We Get Contracting: Episode 1 — Top Five Compliance Challenges for Government Contractors in 2026

Transcript

Scott Pechaitis
Principal, Denver

Hello everyone, and welcome to the very first episode of our new podcast series from Jackson Lewis' Government Contracts and Compliance Group. It's a series we're calling We get Contracting. I'm Scott, and I'm co-leader of the group along with my colleague Jeremy.

Jeremy Schneider
Principal, Washington, D.C. Region

Thanks, Scott, and thanks to everyone for being here. As Scott mentioned, this is the first in what we hope will be an ongoing series about the issues that matter most to federal contractors.

Pechaitis

Our group works with companies across industries on a full range of federal and state government contracts and compliance issues. It's everything from affirmative action to fraud and whistleblower risk to prevailing wage requirements to navigating the regulatory changes in the federal acquisition regulations, which we'll talk about a little bit today. Lots of things that we help with.

Schneider

Of course, given how much change we're seeing right now politically, administratively, and from an enforcement perspective, we thought this was the perfect time to launch the series.

Pechaitis

Today we're going to kick things off with a big picture discussion. It's the beginning of the new year, and we think it's a perfect time to talk about what we should expect for 2026. Our topic for today is the top five things federal contractors should have on their radars for 2026.

Schneider

That's right, Scott. These are the issues that are already developing now, but we expect will have a significant operational and compliance impact on contractors going forward. We will present them in no particular order, so none of these is more important than any others. We think that these are really the issues you should be concentrating on.

Pechaitis

I'll kick it off with the first one here. That's going to be the future of not just the OFCCP, but all those affirmative action obligations that OFCCP enforces. There's been a lot of uncertainty over the last year in this space. Unfortunately, that uncertainty is going to continue into 2026. As everyone probably knows, one year ago, in January 2025, President Trump issued Executive Order 14173, which revoked a different executive order, which was originally issued by Lyndon B. Johnson in the 1960s. That was Executive Order 11246, which was the executive order that required federal contractors to prepare affirmative action plans based on gender and race. Those obligations are no longer in place. Following the issuance of Executive Order 14173, federal contractors are no longer required to prepare AAPs based on gender or race. They're no longer required to be subjected to audits by the OFCCP for their hiring and pay practices relating to gender and race.

Now, contractors still must develop, maintain, and implement affirmative action programs for individuals with disabilities and for protected veterans, but not for gender and race. The reason for the distinction here really comes down to the fact that the disability and veteran AAP obligations come from Congressional acts as opposed to an executive order, which is where the gender and race obligations came from. Of course, presidents are empowered to issue executive orders; those executive orders could revoke other executive orders. What an executive order really does is give direction to the federal government in terms of how the federal government should operate. Here, it was a direction to the OFCCP to enforce the federal contractor obligations. The difference with the disability and veteran affirmative action obligations is that they do come from Congressional acts. Disability AAPs come from the Rehabilitation Act, and the veterans AAPs come from the Vietnam Era Veterans Readjustment Assistance Act. 

Here is where some of the uncertainty comes in. Back in the summer, the White House signaled that it wanted to abolish the OFCCP altogether. They just didn't want it to be a federal agency anymore. In fact, in the proposed budget, the White House proposed that OFCCP should receive $0 and that it should be eliminated entirely. Now, that happened in June of 2025. Of course, the budget has to go through Congress and ultimately be voted on. Our understanding was that the proposal to eliminate the OFCCP met some resistance in Congress. This is still going on because, as everyone, I'm sure, remembers, the government was shut down for many weeks in the fall because Congress didn't agree on a budget. When the government reopened, it was under a continuing resolution, a temporary resolution, which means it's only funding the government through January of 2026. We'll have to wait and see what happens with the OFCCP, but even if it is eliminated, that does not mean our AAP obligations would go away. Rather, the proposal was to move enforcement of the disability AAPs to the EEOC and to move the enforcement of the veterans AAPs to the Veterans Employment and Training Service, or VETS, which is another arm of the Department of Labor. However, again, this proposal was met with some resistance in Congress. We've not seen actions yet to advance the proposal to move the AAP enforcement of disability obligations to EEOC or the veterans AAPs to VETS. 

One more thing about the OFCCP, and then we'll move on. The other big thing to watch for is what happens with proposed changes to the disability affirmative action plan requirements. In June 2025, the OFCCP published a Notice of Rulemaking that proposed removing the requirement that contractors ask applicants and employees to self-identify as individuals with disabilities and to maintain utilization goals. The OFCCP signaled that they believe the solicitation of disability status information is contrary to the Americans with Disabilities Act, and that the Americans with Disabilities Act may, in fact, prohibit such solicitations, and thus, federal contractors should never have been required to do this in the first place. If the rules go through as proposed, contractors would still be required to prepare affirmative action plans for individuals with disabilities. They'd still be required to do the regular recruitment and outreach, and they'd still be required to evaluate the effectiveness of their practices. However, there would no longer be a data component. We would no longer be doing the collection of data on applicants or employees, and no longer doing those utilization analyses that the AAP regulations currently require. Now we know this proposal was also met with some resistance, including some from various disability rights groups and also from some members of Congress. Again, we're going to have to wait and see what happens. The timing here is somewhat uncertain because we know the public comment period ended back in October, and now we're all waiting to see the agency's next step. In the meantime, the obligations remain the same, that we still have all of the full obligations under the Rehabilitation Act as it concerns the individuals with disabilities AAPs, and we're still required to prepare AAPs for veterans. 

Jeremy, do you want to take us through the next development?

Schneider 

For number two, we're going to talk about the DOJ's fraud initiative and whistleblower activity. The administration recently announced that it's going to create a new Deputy Attorney General position to act as a fraud czar. Now, changes at the Department of Justice happen very regularly when a new administration takes over. This one appears to be different because it looks like it's a direct reaction to some recent convictions and other reports of fraud in Minnesota. There are a number of individuals who have been convicted of government fraud for operations and meal service providers without actually doing the things that they promised to do in order to receive the federal funds. The president and Attorney General Bondi have both signaled that they believe that this is a much larger fraud situation than is being reported in just Minnesota. It's likely that we will see in 2026 resources being dedicated to other places in the country. If you're an employer who bills federal programs to provide daycare, food assistance, in-home care, assisted living, and the like, you should expect increased scrutiny in 2026. 

Of course, when these things are in the press, it leads to more whistleblowers coming forward to report suspected government fraud. Over the last year, we've seen an uptick in whistleblower claims brought under the False Claims Act and other laws that are tied to labor and employment compliance, cybersecurity, and billing to Medicare and Medicaid. These fraudulent actions don't always start with fraud in the traditional sense. Many of these types of investigations that the Department of Justice initiates start with compliance concerns, employment-related issues, and things like internal complaints about training, reporting accuracy, and program implementation. Once the DOJ gets involved, though, the scope of those investigations tends to expand very quickly. 

For contractors in 2026, we're recommending that you make sure your internal compliance programs are up to date, running well, and running efficiently. You want to make sure your employee complaints are taken seriously and investigated promptly. You want to know what your certifications and representations are. If you're certifying compliance with a law or a regulation, you need to know whether you truly are doing that. Again, we expect the Department of Justice to put increased scrutiny on federal programs where fraud has been discovered in various places in the country. 

I'll kick it back over to Scott to talk about topic number three.

Pechaitis 

Thank you, Jeremy, and what a good segue, because this one has a lot of overlap with fraud investigations in the Department of Justice. Topic number three for us today is the new Anti-Discrimination Certification Clause, which will be required for all federal contracts and grant awards going forward. This new certification clause was announced in the same executive order that I was talking about earlier, Executive Order 14173. In addition to revoking the affirmative action obligations around race and gender, it also creates a new certification clause that is significant because it requires contractors to affirmatively state that they are not operating programs that violate federal anti-discrimination laws. 

Now, on its face, that may sound somewhat straightforward, but the implications here could be substantial. In addition to certifying that we are not violating any federal anti-discrimination laws, the new clause is also going to require certification that this is a material condition of the contract. That means an inaccurate certification could potentially lead to a determination, suspension, even debarment, or False Claims Act exposure with the Department of Justice potentially conducting investigations. Because this provision has become a material part of the contract, they can say this was a significant undertaking, or a significant thing that we were contracting for. At least that is going to be the argument.

We've seen some litigation around this already, particularly because the certification is a little bit ambiguous with respect to what it means to have a program that does not violate federal anti-discrimination laws. There have been some courts that have agreed that some of this language is ambiguous, and it's not very clear what contractors are required to do. Now, unfortunately, the courts that have held that are somewhat limited in scope with respect to their decisions. There is no broad injunction that applies to everyone with respect to the certification clauses. All indications are that the federal government is going full steam ahead with respect to requiring agencies to start including them in their contracts.

When this clause was first introduced at the beginning of 2025, I saw some agencies actually put out some requirements. They put out contract modifications. We're going to be seeing a lot more of that. It's important as we go into 2026, not only should you keep your eye on the developments with respect to the certification clause, but also keep an eye out for the actual certification clause and any modifications or new contracts. Make sure you understand what it means to be certifying that you do not have any programs that violate federal anti-discrimination laws.

Another recommendation for 2026 is that contractors should be doing a proactive review of their diversity practices to make sure that there is nothing problematic in their practices. Again, the certification clause could form the basis. It could give a justification for the Department of Justice to conduct investigations. We've already seen some investigations as we're going to talk about in a little bit. If the Department of Justice is going to come take a look around, we want to make sure that our practices are lawful. Take a look at any DEI-related programs. You also want to take a look at your training programs and make sure that you're following the latest guidance there. Your recruitment, hiring, and promotional practices are all things that you should be making sure you're comfortable with and are adhering to the requirement not to have any programs that violate federal anti-discrimination laws. It's not just this theoretical risk; with this certification provision, it's becoming contractual. Remember, if we violate these provisions, not only could the Department of Justice potentially come in and investigate potential discrimination claims, but they could also seek to impact the contract. We could lose the funding, and we could lose the contract. In an extreme situation, we could even be debarred.

Jeremy, do you want to take us into the next topic?

Schneider

Yes, thanks, Scott. Next up is number four, and this is the lasting impact of DOGE. It seems timely because in the last month or so, DOGE officially or unofficially wrapped up its operations. Now, what does this mean going forward? Well, look, while it may be going away as a formal entity, its influence over the government and over contracting really isn't going to go away. DOGE accelerated a broader push toward government efficiency, contract scrutiny, and cost accountability, and those issues aren't going away. 

Now, putting aside what actual savings DOGE may have delivered or its impact on the federal civil service, public scrutiny of government efficiency is running high right now. We're seeing agencies continue to apply DOGE-era thinking. At least for the remainder of this administration, we think agency heads and other political appointees are going to continue to take their cues from the president and the numerous executive orders that he issued last year. This has trickled down to contracting and program officers at the individual agencies. Our contractor clients are feeling the squeeze. Contractors should therefore expect continued emphasis on contract justification and value, performance metrics, reduced tolerance for inefficiency or over-billing, and realigned priorities.

In 2026, we expect contractors to be prepared to make changes based on shifting priorities and reduced spending in many government programs. For example, everyone is aware that DOGE had an outsized impact on USAID. While that agency is operating on a limited budget, priorities and spending for government have moved to other areas, such as aerospace, defense, and military spending. With that increased priority toward that type of work, contractors should be on the lookout for increased scrutiny. 

Scott, let me kick it back over to you to finish up.

Pechaitis

In the home stretch now. Number five, again, not in any particular order, but number five on our list here, and this is a big one, the Trump administration's radical overhaul of FAR clauses. This is one of the most significant regulatory developments that the FAR process has seen in many years. This stems from another executive order. This one, Executive Order 14275, which was called Restoring Common Sense to Federal Procurement, was issued back in April 2025. Through that EO, the administration made it very clear that its objectives here include simplifying the procurement process for federal contractors, reducing regulatory burdens, removing requirements that are not contained in statutes and which may potentially have been created by an administrative agency at some point along the way, and eliminating any clauses that may be viewed as duplicative or unnecessary. 

First, taking a step back, some basics. What is the FAR? The FAR is basically the federal government's procurement rule book. I like to think of it as the terms and conditions. FAR stands for the Federal Acquisition Regulations, of course, and they're used to set the terms and conditions for everything from procurement contracts for IT to construction to office supplies to services, and really everything in between. 

The EO kicked off what the government is calling a revolutionary FAR overhaul or RFO. RFO is the term that they're using. It's really the first comprehensive rewrite of the FAR in many years. Again, the goal here is stripping it back to just the essentials. Think of it as taking the FAR from a giant encyclopedia and bringing it back into just a practical playbook. That's really the administration's goal. While some clauses may be streamlined or eliminated, others are being rewritten. One thing to be on the lookout for here is with those rewritings of the FAR clauses, is there a shifting of the risk? Does the risk change at all, particularly with respect to any ambiguities? Is the rewrite going to reduce ambiguity or does it create more ambiguity? Then, think about how that impacts you. The good news is the government is acting very quickly on this. They set up a dedicated RFO hub online. It's on the acquisition.gov website. On that website, or the hub, they've been publishing rewrites of the FAR clauses. You can see some that have red lines where you can see exactly what was changed. They're publishing deviation guidance and other materials to help explain the changes. One of the interesting things here is that the way that they're moving this through so quickly is because they're not going through a formal rulemaking process. Rather, they are relying on deviations to implement the changes more quickly.

As for timing, of course, this isn't going to happen overnight. Much of it has already been done. Many of the changes are already online on the hub. However, we expect a phased implementation, because ultimately, it's the agencies that need to put this into their contracts, whether it be through contract modifications, contract renewals, or new contracts, but of course also for grants and awards. For now, contractors should be tracking the proposed changes. Go take a look at the hub, see which ones particularly impact your business and how they may be changing. Be prepared to adjust your internal processes, templates, and compliance programs as those new clauses are rolled out and start appearing in contracts.

Jeremy, do you want to close this out?

Schneider 

That's our top five things federal contractors should have on their radar for 2026. From OFCCP requirements to whistleblowers, to the DOJ's lasting impact, and sweeping FAR changes. It's going to be an exciting 2026.

Pechaitis

It certainly is, and in future episodes, we'll be diving into each of these topics in greater detail, bringing practical guidance for navigating what's ahead.

Schneider

Thank you everyone for joining us on the first episode of Jackson Lewis' government contracts and compliance podcast.

Pechaitis 

Be sure to tune in next time as we continue the conversation. Until then, thank you so much.