The Revolutionary Federal Acquisition Regulatory (FAR) Overhaul continues to move from concept to formal rulemaking. On September 18, 2026, the Federal Acquisition Regulatory Council published its second batch of proposed rules, including FAR Case 2026-003, which proposes revisions to FAR Parts 8, 12, 13, 15, 38, 44, 51, and related provisions and clauses in Part 52. Comments are due October 19, 2026.

For government contractors, the significance of this package is not simply that the FAR is being reorganized. Several proposed changes could affect how contractors approach commercial acquisitions, competitive procurements, proposal preparation, negotiations, and the interpretation of solicitation requirements.

Below are five areas that contractors should watch closely as the rulemaking proceeds:

1. FAR Part 12: A Stronger Emphasis on Commercial Products and Services

One of the most consequential features of the proposal is the proposed restructuring of FAR Part 12, which governs the acquisition of commercial products and commercial services. The proposed rule would refocus Part 12 on the statutory mandate to acquire commercial products and commercial services when they are available to meet the government’s needs. Proposed FAR 12.101 would be retitled “Requirement” and would frame the commercial-acquisition mandate more directly as a directive rather than simply as agency policy.

The proposal also would reorganize Part 12 around the stages of an acquisition — presolicitation, solicitation/evaluation/award, and post-award administration. Procedures currently spread among Parts 5, 12, and 13 would be consolidated in Part 12 for commercial acquisitions.

For contractors, this matters because the proposed structure could affect how agencies frame solicitations and how commercial companies interact with the government. The proposal expressly seeks to align federal commercial buying more closely with commercial practices and to reduce regulatory material that the FAR Council views as better suited to nonregulatory guidance.

Contractors selling commercial products or services should thus watch more than the numbering changes. They should pay attention to how contracting officers implement the proposed emphasis on commerciality, particularly when an agency is deciding whether a commercial solution can satisfy its requirements.

2. FAR Part 15: Negotiations Could Become More Meaningful — and Less Formulaic

The proposed revisions to FAR Part 15 may have some of the most immediate implications for companies competing for negotiated contracts. The FAR Council proposes to shift the emphasis from “discussions” toward negotiation. The proposal would continue to require meaningful negotiations with offerors in the competitive range, including addressing deficiencies and significant weaknesses, but it would give contracting officers greater flexibility in how those negotiations occur. The proposal expressly contemplates that a contracting officer could have more than one negotiation with a particular offeror without necessarily doing the same with every other offeror.

The proposal also would revise the definition of a “deficiency.” Instead of focusing on a material failure or combinations of weaknesses that create an unacceptable performance risk, the proposed definition would focus on whether a proposal fails to conform to a material term of the solicitation. The new proposal identifies price, quantity, quality, delivery, and certain submission prerequisites as examples of material terms.

That change could be significant in practice. It may give contracting officers greater latitude to negotiate over weaknesses that do not constitute failures to satisfy material solicitation requirements. Contractors should accordingly revisit their proposal strategies. Under a negotiation-focused regime, the proposal may need to be viewed not merely as a document designed to survive evaluation, but as the starting point for a substantive negotiation over price, intellectual property, licensing, technical solutions, and other material terms.

3. FAR Part 15: Clarifications, Competitive Ranges, and Source Selection

Another important Part 15 development is the proposed restructuring of the rules governing exchanges with offerors. The proposal would eliminate the existing process for exchanging information with offerors before establishment of the competitive range and would expand the use of clarifications in competitive negotiated acquisitions. Clarifications could address ambiguities, perceived deficiencies, mistakes, and certain adverse past-performance information. At the same time, the proposal would continue to prohibit clarifications from being used to revise material elements of a proposal or cure a material omission.

The revised Part 15 also contemplates giving agencies more discretion to accept late proposals, when it is in the government’s best interest to do so and would not unduly delay award.

The proposal also would change the competitive-range framework. Rather than requiring the competitive range to consist of all the most highly rated proposals, the proposed rule would provide that the range should include proposals that are best suited for further negotiation.

Finally, the proposal would formally recognize a “highest technically rated with a fair and reasonable price” source-selection approach. Under that method, the agency would identify the highest technically rated proposal and then determine whether its price is fair and reasonable, without making tradeoffs between price and non-price factors. If the price is unreasonable, the agency would proceed to the next highest technically rated proposal.

These changes deserve particular attention from contractors because they could affect both proposal drafting and bid-protest strategy. Companies will want to understand what constitutes a material proposal term, when an agency may seek clarification, and how the government’s chosen source-selection methodology affects the evaluation process. Lastly, the loosened standards for accepting late proposals might provide some relief to offerors who otherwise would have been subject to an unforgiving “late is late” approach when encountering proposal submission challenges.

4. FAR 15.102: Further Limits on Lowest-Price Technically Acceptable Procurements

The proposal also would implement a statutory change concerning the use of lowest-price technically acceptable (LPTA) source selection. The proposed rule would add munitions response services to the categories of services for which agencies should avoid LPTA to the maximum extent practicable. The change implements Section 822 of the FY 2025 National Defense Authorization Act.

Although this provision is narrower than the broader Part 15 changes, it illustrates an important feature of the overhaul: The FAR Council is attempting to remove or revise provisions that no longer reflect statutory requirements or the administration’s stated procurement objectives.

For contractors, the practical question is how these source-selection changes will appear in future solicitations. Contractors should continue to read the solicitation’s stated evaluation methodology carefully rather than assume that a familiar acquisition strategy will remain unchanged under the revised FAR.

5. FAR Part 44: Subcontracting Rules Are Being Reorganized

The proposed overhaul of FAR Part 44 is less dramatic substantively, but contractors should not overlook it. The FAR Council proposes to revise, reorganize, streamline, and clarify Part 44’s existing policies and procedures while expressly stating that the proposal would not substantively change those policies and procedures.

That distinction is important. A regulatory rewrite does not necessarily mean that every change is a new compliance obligation. The FAR Council is simultaneously reorganizing provisions, changing terminology, moving material between FAR parts, and shifting some material from regulation into nonregulatory guidance.

For prime contractors, the practical issue will be keeping internal compliance materials synchronized with the revised FAR structure. Subcontracting procedures, purchasing-system documentation, templates, training materials, and contract-review checklists may all contain references to FAR provisions that move or are renumbered.

The proposed changes to Part 44 should therefore be viewed as part of a broader contract-administration exercise: Contractors will need to distinguish substantive changes in obligation from changes in organization and terminology.

What Contractors Should Do Now

The September 18 proposal is not yet a final rule. Contractors should thus avoid treating the proposed provisions as current FAR requirements. At the same time, the proposal provides a useful preview of the direction of the FAR overhaul.

Companies may want to use the October 19 comment deadline as a trigger for an internal review of:

• Current proposal and capture procedures under FAR Part 15;
• Commercial-product and commercial-service offerings that rely on FAR Part 12;
• Proposal templates and internal guidance concerning discussions, clarifications, and deficiencies;
• Subcontracting and purchasing-system procedures that reference FAR Part 44;
• Standard contract and solicitation checklists containing FAR Part 12, 13, 15, or 44 references; and
• Training materials that may become outdated as FAR provisions are reorganized or moved into nonregulatory guidance.

The FAR Council has emphasized that the overhaul is intended to create a simpler FAR focused on statutory requirements and provisions necessary for sound procurement, with additional guidance moving outside the regulation. The council also reports that industry feedback from the first phase of the overhaul informed changes to the proposed rules.

For government contractors, the key takeaway is that the overhaul is not merely a renumbering exercise. The latest proposal could affect how agencies conduct commercial acquisitions, negotiate with offerors, handle proposal exchanges, structure source selections, and administer subcontracts.

With comments due October 19, 2026, contractors have a limited window to evaluate the proposed changes and determine whether particular provisions warrant industry comments or internal preparation.

If you have any questions about this noteworthy development or require assistance, please do not hesitate to contact Aron Beezley or Patrick Quigley.