The FOCI that contractors do is oft assessed;
The clearances are oft interred with their bones.
So let it be with allies. The honorable rule
Hath told you that we treat all foreigners alike;
If it be so, it is a grievous form,
And grievously hath the SF-328 answered it.

The speech may be a little ridiculous, but in its way, it’s also a little accurate. The proposed DFARS rule implementing Section 847 of the FY 2020 NDAA is not unkind to allies. It is, as was Mark Antony, scrupulously polite to them, right up to the moment it asks them to register as suspects.

Continue Reading Section 847 and the New Era of DOD Continuous FOCI Monitoring

A 2026 federal executive order reshapes federal procurement policy by directing agencies to use fixed-price contracts as the default under FAR Part 16, while requiring written justification and higher-level approval for cost-reimbursement, time-and-material, and labor-hour contracts. The order also establishes agency approval thresholds, carve-outs for R&D and contingency work, and a phased implementation schedule through OMB guidance and FAR Council rulemaking. For government contractors, the change affects how agencies structure acquisitions, allocate risk, and modify existing and future contracts, with significant implications for federal procurement strategy and compliance in 2026.

Continue Reading Cost-Plus Out. Fixed-Price In.

If your supply chain crosses a border, your FAR 52.222-90 flowdown is probably already wrong. Either it overpromises in ways an EU, UK, or South African supplier cannot sign without violating local law, or it underpromises and creates False Claims Act (FCA) exposure on the US side. Both versions of the problem land on the same desk, and they land on a clock.

As we covered in a prior post, FAR 52.222-90 is not a routine flowdown. It reaches subcontract administration, records access, reporting obligations, bilateral modifications, suspension and debarment, and FCA materiality. In cross-border scenarios, those same hooks meet a thicket of foreign equality, pay-transparency, sustainability, human-rights, privacy, and disclosure-blocking regimes. The result is predictable confusion, and confusion in this clause is expensive.

Continue Reading FAR 52.222-90 Goes Global: Cross-Border Supply Chains and the Limits of a US Flowdown

The biggest danger may be misreading the order—and creating new exposure in the process.

On March 26, 2026, President Trump issued an executive order (EO) titled “Addressing DEI Discrimination by Federal Contractors.” Read at the headline level, the order can sound like another broad anti-diversity, equity, and inclusion (DEI) pronouncement. Read as a procurement directive, however, it is something more concrete and more consequential: a command to federal agencies to begin inserting a mandatory clause into covered contracts and contract-like instruments, including subcontracts and lower-tier subcontracts, within 30 days. That shift, from messaging to mechanics, is the real story.

Continue Reading Beyond the Headlines: The Real Contractor Risks in the New DEI Executive Order

As we move into spring—a season for tightening processes, clearing the backlog, and getting every detail right—a recent Government Accountability Office (GAO) bid protest decision delivers a timely reminder: in government contracting, a single compliance miss can be outcome determinative.

Last month, in Morrish-Wallace Construction, Inc. d/b/a Ryba Marine Construction Co., the GAO sustained a protest where the agency awarded a contract to a bidder that failed to acknowledge a material solicitation amendment. The decision is an instructive case study in why amendment acknowledgment is not just a box to check—it also is a binding legal act.

Continue Reading Spring Cleaning Your Proposals: GAO’s Latest Reminder That Compliance Is Critical

In every crisis, half the room runs in circles while the other half picks up a clipboard and starts taking stock. The Anthropic-Pentagon dispute is that crisis, and defense contractors are deciding which half they want to be in.

The short version: The government designated a FedRAMP-authorized, facility-cleared American AI company a national security supply chain threat, via social media, after the company refused to remove safety restrictions on autonomous weapons and mass surveillance. Anthropic sued days later, with the Pentagon’s own officials on the record stating the designation was “ideologically driven” with “no evidence of supply chain risk.”

Continue Reading Don’t Panic! How Federal Contractors Should Navigate the Anthropic Designation

“I felt a great disturbance in the Force, as if millions of voices suddenly cried out in terror and were suddenly silenced.”

When Obi-Wan Kenobi says this in Star Wars: Episode IV – A New Hope, he senses that something profound just changed in the galaxy. A powerful presence has vanished. The balance of power shifting in ways that will ripple far beyond the immediate moment. As Yoda later describes the Force: “Life creates it, makes it grow. Its energy surrounds us, binds us.” In this way, artificial intelligence (AI) is beginning to play a role for the US Defense Industrial Base (DIB) not unlike the Force itself—quietly enhancing the capabilities of engineers, analysts, and compliance professionals across thousands of organizations supporting national defense programs.

So what could happen if a major AI player suddenly disappears from the board?

Continue Reading Orbiting A.I.-deraan? A Disturbance in the Force for the Defense Industrial Base

The Department of Justice (DOJ) recently announced that False Claims Act (FCA) settlements and judgments exceeded $6.8 billion in fiscal year 2025. This massive haul is the largest annual recovery in the statute’s storied history. Although health care enforcement continues to account for the majority of recoveries, DOJ’s annual statistics confirm that procurement fraud, cybersecurity compliance, pandemic-program enforcement, and trade-related fraud remain core enforcement priorities that government contractors should not ignore. The FY 2025 numbers reinforce a familiar message: FCA enforcement remains one of DOJ’s most powerful tools for policing federal spending, and contractors should expect continued scrutiny of their certifications, representations, and contract compliance systems.

Continue Reading Now That’s a Lot of Money: DOJ’s Record-Setting FCA Year Reflects Intensifying Enforcement Pressure on Government Contractors

The FY2026 National Defense Authorization Act (NDAA) became law on December 18, 2025, enacting a tidal wave of the Trump administration’s priorities with respect to Department of Defense (DoD) procurement. One key priority reflected in the NDAA is reducing compliance burdens so that (i) established DoD contractors are incentivized to pursue awards and (ii) more companies opt in to being a DoD contractor to grow the industrial base. Importantly, Section 1804 and Section 1806 of the NDAA take action on this priority by raising the dollar thresholds for complex domains of government contracting: the Cost Accounting Standards (CAS) and submission of certified cost or pricing data. While these changes are welcome developments, companies should be cognizant that a steady stream of compliance requirements remains even with these increased thresholds.

Continue Reading Swept Away: FY2026 NDAA Updates to CAS and Certified Cost or Pricing Data Thresholds