TIP LINE – EDITION 5 – LATEST EXECUTIVE ORDERS & FAR 2.0 REWRITE
From executive orders reshaping defense acquisitions to sweeping changes in research grant funding and regulatory rewrites, this week’s Capital Edge Tip Line delivers must-know updates for Government contractors and research institutions. CEO Chad Braley dives into how these developments may impact your compliance strategy and cost structure moving forward.
Key Updates from This Week’s Tip Line
Executive Order on Modernizing Defense Acquisition Reform
What’s happening? A new Executive Order initiates sweeping defense acquisition reform, directing the Department of Defense (DoD) to prioritize commercial acquisition strategies and streamline internal procurement processes.
What it means for you:
- Expect increased use of commercial item acquisition procedures (FAR Part 12) and Other Transaction Authority (OTA).
- DoD must identify and eliminate duplicative internal processes.
- Major Defense Acquisition Programs (MDAPs) exceeding $3B will be under review for cancellation if they’re 15% over budget, behind schedule, or out of alignment with strategic goals.
Action Item: Evaluate your DoD programs for compliance with performance benchmarks and be prepared for increased scrutiny of cost, timeline, and strategic value.
DOE Follows NIH in Indirect Cost Limits on Research Grants
What’s happening? The Department of Energy (DOE) has issued new policy guidance capping indirect costs for grants to research institutions and universities at 15%—mirroring NIH’s controversial playbook.
What it means for you:
- Significant budget shifts may be required for universities, research institutions, and for-profit research contractors.
- Legal challenges are likely, as seen with NIH’s indirect rate cap.
Action Item: Assess current grant-funded projects for exposure to this cap and explore options for reclassifying certain expenses as direct costs. Be proactive in preparing legal and financial strategies.
FAR 2.0 Rewrite – The Shift Toward Statutory Compliance
What’s happening?
The Federal Acquisition Regulation (FAR) is undergoing a major transformation, with non-statutory content being removed and repurposed into “buying guides.”
What it means for you:
- FAR 2.0 will emphasize statutory requirements only.
- Buying guides may serve as informal direction but lack regulatory authority.
- Uncertainty exists around how much discretion contracting officers will have to deviate from this guidance.
Action Item: Begin evaluating current contract practices against statutory requirements. Track future buying guide releases and plan for increased variability in how guidance is applied.
Looking for Expert GovCon Guidence?
The pace of change in federal contracting has never been faster. The Capital Edge Tip Line is your trusted source for expert guidance on compliance, audit readiness, and regulatory transformation.
Have Questions? Need Help?
If any of these changes impact your business, don’t hesitate to reach out to Capital Edge Consulting for guidance.
Contact us today to discuss your specific challenges and compliance needs.
