The Revolutionary FAR Overhaul: A Guide to the Most Significant Transformation of US Federal Procurement in Four Decades

On June 23, 2026, the Federal Acquisition Regulatory Council published four massive proposed rules, marking the official start of Phase 2 of the Revolutionary FAR Overhaul. Spanning over 1,100 pages and revising 20 parts of the FAR, the package represents the most significant transformation of the government's procurement rulebook since its inception over four decades ago.[3][4]

The FAR is the foundational manual that dictates how the US government—the world's largest buyer—purchases everything from office supplies to fighter jets. Over the decades, it has ballooned into a highly prescriptive, complex web of regulations that often deters innovative companies from bidding on federal work.

In April 2025, Executive Order 14275, titled Restoring Common Sense to Federal Procurement, directed agencies to strip away this non-statutory bloat. The mandate was clear: restructure the system for speed, mission delivery, and alignment with modern commercial practices.[2]

The overhaul is unfolding in two distinct phases. Throughout 2025, Phase 1 relied on model class deviations—temporary stopgap measures that allowed agencies to bypass certain outdated FAR requirements immediately. This allowed the government to test the streamlined rules in real-time while gathering feedback from industry.[4]

Now, Phase 2 is using the formal notice-and-comment rulemaking process to permanently embed these streamlined policies into the FAR. The first public comment period for these 20 revised parts closes on July 23, 2026, with the FAR Council appearing to have closely considered the 1,600 comments it received during Phase 1.[4]

A core philosophy of the overhaul is separating mandatory statutory rules from best practices. The proposed rules aggressively relocate non-regulatory, how-to guidance out of the FAR and into a separate, living document called the FAR Companion.[2][3]

This structural shift aims to produce a shorter, statute-aligned FAR that is easier for both contracting officers and commercial vendors to navigate. By moving practical strategies and buying guides to the FAR Companion, the government can update best practices rapidly without going through the years-long formal rulemaking process.[2][3]

The overhaul also replaces rigid, one-size-fits-all mandates with principle-based discretion. For example, a detailed five-page directive on preparing written acquisition plans is being replaced by a one-page tip sheet, granting agencies the authority to use oral acquisition plans when appropriate.[3]

Similarly, mandatory audits for termination settlement proposals above a certain dollar threshold are being replaced by a risk-based approach. Contracting officers will now decide if audit support is needed based on a factual risk analysis, a common-sense change that is already saving months of administrative delay on lower-risk settlements.[3]

For government contractors, one of the most anticipated changes is the reorganization of FAR Part 40, which consolidates supply chain risk and information security. This section now incorporates rules on TikTok bans, drone restrictions, and the Federal Acquisition Supply Chain Security Act.[4]

Crucially, the proposed rules attempt to establish a uniform, governmentwide approach to handling Controlled Unclassified Information. If successful, this would eliminate the persistent frustration of navigating conflicting, agency-specific cybersecurity frameworks, such as the Department of Defense's CMMC, providing massive compliance relief for vendors.[3][4]

The rulemakings demonstrate that Phase 2 is not merely a codification exercise for the 2025 deviations. The FAR Council is actively using the notice-and-comment process to refine and materially revise policies, proposing significant revisions to market research, emergency acquisitions, and service contracting.[4]

The proposals also clean house by removing numerous obsolete provisions. Expired American Recovery and Reinvestment Act provisions, outdated A-76 competition requirements, and duplicative publicizing rules are all being stripped from the books to create a leaner regulatory environment.

To prevent the FAR from slowly accumulating bloat again in the future, the overhaul introduces a mandatory regulatory sunset process. Under the new rules, the FAR Council must conduct a comprehensive review of the regulations, with public input, at least once every four years to identify and eliminate unnecessary requirements.[1]

The broader goal of the initiative is to prioritize commercial products and services over custom, government-developed solutions. By aligning federal procurement more closely with commercial business practices, the government hopes to attract a wider pool of innovative startups and non-traditional defense contractors.

While the drafting of the new rules has been widely praised, legal experts note that the true test will be implementation. The success of the overhaul depends entirely on whether the federal acquisition workforce embraces the new flexibility.[3]

Contracting officers, long trained to rely on prescriptive checklists to avoid bid protests, will need to undergo a significant cultural shift. If they remain risk-averse and continue to demand the old documentation out of habit, the promised agility of the overhaul will fail to materialize in actual contract awards.[3]

The FAR Council is expected to release two additional proposed rule packages later in 2026 to cover the remainder of the FAR. Once the public comment periods close and the feedback is integrated, the final rules will be published, officially cementing the new era of federal procurement and fundamentally altering how the government interacts with the private sector.[4]