What US Federal Contractors Can Expect in 2026 and Beyond

Federal procurement is in a period of deliberate disruption. For many years, the government has translated policy objectives into new regulations and compliance requirements imposed on government contractors. Now, for the first time in decades, the government is signaling a sustained shift toward faster buying, reduced regulatory burdens, and greater reliance on commercial practices. For industry, the opportunity is real, as are the risks. The contractors that thrive in 2026 and beyond will be those that can adapt quickly, operate comfortably in more varied acquisition environments, and help their government customers execute amid uncertainty.

This moment is not defined by a single acquisition reform. It is a convergence of several key initiatives: a sweeping rewrite of the Federal Acquisition Regulation (FAR), major defense acquisition transformation efforts, and procurement consolidation and channel modernization. These initiatives are collectively designed to push the federal acquisition system toward more speed, competition, and accountability.

The throughline is clear: the government wants to buy more like a modern enterprise—faster, more data-driven, and more willing to take calculated risks. The unanswered question is whether the acquisition workforce and the industrial base are ready to deliver on those ambitions at scale. While the vision is laudable, we foresee a choppy 2026 as acquisition officials attempt to implement these goals and industry adjusts to meet its customer’s new expectations. But the future appears bright for the system as a whole, and for contractors that lean in and adapt to this new acquisition environment.

The “Revolutionary” FAR Overhaul

The most visible structural change is the government-wide initiative to streamline and rewrite the FAR. The government was not aiming for a “refresh,” but a reset, returning the FAR to its statutory roots, rewriting it in plain language, and pruning non-statutory rules that are not essential to procurement.

The FAR rewrite emphasizes plain language, acquisition lifecycle-based organization, category management, and contracting officer discretion. Equally important, significant text is being migrated from binding regulation to non-regulatory guidance (the FAR Companion, Practitioner Albums, and Buying Guides), and many “shalls” will now become “shoulds” and “mays,” with an explicit invitation for contracting officers to experiment.

For industry, compliance posture has to adapt. A slimmer FAR and heavier reliance on guidance may make acquisition easier, but it also increases interpretive variance. Contractors should expect more divergence across agencies and contracting offices, especially during the initial transition period.

The Warfighting Acquisition System

Defense acquisition is being reoriented toward a “Warfighting Acquisition System,” with speed, flexibility, and execution as the organizing principles. Secretary of War Pete Hegseth has outlined a vision of buying the “85 percent solution” to get the capability in the warfighters’ hands faster.

This has several practical implications. Competition dynamics are shifting toward commercial solutions and speed, with an increasingly visible divide between “traditional” and “non-traditional” contractors. The Pentagon is primed to use more non-FAR pathways—including Commercial Solutions Openings (CSO) and Other Transaction Agreements (OTA)—to meet its requirements. That is most visible through the numerous contract vehicles the government is employing to obtain large quantities of drones—a goal that is complicated by the increased focus on supply chain integrity. In addition to being creative with respect to vehicles, the government is also using creative levers to enforce contractor performance and accountability, such as the recent executive order concerning executive compensation and stock buybacks.

For contractors, the message is not simply “move faster,” but “move faster while being more accountable.” While the Pentagon states that it is willing to accept some performance tradeoffs for speed, it remains to be seen how that will operate in practice.

Procurement Centralization and Channel Modernization

Alongside regulatory and defense reforms, the government is accelerating a shift toward enterprise purchasing channels. Government-wide contracts are no longer merely preferred, they are becoming mandatory. Now, if a commercial product or service that meets an agency’s need is available on an existing government-wide vehicle, the agency must use it absent a head-of-agency exception. Best-in-Class contracts sit at the top of the priority stack, with the General Services Administration (GSA) designated as the executive agent for government-wide information technology (IT) vehicles and tasked to rationalize duplicative indefinite delivery, indefinite quantity (IDIQ) vehicles.

Complementing this, through initiatives such as “OneGov,” GSA is negotiating standardized terms with original equipment manufacturers (OEMs) for the entire federal government. This is consistent with other efforts to disrupt traditional acquisition pathways and bypass third-party resellers and system integrators.

The implications for contractors are clear: fewer opportunities exist to win bespoke stand-alone contracts for common needs. If a contractor offers a product or service that is available on a government-wide vehicle, then they need to get on that vehicle. Helpfully, agencies are suggesting that there will be larger, more continuous competitions with more on-ramp opportunities.

However, the bottom line is that the consolidation elevates the importance of being positioned on the right vehicles—and staying positioned as vehicles evolve.

The Big Unknown: the Federal Acquisition Workforce

These reforms raise the stakes for the federal acquisition workforce. The key question is whether the government currently has the personnel, skills, and mindset needed to deliver this new acquisition landscape.

This is not an abstract concern. A government-wide civilian hiring freeze began on Inauguration Day and was extended twice. Large-scale reductions in force and voluntary attrition have undeniably eroded institutional knowledge. Those contracting personnel with the experience and seniority to be best positioned to experiment with these new tools may no longer be in the federal workforce. But, at the same time, the FAR overhaul’s plain-language restructuring is, in part, a mitigation: a simpler regulation is easier for a smaller, less experienced workforce to navigate. Newer acquisition officials may be less burdened by “this is the way we’ve always done it” thinking.

How this dynamic plays out is difficult to predict, but it is an area where industry can become part of the solution. Contractors that help customers help themselves—through clearer market research engagement, better requirements shaping, and creative acquisition strategies—will be at an advantage.

Forecast for 2026: Choppy, Faster, and More Varied Procurements

Significant unknowns remain about how the government will implement these initiatives, but a meaningful opportunity exists for contractors who can quickly adapt.

• New procurement channels and vehicles: Traditional pathways are changing, including shifts implied by OneGov and defense efforts to deal more directly with OEMs. Contractors should become fluent in “favored innovative” methods, such as CSOs and OTAs, expanded Defense Production Act use, and enhanced use leasing opportunities. The increased prevalence of these vehicles reflects an acquisition mindset shift from “How have we done this?” to “How could we do this?”

• Varied solicitation and contract terms: Contractors should expect inconsistency as contracting officers experiment with faster procurements, prioritize commercial offerings, and emphasize fixed-price, performance-based contracting. Anecdotally, agencies appear much more receptive to commercial terms and practices, providing contractors with greater opportunity to shape procurement structure and terms on the front end.

• More “innovative” evaluation techniques: Contractors should also expect more phased procurements, oral presentations, and demonstrations, along with enhanced discretion to communicate and bargain in FAR Part 15 procurements. Even “fair opportunity” FAR Part 16 competitions under IDIQs could look different, with more discretion in areas like late proposal acceptance, competitive range determinations, and OCI waivers.

• Non-traditional award and administration practices: Agencies may move away from the familiar “one-year base plus four options” pattern, favor more multiple-award structures and rolling awards, and use more “prove it” prototype and demonstration contracts before scaling. Options may be less automatic (with more renegotiation), and terminations for convenience may be more frequently invoked.

• Fewer—and less effective—bid protests: Bid protests are already declining, and many of the structural changes could reduce them further. Additional pressure comes from legislative proposals to penalize meritless incumbent protests, the structural shift toward less-protestable vehicles (e.g., OTAs), and the persistent “fear factor” of offending the government customer. The enhanced discretion afforded to agencies through the FAR rewrite will also make successful protests more difficult to achieve.

• More disputes risk: Increased use and enforcement of performance standards, plus the Pentagon’s intent to introduce more risk into the system, raises the question of whether failure will actually be tolerated in practice. Twice as fast and 85% as good may sound reasonable, but it opens up obvious opportunities for performance failure and disputes. Supply chain integrity could also lead to compliance disputes as the covered-entity list evolves and agencies audit contractor sourcing. In other words, even as protests may decline, the disputes portfolio may shift toward performance interpretation, technical acceptability, and contract administration conflicts.

Conclusion

Changes this significant always introduce uncertainty and risk, but bring with them opportunity. 2026 may be a transitional year, but may also be a sorting mechanism for industry. The firms that treat federal contracting as “business as usual” will face significant challenges, but the firms that treat these reforms as an operating model shift and prepare accordingly will be positioned not just to survive the disruption, but to lead through it.