Revolutionary FAR Overhaul Update: Proposed Rules for FAR Parts 8, 12, 15, and 16

For the past year and a half, PilieroMazza has closely followed the Revolutionary FAR Overhaul (RFO), the ongoing rewrite of the Federal Acquisition Regulation (FAR). During Phase One, agencies implemented model deviation text drafted by the Federal Acquisition Regulatory Council (FAR Council) through class deviations and contract modifications. Phase Two moves that text into formal rulemaking to officially amend the FAR. On September 18, 2026, the FAR Council issued four proposed rules (FAR Cases 2026-003, 2026-006, 2026-10, and 2026-011) covering FAR Parts 8, 9, 12–17, 27, 28, 35, 36, 38, 44, 47, 51, and related clauses in Part 52. In this blog, PilieroMazza highlights pertinent changes in Parts 8 (Required Sources of Supplies and Services), 12 (Acquisition of Commercial Products and Commercial Services), 15 (Contracting by Negotiation), and 16 (Types of Contracts).

Overview: Plain Language, Standardization, and Greater Discretion

Like the Phase One RFO Parts PilieroMazza covered previously, the proposed revisions to FAR Parts 8, 12, 15, and 16 convert existing text to plain language, standardize prescriptions for provisions and clauses, remove many non-statutory requirements, and reorganize the regulations. The proposed rules generally replace detailed procedures with broader principles, giving agencies and contracting officers (COs) greater discretion over non-statutory matters. Although the proposed language largely mirrors the Phase One model texts, some provisions differ. Below, we identify the principal changes to the legacy FAR and highlight material differences from the Phase One texts.

FAR Part 8: Required Sources of Supplies and Services

In addition to the general revisions described above, the proposed changes to Part 8 would: (1) clarify the priority and use of required sources; (2) simplify procedures for using Government sources of products and services; (3) reinforce the use of existing contracts to meet agency requirements; and (4) broaden the circumstances in which contractors may use Government supply sources.

1. Clarification for Use of Required Sources and Simplified Process for Using Government Sources. The proposed rule retains the order of priority in which required sources must be considered, as determined by applicable statutes, but reorganizes the text in that order of priority for readability and clarity. The revised text also removes duplicative guidance on ordering from the required sources—the Federal Prison Industries, AbilityOne participating nonprofit agencies, the Federal Supply Schedule, and the Government Publishing Office—and instead would have agencies rely on the rules and procedures developed by each source.
2. Reinforcing the Use of Existing Contracts. When an agency’s need can be met by a commercial product or commercial service available through a Government-wide contract or blanket purchase agreement (BPA), the proposed rule would mandate the use of an Office of Federal Procurement Policy (OFPP) designated “required use” contract, unless the Senior Procurement Executive provides an exception. If no required use contract is feasible, the agency must next consider a “best in class” (BIC) vehicle and lastly consider using any other existing Government-wide contract or BPA before establishing a new vehicle. “Required use” contracts will be separate from BIC contracts; while use of the former is mandatory, use of BIC contracts will be prioritized but not mandated. OFPP has not yet established criteria for what constitutes a “required use” contract or identified those specific vehicles.
3. Expanded Contractor Access to Government Supply Sources. The proposed rule moves FAR Part 51 (which governs the procedures for contractor use of Government supply sources) into Part 8, eliminating Part 51 entirely. The revised procedures allow agencies to authorize contractor use of Government supply sources under a broader range of contract types, no longer limiting use predominately to cost-reimbursement-type contracts. Giving contractors broader access to Government supply sources is expected to reduce costs and simplify contract performance.

FAR Part 12: Commercial Products and Commercial Services

The proposed revisions to FAR Part 12 are intended to align Government purchasing more closely with commercial practices. Three changes are particularly notable. The proposed rule would: (1) consolidate simplified procedures and micro-purchases requirements in Part 12; (2) revise the clauses applicable to commercial acquisitions; and (3) permit qualifying construction to be acquired as a commercial service.

1. Consolidation of Simplified Procedures and Micro-Purchases. The proposed rule consolidates the publicizing requirements from FAR Part 5 applicable to commercial acquisitions, the procedures for acquiring supplies and services valued at or below the simplified acquisition threshold (SAT) from Part 13, and the statutory authority to use simplified procedures for acquisitions of commercial products and commercial services valued up to $9 million from FAR Subpart 13.5 into the new Part 12, creating a “one-stop shop” for commercial acquisitions. Embedding the thresholds for simplified acquisition procedures in FAR part 12 is intended to make clear to COs that they should not be using FAR parts 15 and 14 procedures associated with conducting negotiations or sealed bidding, respectively, and ensure that commercial acquisitions in this dollar range are solicited, offered, evaluated, and awarded in a simplified manner that maximizes efficiency and economy and minimizes burden and administrative costs for both the Government and industry.
2. Commercial Clauses. The proposed revised FAR 12.205 would limit the clauses used in commercial acquisitions to those specifically prescribed for commercial use unless an agency obtains a deviation, creating a more curated framework for clause selection in commercial acquisitions while limiting ad hoc additions absent a deviation. These revisions would shift responsibility for identifying applicable provisions and clauses from contractors to the Government. The practical effect should be to reduce the likelihood that agencies add non-commercial or otherwise onerous clauses to commercial acquisitions.
3. Construction as a Commercial Service. Under the proposed rule, a CO could acquire construction services through Part 12 procedures if the CO determines that the services are “of a type offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions.” The CO would remain required to comply with Part 36 (Construction and Architect-Engineer Contracts).

FAR Part 15: Contracting by Negotiation

Notable revisions for FAR Part 15 would: (1) relax the “late is late” proposal submission rule; (2) emphasize flexible negotiations over structured discussions; (3) revise the rules governing communications with offerors; (4) broaden the competitive range; and (5) introduce a new technique for determining best value.

1. COs Granted More Discretion to Accept Late Proposals. The proposed revision to the “late is late” rule would broaden a CO’s discretion to accept late proposals when doing so is in the Government’s best interest and would not unduly delay award. Under the legacy FAR, a CO may accept a late proposal only if acceptance would not unduly delay the acquisition and the proposal is either the only proposal received or was submitted electronically and reached the initial point of entry by 5:00 p.m. one business day before the submission deadline.
2. Greater Emphasis on Negotiations. Under the legacy FAR, discussions are a defined procedure aimed at fixing problems in an offeror’s proposal, with mandatory content: the CO must raise deficiencies, significant weaknesses, and unaddressed adverse past performance. The proposed rule reframes that process as “meaningful negotiations,” giving COs more flexibility to negotiate pricing, terms and conditions, intellectual property rights, and other material aspects of proposals with a goal of negotiating the best possible deal to meet the Government’s requirement. COs would remain required to address deficiencies and significant weaknesses with each offeror in the competitive range. However, the proposed rule clarifies that a CO could conduct multiple negotiations with one offeror in the competitive range without having to do so with every other offeror. The proposed rule would more concretely and objectively define a “deficiency” as any part of a proposal that does not conform to a material solicitation term—one affecting price, quantity, quality, or delivery, or a prerequisite that must be satisfied at proposal submission.
3. Updates to the Clarification Process. The proposed rule eliminates the process for exchanging information with offerors before establishing the competitive range, expands the use of clarifications to apply to competitive negotiated acquisitions, and revises the clarification process to also include addressing adverse past performance information to which the offeror has not previously had an opportunity to respond. Under the proposed rule, clarifications would occur at the CO’s discretion at any time up until award and could be used to address situations in which proposal ambiguities or other concerns such as perceived deficiencies or mistakes need to be explained.
4. Broadening the Competitive Range. The proposed rule would broaden the competitive range in a manner not included in the RFO’s Phase One text. Rather than limiting the competitive range to the “most highly rated” offerors (as currently provided in the Phase One text), the proposed rule would include proposals “best suited for negotiation.” This new standard could permit COs to include offerors whose proposals are not the highest rated but present solutions or terms that are well suited for negotiation. COs could still narrow the competitive range for efficiency, but the remaining proposals would be the “most highly evaluated” rather than the “most highly rated.”
5. Best Value: Highest Technically Rated with a Fair and Reasonable Price. The proposed rule would formally recognize, in line with the Phase One text, a best-value method under which the CO first evaluates all technical proposals and then evaluates the price of only the highest technically rated proposal. If that price is fair and reasonable, the agency awards the contract without a tradeoff analysis. If not, the agency evaluates the price of the next highest technically rated proposal and continues in descending technical order until it identifies the highest technically rated proposal offering a fair and reasonable price. This method is expected to streamline and accelerate award decisions by eliminating the need for traditional price-technical tradeoffs. While it does not eliminate protest risk, it may narrow challenges directed at tradeoff judgments. This method is likely to be used in large multiple-award vehicles and certain task-order competitions where technical excellence is the predominant discriminator and evaluation efficiency is a significant concern.

FAR Part 16: Types of Contracts

The proposed revisions to FAR Part 16 would give agencies greater flexibility in selecting and structuring contract types while reinforcing the Government’s preference for fixed-price contracting. Other notable changes would streamline incurred-cost submissions, introduce consumption-based solutions and BPAs under multiple-award contracts (MACs), and require brief explanations for certain unsuccessful task- and delivery-order offerors.

1. Greater Flexibility in Contract Types. The proposed rule shifts from a restrictive to a more permissive framework, allowing agencies to use contract types not expressly addressed in the FAR when they are in the Government’s best interest and not prohibited by statute. When utilized, Alternate I to 52.216-1, Type of Contract, would permit offerors to propose an alternative contract type.
2. Stronger Preference for Fixed-Price Contracting. Consistent with Executive Order 14402, which PilieroMazza covered in Fixed-Price Contracts EO: What It Means for Government Contractors, the proposed rule establishes that fixed-price contracts are the default and preferred contract type, while agencies would need written justification and higher-level approvals to use many non-fixed-price contract types.
3. Reduced Administrative Burden Under FAR 52.216-7. The proposed rule streamlines incurred-cost submission requirements under FAR 52.216-7 by eliminating several reporting elements and reducing required subcontract and cost data contractors must provide. These changes should simplify audits, contract closeouts, and indirect-cost settlements.
4. Two New Contracting Approaches: Consumption-Based Solutions and BPAs under MACs. The proposed rule would introduce consumption-based solutions and establish procedures for BPAs under MACs. A CO could acquire a consumption-based solution when the relevant supplies or services can be metered and billed as fixed-price units based on actual usage. The proposed rule would also authorize COs to establish and use BPAs under MACs, similar to those permitted under FAR Part 8 Federal Supply Schedules.
5. Brief Explanation for Small Task-Order Contracts. Under the proposed rule, unsuccessful offerors under task or delivery orders exceeding the SAT but not greater than $7.5 million will be entitled to a brief explanation of the award decision. While offerors will need to request the brief explanation in writing, COs will be required to provide post-award notices to all offerors within seven days of awarding the order. This brief explanation requirement was not included in the RFO’s model text.

Key Takeaways

• Existing Contract Vehicles Take Priority. Agencies would be required to look first to OFPP-designated required-use contracts, then to best-in-class vehicles and other existing Government-wide contracts or BPAs before establishing a new vehicle. Contractors should monitor which vehicles OFPP designates and assess whether their offerings are positioned on the vehicles agencies will be directed to use. Contractors may want to consider entering into teaming arrangements with other contractors to be more competitive if and when agencies open required-use/BIC contracts for on-ramping.
• Increased Emphasis on Commercial Practices. The proposed rule would limit the clauses used in commercial acquisitions to those prescribed for commercial use, consolidate streamlined procedures, and permit qualifying construction to be acquired as a commercial service. These changes may reduce compliance burdens and create opportunities, but contractors should be prepared to substantiate commerciality and carefully review solicitation terms.
• Flexible Negotiations. Under the proposed rule, COs would gain broader discretion to accept late proposals, seek clarifications through award, conduct meaningful negotiations, and include proposals best suited for negotiation in the competitive range. Offerors should still submit timely, compliant proposals while preparing for more fluid and potentially less uniform agency negotiations.
• Contract Structures May Offer Greater Flexibility While Shifting Risk. Although the proposed rule would permit alternative contract types and introduce consumption-based solutions and BPAs under MACs, it also reinforces fixed-price contracting as the Government’s preferred approach. Fixed-price contracts generally place a greater risk on contractors. Contractors should therefore evaluate pricing, usage assumptions, risk allocation, performance administration, and monitoring tools when preparing proposals under solicitations that contemplate new contract structures.
• Greater Discretion for Contracting Officers. By replacing detailed procedures with broader standards, the proposed rules may accelerate acquisitions and reduce administrative burdens, but they may also produce greater variation in how agencies interpret and implement procurement requirements. Contractors should preserve disciplined proposal and compliance practices while preparing for a procurement environment in which a CO’s judgment plays a larger role.
• Public Comments. The FAR Council is accepting comments on the proposed rules through October 19, 2026. Contractors affected by the proposed rules should evaluate the rules’ operational impact and submit any comments by that deadline.

PilieroMazza will continue to monitor the RFO rulemaking process. For questions about the proposed rules, their application to existing or future contracts, preparation of public comments, or other government contracts matters, please contact Jackie Unger, or another member of PilieroMazza’s Government Contracts Group. Special thanks to Domenic Allegra and Krissy Crallé for their assistance with this blog.

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