Gordon Rees Scully Mansukhani’s Government Contracts practice highlights the key developments from the past month and their implications for federal contractors. The team tracks significant decisions, regulatory changes, and practical updates to help contractors stay compliant in a rapidly changing environment.
Tune in to The Essential GovCon Brief podcast on Spotify or YouTube for a discussion on the issues highlighted below.
FAR Council Proposes Sweeping Changes to Commercial Acquisitions and Contracting Procedures
On September 18, 2026, the Federal Acquisition Regulatory (FAR) Council published several proposed rules advancing the Revolutionary FAR Overhaul (RFO), an initiative established under Executive Order 14275, Restoring Common Sense to Federal Procurement. These proposals would revise regulations governing commercial acquisitions, negotiated procurements, contract types, special contracting methods, and research and development contracting. The proposed revisions seek to simplify procurement procedures, eliminate unnecessary requirements, and provide contracting officers greater flexibility.
Among the most significant changes, FAR Case 2026-003 would reorganize FAR Part 12 into a “one-stop shop” for commercial acquisitions, consolidating publicizing, simplified acquisition, and micro-purchase procedures. It would also relocate existing authority to use simplified procedures for commercial acquisitions valued up to $9 million, or $15 million for certain emergencies and major disasters, from FAR subpart 13.5 to Part 12. Revisions to FAR Part 8 would increase reliance on existing governmentwide contracts and purchasing vehicles, potentially making access to those vehicles increasingly important for contractors.
The proposed revisions to FAR Part 15 would also significantly change how the government interacts with offerors. The rule would narrow the definition of “deficiency” to an offer’s failure to conform to a material solicitation requirement, eliminating the current provision treating a combination of significant weaknesses as a deficiency. It would also expand permissible “clarifications” to include ambiguities, perceived deficiencies, weaknesses, errors, omissions, and mistakes. Under the proposed revisions, contracting officers would have greater flexibility to conduct clarifications at any point between proposal submission and award, without necessarily extending identical opportunities to other offerors. The expanded scope of permissible clarifications could generate new disputes concerning the boundary between clarifications and negotiations, as well as the requirement for fair treatment of competing offerors. These changes could generate bid protests concerning the distinction between permissible clarifications and negotiations.
Although the proposed rules are intended to streamline federal procurement, their ultimate impact will depend on the final regulatory language and agency implementation. Contractors should monitor these developments and evaluate how the proposed changes could affect their acquisition strategies, proposal preparation, and compliance obligations.
SBA Implements New 8(a) Eligibility Standards and Prioritizes Defense-Critical Industries
On September 10, 2026, the Small Business Administration’s (SBA) final rule eliminating the 8(a) Business Development Program’s rebuttable presumption of social disadvantage for individually owned firms took effect, and SBA issued implementing guidance on the same day. The rule, published August 11 and codified at 13 C.F.R. § 124.103, replaces the presumption with a race-neutral standard requiring applicants to demonstrate that a governmental or private entity discriminated against their clearly definable group and that the discrimination caused them material harm. The rule applies to individually owned applications pending as of September 10 but does not affect entity-owned firms, including those owned by Indian tribes, Alaska Native Corporations, Native Hawaiian Organizations, or Community Development Corporations.
The accompanying guidance announced that SBA will prioritize processing 8(a) applications from small businesses in ten designated defense-critical industries, including ammunition manufacturing, aerospace components, electronics, machine shops, and shipbuilding. This prioritization affects application processing rather than establishing a preference in the award of 8(a) contracts. SBA also reinstated comprehensive “potential for success” reviews, evaluating applicants’ financial resources, business experience, and operational capabilities. Notably, denials based on potential for success are not appealable to SBA’s Office of Hearings and Appeals, which generally reviews 8(a) application denials based solely on social disadvantage, economic disadvantage, ownership, or control.
Together, these changes signal increased scrutiny of 8(a) applicants alongside expedited consideration for businesses in designated defense-critical industries. Prospective and pending applicants should review their eligibility and supporting documentation under the revised standards, with particular attention to the resubmission deadline and the renewed emphasis on demonstrating potential for success.
D.C. Circuit Upholds Anthropic’s Exclusion from Defense Supply Chain
On September 25, 2026, a divided D.C. Circuit denied Anthropic PBC’s petitions for review of the Department of War’s (DoW) decision to exclude its artificial intelligence (AI) model, Claude, from the DoW’s supply chain under the Federal Acquisition Supply Chain Security Act of 2018 (FASCSA). Anthropic PBC v. United States Department of War, Nos. 26-1049, 26-1162, 2026 WL 2881404 (D.C. Cir. Sept. 25, 2026). The exclusion followed Anthropic’s refusal to accept an “all lawful uses” contractual authorization that would have eliminated restrictions on Claude’s use for lethal autonomous warfare and mass domestic surveillance.
Writing for the majority, Judge Katsas concluded that the DoW reasonably determined that continued integration of Claude into its information systems presented a national security supply chain risk under 41 U.S.C. § 4713. Anthropic acknowledged that it embeds usage restrictions into its AI models through model training, and the record demonstrated that these restrictions had previously prevented Claude from performing certain tasks requested by government users. A dispute also had arisen over whether Anthropic’s contractual restrictions prohibited Claude’s use in an overseas military operation. The court concluded that the DoW reasonably feared that these restrictions could prevent Claude from performing functions necessary for military operations.
The court rejected Anthropic’s argument that FASCSA reaches only malicious or deceptive interference. Unlike the narrower definition of supply chain risk under 10 U.S.C. § 3252, which refers to conduct by an “adversary,” Section 4713 encompasses conduct by “any person” and does not require malicious intent. On this basis, the court distinguished an August 2026 district court decision invalidating a separate Anthropic supply chain risk designation under Section 3252. The D.C. Circuit also deferred to the DoW’s determination that less intrusive measures, including advance testing of AI models, would not adequately address the identified risks.
Anthropic’s procedural and constitutional challenges also failed. Although FASCSA generally requires advance notice and an opportunity to respond, the statute permits delayed notice when urgent national security interests require immediate action. The court concluded that any error in delaying notice was harmless because Anthropic could not demonstrate prejudice. The court also rejected Anthropic’s First Amendment retaliation claim, finding that the DoW acted because Anthropic refused to accept contractual terms the government considered essential, rather than because of its public advocacy concerning AI safety. Judge Henderson dissented, arguing that FASCSA was intended to address intentionally hostile or deceptive interference rather than a contractor’s good-faith enforcement of disclosed usage restrictions.
The decision underscores the breadth of federal supply chain security authorities and their potential application to contractors’ own contractual and technical restrictions. Contractors providing AI and other technologies to defense and national security agencies should carefully evaluate whether usage policies, licensing terms, or embedded technical safeguards could interfere with an agency’s intended use of their products. Even restrictions adopted for legitimate safety or ethical reasons may present supply chain security concerns where they create operational risks that the government determines cannot reasonably be mitigated through less intrusive measures.
GAO Reaffirms That Affiliate Experience Requires Specificity, Not Corporate Unity
On September 10, 2026, the Government Accountability Office (GAO) sustained in part a protest by Battelle Memorial Institute challenging the National Science Foundation’s (NSF) award of the Antarctic Science and Engineering Support contract to KBR Services, LLC. In Battelle Memorial Institute, B-424575, B-424575.2, GAO concluded that NSF improperly credited KBR with the prior experience and past performance of an affiliated company without sufficient evidence that the affiliate’s resources would meaningfully contribute to contract performance.
GAO reiterated that an agency may consider an affiliate’s experience or past performance where the proposal demonstrates that the affiliate’s resources, including personnel, management, facilities, or other capabilities, will be provided or relied upon during contract performance. Citing the Court of Federal Claims’ recent decision in Noblis MSD, LLC v. United States, 180 Fed. Cl. 667 (2026), GAO explained that when a solicitation is silent on the requirements for attributing affiliate experience, an offeror must still explain how the affiliate will be involved in performing the contract. General statements of corporate unity or affiliation are insufficient.
KBR submitted five prior experience examples, two of which involved an affiliate. Although KBR described the affiliate as part of its “one-team delivery model” and provided its unique entity identifier and cost accounting disclosures, the proposal did not identify the specific personnel, systems, management tools, or other resources the affiliate would contribute. GAO concluded that these generalized references did not provide a reasonable basis for crediting KBR with the affiliate’s experience and past performance. GAO also found competitive prejudice because the improperly credited experience narrowed the evaluation disparity between KBR and Battelle.
GAO recommended that NSF reevaluate KBR’s prior experience and past performance and conduct a new best-value determination. The decision underscores the importance of clearly documenting an affiliate’s anticipated role when relying on its experience or past performance in a federal procurement. Contractors relying on an affiliate’s experience or past performance should clearly explain the affiliate’s anticipated involvement in contract performance and identify the resources, capabilities, or other support that demonstrate how the affiliate’s experience will meaningfully benefit the proposed effort.
GRSM Government Contracts Practice
GRSM’s Government Contracts team supports contractors throughout the entire procurement lifecycle, providing both proactive counseling and representation in disputes.
The team’s attorneys advise on compliance, small business programs, cost and pricing requirements, cybersecurity, subcontracting, and other regulatory issues, while also litigating bid protests, claims, and agency matters nationwide.
Please contact Patrick Burns or Meredith Thielbahr with any questions or for additional information.