FY 2026 NDAA: Key Procurement Reforms for Defense Contractors

Section 812 updates the competitive procedures for DoD procurements using the GSA MAS. The evaluation standard is changing from the “lowest overall cost alternative” to “best value.”

According to the Federal Acquisition Regulation (FAR), best value refers to the expected acquisition outcome that provides the greatest overall benefit based on the government’s assessment of the requirement.

This shift allows DoD buyers to consider technical merit, delivery, and risk alongside price, rather than defaulting to the lowest-cost option. However, it’s important to note that this change affects only DoD acquisitions. Civilian agencies will continue to follow the Title 41 MAS standard unless Congress makes further adjustments.

Section 875 directs the DoD to adopt Defense Federal Acquisition Regulation Supplement (DFARS) procedures that permit contracting officers to withhold up to 5% of payments from incumbent contractors who file a GAO protest for the sole purpose of extending a contract or bridge during the protest stay.

If the GAO dismisses a protest for lacking a reasonable legal or factual basis, the contractor may forfeit the withheld amount.

Contractors should carefully evaluate their decisions to protest, particularly in bridge extension situations, ensuring they have a solid legal or factual basis before proceeding. The financial implications of withholding payments mean that contractors must ensure they have a solid legal and factual basis before submitting a protest.

By adapting their protest strategies in light of these new rules, contractors can better position themselves for success while mitigating financial risks. This change encourages a more responsible and informed approach to the protest process, balancing the need for accountability with the realities of contract performance.

The NDAA raises the threshold for TINA certified cost or pricing data from $2 million to $10 million for defense contracts entered into after June 30, 2026.

The NDAA also eliminates the $7.5 million trigger for CAS applicability, raising the modified CAS applicability threshold from $2 million to $35 million. Additionally, full CAS coverage has increased to $100 million (up from $50 million) as well as for filing CAS Disclosure Statements.

While CAS changes are set for January 1, 2028, the threshold increases will take effect within 180 days of enactment, or by June 26, 2026.

The increased thresholds for TINA and CAS requirements will significantly reduce compliance burdens for defense contractors. By raising financial limits, smaller contracts can avoid extensive pricing regulations, enabling more efficient resource allocation. This reform fosters a more agile contracting environment, promoting innovation and competition, particularly among small and non-traditional contractors. Ultimately, this expansion strengthens the defense industrial base and enhances the DoD’s responsiveness to national security needs.

Section 1826 exempts qualifying NDCs from FAR Part 31 cost principles, certified cost or pricing data requirements, and various DoD business system rules, subject to limited waiver authority and congressional notification.

NDC status is defined by whether the contractor is not currently performing (and has not recently performed) a full CAS-covered contract.

Eligible contractors may find it easier to enter the market, as Section 1826 significantly reduces barriers for commercial contractors. Non-traditional defense contractors should be cautious about providing extensive cost or pricing data in their proposals.