The FAR Council has released a second tranche of proposed rules, including Case 2026-011, which overhauls federal contracting intellectual property and data rights by importing defense-derived standards into civilian acquisitions. The proposals also increase domestic content requirements to 75% by 2029 and tighten subcontractor evaluations. Meanwhile, industry groups warn of potential compliance confusion arising from differences between the Pentagon's recent cost accounting memos and the Cost Accounting Standards Board's rules.
Proposed rules on intellectual property
- ▪Proposed FAR Case 2026-011 creates a new section 27.5 establishing a separate regime for commercial technical data, computer software, and documentation in civilian and defense acquisitions.
- ▪The Federal Acquisition Regulatory (FAR) Council released a second tranche of proposed rules, including Case 2026-011 on intellectual property and data rights, with comments due by October 19, 2026.
- ▪Proposed FAR Case 2026-011 replaces the existing FAR 27.4 with a Defense Federal Acquisition Regulation Supplement (DFARS) derived technical data and software rule package for other-than-commercial purchases.
Proposed rules on subcontracting
- ▪Proposed FAR Case 2026-003 addresses subcontracting and negotiations as part of the FAR Council's second tranche of proposed rules.
- ▪Proposed FAR Case 2026-003 requires contracting officers to evaluate past performance and the validity of the supplier base for prime contractors during the proposal evaluation process.
Changes to domestic content requirements
- ▪The FAR Council's proposed rules outline that domestic content requirements for federal contracting will increase from 65% to 75% in 2029.
- ▪Under the FAR Council's proposed rules, federal contractors seeking waivers to Buy America requirements must submit applications through the Made in America Office at the White House.
Pentagon memos on cost and compliance
- ▪Deputy Secretary of War Feinberg signed a memo on August 18, 2026, resetting expectations for supplier cost and pricing transparency throughout all tiers for products and services valued at $10 million or more.
- ▪The September 14, 2026, Pentagon memo signed by Deputy Secretary of War Feinberg helps implement an executive order on fixed-price contracting and includes an appendix proposing that Cost Accounting Standards (CAS) exemptions become the default over Generally Accepted Accounting Principles (GAAP).
- ▪Deputy Secretary of War Feinberg signed the 'Fostering One Strong Industrial Base' memo on September 14, 2026, directing the removal of certain cost accounting, audit, and compliance barriers.
Industry response to conflicting cost directives
- ▪Professional Services Council President Stephanie Kostro stated that differences between the Cost Accounting Standards (CAS) Board's modernization efforts and the Pentagon's directives could create compliance confusion for contractors.
- ▪Professional Services Council President Stephanie Kostro advised federal contractors to prioritize compliance with their signed contracts when navigating conflicting cost accounting directives.
Debatable claims
- ▪Importing defense-style intellectual property rules into civilian contracting will deter commercial suppliers
- ▪Raising federal contracting domestic content requirements to 75% will harm the government supply chain
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