The Weekly Update recaps recent legislative and regulatory updates affecting
government contractors and commercial businesses.
If you have questions concerning this content, please email marketing@pilieromazza.com.
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GovCon M&A and Security Clearances: What Buyers Need to Know When Acquiring a Cleared Contractor | The GovCon M&A Playbook, Part 5
PilieroMazza Blog; Author: Samuel S. Finnerty
A private equity firm identifies an attractive government contractor. The company has strong margins, a healthy backlog, an experienced management team, and a significant amount of classified work. The buyer has reviewed the contracts, financials, employees, and customer relationships. The numbers work, and the deal model assumes the buyer can bring the company onto its broader platform after closing. Then someone asks what happens to the company’s facility security clearance when the deal closes. If the buyer has foreign ownership or other foreign interests, there is another question: Does the transaction create a Foreign Ownership, Control, or Influence (FOCI) issue? Read more here.
DOD Asks for Encryption Software to Protect Military Data
Source: Federal News Network
The Defense Department is looking to the commercial sector to encrypt its data on major weapon systems and other acquisition programs. The department wants data packet-protection software it can use as a stepping stone on the way to adopting post-quantum cryptography by the early 2030s, according to a recent solicitation. Software-based encryption can be easier to adopt than using hardware, which may not be compatible with the machine it needs to protect. Products must not require the “replacement, modification or augmentation of existing hardware components,” like chips or radios, the Aug. 27 request said. Read more here.
Money Doesn’t Build Ships. Execution Does
Source: Federal News Network
Every administration eventually confronts the same question: Is success determined by how much government spends or by how well government executes? The president’s fiscal 2027 budget request includes a staggering $65.8 billion for shipbuilding and 34 new ships, the largest single-year investment in decades. It represents exactly the kind of national commitment defense leaders, lawmakers and military planners have long argued is necessary to strengthen America’s maritime advantage. But history tells us funding is only the beginning. Read more here.
Department of Defense (DOD) Class Deviation 2026-O0020 Rev. 1: Revolutionary Federal Acquisition Regulation (FAR) Overhaul Part 7, Defense FAR Supplement (DFARS) Part 207
Source: U.S. Department of War
On September 2, DOD issued a class deviation, effective immediately, revising its class deviation issued on February 1, 2026. This revision implements sections 811 and 812 of the National Defense Authorization Act for Fiscal Year 2026, relocates bundling notification criteria from DFARS part 205 to DFARS part 207, and corrects minor errors. Read more here.
DOD Class Deviation 2026-O0025 Rev. 3: Revolutionary Far Overhaul Part 40, DFARS Part 240
Source: U.S. Department of War
On September 3, DOD issued a class deviation, effective immediately, revising its class deviation issued on July 16, 2026. This revision implements several statutory requirements and corrects definitions. Read more here.
Pentagon Plans Fleet of Portable SCIFs
Source: Federal News Network
DOD plans to roll out a fleet of portable classified spaces to make it easier for more companies across the country to do business with the military. Small businesses and nontraditional contractors have long been hamstrung by a lack of access to accredited, secure facilities where they can discuss classified work. The Pentagon argues its initiative will allow more companies to contribute to national security, collaborate directly with government teams and compete for classified contracts. Read more here.
Contractors Want More Data on ‘Continuous Vetting’ Clearance Model
Source: Federal News Network
Cleared industry is pressing the Defense Counterintelligence and Security Agency for more information and metrics on “continuous vetting,” as contractor representatives say the lengthy time to adjudicate some alerts has led to delays in getting cleared people working on contracts. Read more here.
Lawmakers Say DOD to Divert NIH Funds for Defense Budget
Source: Law360
The U.S. Department of Defense is looking to “siphon” billions of dollars from the National Institutes of Health intended for biomedical research to supplement the agency’s budget, according to top Democrats on the House and Senate Appropriations Committees. Read more here.
Pentagon Unveils First of Two Solicitations for its Next Big Cloud Contract
Source: Washington Technology
The Defense Department has released the first of two final solicitations for the next iteration of the military’s main cloud computing contract, which is poised to have a much wider scope this time around. The hyperscalers can now start working on proposals for their portion of the Joint Warfighter Cloud Capability recompete, while a second contract is in the works to cover everything else. Read more here.
Small Business Administration (SBA) News Release: SBA Recognizes Innovative CHOICE Arrangements as Major Win for Small Businesses
Source: U.S. Small Business Administration
On September 3, SBA announced that it joined the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services to announce CHOICE Arrangements. Formerly known as Individual Coverage Health Reimbursement Arrangements, they are a proven tool that enables small employers to offer health benefits at a fraction of the cost of traditional group insurance. CHOICE Arrangements allow businesses to set a predictable monthly budget for health benefits instead of absorbing the rising, unpredictable premiums of group insurance plans. Read more here.
Department of Labor (DOL) News Release: DOL Unveils Agency-Wide Initiatives Supporting American Workers, Job Creators, Retirees
Source: U.S. Department of Labor
On September 8, DOL announced its latest round of opinion letters and ongoing policy efforts to provide greater guidance and transparency to support American workers, job creators, and retirees from the Center for Faith, Employee Benefits Security Administration, Employment and Training Administration, Bureau of Labor Affairs, Mine Safety and Health Administration, Office of Labor-Management Standards, Occupational Safety and Health Administration, Wage and Hour Division, Office of Disability Employment Policy, and Veterans’ Employment and Training Service. Read more here.
DOL Issues Mental Health Parity Enforcement Guidance
Source: Law360
The U.S. Department of Labor’s employee benefits arm issued guidance Tuesday on how to comply with federal laws that require employer health plans to produce an analysis of their mental health and substance use disorder coverage, which remains subject to litigation in D.C. federal court. Read more here.
Upcoming Presentations
CONFERENCES:
Employment Law Updates: Hot Topics, September 17, 2026
2026 DC SHRM Annual Conference
Speaker: Sarah L. Nash
Federal Government Contracting 101: A Roadmap for Commercial Businesses, October 15, 2026
ACRA’s 32nd Annual Conference
Speaker: Nichole D. Atallah
General Services Administration (GSA) News Release: GSA Urges Reform of Outdated Repair Approval Process, Delivers 103 Prospective Capital Projects to Congress
Source: U.S. General Services Administration
On September 3, GSA transmitted 103 prospectus-level capital project fact sheets to the House and Senate authorizing committees, outlining approximately $10 billion in critical repairs and modernization needs across Fiscal Years 2028–2034. The submission highlights escalating risks and rising costs across federally owned buildings due to an approval process that routinely delays even basic maintenance. Read more here.
Government Accountability Office (GAO) Report: DHS Contracts: Reported Potential Cost Avoidance from Terminations Will Not Fully Materialize
Source: U.S. Government Accountability Office
On September 3, GAO published a report reviewing the Department of Homeland Security and Department of Government Efficiency efforts to terminate contracts and grant awards and make reductions to its workforce in 2025. The report, the first in a series, provides information on DHS actions to review and terminate contracts from January through September 2025, and the number and value of contracts terminated. DHS publicly reported on its website that its contract terminations over this time frame could allow the department to potentially avoid over $10.5 billion in costs. However, this overstates actual costs avoided for two reasons: (1) it represents the maximum that could be obligated on these contracts, not how much would have actually been obligated and (2) if DHS continues to need the goods and services covered by those contracts and meets those needs through other contracts, then those costs would not be avoided but incurred through those contracts. Read more here.
Upcoming Presentations
PM WEBINARS:
Starting a Nonprofit: What Every Business Leader Should Know
October 1, 2026
Speaker: Kristen Centre
Buying and Selling a Business: M&A Processes and Procedures
October 21, 2026
Speaker: Kristen Centre
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