FAR 2.0 Overhaul: What Government Contractors Must Change Before June 2026

The threshold that defined cost or pricing data obligations for federal contractors since 1987 was $2 million. Effective June 30, 2026, that number becomes $10 million. A 400% increase in a single rulemaking cycle. For contractors whose proposals routinely land between $2 million and $9.9 million, the Truth in Negotiations Act (TINA) requirement that drove years of pricing submittals, defective pricing risk, and post-award audits simply disappears. The Cost Accounting Standards (CAS) numbers shift even further: the per-contract trigger moves from $2.5 million to $35 million, and full CAS coverage from $50 million to $100 million.

Executive Order (EO) 14275, “Restoring Common Sense to Federal Procurement,” signed April 15, 2025, triggered the most consequential overhaul of the Federal Acquisition Regulation (FAR) in 40 years. The order directed OFPP to strip non-statutory prescriptions from the FAR and replace them with principles-based Strategic Acquisition Guidance (SAG): plain-language, scenario-specific references that contracting officers and contractors actually use, rather than clause libraries that nobody reads in full. The FAR Companion Guide v2.0, published October 30, 2025, formalized the transition architecture.

Two phases govern the rollout. Phase 1 deploys interim class deviations, effective immediately, while formal rulemaking completes. Phase 2 makes the changes permanent through notice-and-comment rulemaking. Contractors who treat this as a long-cycle regulatory event and wait for Phase 2 to act will spend 2026 operating under outdated compliance matrices, citing clauses that no longer exist by their original numbers, and missing the cost savings embedded in thresholds they never updated. The changes require action now.

TINA and CAS Threshold Changes: What the Numbers Mean for Your Proposals

The TINA and CAS threshold increases are the most operationally significant changes in the FAR 2.0 overhaul for small-to-mid contractors. Both thresholds shift on June 30, 2026, and the impact runs from pre-proposal through post-award audit exposure.

The TINA Threshold: From $2 Million to $10 Million

TINA, codified at 10 U.S.C. § 3702 and 41 U.S.C. § 3502, requires contractors to submit certified cost or pricing data when a negotiated contract or modification exceeds the threshold. The current threshold is $2 million. As of June 30, 2026, that threshold rises to $10 million under Defense Federal Acquisition Regulation Supplement (DFARS) Class Deviation 2025-O0012.

What changes in practice: any sole-source negotiated contract or modification between $2 million and $9.99 million that previously required certified cost or pricing data submission will no longer carry that obligation. Contractors who submitted certified data on those actions faced defective pricing exposure under 10 U.S.C. § 3547 for up to six years post-award. That exposure disappears for post-June 30, 2026 awards at the new threshold range.

What does not change: the truth and accuracy obligations in representations and certifications. Price reasonableness determinations by contracting officers continue. Contractors who are asked to provide cost data voluntarily as a condition of award still must provide accurate information even without the TINA certification requirement. The certification is gone. The accuracy obligation is not.

CAS Coverage: The Two-Tier Shift

Cost Accounting Standards govern how contractors accumulate, measure, and allocate costs on covered contracts. Two tiers apply: full CAS coverage and modified CAS coverage. Both thresholds change under the overhaul per FAR 30.201-4 and CASB Disclosure Statement requirements.

The per-contract trigger for CAS applicability rises from $2.5 million to $35 million. Full CAS coverage, which requires disclosure statements and adherence to all 19 standards, moves from $50 million in CAS-covered awards to $100 million. The practical result: many mid-size contractors who previously crossed the full coverage threshold in a single contract year will now remain in modified coverage or exit CAS applicability entirely.

For contractors currently under full CAS coverage who will fall below the new $100 million threshold, the transition creates a window to restructure indirect cost systems without the full disclosure statement burden. That window requires coordination with your administrative contracting officer (ACO) and careful timing relative to active contracts.

The audit fix. The Audit Fix: Pull your last 24 months of contract awards. Identify every award between $2.5 million and $35 million where you submitted certified cost data or applied CAS full-coverage accounting. Calculate your post-June 30, 2026 CAS-covered award total using the new $100 million threshold. Brief your pricing team and cost accounting leads on the new exposure profile before the effective date. Do not wait for a contracting officer to raise it.

FAR Clause Renumbering: Why Your Templates Are Already Wrong

Phase 1 of the FAR 2.0 overhaul includes systematic clause renumbering. FAR Part 52 clauses are being reorganized under a new numbering schema. The most widely used example: FAR 52.204-21, “Basic Safeguarding of Covered Contractor Information Systems,” is renumbered to FAR 52.240-93 under the interim deviation structure. The underlying requirement does not change. The clause designation does.

Why Renumbering Creates Real Compliance Risk

Proposal templates, compliance matrices, reps and certs packages, and subcontract flow-down clauses all reference FAR clause numbers directly. A compliance matrix that lists FAR 52.204-21 as the cybersecurity flow-down requirement is already out of date. When a contracting officer or prime contractor auditor reviews your compliance package against the solicitation, mismatched clause numbers create discrepancy flags, even when the underlying controls are in place.

The risk extends to subcontract administration. If your standard subcontract template includes clause lists by FAR number, each template requires a line-by-line update. A subcontractor receiving a flow-down citing the old number has legal ground to argue ambiguity if a dispute arises post-award. Courts and boards of contract appeals have historically resolved ambiguity against the drafter.

Identifying Which Clauses Have Changed

The FAR Companion Guide v2.0, published October 30, 2025, contains the full renumbering cross-reference. OFPP has also published interim class deviations on the FAR Council website that list each affected clause by old and new number. The most directly affected areas for small-to-mid contractors are Part 4 (administrative and information systems clauses), Part 19 (small business programs), and Part 52 broadly.

The audit fix. The Audit Fix: Download the FAR Companion Guide v2.0 cross-reference table. Run a string search across your proposal template library, compliance matrix workbooks, and standard subcontract templates for every FAR 52.xxx clause number. Map old numbers to new numbers. Update all templates before submitting any proposal with a June 30, 2026 or later award date. Flag your contracts team to update flow-down clause lists in active base contracts before the next option period exercise.

Strategic Acquisition Guidance: The Philosophy Shift Behind the Clause Changes

The most significant long-term change in the FAR 2.0 overhaul is not a threshold or a clause number. OFPP is replacing non-statutory FAR provisions with Strategic Acquisition Guidance, plain-language, scenario-specific references that interpret regulatory intent rather than prescribe exact procedures. The shift moves federal procurement from a rules-based compliance model toward a principles-based one.

What SAG Replaces and What It Does Not

SAG does not replace statutory requirements. TINA, the Competition in Contracting Act, the Small Business Act, and the Walsh-Healey Public Contracts Act are statutory. They remain in the FAR as binding regulation. What SAG targets is the layered non-statutory prescription that has accumulated over 40 years: procedures, formats, and documentation requirements that have no Congressional mandate and exist only by regulatory accretion.

For contractors, the SAG transition means that some compliance obligations you have treated as hard rules are now interpretive guidance. The opportunity is real: in areas where SAG applies, contracting officers have discretion to accept compliant approaches that differ from historic templates, provided the approach satisfies the underlying statutory or regulatory intent. The risk is equally real: without explicit prescription, “close enough” judgments shift to the contracting officer, and what satisfies one CO on one contract may not satisfy another.

How Contractors Should Respond to SAG

The practical response is documentation of intent, not documentation of compliance boxes. Under prescriptive FAR, you documented that you completed the required steps. Under SAG, you document that your approach achieves the regulatory objective and explain why. That is a materially different evidentiary posture in a dispute or audit.

Build internal SAG interpretation memos for every area where your compliance program relied on non-statutory FAR prescriptions. These memos answer: what is the statutory or regulatory objective? How does our practice satisfy that objective? Who approved the interpretation? Log the memo against the specific contract or solicitation where it applies. If a Government Accountability Office (GAO) protest or DCAA audit questions your approach, the memo is your contemporaneous record of reasoned judgment.

The audit fix. The Audit Fix: Identify three to five areas in your compliance program where your current process is driven by non-statutory FAR prescription rather than statute. For each, write a one-page SAG interpretation memo documenting: the statutory objective, your compliant approach, and the contracting officer or CO-level authorization on the relevant contract. File these memos in your contract administration records. Review them at each option exercise.

Updating Representations, Certifications, and Proposal Infrastructure Before June 2026

The FAR 2.0 overhaul requires updating three categories of contractor documentation: representations and certifications (reps & certs), proposal templates, and compliance matrices. Each category has a different update trigger and a different risk profile if left unchanged.

Representations and Certifications

Reps and certs reference FAR clause numbers directly in both the SAM.gov annual representations and in solicitation-specific certifications. Renumbered clauses will begin appearing in solicitations as agencies adopt Phase 1 deviations. A response certifying compliance with FAR 52.204-21 when the solicitation cites FAR 52.240-93 creates a technical deficiency that a contracting officer can use to reject a proposal as nonresponsive or request clarification.

The higher-stakes risk: false statements. Representations and certifications carry False Claims Act exposure. A contractor who certifies compliance with a clause and then cannot demonstrate that compliance during a DCAA audit or inspector general review faces potential liability regardless of whether the clause number cited was the old or new designation. The accuracy obligation runs to the underlying requirement, not the label, per 31 U.S.C. § 3729 and FAR 52.209-5.

Proposal Templates and Compliance Matrices

Proposal templates used for cost-type contracts need updating in two specific areas: the cost or pricing data certification block (which cites TINA applicability) and any compliance narrative that references CAS coverage determinations. Both must reflect the new thresholds effective June 30, 2026.

Compliance matrices used for information systems, cybersecurity, and supply chain security requirements are the highest-priority update. FAR 52.204-21 (cybersecurity basic safeguarding) and FAR 52.204-23 (prohibition on ByteDance-covered applications) both fall in the renumbered Part 52 range. Matrices that cite the old numbers are producing reports that misstate your actual compliance posture against the current clause library per DFARS 252.204-7012 and FAR 52.240-93.

The audit fix. The Audit Fix: Assign a contracts administrator to a clause audit before April 30, 2026. The scope: every proposal template, compliance matrix, reps & certs master document, and SAM.gov annual representation file. Update each document to reflect new clause numbers and the new TINA and CAS thresholds. Create a version-controlled master with the effective date of each change. Submit updated annual reps in SAM.gov as soon as your organization’s next update cycle opens after the effective date.

Implementation Timeline: What Must Happen Before June 30, 2026

The June 30, 2026 effective date for TINA and CAS thresholds is the hard deadline. Phase 1 interim class deviations on clause renumbering are already in effect. Contractors who organize their response around the June 30 date will miss the clause-number work that is required now.

April 2026: Inventory and Assessment

This month’s work is documentation gathering. Pull every active contract and subcontract. Identify which are currently CAS-covered and at what tier. Identify which include certified cost or pricing data certifications. Map the FAR clauses cited in your top 10 proposal templates and your SAM.gov annual representations. This inventory does not require legal review or policy decisions. It is discovery. Do it before May, because May is when the updating work must begin.

May 2026: Template and Matrix Updates

With the inventory complete, May is execution. Update proposal templates to remove TINA certification requirements for awards below $10 million. Update CAS applicability determinations. Run the clause cross-reference exercise from the FAR Companion Guide v2.0 against every affected template and matrix. Brief your pricing analysts and subcontract administrators on the new thresholds. If your organization uses an enterprise resource planning (ERP) system with embedded FAR compliance checks, work with your system administrator to update the threshold parameters before June.

June 2026: Verification and SAM.gov Updates

The final 30 days before the effective date are for verification. Test your updated templates against a live solicitation scenario. Confirm that your SAM.gov reps and certs reflect the updated clause numbers. For contracts in active option periods that will exercise after June 30, brief the program office on the new threshold implications for any modifications expected in the second half of 2026. Submit updated SAM.gov annual representations during your next scheduled update window.

• Download FAR Companion Guide v2.0 and distribute to contracts, pricing, and compliance teams
• Complete a 24-month contract award inventory identifying all CAS-covered awards and TINA-applicable certifications (April 2026)
• Update TINA certification blocks in all proposal templates to reflect $10 million threshold effective June 30, 2026 per 41 U.S.C. § 3502
• Recalculate CAS coverage tier for all contracts between $2.5 million and $35 million (modified) and $50 million to $100 million (full) per FAR 30.201-4
• Coordinate with ACO on disclosure statement status for contractors transitioning out of full CAS coverage
• Run FAR clause cross-reference audit across all proposal templates, compliance matrices, and subcontract flow-down clause lists using Companion Guide v2.0 table
• Update SAM.gov annual representations to reflect renumbered clauses at next scheduled update window
• Build SAG interpretation memos for three to five non-statutory compliance areas where your program relied on prescriptive FAR provisions
• Brief subcontract administrators and pricing analysts on new thresholds before May 31, 2026
• Verify ERP or contract management system threshold parameters are updated before June 30, 2026

Frequently Asked Questions

What is the FAR 2.0 overhaul and when does it take effect?

The FAR 2.0 overhaul is a full-scale revision of the Federal Acquisition Regulation initiated by Executive Order 14275, signed April 15, 2025, under the directive “Restoring Common Sense to Federal Procurement.” Phase 1 interim class deviations, including FAR clause renumbering, are already in effect. The TINA and CAS threshold increases take effect June 30, 2026, as the highest-impact deadline for contractor compliance action.

Does the new $10 million TINA threshold apply to modifications on existing contracts?

Yes, with timing caveats. The $10 million threshold applies to negotiated contracts and modifications awarded on or after June 30, 2026 per 41 U.S.C. § 3502 and DFARS Class Deviation 2025-O0012. Modifications to contracts awarded before the effective date are subject to the threshold in effect at the time of the modification award, not the original contract award. Review the modification date, not the base contract award date, to determine which threshold applies.

What happens to my CAS disclosure statement if I fall below the new full-coverage threshold?

Contractors who fall below the new $100 million full CAS coverage threshold must coordinate with their administrative contracting officer (ACO) before changing cost accounting practices per FAR 30.201-5. An existing CAS-covered contract remains under the CAS requirements in effect at award until the contract closes. The new threshold affects prospective applicability on new awards, not retroactive obligations on existing covered contracts. Work through your ACO with adequate lead time before the next contract year begins.

Is FAR 52.204-21 still required, or has it been eliminated?

The underlying cybersecurity safeguarding requirement has not been eliminated. FAR 52.204-21 is renumbered to FAR 52.240-93 under Phase 1 interim class deviations. The 15 basic safeguarding requirements for covered contractor information systems remain in force. Update your compliance matrices and subcontract flow-down clauses to cite the new number, but the compliance obligation itself is unchanged.

What is Strategic Acquisition Guidance (SAG) and how is it different from a FAR clause?

Strategic Acquisition Guidance is plain-language, scenario-specific interpretive guidance issued by OFPP to replace non-statutory FAR provisions. A FAR clause is binding regulation. SAG is guidance. Where SAG replaces a FAR provision, contracting officers retain discretion to accept contractor approaches that satisfy the underlying statutory or regulatory objective rather than prescribing a single required procedure. The practical implication: contractors in SAG-covered areas must document their reasoning, not just their compliance steps.

Do I need to resubmit my SAM.gov annual representations because of the clause renumbering?

SAM.gov representations are updated on your annual renewal schedule. You do not need to file an off-cycle update solely because of clause renumbering unless your contracting office requires it. Review the renumbered clause list from the FAR Companion Guide v2.0 cross-reference table and update your representations at your next scheduled annual renewal. For solicitation-specific representations, update your response to match the clause numbers cited in the solicitation, not your SAM.gov annual record.

How does the FAR 2.0 overhaul affect small business set-aside requirements?

Small business program requirements under FAR Part 19 are statutory, derived from the Small Business Act, and are not subject to elimination or relaxation under the SAG framework per 15 U.S.C. § 644. The thresholds for small business set-aside applicability and the SBA size standards are unchanged by the executive order. What changes are administrative reporting formats and documentation requirements in areas where OFPP determines the existing FAR prescription exceeds the statutory mandate. Watch for SAG publications specific to Part 19 as Phase 2 rulemaking proceeds.

What is the difference between Phase 1 and Phase 2 of the FAR 2.0 overhaul?

Phase 1 uses interim class deviations, agency-level and FAR Council-level temporary regulatory instruments that allow immediate implementation without completing the full notice-and-comment rulemaking cycle per FAR 1.404. Phase 1 changes, including clause renumbering and some threshold adjustments, are in effect now. Phase 2 is formal rulemaking under the Administrative Procedure Act and will make the changes permanent. Contractors must comply with Phase 1 deviations on solicitations that cite them, even while Phase 2 rulemaking continues.

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