GSA And OMB Propose Legislative Changes To Advance The Revolutionary FAR Overhaul

In July 2026, GSA published 20 legislative proposals, along with a related summary that OMB submitted to Congress, recommending statutory revisions to support the goals of the Revolutionary Federal Acquisition Regulation (FAR) Overhaul (RFO). The legislative proposals aim to complement the ongoing FAR rewrite by seeking statutory changes in accordance with the RFO’s overarching goal of streamlining procurement. The proposed changes are designed to simplify procurement processes, reduce regulatory burdens, increase acquisition flexibility, and improve overall efficiency of the federal acquisition system. This GT Alert summarizes some of the key legislative proposals and their potential implications for federal contractors.

Streamlining Compliance and Competition Procedural Requirements

First, the legislative proposal recommends increasing the Simplified Acquisition Threshold (SAT) and related streamlined purchasing thresholds. The proposed changes are intended to move a larger share of federal buys into procurement channels that involve fewer procedural requirements, shorter timelines, and less administrative friction for both agencies and contractors. The SAT is often used as a threshold for determining whether certain FAR or Defense Federal Acquisition Regulation Supplement (DFARS) clauses are applicable to solicitations.

• In general, the legislative proposal recommends increasing the SAT from $350,000 to $500,000 for all acquisitions.
• For the acquisition of commercial services, the legislative proposal would increase the threshold to $10 million by Sept. 30, 2030.
• For simplified acquisitions by both defense and civilian agencies, which apply to certain purchases above the SAT and leasehold acquisitions where rental rates do not exceed the SAT, the threshold would increase to $50 million by Sept. 30, 2030.

GSA also proposes to apply those thresholds to certain emergency and overseas procurements, revise the small business reserve ceiling, align enhanced competition requirements for multiple-award contracts with the applicable acquisition threshold, and remove outdated posting requirements for lower-dollar purchases.

According to OMB, these threshold changes “will draw America’s best and most innovative companies to a more competitive federal marketplace, slash administrative burdens, increase small business opportunities, and improve taxpayer value.” If enacted, agencies may have more flexibility, which could reduce acquisition lead times and lower proposal costs. For contractors, the legislative proposal may create more simplified acquisition opportunities, while requiring continued monitoring of whether agencies preserve meaningful competition.

Expanded Authority to Withhold Contract Payments during Period of Pendency of a Bid Protest

Section 875 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2026 authorizes the U.S. Department of Defense (DoD) to withhold up to 5% of payments to the incumbent contractor during a protest. The legislative proposal would expand that authorization to all other agencies. If enacted, the legislative proposal would provide that if a protest before the Government Accountability Office (GAO) gets dismissed for lacking a legal or factual basis, the incumbent protester would forfeit the withheld amount. Considered alongside GAO’s revised pleading standard, the legislative proposal underscores the importance of filing well-supported protests from the outset, as protesters “must provide more than a bare allegation; the allegation must be supported by some explanation and evidence that establishes the likelihood the protester will prevail in its claim of improper agency action.” Warfighter Focused Logistics, Inc., B-423546, B-423546.2, Aug. 5, 2025, at 3. Per OMB, the legislative proposal is intended to discourage protests filed primarily to obtain contract extensions during a Competition in Contracting Act stay and preserve “the integrity of the bid protest system for contractors with valid legal and factual challenges to agency procurement decisions.”

Task and Delivery Order Protest Threshold Parity

Next, the legislative proposal recommends increasing the civilian agency task and delivery order protest threshold from $10 million to $35 million, which would be consistent with the defense agency threshold. According to OMB, “providing a consistent threshold for all agencies will not negatively impact bidding contractors because of statutory measures in place to promote competition.” This proposed change supports OMB’s goal of greater consistency across the federal acquisition system and would reduce the number of task and delivery order awards that contractors may challenge at GAO.

OMB further notes that the current disparity may create complications, including when civilian agencies, such as GSA, conduct assisted acquisitions on behalf of DoD. By establishing a uniform $35 million threshold, the legislative proposal would promote consistency across all agency procurements, while still relying on competition safeguards and enhanced debriefing efforts to mitigate potential impacts on disappointed offerors.

NASA Authority for Follow-on Production Service Contracts Following Other Transaction Prototype Projects

The legislative proposal suggests granting NASA authority to award follow-on production or service contracts stemming from other transaction (OT) prototype projects. The legislative proposal models NASA’s authority on existing DoD statutory authority and aims to give NASA a more direct pathway from successful prototype efforts to follow-on production or service contracts.

Essentially, NASA would be able to award follow-on production or service contracts from competitively awarded OT prototype projects without subsequent competition. This would give NASA and its partners greater flexibility to transition successful technologies from development to operational use. The legislative proposal is intended to support more flexible collaboration between NASA and its contractors, accelerate innovation, and help bring new technologies to NASA missions.

Key Takeaways

The legislative proposals outlined in this GT Alert are focused on giving federal agencies greater flexibility to use streamlined procurement procedures and decreasing oversight of procurement processes by protestors. Presented as an effort to standardize authorizations between DoD and civilian agencies and streamline procurements, these legislative proposals would limit the ability of disappointed offerors to challenge agency procurements. If enacted, federal contractors should monitor how the legislative proposals affect competition, protest strategy, and OTA-related opportunities.

The legislative proposals are not self-executing and would require congressional enactment, which may create opportunities for stakeholders to engage legislators on key priorities to shape the final legislative product. Several such recommendations mirror acquisition reforms already being debated on Capitol Hill, including increases to acquisition thresholds and protest-related authorities. Given the breadth of the package, stakeholders should consider monitoring the NDAA for FY 2027 and appropriations processes, as well as other year-end legislative vehicles as potential pathways for enactment.

*Special thanks to Government Contracts Project Assistant Ema Amuial for contributing to this GT Alert.