The Federal Acquisition Regulation (FAR) has long served as the backbone of federal procurement, guiding how the U.S. government acquires goods and services. However, after more than four decades of incremental updates and mounting complexity, the FAR is undergoing a historic transformation. The Revolutionary FAR Overhaul (RFO), initiated under Executive Order 14275, marks the most significant rewrite of the FAR since its inception, promising a more uniform, efficient, and transparent procurement process.
What Is the FAR Overhaul?
The existing FAR spans over 2,000 pages and includes nearly 3,000 directives, many of which are duplicative, outdated, or overly burdensome. Contractors and contracting officers alike have struggled to navigate its maze-like structure, leading to inefficiencies, delays, and increased costs. The RFO seeks to address these issues head-on by streamlining the regulatory framework and aligning it with modern acquisition needs.
Under the Executive Order titled “Restoring Common Sense to Federal Procurement,” the FAR is currently undergoing a revision to restore its statutory roots by:
- Using plain language,
- Eliminating non-statutory and duplicative rules, and
- Introducing non-regulatory buying guides for practical procurement strategies.
Key Changes in the RFO
Emphasis on Domestic Sourcing
One of the main areas of focus in the RFO is a renewed emphasis on domestic sourcing. In an effort to bolster national security and support American industries, the overhaul strengthens requirements for sourcing goods and services, highlighting U.S.-based suppliers. This shift is particularly impactful for defense contractors and those involved in critical infrastructure, as it introduces multi-tiered sourcing provisions and stricter compliance expectations – FAR Part 8 – Mandatory Sources of Supplies and Services in Federal Contracting.
Streamlined Procurement Processes
The RFO introduces a plain-language rewrite of key FAR parts, eliminating non-statutory and duplicative regulations. This simplification is designed to make the FAR more digestible for small businesses and new market entrants. Additionally, the overhaul introduces Strategic Acquisition Guidance (SAG), a set of practical, non-regulatory guides that help agencies make informed purchasing decisions without being bogged down by red tape.
The SAG is not part of the FAR text itself—it’s a non-regulatory framework created alongside the FAR overhaul. You can find SAG resources here:
- FAR Overhaul Policy and Guidance Section (Acquisition.gov): Includes links to OMB Memo M-25-26, Executive Order 14275, and non-regulatory buying guides that form the SAG framework.
- FAR Overhaul Page (DAU): Explains that SAG will accompany the FAR rewrite and provide part-by-part guidance plus practical strategies for acquisition professionals.
- OMB Memo (M-25-26): Officially defines SAG as the combination of the streamlined FAR and OFPP-endorsed buying guides, emphasizing innovative techniques and category management.
The FAR Overhaul significantly altered acquisition thresholds effective October 1, 2025, for micro-purchases and simplified acquisitions have also been raised, enabling faster, flexible, and inclusive procurement.
Increased Risk of Stop-Work Orders and Contract Terminations
While the RFO aims to simplify and accelerate procurement, it also introduces stricter oversight mechanisms. Agencies are now more empowered to issue stop-work orders and terminate contracts that fail to meet performance or compliance standards. FAR Subpart 42.13 and Clause 52.242-15 outline the procedures and implications of stop-work orders, including potential cost adjustments and termination actions. These stop-work orders allow the Contracting Officer to require a contractor to stop all or part of the work for up to 90 days (or longer if extended). The purpose is to avoid unnecessary costs when the government needs time to resolve issues like funding, scope changes, or regulatory updates.
Implications for contractors include:
- Cost Recovery: Contractors may claim reasonable costs due to the stop-work order (e.g., idle labor, storage) by submitting a claim within the timeframe stated in the clause.
- Risk of Termination: If work cannot resume, the government may either – terminate for convenience (contractor reimbursed for completed work + settlement costs) or terminate for default (used when contractor fails to comply).
Implementation Strategy
The RFO was rolled out in two phases. The first phase, effective April 15, 2025, involves interim adoption through class deviations, allowing agencies to begin implementing changes ahead of formal rulemaking. The second phase, October 1, 2025, onward, involves a comprehensive rulemaking process, including public comment and stakeholder engagement. The FAR Council, Office of Federal Procurement Policy (OFPP), and individual agencies are working collaboratively to ensure a smooth transition.
Implications for Industry
The RFO presents both opportunities and challenges for the contracting community. Small businesses may find it easier to enter the federal marketplace, thanks to less ambiguity to simplify rules and clearer guidance. However, legacy vendors’ implications are both immediate and long-term. Immediate impacts include compliance adjustments, uncertainty and risk, class deviations, and threshold increases. Long-term impacts include risks of instability, high compliance costs, and competitive disadvantages. Proactive adaptation, strategic planning, and continuous engagement with regulatory updates will be essential for success as inconsistencies across agencies may arise during the transition.
Conclusion
The Revolutionary FAR Overhaul is more than a regulatory update—it is a paradigm shift in how the federal government approaches procurement. By emphasizing domestic sourcing, streamlining processes, and enforcing accountability, the RFO aims to create a procurement system that is faster, fairer, and more responsive to the needs of the nation. Contractors and agencies alike are encouraged to embrace this change and work collaboratively and take advantage of its full potential.
Author: Shaneik Williams | [email protected]
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