Government Contracts: New Legal and Policy Developments on Cybersecurity, Affirmative Action, Small Business

Description

There were significant legal and regulatory shifts affecting federal contractors in 2024 and early 2025. Attorneys advising their federal government contract clients must be aware of these changes to ensure their clients are in compliance.

The Supreme Court's Loper Bright ruling put an end to Chevron deference, which will have a major impact on how courts evaluate agency decisions in contract disputes and bid protests. Several federal court rulings have dealt setbacks to disadvantaged business programs, finding that certain federal programs aimed at supporting socially disadvantaged and minority-owned small businesses violated the Equal Protection Clause.

President Trump rescinded a Biden-era executive order pertaining to artificial intelligence (AI) compliance requirements for government contractors, introducing uncertainty and potential legal and ethical risks in AI development and deployment. President Trump also revoked EO 11246, thereby eliminating affirmative action requirements for federal contractors, shifting the focus to merit-based hiring and compliance with existing anti-discrimination laws. Additionally, the administration issued an executive order ending federal diversity, equity, and inclusion (DEI) programs and requiring contractors to certify that they will not operate any DEI programs.

The FAR Council published a proposed rule overhauling the FAR's Organizational Conflict of Interest provisions. The final rule under the Buy American Act increased domestic content thresholds, requiring 65 percent for items delivered between 2024 and 2028; and the FAR Council proposed a rule to remove 70 articles from the Buy American Act's list of domestically non-available products, aiming to encourage market research and emphasize domestic manufacturing and sourcing.

The Department of Defense released a Cybersecurity Maturity Model Certification (CMMC) rule establishing a new compliance framework for federal contractors handling sensitive information. And the Small Business Administration (SBA) proposed a rule that would apply the "Rule of Two" to multiple-award contract task and delivery orders and published a final rule to amend its regulations governing the Historically Underutilized Business Zone Program and impacting such things as recertification requirements for small businesses after a merger, sale, or acquisition, among others.

Listen as our authoritative panel of government contract attorneys reviews the latest developments in federal government contracting rulings, policies, and regulations and provides tips for advising clients on these issues to ensure compliance.