FAR 2.0 Overhaul: What Small Business Contractors Must Change Before June 2026

The FAR 2.0 overhaul is the biggest change to the Federal Acquisition Regulation (FAR) in four decades. For small business contractors, the headline news is good: compliance burdens that used to hit contracts as small as $2.5 million are going away. The threshold that triggers certified cost or pricing data requirements will rise from $2.5 million to $10 million for contracts awarded after June 30, 2026. The per-contract trigger for Cost Accounting Standards (CAS) coverage is also rising. And agencies are already adopting new FAR clause numbering through class deviations right now.

Two separate legal mechanisms are driving these changes, and understanding the difference matters for your compliance planning.

The first mechanism is Executive Order (EO) 14275, “Restoring Common Sense to Federal Procurement,” signed April 15, 2025. EO 14275 directed the FAR Council and the Office of Federal Procurement Policy (OFPP) to strip non-statutory rules from the FAR and replace them with plain-language guidance. That directive is the engine behind Phase 1 of the FAR overhaul: agencies are issuing class deviations that reorganize FAR clauses under a new numbering scheme, with guidance organized as what OFPP later named Strategic Acquisition Guidance (SAG) in OMB Memo M-25-25 (May 2, 2025).

The second mechanism is the FY2026 National Defense Authorization Act (NDAA), enacted December 18, 2025. The NDAA changes are statutory. Congress passed them. They operate independently of EO 14275 and have their own effective dates and implementation timelines. The TINA threshold increase comes from NDAA Section 1804(c). The CAS threshold changes come from NDAA Section 1806. These are not Phase 1 of the EO overhaul. They are a separate track running in parallel.

If your contracts fall between $2.5 million and $10 million, this is a genuine win. But you have to act on it. The contractors who capture the benefit are the ones who update their proposal templates, compliance matrices, and representations and certifications (reps and certs) before the threshold changes take effect.

The Key Question: Does FAR 2.0 Actually Affect Your Business?

Not every small business contractor will feel this overhaul the same way. Whether it changes your day-to-day depends on your contract size and what you bid on.

You gain the most from the FY2026 NDAA threshold changes if your contracts are between $2.5 million and $10 million. That is the range where TINA currently requires certified cost or pricing data submissions. The Truth in Negotiations Act (TINA) is codified at 10 U.S.C. Chapter 271 (sections 3701-3708) and 41 U.S.C. Chapter 35 (sections 3501-3509). Under FAR 15.403-4(a)(1), the current threshold is $2.5 million (raised from $950,000 in 2018 by FAC 2018-03, effective July 1, 2018).

After the FY2026 NDAA Section 1804(c) threshold change takes effect for contracts awarded after June 30, 2026, that TINA obligation disappears for awards in the $2.5 million to $9.99 million range.

You also benefit significantly if your contracts run between $2.5 million and $35 million. That is the old CAS per-contract trigger range. Under the new thresholds flowing from FY2026 NDAA Section 1806, CAS modified coverage does not kick in until $35 million per contract. If you have been maintaining a CAS-compliant accounting system for contracts in that range, you may soon have room to step down from that requirement once implementing regulations are finalized.

If your contracts are consistently below $2.5 million, you will not see much change from the threshold increases. The TINA and CAS changes did not affect you before, and they will not after. What may affect you is FAR clause renumbering. Agencies are adopting new clause numbers through Phase 1 class deviations, and solicitations from those agencies already use the new numbering. If your templates cite FAR clause numbers, check whether the solicitations you respond to have adopted the new scheme.

The FAR 2.0 Overhaul: Two Tracks, Two Timelines

One of the most common misunderstandings about FAR 2.0 is treating the EO 14275 overhaul and the FY2026 NDAA threshold changes as a single package that went live together. They are not. Here is how to think about them separately.

EO 14275 / Phase 1 track: This is the FAR Companion Guide track. OFPP published FAR Companion Guide v1 (September 2025) and v2.0 (October 30, 2025). Agencies are issuing class deviations that adopt the reorganized clause numbering from the Companion Guide. These deviations are binding for contracting actions under the agencies that issued them. They are not yet a government-wide regulatory renumbering. FAR 52.204-21, for example, remains active at acquisition.gov under its original number and title. Agencies that have issued class deviations adopting the Companion Guide language may use the new designations in solicitations. Not all agencies have done so. Check each solicitation you respond to.

FY2026 NDAA statutory track: Congress raised the TINA threshold in Section 1804(c) and the CAS thresholds in Section 1806. These are statutory changes that operate by their own effective dates, independent of EO 14275. The TINA threshold rise to $10 million applies to contracts entered into after June 30, 2026 by operation of statute. The CAS threshold changes require regulatory implementation at 48 CFR 9903.201-2 within 180 days of NDAA enactment (approximately June 15, 2026). Until that regulatory update is finalized, the old CAS thresholds remain in the CFR.

The practical takeaway: Phase 1 clause-numbering work is ongoing now. The TINA threshold change is a hard statutory date (June 30, 2026). The CAS threshold change requires a regulatory update by approximately June 15, 2026. Plan accordingly.

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

The TINA Change in Plain English

The Truth in Negotiations Act (TINA) requires contractors to submit certified cost or pricing data when a negotiated contract or modification exceeds the threshold. That threshold has been $2.5 million since FAC 2018-03, effective July 1, 2018, per FAR 15.403-4(a)(1). FY2026 NDAA Section 1804(c) raises the threshold to $10 million for contracts entered into after June 30, 2026.

Here is what changes in practice. Any sole-source negotiated contract or modification between $2.5 million and $9.99 million that currently requires you to submit certified cost or pricing data will no longer carry that obligation for awards after June 30, 2026. If your proposals in that range have included certified cost data packages, those packages go away for post-June 30 awards.

Under the current rules, contractors who submitted certified data on awards in that range faced defective pricing exposure under 10 U.S.C. section 3706. The six-year limitations period for that exposure flows from the Contract Disputes Act at FAR 33.206(b). After the threshold change, that exposure disappears for new awards between $2.5 million and $9.99 million going forward. Existing contracts and modifications on pre-July 1 awards remain subject to the old threshold.

What does not change: the truthfulness obligations in your reps and certs. Price reasonableness determinations by contracting officers continue. If a contracting officer asks you to provide cost data voluntarily as a condition of award, you still must provide accurate information even without the TINA certification requirement. The certification goes away. The accuracy obligation stays.

The CAS Change in Plain English

Cost Accounting Standards (CAS) govern how contractors accumulate, measure, and allocate costs on covered contracts. There are 19 CAS standards (CAS 401-420, with 419 reserved). Two tiers apply: modified CAS coverage and full CAS coverage. Both thresholds are changing under FY2026 NDAA Section 1806.

Modified CAS coverage requires you to follow only four standards: CAS 401, 402, 405, and 406 (per 48 CFR 9903.201-2). These cover consistency in estimating, accumulating, and reporting costs. The per-contract trigger for modified CAS coverage rises from $2.5 million to $35 million. Full CAS coverage requires compliance with all 19 standards and a written disclosure statement (CASB DS-1 form per FAR 30.201-4). Full coverage moves from $50 million in CAS-covered awards per year to $100 million.

These new CAS thresholds require regulatory implementation at 48 CFR 9903.201-2 within 180 days of NDAA enactment (approximately June 15, 2026). The implementing rulemaking is in progress. Until that regulation is updated and effective, the old thresholds remain in force in the CFR. Monitor the OFPP and ecfr.gov rulemaking tracker for the final rule effective date before changing your CAS compliance posture.

The practical result once implemented: many mid-size contractors who previously crossed the full coverage threshold will now stay in modified coverage or exit CAS applicability entirely. For contractors in cost-type contracts, this is especially significant because CAS full coverage is most common on cost-reimbursable awards. For a closer look at how your indirect costs interact with CAS requirements, see Indirect Cost Rates for Government Contracting.

If you are currently under full CAS coverage and expect to fall below the new $100 million threshold once the regulation is updated, you have a window to plan for restructuring your indirect cost systems. That window requires coordination with your Administrative Contracting Officer (ACO) and careful timing relative to your active contracts. An existing CAS-covered contract stays under the CAS requirements in effect at award until that contract closes. The new threshold affects new awards going forward, not your existing obligations.

FAR Clause Renumbering: What Is Actually Happening and What It Means for Your Templates

Phase 1 of the EO 14275 overhaul is producing FAR clause reorganization through agency class deviations. The FAR Companion Guide v2.0, published October 30, 2025, includes model deviation language for reorganized Part 52 clauses under a new numbering scheme. Agencies that choose to adopt the Companion Guide language do so by issuing class deviations, which bind contracting actions under that agency.

The most widely cited example is the cybersecurity safeguarding clause. Under the Companion Guide model, FAR 52.204-21 (“Basic Safeguarding of Covered Contractor Information Systems”) would be redesignated as FAR 52.240-93. However: as of May 2026, FAR 52.204-21 remains active on acquisition.gov with an effective date of November 2021. FAR 52.240-93 does not return a live regulation at acquisition.gov. The Companion Guide renumbering is model language. It becomes the clause number that applies to you on a given solicitation if and only if the contracting agency has issued a class deviation adopting it.

What this means practically: some solicitations will use new clause numbers (from agencies that have issued deviations), and some will still use the original numbers. You cannot apply a single template answer. You need to read each solicitation and match your clause citations to whatever that solicitation uses.

Why Your Templates May Be Out of Date

Proposal templates, compliance matrices, reps and certs packages, and subcontract flow-down clauses all reference FAR clause numbers directly. If your compliance matrix lists FAR 52.204-21 as your cybersecurity flow-down requirement, that matrix is accurate for solicitations from agencies that have not yet issued a class deviation. But for solicitations from agencies that have adopted the Companion Guide numbering, FAR 52.204-21 will not match what the solicitation requires.

The safest approach: download the FAR Companion Guide v2.0 from acquisition.gov. Build a two-column cross-reference of old numbers to Companion Guide numbers for every FAR clause your templates cite. On each new solicitation, check whether the solicitation uses original or Companion Guide clause numbers. Match your response to what that solicitation uses.

The underlying compliance obligations have not changed. The cybersecurity requirements behind whichever clause designation applies in your solicitation are the same as before. The clause number changed. The requirement did not. Under the False Claims Act (31 U.S.C. section 3729) and FAR 52.209-5, the accuracy obligation runs to the underlying requirement, not the label.

Strategic Acquisition Guidance: The Philosophy Shift Behind the Clause Changes

The most significant long-term change in the EO 14275 overhaul is not a threshold or a clause number. OFPP is replacing non-statutory FAR provisions with Strategic Acquisition Guidance (SAG). SAG is plain-language, scenario-specific interpretive guidance rather than binding regulation. OFPP formally named this construct SAG in OMB Memo M-25-25 (May 2, 2025); EO 14275 itself does not use the term SAG. Where SAG replaces a FAR provision, contracting officers have discretion to accept contractor approaches that satisfy the underlying statutory or regulatory purpose, rather than requiring a single prescribed procedure.

SAG does not replace statutory requirements. TINA, the Competition in Contracting Act, and the Small Business Act are all statutory. They stay in the FAR as binding regulation. What SAG targets is the layered non-statutory prescription that has built up over 40 years: formats, documentation requirements, and procedures that have no Congressional mandate and exist only because they were added to the FAR over time.

For most small businesses with contracts under $25 million, the day-to-day SAG impact is limited. The bigger shift is in how you document your compliance approach. Under prescriptive FAR, you documented that you completed specific required steps. Under SAG, you document that your approach achieves the regulatory purpose and explain why. That is a different kind of record in a dispute or audit.

If you have compliance areas where your process has been driven by non-statutory FAR prescription, identify three to five of them. For each, write a brief internal memo that states: what the statutory purpose is, how your practice satisfies that purpose, and who approved the approach. Keep those memos in your contract administration records. If a Government Accountability Office (GAO) protest or DCAA audit questions your approach, the memo is your record of reasoned judgment.

What Does NOT Change

The threshold increases are real. But some contractors read early coverage of FAR 2.0 and conclude they can relax on everything. That is not accurate. Here is what stays in place regardless of the overhaul.

• Truthfulness obligations in all reps and certs. The certification requirement goes away below the new TINA threshold. The obligation to be accurate does not. Submitting false information in a rep or cert is still False Claims Act exposure under 31 U.S.C. section 3729.
• Price reasonableness determinations. Contracting officers still assess whether your price is reasonable. They can still ask for cost data to support that determination even without a TINA certification requirement.
• FAR 42.709-2 unallowable cost penalties. If DCAA determines that costs you claimed were previously determined unallowable, the penalty structure stays: two times the disallowed amount for repeat offenses, one time for first occurrences. That does not change.
• False Claims Act exposure. 31 U.S.C. section 3729 civil provisions apply to any false claim submitted to the government, regardless of whether TINA applies to your contract.
• Small business set-aside protections. Small business program requirements under FAR Part 19 are statutory, derived from the Small Business Act (15 U.S.C. section 644). They are not subject to elimination under the SAG framework.
• Cybersecurity requirements. The underlying controls in the basic safeguarding clause (designated FAR 52.204-21 at acquisition.gov; FAR 52.240-93 in agencies that have adopted the Companion Guide deviation) and DFARS 252.204-7012 remain in force. The clause designation may differ by solicitation. The requirement does not.

Phase 2: What Has Not Happened Yet

Phase 2 of the EO 14275 overhaul is formal rulemaking under the Administrative Procedure Act. This is the stage that makes the Companion Guide changes permanent in the FAR through notice-and-comment rulemaking. As of May 2026, Phase 2 final rules have not been promulgated. The formal rulemaking is in progress. Phase 1 class deviations are interim instruments. Phase 2 will make the changes permanent and government-wide.

The practical implication: contractors must comply with Phase 1 deviations on solicitations that cite them. But the full scope of renumbering and restructuring that will eventually emerge from Phase 2 is not final. Do not treat the current Companion Guide as the permanent end-state of FAR Part 52.

Reps and Certs and Proposal Template Updates

The FAR 2.0 changes require updating three categories of contractor documentation: reps and certs, proposal templates, and compliance matrices. Each has a different update trigger.

SAM.gov annual representations. You update these on your annual renewal schedule. You do not need to file an off-cycle update only because of clause renumbering, unless your contracting office specifically requires it. At your next scheduled annual renewal, review the Companion Guide v2.0 cross-reference and update to whatever clause designations match the solicitations you are active on.

Solicitation-specific reps and certs. For each solicitation response, match your clause citations to the clause numbers cited in that specific solicitation. If the solicitation uses Companion Guide clause numbers, use those. If it uses original FAR clause numbers, use those. Do not copy forward old representations from previous proposals without checking the current solicitation.

Proposal templates for cost-type contracts. These need updating in two specific places after June 30, 2026: 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 once they are in effect.

Compliance matrices for cybersecurity and information systems. Build a two-column version: original FAR clause number and Companion Guide designation. Use whichever column the solicitation uses. A matrix that cites only one numbering scheme will be wrong for solicitations that use the other.

If you are not yet sure how FAR thresholds interact with the simplified acquisition threshold, that context will help you understand which of your contracts fall into which compliance tier.

Implementation Timeline: May and June 2026

Two separate deadlines govern your response. TINA: the hard statutory date is June 30, 2026 per FY2026 NDAA Section 1804(c). CAS: the regulatory update is expected by approximately June 15, 2026 per the 180-day NDAA implementation window for Section 1806. Phase 1 clause-number work is ongoing now, not deadline-bound.

May 2026: Inventory and Template Work

May’s work is documentation gathering and template updating in parallel. 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 against the Companion Guide cross-reference. Identify which soliciting agencies have issued class deviations and update your clause-number approach for those agencies. Brief your pricing analysts and subcontract administrators on the new thresholds and the June 30 TINA effective date.

June 2026: Verification and Cutover

The final month before the TINA statutory cutover is for verification. For contracts expected to be awarded after June 30, confirm your updated proposal templates have removed TINA certification requirements for awards that will fall below $10 million. Monitor the Federal Register and ecfr.gov for the CAS regulatory update; do not change your CAS coverage posture until the regulation is published and effective. Confirm your SAM.gov reps and certs are ready for your next annual update. 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.

Threshold Changes Comparison Table

The FY2026 NDAA threshold increases are the most favorable regulatory shift for small GovCon businesses in two decades. The contractors who capture that benefit are the ones who understand the correct effective dates and plan accordingly, not the ones who moved too early or too late based on a misread of when the changes actually take effect.

The overhaul also changes who is likely to face a DCAA audit based on contract size. See the DCAA Audit Readiness Checklist for what to do if your contract profile puts you in audit territory.