On December 18, 2025, President Trump signed the National Defense Authorization Act (NDAA) into law. The NDAA authorizes the Department of War (DOW) to spend $900 billion on a variety of program priorities. To spend these allocated and authorized funds, the NDAA requires the implementation of Defense Acquisition reforms, largely through revisions to the Federal Acquisition Regulation FAR) and Defense Federal Acquisition Regulation Supplement (DFARS), many of which must occur before the end of June 2026. These revisions will fundamentally impact how DOW agencies award contracts and spend defense dollars and conduct future procurements and how contractors are selected to perform DOW contracts. With this one-hundred-eighty-day period now underway, here are the key dates in the regulatory development process:
- March 1, 2026: DOW will submit a report to Congress on policies that discourage defense industrial base contractors from maintaining or investing in surge capacity and steps to encourage contractors to initiate surge capacity capability (Sec. 1847).
- April 1, 2026: The Secretary of War will establish a task force on artificial intelligence (AI) sandbox environments to allow for isolated testing and training of artificial intelligence across the DOW; essentially, setting the standards for AI's role in DOW, which could include procurements (Sec. 1534).
- April 1, 2026: DOW will identify a steering committee to direct the DOW's long-term AI strategy, analyze the trajectory of advanced AI technologies, and develop a strategy for its risk-informed adoption (Sec. 1535).
- May 2026:
- The DOW is expected to have issued guidance on expedited "Authorizations to Operate" (ATO) for cloud services within 180 days of the NDAA execution (December 18, 2025) (Sec. 1521).
- The DOW is also directed to develop a department-wide policy for cybersecurity and governance of AI and machine learning (ML) systems within this same 180 period (Sec. 1512).
- June 1, 2026: The Secretary of War is directed to harmonize cybersecurity requirements applicable to the defense industrial base and eliminate duplicative or inconsistent regulations, which may lead to significant DFARS changes (Sec. 866).
- June 30, 2026: The FAR will be updated to reflect the new threshold for mandatory submission of certified cost or pricing data (TINA threshold) increases from $2 million to $10 million for contracts awarded after June 30, 2026 (Sec. 1804). The FAR will also be updated to revise the Cost Accounting Standards (CAS), increasing the full CAS coverage threshold from collective annual contract awards $50 million to $100 million, and raising the per contract-level trigger for mandatory CAS application from $2.5 million to $35 million, effective for contracts after June 30, 2026 (Sec. 1806).
- June 2026: The Secretary of War will revise the DFARS to implement a new "loser pays" rule to the GAO bid-protest process, allowing Contracting Officers to withhold up to 5% of payments to incumbent contractors filing a protest (Sec. 875).
- June 2026: The DOW will submit a comprehensive review and report on the DOW's approach to commercial product procurements and legislative/regulatory recommendations geared to encourage DOW's use of commercial items and to enhance the contractor's ability to classify its products as commercial items (Sec. 1828).
With these broad changes to be implemented in less than six months, the government contract community will have the opportunity to not just monitor but help shape the development of this new regulatory framework as the revised FAR and DFARS provisions and clauses are developed, promulgated, and adopted. Venable's Government Contracts Group will continue to provide updates during this evolving process. For any questions about these developments, contact Douglas Proxmire or Chris Griesedieck.