Morrison Foerster’s Government Contracts Insights provides our in-depth analysis of developments and trends impacting government contracting. Through Insights, our attorneys offer a real-time assessment of the statutory, regulatory, legal, and business-related developments and trends that are shaping the industry. We also examine a full array of non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Morrison Foerster’s nationally recognized Government Contracts and Public Procurement practice represents the world’s leading companies in the aerospace and defense, intelligence, cybersecurity, information technology, financial and professional services, education, healthcare, infrastructure, and logistics support sectors. We are enlisted to address our clients’ most complex and important legal issues. Our work includes contract and subcontract negotiation and other transactional matters, business and regulatory compliance counseling, internal investigations, bid protests, and a wide array of enforcement and litigation matters. Our clients range from Fortune 50 companies to small and medium-sized companies just entering the public sector. We advise both U.S. and non-U.S. companies involved in municipal, state, federal, and non-U.S. procurement matters.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Tina is Co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmaceutical companies, with a focus on general contract counseling and compliance, particularly concerning intellectual property, and cybersecurity matters and federal grant funding.Tina counsels contractors on compliance with federal, state and local acquisition and ethics regulations and with the evolving myriad of requirements pertaining to data security and cybersecurity. She has been involved with numerous internal investigations and compliance reviews, and with mandatory and voluntary disclosures to agencies, and litigation of False Claims Act matters.Tina routinely advises clients concerning:<ul><li>Prime-subcontractor relationships</li><li>Sources of supply and country of origin requirements</li><li>Price reductions and price reporting issues</li><li>Organizational conflicts of interest</li><li>Safeguarding of intellectual property and other proprietary interests</li><li>Licensing and data rights issues</li><li>Handling of classified materials and controlled unclassified information</li><li>Agency suspension and debarment proceedings</li></ul>She also assists clients with due diligence and other activities related to the acquisition of government contracting concerns, and with the drafting and negotiation of teaming agreements, subcontracts, licensing agreements, and cooperative research and development agreements. She also assists clients applying for federal grants (including SBIR and STTR agreements), and those who seek to obtain other transactional authority agreements, as well as those competing for state and local government work.Tina’s litigation experience includes government contracts claims litigation in federal courts and before boards of contract appeals, bid protests before the Government Accountability Office and the Court of Federal Claims, and complex disputes in federal courts, including civil fraud and False Claims Act litigation and reverse Freedom of Information Act litigation.Prior to joining Morrison Foerster, Tina worked at another large national firm and as a trial attorney in the Office of the General Counsel of the Navy, Navy Litigation Office.<h4>Representative Experience</h4><ul><li>Negotiation of largest CHIPS Act federal funding agreement between multinational semiconductor corporation and U.S. Department of Commerce.</li><li>Negotiated prime contract and major subcontracts related to the Department of Energy’s next generation supercomputer program, including extensive IP rights negotiations and negotiation of associated patent rights waivers.</li><li>Negotiated series of other transaction authority agreements with DARPA and associated subcontracts with more than a dozen research universities on behalf of a firm biotech client, including complex IP rights allocations and material transfer agreements.</li><li>Assist clients with FedRAMP authorization process and with development of license agreements for software products sold to federal, state and local government agencies.</li><li>Cyber incident response counseling to some of the largest companies and organizations impacted by security incidents.</li><li>Advises clients on Bayh-Dole reporting of inventions and IP strategies for contracts and grants.</li><li>Conducts due diligence for major government contract mergers and acquisitions.</li></ul>

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Tina is co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She counsels a wide variety of government contractors on compliance with federal acquisition and ethics regulations. She drafts and negotiates contracts on their behalf and has been involved with numerous internal investigations and compliance reviews, and with bid protest, contract claims, and False Claims Act litigation. She also advises on M&A transactions involving government contractors.

Tina D. Reynolds

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters. He has represented both protesters and awardees in scores of protests before the Government Accountability Office, the Court of Federal Claims, and procuring agencies, in acquisitions ranging from small business procurements to multibillion-dollar contracts of global significance. His representative protest matters span the aerospace sector, the Intelligence Community, base operations and logistics, healthcare, nuclear and environmental work, and information technology and software acquisitions. His protests have included both classified and unclassified programs. In addition to prevailing in published decisions, Jim has also secured favorable corrective action on behalf of clients in a wide variety of protests that were resolved without a published decision.Jim’s work also focuses on disputes over cost allowability and compliance with the Cost Accounting Standards, and he has appeared before the Armed Services and Civilian Boards of Contract Appeals, in size and status protests before Small Business Administration (SBA) area offices, and appeals before the SBA Office of Hearings and Appeals. Jim regularly counsels clients on contract interpretation, organizational conflicts of interest, and small business compliance.Jim graduated with high honors from the George Washington University Law School, where he focused his studies on federal procurement law, was a member of the Law Review, and interned with the General Services Administration’s suspension and debarment office. Jim also holds a degree in theology magna cum laude from the Pontifical Gregorian University in Rome and a bachelor’s degree in classical languages and literature summa cum laude from the University of Kentucky, where he graduated Phi Beta Kappa.

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Jim maintains an active practice in bid protests before the Government Accountability Office and contracting agencies and counsels clients in contract disputes and compliance obligations.

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office. Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters.

James Tucker

<div style="margin-bottom: 15px;" class="videoWrapper"><iframe class="sticky-video" title="Meet Alex Ward, Government Contracts Practice Co-Chair" src="https://www.youtube-nocookie.com/embed/TkliwdSlTaQ?rel=0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen="1" title="iframe"></iframe></div>J. Alex Ward is co-chair of Morrison Foerster’s Government Contracts and Public Procurement group. His practice covers a full range of government contracts matters, including investigations, bid protests, claims, general litigation, corporate transactions, and counseling. Alex strives in all matters is to provide his clients the highest level of efficient and effective representation.Alex represents contractors in internal and external investigations, disclosures to the government, and qui tam litigation, with great success in reducing or eliminating his clients’ exposure through active engagement with the government. His work in this area includes obtaining numerous declinations and dismissals of False Claims Act cases in their earliest stages, sparing his clients the cost, risk, and exposure of litigation.He has also served as lead counsel in dozens of bid protests involving military and civilian agency procurements of a wide range of products and services, including all manner of pre- and post-award protests in the GAO, the U.S. Court of Federal Claims, and state tribunals, as well as appeals to the U.S. Court of Appeals for the Federal Circuit and size protest appeals before the SBA’s Office of Hearings and Appeals.Alex handles all aspects of the claims process, from the initial assessment and drafting of requests for equitable adjustment through litigation in the Boards of Contract Appeals and the Court of Federal Claims. Alex’s practice also covers the full gamut of other controversies confronting government contractors, including prime-sub, teaming partner, employer-employee, competitor, and indemnification disputes. His litigation work also includes a wide variety of pro bono engagements, in which he has represented both individual and institutional clients in matters ranging from immigration and criminal defense to sustainable procurement and protection of the environment.Prior to joining the firm, Alex served in the U.S. Army as a commissioned officer and an Assistant to the General Counsel of the Army responsible for civil works and international matters, and as a clerk for judges on the U.S. Courts of Appeals for the Armed Forces and the D.C. Circuit. He is a member of the Boards of the Morrison & Foerster Foundation and the Chesapeake Bay Foundation and of Law360’s Government Contracts Editorial Board.

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Alex is co-chair of Morrison Foerster’s Government Contracts and Public Procurement practice. His practice covers a full range of government contracts matters, including bid protests, claims, investigations, corporate transactions, and counseling.

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Morrison Foerster’s Government Contracts Insights blog provides an in-depth analysis of news, developments, and trends impacting government contracting and procurement. Through Insights, attorneys from our nationally recognized Government Contracts and Public Procurement practice will offer a real-time assessment of the statutory, regulatory, legal, and business-related developments that are shaping the industry. This blog will also examine a full array of U.S. and non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Read about our <a href="http://govcon.mofo.com/editors/">Authors</a>.Never miss a post. Subscribe to get real-time updates.

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James A. Tucker

Is Change Around the Corner? One Proposal to Forge Sweeping Changes to Defense Contracting

FAR Reform Now Underway

Deregulating Federal Procurement: Implications of Three Recent Executive Actions

Kickstarting AI in the Federal Government: OMB’s Policy to Implement Executive Order 14179

Bid Protest Spotlight: Instructions, Price Evaluation, Standing

At the end of 2024, Senator Roger Wicker (R-MS) published a plan (“<a href="https://www.wicker.senate.gov/2024/12/senator-wicker-announces-pentagon-reform-and-innovation-proposal" target="_blank">Restoring Freedom’s Forge: American Innovation Unleashed</a>”) and introduced a bill (the <a href="https://www.wicker.senate.gov/services/files/DB895B97-6ED7-43B2-B1BA-E96250D17591" target="_blank">Fostering Reform and Government Efficiency in Defense Act</a> or FoRGED Act). The plan and the FoRGED Act propose significant changes to the future of defense innovation and acquisition reform. This year, the proposal is gaining traction. Where does that leave the FoRGED Act, and what will it mean for federal contractors? We break down the proposal and its outlook here.What’s in the proposal?GeneralOverall, the bill is focused on repealing existing statutes and reducing regulations. Consistent with Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts, the bill aims to elevate commercial contracting as the default means for defense procurement and simultaneously leans into the use of rapid acquisition pathways and nontraditional defense contractors. The proposal is overflowing with significant changes—many of which would be headline-worthy on their own if enacted.<a href="#_ftn1" target="_self">[1]</a> Here is a sampling of changes, followed by a title-by-title breakdown.A key goal is the reduction of red tape. In line with this, the FoRGED Act includes a five-year sunset provision designed to automatically terminate indefinite-duration statutory reporting requirements after that period. Any new statutory reporting requirement would automatically cease to be effective five years after it went into effect, unless explicitly exempted.Structurally, the legislation would transition program executive officers’ roles to new portfolio acquisition executives—a move intended to integrate requirements, centralize decision-making, and reduce bureaucracy. Specifically, in Title II, the bill transitions to a model where acquisitions are overseen in a portfolio-by-portfolio acquisition executives (PAEs) model and particular systems are managed holistically. Requirements and programming staff would be moved to PAEs, where a set of capstone requirements would inform requirements. Key individuals among the PAEs would report to a Joint Requirements and  Programming Board.The establishment of the Joint Requirements and Programming Board would alter the way contractors interact with their customers by centralizing decision-making processes that are related to joint military capabilities and program evaluation. Policy decisions would be subject to a vote by the board. Decisions will be made by committee vote—this may distance decision-makers from decision impacts and affect the speed of decision-making.Separately, both the Act and report emphasize investing in and increasing access among nontraditional defense contractors and creating advantages for commercial contractors. For example, the legislation promises a crackdown on Organizational Conflicts of Interest as, per Title III, within 180 days of enactment, “the Secretary of Defense shall issue guidance on steps to identify and prevent the potentially unfair competitive advantage of entities providing technical advice to acquisition officials in the award of research and development work by such officials.” Here, ‘‘potentially unfair competitive advantage’’ means unequal access to acquisition officials responsible for award decisions or allocation of resources or to acquisition information relevant to award decisions or allocation of resources. The concurrently issued report stated: “When government standards and reference architectures are overly prescribed, they can become a back door to sole-sourced solutions. . . . We can work against this conflict of interest.”Title-by-Title Overview<a href="https://www.wicker.senate.gov/services/files/DB895B97-6ED7-43B2-B1BA-E96250D17591" target="_blank">The bill</a> includes five main titles, each of which addresses a different facet of defense acquisition:Title I: Defense Acquisition Process Streamlining<ul><li>Repeals numerous existing laws to streamline the defense acquisition process (Sections 101–103).</li><li>Introduces modifications to current defense acquisition requirements, including changes to procurement thresholds and acquisition strategies (Sections 102–103).</li><li>Establishes automatic sunset provisions for indefinite-duration statutory reporting requirements (Section 103).</li></ul>Title II: Defense Acquisition Roles, Responsibilities, and Organizations<ul><li>Transitions the role of Program Executive Officer to Portfolio Acquisition Executive, emphasizing overall management of defense acquisition programs (Section 201).</li><li>Amends responsibilities and procedures of the Joint Requirements Oversight Council (Section 202).</li><li>Establishes the Joint Requirements and Programming Board to coordinate requirements and program evaluation (Section 204).</li><li>Introduces iterative capstone requirements for acquisition portfolios to enhance speed and innovation by revising programs in consultation with operational commands and the Joint Requirements and Programming Board (Section 205).</li></ul>Title III: Rapid Acquisition and Commercial Contracting<ul><li>Exempts nontraditional defense contractors from nearly a dozen specific regulatory requirements (Section 303).</li><li>Modifies treatment of certain products and services as commercial products and services (Section 304).</li><li>Introduces alternative capability-based pricing and adjusts procurement thresholds (Sections 306–307).</li><li>Enhances commercial solutions openings and other transactions authority (Sections 308–309).</li><li>Encourages nontraditional defense contracting and uplifts the middle tier of acquisition for rapid prototyping and rapid fielding (Section 315–317).</li></ul>Title IV: Promotion of Competition in the Defense Industrial Base<ul><li>Establishes a program to enhance secondary sources and supply chain management for the Department of Defense (Section 401).</li><li>Creates an industrial expansion program to fund defense logistics, including updating and refining specifications, and reinforce supply chain resilience, including reverse-engineering or re-engineering property to create technical data packages or manufacturing capabilities (Section 402).</li></ul>Title V: Defense Budgeting Processes<ul><li>Compels a review of the structure of the budget and appropriations for defense acquisition programs to improve management and efficiency (Section 501).</li><li>Modifies the Defense Modernization Account to streamline funding processes (Section 502).</li><li>Amends and repeals various budgetary requirements for defense acquisition to simplify financial management (Section 503).</li></ul>What’s the likelihood of implementation of the proposed legislative changes?Last Congress, the FoRGED Act bill had no cosponsors and no House companion. However, the bill served as a marker in the sand for what was to come. On January 3, 2025, the 119th Congress began, and Senator Wicker was selected as chairman of the Senate Armed Services Committee (SASC). With Senator Wicker becoming chairman of the key committee and Republicans in control of both the House and Senate, passage seems more likely.Momentum is gathering for the proposed legislation, both in Congress and the administration. In January, Secretary of Defense Pete Hegseth endorsed the “Freedom’s Forge” plan, signaling support from the Trump administration. Then, in a January 28, 2025 hearing on defense innovation, Chairman Wicker touted his “Restoring Freedom’s Forge” plan as a way to fundamentally change how the Pentagon does business by streamlining regulations and increasing competition.The <a href="https://www.mofo.com/resources/insights/250108-fy25-ndaa-promoting-nontraditional-acquisition" target="_blank">National Defense Authorization Act (NDAA) for fiscal year (FY) 2025 ushered in changes</a> to the Department of Defense’s acquisition approach and strategy. It is possible that the proposal will be the basis for reform via NDAA for FY 2026. After all, there is not another legislative vehicle that is reliably enacted. Tracking the amendments by both the House and Senate, resolution of differences, and the version of NDAA FY 2026 signed by the president will provide the only certainty about how this proposal will fare, how much it will change, and whether it will be enacted at all.<a href="#_ftnref1" target="_self">[1]</a> It is seemingly unlikely that this specific legislation will pass, but it would be no surprise to see these concepts incorporated in other legislation such as the National Defense Authorization Act.

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Damien is a partner in the firm’s Government Contracts & Public Procurement practice. He represents clients in all facets of government contracts transactions, as well as regulatory counseling, subcon

Damien Specht

Damien C. Specht

Jim Tucker is of counsel in Morrison & Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.
Jim’s practice runs the gamut of litiga

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Cody Brianna Fisher

Cody Fisher

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New DCMA Defective Pricing Pilot Team Will Possess Audit Resolution Authority

The current administration’s efforts to reform the Federal Acquisition Regulation (FAR) are now officially underway. On April 15, 2025, in an Executive Order titled <a href="https://www.whitehouse.gov/presidential-actions/2025/04/restoring-common-sense-to-federal-procurement/" target="_blank">Restoring Common Sense to Federal Procurement</a> (EO or “Order”), the White House directed the Office of Federal Procurement Policy (OFPP) to trim the FAR. As <a href="https://govcon.mofo.com/topics/far-overhaul-underway" target="_blank">anticipated</a>, the Order directs OFPP to remove any provision not “required by statute or essential to sound procurement.” The Order gives OFPP broad discretion to determine which provisions are essential and which are not. Below, we outline key provisions of the Order and discuss their potential implications for government contractors.Key Provisions of the Executive OrderIn what the White House <a href="https://www.whitehouse.gov/briefings-statements/2025/04/white-house-announces-revolutionary-federal-procurement-overhaul/" target="_blank">heralds</a> as “a sweeping review and rewrite,” dubbed the “Revolutionary FAR Overhaul (RFO),” the Order directs OFPP to identify “unnecessary regulations” or other “undue barriers” and excise them from the FAR. The stated policy goal is to create “the most agile, effective, and efficient procurement system possible.” The intended result: a leaner set of regulations that, as described by the General Services Administration’s <a href="https://www.acquisition.gov/content/revolutionary-far-overhaul" target="_blank">Acquistion.gov</a>, returns the FAR “to its statutory roots, rewritten in plain language, and remove[s] most non-statutory rules.”  <ul><li>The Order directs OFPP to lead the FAR Council, the heads of agencies, and appropriate senior acquisition and procurement officials to “take appropriate actions” within 180 days to amend the FAR to ensure it contains “only provisions that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.”  </li><li>Contractors may expect changes much sooner than in 180 days. Within 15 days, agencies are to “provide recommendations regarding any agency-specific supplemental regulations to the FAR.” Within 20 days, the Office of Management and Budget is to “propose new agency supplemental regulations and internal guidance” that promote expedited and streamlined acquisitions and instruct agencies, by memorandum, on the “implementation of this order.” In issuing new regulations, the Order directs agencies to “adhere to the ten-for-one” rule, issued in EO 14192, which requires rescinding 10 regulations for every new one promulgated. </li><li>New revisions will likely be implemented almost immediately upon release. OFPP and the FAR Council are to issue “deviation and interim guidance” even as the rule changes go through the notice-and-comment rulemaking process. This approach means the government will operate as if the revised FAR provisions were already final, in full force and effect, before the public has had an opportunity to weigh in. Restoration of improvidently removed text and the correction of other unintended consequences will have to wait for a final rule.</li><li>Finally, the Order mandates the consideration of sunset provisions for non-statutory requirements retained within the FAR. OFPP and the FAR Council are to identify all non-statutory FAR provisions not immediately removed, and to consider amending the FAR to automatically sunset all such provisions within four years, unless renewed by the FAR Counsel. Similarly, OFPP and the FAR Council shall consider extending the sunset provisions to any new provision not required by statute. In effect, if approved, many non-statutory provisions within the FAR will be subject to expiration every four years, unless renewed by the FAR Council.</li></ul>Key TakeawaysNo one can predict with guaranteed accuracy which exact regulations will be removed, modified, or kept in place, but recent procurement reform efforts suggest likely outcomes. By carving out regulations “essential to sound procurement” or “to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests,” the Order allows retention of favorable or successful non-statutory provisions. We provide the following takeaways for contractors to consider as the government begins the process of overhauling the FAR.<ul><li>First, non-statutory clauses that are in the government’s interests are likely to remain. For example, the government’s power to terminate a contract for its convenience, a tool favored by the current administration, is very likely safe. As OFPP and the FAR Council review the FAR, even these regulations may be subject to streamlining to further protect the government’s interests. </li><li>Second, on the other-hand, non-statutory FAR clauses implementing social policies are very likely candidates for removal, especially those that FAR 52.212-5 requires to be inserted in contracts for commercial products and services. The Section 809 Panel, which the Order cites with approval, previously recommended the removal from commercial item contracting of those policy clauses that are derived from executive orders and agency policy or regulations. </li><li>Third, government contractors should keep a sharp eye out for class deviations that impact multiple contract actions that are issued in the interim period between now and the promulgation of final rules. Such deviations may provide the first notice of specific FAR revisions. Keeping up with these class deviations will aid contractors as they identify new contracting opportunities. </li><li>Fourth, until the government renegotiates or terminates existing contracts, contractors must continue to comply with their obligations as written in their contracts. Even class deviations, unless imposed through a contract modification, are not automatically retroactive in effect. As for the non-statutory provisions subject to the sunsetting, even if those provisions come to expire during a contract’s period of performance, the terms of the contract are likely to prevail over the broader regulations (unless the contract is modified to remove a dead clause). Contractors should therefore remain compliant with the terms of their contract, even if certain provisions are no longer in the FAR or set to expire.</li></ul>Government contracting is set to change. We’ve previously analyzed other recent executive actions and their likely effects on government contractors, including those related to <a href="https://govcon.mofo.com/topics/deregulating-federal-procurement-implications-of-three-recent-executive-actions" target="_blank">deregulation</a> and <a href="https://govcon.mofo.com/topics/deja-vu-all-over-again-trump-s-tariffs-and-their-impact-on-government-contractors" target="_blank">tariffs</a>, and will continue to do so.

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Markus Speidel is an associate in Morrison & Foerster’s Government Contracts & Public Procurement group, in Washington, D.C. Markus assists clients across a wide range of contract matters, including contract claims and disputes, bid protests, compliance counseling, and investigations.

Markus Gerhard Speidel

Markus Speidel

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Thomas Lee

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The Administration signed two Executive Orders (EOs or “Orders”) and one Presidential Memorandum (“Memo”) on April 9, 2025, that aim to make federal procurements faster and more efficient: <ol class="li-text-orange"><li class="li-text-orange"><a href="https://www.whitehouse.gov/presidential-actions/2025/04/modernizing-defense-acquisitions-and-spurring-innovation-in-the-defense-industrial-base/" target="_blank">Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base</a></li><li><a href="https://www.whitehouse.gov/presidential-actions/2025/04/reforming-foreign-defense-sales-to-improve-speed-and-accountability/" target="_blank">Reforming Foreign Defense Sales to Improve Speed and Accountability</a></li><li><a href="https://www.whitehouse.gov/presidential-actions/2025/04/directing-the-repeal-of-unlawful-regulations/" target="_blank">Directing the Repeal of Unlawful Regulations</a></li></ol>This article delves into the details of each EO and the Memo to explore their potential effects on federal contractors.<a href="#_ftn1">[1]</a>Modernizing Defense AcquisitionsThe EO titled “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base” is likely of greatest interest to defense contractors. In a move to modernize the United States’ defense acquisition processes, the Order directs several key reforms.First, the Order establishes “speed, flexibility, and execution” as the hallmarks of the government’s defense procurement policy, with the express intent to “incentivize and reward risk-taking and innovation” by the defense acquisition workforce. Second, the Order directs the Secretary of Defense to submit a plan to “reform the Department of Defense’s acquisition processes” within 60 days. The plan, to the “maximum extent possible,” shall:<ul><li>Immediately prioritize a “first preference” for commercial solutions and a “general preference” for Other Transaction Authority (OTA) agreements, Rapid Capabilities Office policies, and any other Adaptive Acquisition Framework authority or pathway. The preferences apply to all “pending” contracting actions and those “pursued” during the formulation and consideration of the acquisition reform plan;</li><li>Include a detailed process review of “each functional support role” within the acquisition workforce, including program managers, contracting officers, cost estimators, and others; and</li><li>Establish a formal “Configuration Steering Board” to effectively manage risk.</li></ul>Third, the Department of Defense (DoD) must review and propose revisions to its instructions, implementation guides, manuals, and regulations, including the Defense Federal Acquisition Regulation Supplement (DFARS).<ul><li>The review is focused on eliminating or revising unnecessary regulations or guidance, with the DFARS and the Financial Management Regulation specifically identified.</li><li>Going forward, the Defense Secretary is directed to follow the “ten-for-one” rule (as described in EO 14192): for every new regulation added, ten must be deleted. </li></ul>Fourth, within 120 days, DoD is directed to develop a plan to reform, right-size, and train the acquisition workforce.<ul><li>Most notably, the EO directs the use of performance evaluations for acquisition workforce personnel based on their ability to “demonstrate and apply” a first consideration of commercial solutions, adaptive acquisition pathways through the Adaptive Acquisition Framework, and requirements “based on the perspective of the end user.” </li><li>Moreover, the EO mandates “policies, procedures, and tools” to incentivize acquisition officials to take “measured and calculated risks.”</li></ul>Fifth, within 90 days, DoD must conduct a comprehensive review of all Major Defense Acquisition Programs (MDAPs), defined as programs with significant budgets.<ul><li>All MDAPs will be scrutinized for consistency with the new policy, emphasizing speed, flexibility, and execution. Programs exceeding cost or schedule thresholds may face cancellation, prompting contractors to ensure rigorous project management and adherence to timelines.</li><li>Programs more than 15% over budget or more than 15% behind schedule are expressly targeted for review and potential cancellation. This is a more stringent version of the Nunn-McCurdy breach review process that already exists in statute.</li></ul>For contractors, these reforms signal a shift toward a more commercially focused defense acquisition environment. There is a notable emphasis on speed, innovation, and acceptance of risk that will inform pending and future procurements.Reforming Foreign Defense SalesThe second EO seeks to achieve a “rapid and transparent foreign defense sales system.” This order introduces several new measures.First, it announces the administration’s key policies, including improving accountability and transparency, consolidating parallel decision-making, reducing rules and regulations, increasing government-industry collaboration, and advancing the United States’ competitiveness abroad.Second, the Order requires DoD and the State Department to implement the National Security Presidential Memorandum 10 of April 19, 2018 (“United States Conventional Arms Transfer Policy”), and successor policy directives. Additionally, the agencies are directed to:<ul><li>Reevaluate restrictions imposed by the Missile Technology Control Regime on Category I items, including considering supplying certain partners with these items.</li><li>Submit a proposal to Congress to add an update to statutory congressional certification thresholds for proposed sales under the FMS and Direct Commercial Sales (DCS) programs in the Arms Export Control Act.</li></ul>Third, within 60 days of the Order, DoD and the State Department must develop a list of priority partners for conventional arms transfers and issue updated guidance regarding the list, develop a list of priority end-items for potential transfer to priority partners, and review, update, and reissue the lists of priority partners and military end-items on an annual basis.Fourth, within 90 days, DoD, the State Department, and the Commerce Department must submit a plan to improve the transparency of United States defense sales to foreign partners by developing metrics for accountability; secure exportability as a requirement in the early stages of the acquisition process; and consolidate technology security and foreign disclosure approvals.For contractors, this order represents a concerted effort to streamline foreign defense sales, potentially leading to more engagements and more predictability in those engagements with international partners.Memo for the Repeal of Unlawful RegulationsThe Memo, which builds on EO 14219, Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative, directs agencies to prioritize their deregulatory efforts in line with 10 Supreme Court cases. The EO established a 60-day review period for agencies to identify certain categories of unlawful and potentially unlawful regulations. That 60-day period will end on April 20, 2025.Once that review period is completed, the Memo directs agencies to repeal “facially unlawful regulations” immediately and without notice-and-comment rulemaking under the “good cause” exception in the Administrative Procedure Act. Within 30 days of the review period’s conclusion, agencies must submit a one-page summary to the Office of Information and Regulatory Affairs of each regulation not targeted for repeal despite being initially identified as within the EO’s scope of review.   The Fact Sheet accompanying the Memo summarizes each Supreme Court case and its relevance to the administration’s deregulatory efforts. Three cases stand out for their potential implications for federal procurement and, by extension, for government contractors:<ul><li>Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024) ­­­– Agencies are directed to repeal any regulation that is either not consonant with the “single, best meaning” of the statute authorizing it or that was promulgated in reliance on the Chevron doctrine and that could be defended only by relying on Chevron deference.</li><li>West Virginia v. EPA, 597 U.S. 697 (2022) – Agencies are directed to repeal any regulation promulgated in violation of the Major Questions Doctrine as they cannot claim to discover vast delegations of power on an important issue in a statutory text that doesn’t clearly provide such authority. </li><li>Michigan v. EPA, 576 U.S. 743 (2015) – Agencies are directed to repeal any regulation where the “costs imposed are not justified by the public benefits,” or where such an analysis was never conducted to begin with because the Administrative Procedure Act requires agencies to properly consider the cost as well as the benefits in promulgating regulations.</li></ul>The decisions as interpreted by the Memo provide agencies with broad powers to deregulate. It is too soon to say how agencies will respond, and which regulations will be cut, but taken apace with the efforts to rewrite the Federal Acquisition Regulation, federal procurement appears poised for sweeping changes. Overall, these Executive Orders and the Memo reflect an effort to improve efficiency and foster innovation. At the same time, the Orders indicate that a wave of changes may be forthcoming, and contractors should be continuously monitoring for updates. Contractors should be sure they understand the changes, consider providing their own views to the relevant agencies, and be prepared to adapt to the changes once they are finalized.<a href="#_ftnref1">[1]</a>We separately analyze the April 15 EO, Restoring Common Sense to Federal Procurement, which calls for a previously <a href="/topics/far-overhaul-underway" target="_self">predicted</a> FAR overhaul.

On April 3, 2025, the Office of Management and Budget (OMB) issued two memoranda implementing President Trump’s <a href="https://www.federalregister.gov/documents/2025/01/31/2025-02172/removing-barriers-to-american-leadership-in-artificial-intelligence" target="_blank">Executive Order 14179, Removing Barriers to American Leadership in Artificial Intelligence</a>. <a href="https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-21-Accelerating-Federal-Use-of-AI-through-Innovation-Governance-and-Public-Trust.pdf" target="_blank">Memorandum M-25-21, Accelerating Federal Use of AI through Innovation, Governance, and Public Trust</a> (OMB Memo M-25-21) describes the federal government’s policy on promoting the responsible deployment of artificial intelligence (AI) to drive innovation, economic growth, and national security. It rescinds and replaces OMB Memorandum M-24-10, Advancing Governance, Innovation, and Risk Management for Agency Use of Artificial Intelligence. <a href="https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-22-Driving-Efficient-Acquisition-of-Artificial-Intelligence-in-Government.pdf" target="_blank">Memorandum M-25-22, Driving Efficient Acquisition of Artificial Intelligence in Government</a> (OMB Memo M-25-22) provides guidance to executive agencies regarding AI procurement. This memorandum rescinds and replaces OMB Memorandum M-24-18, Advancing the Responsible Acquisition of Artificial Intelligence in Government. Both memoranda are generally applicable to executive agencies, with exemptions for national security. Taken together, the OMB memos pave the way for a significant expansion in the use and procurement of AI technologies in the federal ecosystem. We discuss the key aspects of the memos below.<ul><li>Data Rights: OMB Memo M-25-21 contemplates agencies, to the extent permitted by law, retaining the ability to reuse and share AI code and models, including by releasing and maintaining AI code as open-source software in a public repository. OMB Memo M-25-22, on the other hand, directs agencies to have “appropriate processes for addressing use of government data and include appropriate contractual terms that clearly delineate the respective ownership and IP rights of the government and the contractor.” In particular, it directs agencies to (1) scope licensing and other IP rights based on the intended use of AI to avoid vendor lock-in; (2) ensure components necessary to operate and monitor an AI system or service remain available for as long as necessary; (3) provide guidance on handling, accessing, and using agency data or information to ensure that such information is only collected and retained by a vendor when necessary to perform the contract; (4) prohibit the use of non-public inputted agency data and outputted results to train publicly or commercially available AI algorithms without express agency consent; and (5) prioritize obtaining documentation from contractors that facilitates transparency and ensures the ability to track the performance and effectiveness of procured AI. Contractors providing AI services to the government therefore should anticipate data rights negotiations (at least where the AI is not a commercially available solution governed by FAR 52.212-4) and strict parameters around the contractor’s ability to use government data for non-contractual purposes (restrictions that will likely be similar to those applicable to controlled unclassified information).</li><li>Data Privacy: OMB Memo M-25-22 directs agencies to establish “policies and procedures, including contractual terms and conditions, that ensure compliance with privacy requirements” whenever agencies acquire an AI system or service that will create, collect, use, process, store, maintain, disseminate, disclose, or dispose of federal information containing personally identifiable information.</li><li>Promoting Competition and Avoiding Vendor Lock: Both OMB memos identify the need to encourage competition among AI vendors to avoid vendor lock. With respect to building a robust AI marketplace, OMB Memo M-25-22 directs agencies to conduct broad market research, including seeking out novel AI capabilities from new market entrants and providing opportunities for product demonstrations. An initial gating item to market entry, at least for AI vendors operating in the cloud, will be obtaining Federal Risk and Authorization Management Program (FedRAMP) authorization for their AI offerings. Regarding vendor lock, OMB Memo M-25-22 recommends that agencies include solicitation provisions addressing knowledge transfer, data and model portability, licensing (see Data Rights section above), and pricing transparency. It also provides that, “[a]s soon as a decision is made not to extend a contract for an AI system or service,” agencies should work with the vendor to ensure knowledge and data transfer.</li><li>Domestic Preference: Both OMB memos contemplate establishing a domestic preference for AI that is developed and produced in the United States. Exactly how this domestic preference would apply, however, is an open question. Existing domestic preference statutes apply to products rather than services. Although U.S. Customs and Border Protection has treated software as a product when analyzing country of origin under the Trade Agreements Act, AI operators typically view AI as a service (i.e., SaaS) rather than software. That makes existing domestic preference statutes ill-suited to serve as a mechanism to apply a domestic preference for AI. Giving preference to American AI could also complicate existing trade agreements that provide designated countries with access to the U.S. market, unless such agreements are renegotiated or an agency can identify a valid exception. </li><li>AI Use in Government Contract Performance: OMB Memo M-25-22 acknowledges that contractors “will likely increasingly utilize AI as part of contract performance in situations where the government may not anticipate the use of that AI.” It therefore directs agencies to consider including, when appropriate, a solicitation provision requiring disclosure of AI use as part of contract performance. Contractors thus should closely examine their solicitations and contracts to determine whether there are any restrictions on the use of AI in performance. Even where no restriction exists, contractors will ultimately be responsible for whatever AI outputs they rely on for performance.</li><li>Emphasis on Performance-Based Contracting: OMB Memo M-25-22 “strongly encourage[s]” agencies to leverage performance-based requirements when issuing solicitations for AI services. In particular, the memo recommends issuing Statements of Objectives and Performance Work Statements, which eschew “overly limiting requirements” in favor of “outcome-based needs”; Quality Assurance Surveillance Plans, which can help agencies monitor performance effectiveness; and contract incentives, including those tied to achieving Quality Assurance Surveillance Plan metrics. The emphasis on performance-based contracting could promote greater competition by eliminating restrictive requirements that might otherwise preclude AI vendors from entering the federal market and allowing AI contractors to focus on the outcomes that their services can achieve.</li><li>Contract Performance Assessments: OMB Memo M-25-22 directs agencies to include contract terms allowing agencies to regularly monitor and evaluate the performance, risks, and effectiveness of AI systems or services. In addition, the memo encourages agencies to require contractors to regularly self-monitor their AI systems and services and to remediate any unacceptable activity. The memo explains that these monitoring activities should inform agency decision-making as to whether a particular AI system or service is effective and valuable, and it advises that agencies should be prepared to sunset AI systems or services that outlive their worth. These monitoring activities could also prompt potential investigations or enforcement actions under the False Claims Act.</li><li>Minimum Needs v. Best Practices: OMB Memo M-25-21 describes an approach to risk management that focuses on establishing “the minimum number of requirements necessary to enable the trustworthy and responsible use of AI.” Although consistent with the Trump administration’s focus on deregulation and reducing bureaucracy, this focus on minimum requirements appears to reflect a departure from the “best practices” approach generally seen in the regulation of technology, such as in the cybersecurity space, and articulated in existing National Institutes of Standards and Technology guidance, such as the <a href="https://nvlpubs.nist.gov/nistpubs/ai/nist.ai.100-1.pdf" target="_blank">AI Risk Management Framework</a>. Contractors may ultimately have to make discretionary determinations as to what measures must be deployed to adequately mitigate risk for their particular AI use cases.</li></ul>

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Sandeep Nandivada is a partner in the Litigation Department of Morrison Foerster’s Washington, D.C. office.

Sandeep N. Nandivada

Sandeep Nandivada

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Justin Haan