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Three tribally owned firms land $400M Air Force Pacific advisory deal

Nick Wakeman — Wed, 02 Sep 2026 15:43:51 -0400

Three small businesses will share in a $400 million Air Force contract vehicle to provide advisory and assistance services throughout the Pacific theater.

Cherokee Nation Government Solutions, SSE BB&E JV, and KIRA Services will compete for task orders to provide engineering, logistics, program management, and project management services to the Air Force.

Work will take place at multiple locations including Joint Base Pearl Harbor-Hickam, Hawaii; Andersen Air Force Base, Guam; Kadena Air Base, Japan; Yokota Air Base, Japan; Misawa Air Base, Japan; Eielson AFB, Alaska; Joint Base Elmendorf-Richardson, Alaska; and Wake Island.

The contract was competitively awarded with five companies submitting bids.

The three winners are tribally owned businesses. Cherokee Nation Government Solutions’ ownership is in its name.

SSE BB&E JV was formed by SpecPro Sustainment and Environmental, a subsidiary of Bristol Bay Native Corp., an Alaska Native Corporation.

Kera is part of the Tlingit Haida Tribal Business Corporation based in Juneau, Alaska.

The Air Force contract is for five years and ends on Sept. 1, 2031.

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When the government blackballs your sub, CICA is no help

Nick Wakeman — Wed, 02 Sep 2026 14:57:59 -0400

Subcontractors have little recourse when an agency orders the prime to kick them off their team.

That was the situation FCN Inc. found itself in. It was bidding to be a teammate to Invictus on a task order bid under the SITE III vehicle.

While Invictus was evaluating FCN’s quote, the Defense Intelligence Agency was separately reviewing whether FCN had an organizational conflict of interest.

DIA told Invictus to drop the company and that is what Invictus did.

FCN went to the Government Accountability Office to challenge that decision. But in a short, four-page decision GAO said FCN did not have standing to challenge the decision. In legal terms, FCN was not an “interested party.”

It doesn’t matter that FCN would suffer financially because of a lost business opportunity, GAO said.

DIA asked GAO to dismiss the protest because it doesn’t meet the requirements for an interested party under the Competition in Contracting Act.

The procurement law defines an interested party as a “prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract,” GAO said, quoting CICA.

“Under these rules, a prospective subcontractor does not qualify as an interested party,” GAO said.

FCN argued that because DIA told Invictus to remove FCN from its team, the removal was a government action, and FCN should be able to protest.

But GAO said no. Invictus held its own evaluations for its subcontractors and retained “substantial responsibility” for the subs, and DIA did not, GAO wrote.

That was actually GAO's second, independent reason for dismissal: even setting aside the interested-party problem, GAO said it has no jurisdiction over a subcontract award unless the agency handled substantially all of the substantive procurement work itself. Here, Invictus — not DIA — wrote the RFQ soliciting its subcontractors, ran the evaluation, and made the call on its teammates, so GAO stayed out.

The U.S. Court of Federal Claims made a similar ruling when FCN went to the court to get a stay to stop work under the task order while GAO weighed the protest.

But the court denied the request. Like GAO, the court said that FCN was not an interested party and couldn’t request a stay.

So, what is the lesson beyond this decision?

Subcontractors cannot rely on CICA to protect them. Instead, they need to lean into teaming agreements and other contractual mechanisms between them and their prime.

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Industry offers government a playbook for handling OneGov expirations

Christian Robles — Wed, 02 Sep 2026 12:00:00 -0400

The Trump administration should publish a consolidated inventory of discounted software offerings that highlights expiration dates, expected price hikes and agency participation, a Tuesday industry whitepaper recommends, and contractors should provide agencies with “timely renewal estimates and anticipated consumption costs” before discounted software prices end.

The recommendation is among the four the Center for Procurement Advocacy — a group whose membership includes Amazon, CGI, Cisco, Google Cloud, Microsoft and Oracle — is issuing before several popular OneGov deals are due to expire at the end of the month.

The OneGov program offers federal agencies discounted access to software, such as ChatGPT, thanks to the buying power of the government as a whole. A General Services Administration official said in August that some companies have already agreed to extend OneGov offerings while others are in the process of forging new deals. GSA has yet to publicly announce which companies are extending OneGov deals but the agency has signaled it wants the initiative to expand to products beyond software.

GSA did not immediately respond to a request for comment.

Should OneGov discounts end or be phased out, “agencies that adopted AI at nominal or deeply discounted prices will then face recurring costs for enterprise licenses, cloud capacity, cybersecurity, data engineering, training, and model usage,” the Center for Procurement Advocacy warns in the paper.

“The result could be a contraction in federal AI use. Some agencies were cautious from the outset because they were uncertain how pilots would be funded after introductory offers ended. Without a planned transition, agencies may keep deployments small, postpone expansion, or discontinue tools that have demonstrated value simply because the budget did not anticipate the post-discount costs,” it adds.

Amid uncertainty over the future of the OneGov, the Center for Procurement Advocacy is urging agencies to identify successful AI deployments, estimate how much they would cost after discounts expire and incorporate them in fiscal year 2027 operating plans and future budget submissions to Congress. Lawmakers, in turn, should consider those deployments in full-year appropriations.

“If there are certain deals where [agencies] have seen increased productivity, service delivery or cost savings, those should be prioritized,” Tim Brennan, president of the Center for Procurement Advocacy, told Nextgov/FCW.

Agencies should assess the benefits of AI capabilities before deciding to renew technology, the paper adds. Those assessments should identify “mission owner, problem being solved, number of users or transactions, security and governance status, expected full-price cost and measurable benefit.”

The Trump administration should give agencies an off-ramp for discounted technology by allowing them to procure from a set of integrated AI platform providers rather than a large number of specific models, the paper recommends. The proposal could address concerns that agencies that have used OneGov discounts for enterprise-wide adoption will be locked into using a specific technology once deals lapse.

The Center for Procurement Advocacy’s approach "would allow agencies to apply common compliance, governance, security, and operational practices across many models under unified service levels and predictable, transparent billing, enabling constrained budgets to deliver substantially greater capability," the paper says. "Because the underlying workloads, containers, models, data, and frameworks remain portable, agencies gain these manageability benefits while reducing the risk of model or vendor lock-in and retaining the freedom to change models or infrastructure providers as mission needs and acquisition strategies evolve."

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A subset of the tech talent supply crunch to watch out for

Ross Wilkers — Tue, 01 Sep 2026 16:44:26 -0400

Amid the rush across all industries to fill out their technology staff, the lack of forward-deployed engineers is emerging as a talent crunch-within-the-crunch that companies are grappling with.

FDEs are customer-facing software engineers that embed directly inside a client’s environment to develop and deploy software within that enterprise, often times working alongside the client’s employees for a set duration. This is in essence a hybrid position with technical and business responsibilities that is crucial for taking artificial intelligence from the lab to workflows and producing measurable results.

Only 2,000 out of a total 17,000 FDEs currently working in the U.S. have turned enterprise AI into meaningful return-on-investment, according to a new study from the tech-focused executive search firm Christian & Timbers.

The study labels that group of 2,000 as “Elite,” meaning they have consistently translated AI deployments into documented results.

JC Christian, a co-founder of the firm, told Washington Technology that the main frontier AI labs are aware of situation thanks to their networks of companies acting as service providers to aid deployment efforts.

The health and wealth of frontier AI labs depends on how many enterprise organizations adopt their technology, but Christian the latter group needs to see value to continue spending at the quantities that they are.

A group of 2,000 people caps out quickly for any decently-sized services company, as Christian pointed out.

With that backdrop in mind, how does that small group become larger in order to meet the global demand for these AI tools and see meaningful ROI?

One main answer lies in recruiting junior forward-deployed engineers to work under those at the elite-level, according to Christian.

“You need to turn them into elite FDEs by working with them on problems at scale, that they have conviction that they can win on,” Christian said. “Once you have that, then you’re getting into a proliferation of knowledge, know-how, technology and business processes that will lead to positive results.”

As the study strongly suggests, defense and government contractors are facing the exact same quandary of having a limited pool of elite-level FDEs.

Aerospace-and-defense companies are looking for leaders on their teams to sitting in roles that are customer-facing but not strictly sales-focused, Christian said.

“Within A&D, I think it’s even more of an elite category, where these people might not be implementing a lot of these services, but it’s going to be very much relationship-driving to drive consumption of whatever service they’re ultimately offering, and to drive stronger relationships into the government bodies that they’re trying to ultimately have as buyers,” Christian said.

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DISA sends mixed signals on combatant command network migration

Nick Wakeman — Tue, 01 Sep 2026 16:40:31 -0400

DISA appears to be sending mixed signals about how it wants to transition the IT infrastructure for the combatant commands to the DODNet.

The agency has issued two requests for information in the wake of a protest of the first plan that would DISA add the combatant commands to the $11 billion Enclave contract held by Leidos.

Under Enclave, Leidos is moving the Pentagon’s 22 administrative and support agencies to DODNet.

When Defense CIO Kirsten Davies ordered that the combatant commands also move to DODNet, DISA added the work to Enclave. General Dynamics IT objected by challenging the justification document that DISA issued.

The company argued that DISA failed to conduct new market research, conduct a pricing determination, and didn’t describe how it planned to remove barriers to future competitions.

After the protest, DISA agreed in late July to pull the combatant command work off Enclave and began taking steps to address GDIT’s complaints.

On July 27, it issued a sources sought notice that addressed the market research shortcomings GDIT tagged.

Comments on that notice were due Aug. 4, giving respondents about eight days to comment.

A second RFI was issued Aug. 27, with a due date of Aug. 28.

That quick turnaround raised some eyebrows, a source told us. The one-day comment period conveys a sense of urgency that wasn’t well communicated when DISA first tried to add the combatant commands to Enclave.

Aspects of the sources sought notice underscore that DISA is beginning to grasp the complexity and the need to “get it right,” the source said.”

For example, in the Aug. 27 sources sought notice, DISA wants respondents to provide three things:

Examples of migrations that involved at least 20 locations and 12,000 users.
Examples of automated migrations from legacy endpoint tools to modern device management with a Defense Department environment.
Explain how to handle training and adoption for an accelerated rollout across geographically dispersed locations.

Taken together the three asks indicate that DISA realizes the complexity of migrating the combatant commands. The second notice also sets a high bar for entry. There are only a few companies with the enterprise IT experience and DOD expertise to provide the examples DISA asked for.

The question remains of whether DISA will go forward with a new competition.

When DISA tried to add the combatant commands to Enclave, the agency was dinged for its poor market research work.

On one hand, you can look at the two notices and argue that DISA is laying the groundwork for a new justification document to add the combatant commands to Enclave.

But when you set that history aside, you see an agency developing a new contract with a full and open competition.

Right now, both scenarios are possible.

DISA does have some deadlines approaching. The CIO’s May memo asked for a plan by the end of August, so news of that could trickle out in the next few weeks.

The sources sought notices also say they want the migration work completed by the end of fiscal 2028.

DISA can still reach that deadline with a full-and-open competition if it uses streamlined acquisition processes.

What could tip the answer one way or the other is how the CIO responds to DISA’s plan and whether the combatant commands are fully on board with that plan. Some questions have been raised about that.

The top thing to watch for in the short term is DISA’s plan and briefing with the CIO. If it hasn’t happened yet, it is about to.

The deadline for DISA’s plan and a briefing with the CIO has passed, according to the CIO memo. If the briefing hasn’t happened yet, it is about to. From there we’ll watch for signs of whether this will be a new competition or its back to justification document and an expansion of Enclave.

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Shutdown threat possibly lifted as House passes stopgap spending bill

Jory Heckman — Tue, 01 Sep 2026 14:22:02 -0400

The House approved a stopgap spending bill on Tuesday that will keep the federal government funded through early December, taking a government shutdown off the table ahead of midterm elections this fall.

The House voted 370-48 to pass a continuing resolution that will keep the federal government funded through Dec. 11.

The continuing resolution includes a provision that temporarily blocks the Office of Management and Budget’s proposed rule that would put federal grant funding under review by political appointees. It also includes language that would prevent the Trump administration from transferring funds from other programs to Border Patrol.

The Senate passed the stopgap spending bill in a 90-6 vote in July before leaving for its summer recess.

Federal employees dealt with the longest government shutdown in history last year, followed by the longest partial shutdown, which impacted the Homeland Security Department. Both shutdowns led to federal workers missing paychecks.

House Speaker Mike Johnson, R-La., told reporters Tuesday morning ahead of votes that Congress is “going to avoid the threat” of another government shutdown.

“On this CR we'll take up, it simply holds funding steady at current levels through Dec. 11th, as Republicans work to complete the full year appropriations process,” Johnson said.

The stopgap spending bill gives Congress more time to reach a deal on a comprehensive spending package for fiscal 2027. So far, the House has passed three of 12 spending bills that make up a comprehensive spending plan. The Senate hasn’t passed any of its FY 2027 bills yet.

House Appropriations Committee Chairman Tom Cole, R-Okla. said “the fiscal year deadline is outpacing the work that remains,” and that the continuing resolution will ensure constituents “will continue to get the services they need.”

“This will allow Congress time to get past the November elections, and allow us time to assess and move forward with further appropriations measures in November and December,” Cole said.

House Appropriations Committee Ranking Rosa DeLauro, D-Conn. said the CR is a “marked improvement” from an earlier version that would have kept the government funded through Dec. 4 – and did not contain provisions blocking OMB’s proposed rule.

“The continuing resolution we are considering today is in no way a substitute for the full-year funding process. It is merely a means to complete this important work while averting a lapse in government funding,” DeLauro said.

The House passed the previous Dec. 4 CR largely along party lines, with Republicans overwhelmingly voting in favor of the bill. House Democratic leaders rejected the earlier stopgap spending bill, but House Democratic Caucus Chairman Pete Aguilar, D-Calif., said this latest version would receive “broad bipartisan support."

Vice Chairman of the House Democratic Caucus Ted Liu, D-Calif., said he would vote for the CR, “even though doing CRs is a stupid way to run government.”

“It is not a good way to run our federal government. But it's the only alternative that's gonna be put before us,” Lieu said.

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SBA’s size standard rewrite draws angry, frustrated comments

Nick Wakeman — Mon, 31 Aug 2026 18:09:57 -0400

In the first week after its Aug. 20 release, the Small Business Administration’s proposed size standards have received hundreds of comments, and there are still three weeks to go.

SBA’s proposal for the new size standards is garnering a lot of negative comments on Regulation.gov, with the latest count showing 325 filed comments. A second rule that explains the methodology for how SBA will calculate the size standard has received 109 comments.

Comments for both rules are due by Sept. 21.

The changes to the size standard are sweeping, expanding the scope of how a small business will be defined. By SBA’s calculations, another 115,000 firms will qualify as small.

Many of the filed comments reflected what people have been saying on LinkedIn—the expansion will punish the small businesses currently carrying that designation.

Businesses with less than $50 million in annual revenue will theoretically be competing with businesses with hundreds of millions in revenue or even a billion in some categories because those companies will be considered small.

“While we support periodic updates that account for inflation, market changes, and the realities of business growth, this proposal appears to go well beyond modernization,” one commenter wrote. “The rule risks redefining “small business” into what is effectively a mid-size business category.”

I did find some supporters as I randomly read the comments posted on Regulation.gov. “The current limits on small business especially certain NAICS codes are harmful to both growing small businesses and the federal government,” wrote one supporter.

But the supportive comments were outnumbered by commenters expressing fear for the businesses as well as frustration with what they see as the unfairness of the SBA proposal.

“The proposed rule would blur the line between small businesses that rely on set-asides to enter and grow in the federal market and much larger firms that already have substantial revenue, staff, proposal infrastructure, incumbent relationships, and pricing flexibility,” wrote the CEO of one woman-owned small business.

That last part of her comment seems to be what is sticking in the craw of many of the commenters opposing the changes. When a traditional small business with $30 million in annual revenue must compete with a “new” small business with $300 million in revenue, the differences are more than just the amount of annual revenue.

As some of the commenters argued: The kind of infrastructure needed to build a $300 million companies simply doesn’t exist at a $30 million company. You’ll see differences in bid and proposal operations, capture, past performance, accounting systems, and on and on.

“The practical consequence is not an expansion of opportunity, but a de facto conversion of the small-business program into a marketplace increasingly dominated by the largest firms still classified as small,” one commenter wrote. “Calling these firms ‘small’ does not make them similarly situated competitors.”

This commenter went on to say: “The success of this rule should not be measured by how many additional firms qualify as small. It should be measured by whether contracting opportunities remain meaningfully accessible to truly small, independent businesses.”

More than a few comments expressed anger at SBA’s proposal. “You basically will be removing my value to a larger company. This is disgusting,” one wrote.

Because SBA only gave a 30-day window for comments, there is concern that the size standard changes are a done deal. The prevailing wisdom is that the shorter the comment period, the less likely an agency is to change its proposal.

SBA is required to respond to comments that it considers “significant” but there is no uniform definition what is significant. SBA also opens itself to litigation if it doesn’t address significant comments.

The only other public response we may see will come in the preamble of the final rule.

For now, we’ll continue tracking the comments. Keep them coming.

I recently participated in a panel discussion about the proposed size standards led by Guy Timberlake of the American Small Business Coalition. It’s a group of people much smarter than me. Click to watch.

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CMS taps Mathematica, Deloitte to improve effectiveness of its healthcare models

Edward Graham — Mon, 31 Aug 2026 16:29:00 -0400

The Centers for Medicare and Medicaid Services has launched a project to help its innovation unit scale the deployment of effective healthcare payment and service delivery models.

Mathematica first announced the effort in an Aug. 24 press release, saying the agency selected both the firm and Deloitte to jointly support the development of the new four-year Learning Insights for Action initiative for the CMS Innovation Center.

“We’ll bring our expertise in data, evidence, and continuous learning to help CMS identify what’s working and put those insights into practice more broadly — supporting more efficient use of resources and stronger program performance,” Matthew Kehn, director of Mathematica’s program and model operations practice, said in a statement.

The CMS Innovation Center was created by the 2010 Patient Protection and Affordable Care Act — colloquially known as Obamacare — and develops and designs alternative payment models to reduce costs across the Medicare, Medicaid and Children’s Health Insurance Program.

In a statement to Nextgov/FCW, a CMS spokesperson said the LIA project “represents the expansion of CMS’ ongoing work to leverage model data to identify high-performing participants and study the strategies behind their successes.”

“Deloitte and Mathematica’s analytics expertise and capabilities will support CMS’ goal to scale these approaches to more models and increase the dissemination and uptake of successful approaches with model participants through targeted learning events, resources, and industry sharing,” the spokesperson added. “This four-year contract will enable CMS to efficiently target resources across models with varying periods of performance and support cross-model learning.”

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Mixed signals on acquisition are creating a confused market

Stan Soloway — Mon, 31 Aug 2026 15:00:00 -0400

It is an old saw that markets crave certainty. The more predictable and stable market dynamics and conditions are, the better. In the government market, however, stability has always been relative.

On one hand, the government market is, by definition, enormous, always there and, until last year’s shutdown of USAID, always paid its bills. On the other, it is routinely buffeted by budget pressures, changing political and policy priorities and leadership transitions.

While most of those factors are inevitable features of our democratic system, since the 1990s, every administration has sought to streamline and rationalize the processes that govern federal acquisition, bring the process closer to the norms of the commercial marketplace, and increase access to new and emerging technologies.

Those efforts have produced some successes. But as everyone involved knows, they remain very much a work in progress.

The current administration is no different. It launched the “Revolutionary FAR Overhaul,” or RFO, the latest in that long line of efforts to reform the acquisition system.

The RFO has generated a series of proposed changes that, while perhaps not literally “revolutionary,” are significant and potentially valuable. And while their actual impact won’t be known until the final implementing rules are issued and contractors and government customers alike can determine what they actually mean in practice, the RFO has been a serious and thoughtful initiative.

Likewise, the Department of Defense initiated multiple seven-year “framework” agreements for weapons systems purchasing which could have positive impacts--if accompanied by real funding and opportunities.

But here’s the rub. Those positive developments have been accompanied by a number of other policy initiatives which have arguably pushed the acquisition system backwards. And the collective confusion, mixed signals, and new requirements they have generated have in turn created unusual levels of confusion and uncertainty across the market.

Consider this.

Last year, the Department of Defense aggressively challenged contractor fees and profit margins—not during the award process but, rather, in the middle of performance on competitively awarded contracts. That was unprecedented. The department also instituted new policies imposing new, higher level approval requirements for even modest contract awards.

Further, a few months ago the secretary declared that “bureaucrats” (presumably the warranted contracting officers) would no longer be allowed to negotiate prices on major contracts.

And within the last couple of weeks, the deputy secretary issued new cost and pricing policies that will require that virtually all contractors performing on other than fixed-price contracts with a value of more than $10 million (including those awarded in an open competitive process), grant the government direct access to their, and all of their subcontractors’ cost and pricing records.

The goal? To ensure that the profits they are making are “consistent with best commercial practices.”

To say that these initiatives raise a host of practical, legal, and other issues would be an understatement. Imposing new layers of compliance is likely to do little to help expand or strengthen the industrial base. And make no mistake, the message to the workforce as to what the leadership is focused on, and what they will be evaluated on, is clear. And it’s not “cost, schedule and performance.”

At the same time, agencies across the government, including DoD, continue to contend with the after-effects of DOGE.

It is now clear to just about everyone that far too often the workforce cuts, including in acquisition, were non-strategic and went way too deep. Today, DoD is aggressively re-hiring to fill the many workforce gaps those cuts created. But they, like others, are finding that those coming back tend not to be the more seasoned, experienced professionals.

Given that, and some of the new and complicated rules changes, the training and workforce development needs, which have always been significant, are extraordinary. But there is no sign that either the strategy or resources to meet those needs at the requisite scale is in place.

Outside of DoD, one of the administration’s most significant initiatives has been to consolidate procurement at the General Services Administration and to seek to sharply reduce agency-specific (or agency managed) contracts.

That consolidation is well underway. Yet, it remains unclear as to the extent to which agencies will be willing to transfer responsibility for major, mission critical procurements to a third party (agency). GSA is also undergoing significant internal restructuring that, while likely the right thing to do, comes at a particularly fraught time. After all, GSA is also still struggling to recover from the enormous DOGE-driven workforce reductions, making the agency’s ability to absorb and efficiently manage its new responsibilities unusually challenging.

Here too contractors attempting to understand how all of these dynamics will play out face substantial uncertainty.

Finally, just over a week ago, the Small Business Administration's proposed a dramatic overhaul of the small-business size standards. At its core, the proposal revives an idea first floated more than a decade ago: creating something resembling a mid-tier set-aside. It is a complicated debate, and whether the proposed changes make sense depends in large part on where a company sits in the market today.

But there is little doubt that, if adopted, the changes will have significant consequences. We have already seen marked reductions in contract awards in all of the socio-economic categories. The new size standards would further and substantially upend the dynamics of small business contracting.

Traditional small businesses will face substantially more competition within the set-aside market from much larger companies than ever before. Set-aside contracts could become much more common and larger, affecting both traditional small businesses and the rest of the market. And the implications for mergers and acquisitions, including within and among small businesses, could be substantial.

In short, the GovCon market is being asked to interpret and adapt to all of these changes at once, with some signals actually pointing in different directions.

The government wants more competition and faster access to technology, but acquisition organizations have fewer people to execute procurements. It wants commercial-like acquisition practices, while simultaneously contemplating more government scrutiny of commercial profit margins.

It wants to improve industrial-base resilience and competition, while increasing the rules of compliance and those that determine which companies can compete for which contracts. It wants acquisition professionals to move faster and be more innovative, while adding new layers of review and approval that signal little confidence in that workforce and without much needed, robust workforce development strategies.

For contractors, these aren't abstract policy debates. They affect decisions about hiring, capital investment, pricing, teaming, technology development, organic growth, and mergers and acquisitions. Markets will adapt to change. What they struggle with is uncertainty and confusion about the direction and pace of change.

For the government market to achieve its objectives of effectiveness, efficiency, responsiveness, and competition, it is essential that those elements that are not inevitably buffeted by politics and priorities be as consistent and clear as possible.

In other words, if a market craves clarity and certainty, this isn't that.

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Army picks Dragonfly payload system for spectrum sensing

Nick Wakeman — Mon, 31 Aug 2026 13:28:01 -0400

The Army has awarded a nearly $100 million contract to Research Innovations Inc. for ruggedized sensors that autonomously process electromagnetic spectrum.

The company provide and sustain Dragonfly payload systems. The Army received 95 bids for the five-year contract, according to the Defense Department’s contract digest.

According to its website, Research Innovations’ Dragon system weights about 3.5 pounds and can be mounted to multiple platforms including drones. Capabilities include automatic signal classification, direction finding and geolocation, and swarm networking, which means users can create a network of sensors.

Work locations under the contract will be determined by each task order. The Army Contracting Command at the Aberdeen Proving Grounds in Maryland is the contracting activity.

Research Innovations is a small business and was founded in 2009. It has grown into a 350-person company with headquarters in Alexandria, Virginia.

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Evaluating contract bids with AI? Prepare to be challenged.

David Smalley — Fri, 28 Aug 2026 16:43:23 -0400

A recent contractor lawsuit over the Army’s use of artificial intelligence to award a $450 million contract alleges that the decision was based on “a classic AI hallucination.”

If the protester prevails in court, the lawsuit could “shape how federal agencies document and disclose AI’s role in procurement decisions .” A decision in favor of the protester could call into question other contract awards where AI was used to research, evaluate, or summarize proposal responses before arriving at a source-selection decision.

From here, it’s easy to imagine how this could prompt a sudden influx of Freedom of Information Act requests from contractors who feel they were wrongly excluded from an award as a result of hallucinated AI outputs.

This points back to the larger conversation surrounding how the race to AI adoption is outpacing the ability to explain and defend decisions influenced by AI. What we are seeing here is a distinction most AI deployment roadmaps have not mapped out yet: informing a decision and being held accountable for one are separate jobs with separate standards.

When AI returns an answer, nothing in the interaction reveals what it weighted, what it discarded, how confident it was, or whether it would answer the same question the same way tomorrow. The user gets fluent, confident prose and a subjective impression of neutrality. Anyone who’s worked with AI has encountered this, so it’s understandable how this issue would be raised in a protest over a $450 million contract award.

Despite popular perception that protests are out of control, the Government Accountability Office most recent annual bid protest report indicates a decade-long trend of declining protests. The concerns surrounding contract award protests are not misplaced.

For federal government agencies, protests can result in work stoppages, operational delays with negative mission impact, financial waste and additional administrative burden. For contractors, there is lost trust in the procurement system. Within our shrinking Defense Industrial Base, the procurement system itself is viewed as a barrier to entry at best or “the valley of death” at worst.

The fact that bid protests have receded significantly over the past decade is a trend to be celebrated. This is progress that should be further accelerated by the responsible application of AI, not the opposite. Contract and procurement officials are under severe strain from staffing and capacity shortages. These challenges are exacerbated by the tedious and time-consuming requirements of the job, so it’s understandable that the rush to adopt AI in government procurement might be outpacing acquisition regulations.

To address these challenges, what’s needed now are four concrete capabilities, concrete enough that someone outside the procurement operation can audit them:

Auditability. Every AI output - especially outputs related to government contract decisions – must include evidence, provenance and traceability so organizations, auditors and investigators can trace decisions back to the data and reasoning that supported them.

Observability. A durable record of what the system actually did, not a summary of what it was designed to do.

Contestability. A defined path for the person or organization affected by a decision to challenge it and get a real answer.

Evaluations. Continuous, against criteria defined by the government agency. Because trust is granted once, and performance has to be re-proven.

These four capabilities are best thought of in anticipation of a hypothetical question that is commonly raised during a bid protest: if someone were to ask you about a single decision your systems touch, one that changes something for an organization or citizen stakeholder, could you produce a record of what happened, an explanation of why, and a route for that person to contest it? Not in principle, but for a decision made six months ago, asked without warning, this week.

Most organizations find they can’t. And that realization is far better learned from yourself than from a regulator, a journalist, somebody’s lawyer, or in a publicly shared document.

All of this is ordinary practice in every regulated domain where consequential decisions get made and somebody can be held to account for them. Aviation does it. Clinical medicine does it. Financial audit does it.

This process is familiar to information governance professionals in these and other industries who work with electronically stored information (ESI). While agentic AI is new, it should not be an outlier. Yet it is, at exactly the moment when government agencies are beginning to trust it and courts are starting to treat AI as ESI.

As this award protest suggests, any contract decision involving AI is increasingly likely to face scrutiny or challenge.

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Air Force eyes overhaul of PLM program as Siemens contract nears 2029 end

Nick Wakeman — Fri, 28 Aug 2026 15:54:52 -0400

The Air Force apparently wants to change how it manages the data across the lifecycle of its weapons systems.

Currently, the Air Force uses Siemens Teamcenter software for its product lifecycle management system. The software has been deployed through multiple task orders that have left the Air Force with a “disparate and sub-optimized implementation,” according to an Aug. 27 request for information.

Contract data from GovTribe indicate that Siemens Government Technologies Inc. is the incumbent on this work. The company has been supporting the Air Force since 2019. The contract ends in 2029

The Air Force is looking for industry feedback on how to address the fragmented nature of how the software has been deployed and maintained. Different locations run different versions and module configurations of the software.

The service wants to reactivate some 6,000 licenses at locations such as Robins, Hill and Tinker Air Force bases. They want to standardize the implementation and bring in a common configuration.

Essentially, this is a consolidation play and not a new system buildout, but the Air Force is also looking for several changes.

It wants respondents to detail their experience with Git-based configuration management and their ability to deliver build pipelines and code directly to government hosted Git-based repositories.

Git is a distributed version control system – think GitHub and GitLab. The Air Force wants to make sure that changes to configuration files, scripts and code are tracked in a Git repository. In this case, Bitbucket.

It also wants Scrum-based Agile development, a standardized data model across the enterprise, and a genuine "digital thread" connecting design through sustainment and retirement. The changes will bring the Air Force into more of a DevOps environment.

As with all RFIs, the Air Force said the market research notice doesn’t commit it to a future solicitation.

Comments are due Sept. 11.

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Judge rules Anthropic supply chain risk designation was ‘illegal and baseless’

Alexandra Kelley — Fri, 28 Aug 2026 11:00:00 -0400

Anthropic secured a legal victory in its case against the Department of Defense for designating the company as a supply chain risk earlier this year, a move that hindered the company’s ability to work with government clients and compete economically.

In a ruling released Thursday evening, Judge Rita Lin of the U.S. District Court in the Northern District of California sided with Anthropic following a dispute between the company and the Pentagon over how its technology was used in agency missions, specifically those involving mass surveillance and autonomous weaponry.

“Though the Department of War is undisputedly free to select the AI vendor of its choice, the evidence demonstrates that the broad measures imposed on Anthropic were illegal and baseless,” Lin’s judgment read.

A key finding in the ruling was that Anthropic’s products did not constitute a meaningful threat to national security, thus, labeling the company a supply chain risk was “unlawful retaliation” and a violation of Anthropic’s First Amendment right. Additionally, the ruling found that Anthropic was also denied its pre-deprivation process required under the Fifth Amendment, which states that no person shall be deprived of life, liberty or property without due process of law.

The ruling also addressed the public statements made by both parties. Lin found that the Pentagon’s statements, specifically those related to the “arrogance” of Anthropic for expressing concern over its products' usage, indicated that the Trump administration’s efforts to blacklist Anthropic had less to do with national security and artificial intelligence model concerns than retaliation.

“The empty invocation of national security is not a blank check to punish and retaliate against government critics,” the judgment continued. “An IT vendor does not become a potential adversary of the United States whenever it asks probing questions or stubbornly insists on particular contracting terms, even if doing so causes DoW to doubt its trustworthiness. Such a breathtakingly broad interpretation of Section 3252 would make its restrictions on the Secretary’s discretion meaningless.”

Following the release of the judgment, Anthropic said it welcomes the court’s ruling that found the supply chain risk label illegitimate.

“We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology,” an Anthropic spokesperson told Nextgov/FCW.

The Pentagon did not return a request for comment by the time of publication.

The ruling in favor of Anthropic will likely bolster confidence within the larger technology vendor ecosystem. In the wake of the initial supply chain risk label and further export controls on newer models, vendors were shaken by the Trump administration’s actions, citing uncertainty over the future of new and existing contracts with the government.

“Contractors fear their past corporate decisions or public stances are scrutinized through new lenses from the administration, the fear that you can be disqualified for lack of integrity or lack of compliance with those views, not because you've done a poor job,” a source in the tech contracting industry told Nextgov/FCW in April.

Business advocacy groups like the Information Technology Industry Council addressed this lack of clarity, seeing the ruling as preserving the relationship between the public and private sectors.

“Importantly, yesterday’s ruling removes uncertainty for businesses across industry seeking to partner with the U.S. government,” said ITI President and CEO Jason Oxman in a statement.

The future of government tech contracting stands to change following the Anthropic-Pentagon dispute. Defense Under Secretary for Research and Engineering Emil Michael, who was referenced many times in the ruling, said in May that the Pentagon will “never again” be beholden to a single vendor.

“We were single-threaded on one vendor, one AI vendor at the Department of War, and to integrate into classified systems is not just putting your software on a public cloud and having it work,” Michael said, referring to Anthropic. “But never again will we be single-threaded with any one model.”

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Valiant divests O&M business to private equity firm

Nick Wakeman — Thu, 27 Aug 2026 16:49:15 -0400

Valiant Integrated Defense Services has sold its operations and maintenance division to the private equity firm Inspirit Equity.

The now independent company will operate as Vulcan Government Services and focus on facility operations, maintenance and logistics services.

Financial terms of the deal were not disclosed.

VGS provides logistics and facilities services for hospitals, medical facilities, research laboratories, and other critical infrastructure as well as chemical management and logistics support services.

Chuck Phillips will lead the business as CEO. He joined Valiant in 2023 as vice president and general manager of the operations and maintenance division.

“As a standalone company, we can operate with greater focus, agility and strategic flexibility," Phillips said in the company’s announcement. "Inspirit's support will allow us to continue investing in our people, expand our capabilities, and deliver the reliable service our customers count on every day."

The company plans to focus on organic growth while it looks for merger and acquisition opportunities, said Ryan Kanaley, managing director at Los Angeles-based Inspirit.

"Our job now is to give the team the resources and support they need to maximize their potential," he said.

An early priority is adding business development resources, expanding construction capabilities, and pursuing new opportunities in existing and adjacent markets.

The McLean Group acted as the exclusive financial advisor to Valiant O&M, Sidley Austin LLP served as legal counsel to Valiant, and Jones Day served as legal counsel to Inspirit Equity.

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When ‘small’ gets bigger, who gets left behind?

Kristina Messner — Thu, 27 Aug 2026 16:25:15 -0400

For more than two decades, I’ve watched small government contractors navigate one of the industry’s most difficult transitions: succeeding.

They win. They grow. They recruit exceptional people, develop deep expertise in an agency’s mission and systems, and build trusted customer relationships and institutional knowledge that can take years to develop.

Then they become too big to be small.

Suddenly, a thriving company can find itself competing in the mid-tier against organizations many times its size, without the advantages that helped it grow.

It’s a challenge the GovCon community has debated for years, and one the Small Business Administration’s proposed overhaul of its size standards could help address.

But it raises another important question: If we make “small” substantially bigger, what happens to the companies that really are small?

And what happens to the mid-tier?

Moving the line changes the market

SBA estimates its proposed changes would allow roughly 115,000 additional businesses to qualify as small. That could provide valuable breathing room for successful companies approaching today’s thresholds.

But expanding the pool also changes who competes within it. SBA itself acknowledges that growing businesses near today’s thresholds could face greater competition from newly eligible companies.

That deserves attention.

Growth shouldn’t become a liability

A contractor can spend years building the people, past performance, clearances, customer relationships and technical expertise necessary to support a government mission. Yet crossing a size threshold can dramatically alter its competitive environment.

Some companies successfully make the leap. Others pursue acquisitions to gain scale. Some become acquisition targets themselves. Others struggle to survive the transition.

There is real value in reconsidering whether today’s standards reflect the realities of modern government contracting.

But moving the dividing line doesn’t necessarily solve the underlying structural problem. It may simply move it.

Perhaps we should think beyond two broad categories of small and other-than-small. Could additional tiers, transition mechanisms or more flexible approaches for certain procurements preserve competition while allowing successful companies to keep growing?

Protecting the innovation pipeline

Government leaders continually call for greater innovation, faster technology adoption and access to highly specialized talent. Small and mid-tier businesses are an important part of that ecosystem.

Having supported companies across the GovCon spectrum, from emerging small businesses and mid-tier contractors to large global technology and defense companies, I’ve seen the distinct strengths each can bring to the mission.

What has always stood out to me about small and mid-tier companies, in particular, is their ability to combine deep mission expertise with entrepreneurial speed. They can make decisions quickly, organize around emerging requirements and attract specialized talent. As they grow, the best retain that entrepreneurial culture while adding the infrastructure and scale needed for increasingly complex missions.

Large primes benefit, too. Small businesses frequently enter programs as subcontractors and technology partners, developing capabilities and institutional knowledge that become important to the larger team.

A healthy industrial base should create pathways for promising companies to enter, compete, grow and keep contributing after they succeed.

Compete on more than status

Many small businesses understandably lead their marketing with their size status or set-aside category. Those designations can be powerful differentiators and important pathways into the federal market.

But they should never become a company’s entire value proposition.

Whether or not SBA’s proposal becomes final, small businesses should already be preparing to answer the question that eventually confronts every growing contractor:

Why us?

What expertise do we own? What missions do we understand exceptionally well? What makes our people, technology or approach different? Why should an agency choose us? Why should a prime want us on its team?

And there is another increasingly important audience for that answer: talent.

GovCon companies aren’t only competing for contracts. They are competing for people, particularly in markets requiring highly specialized technical expertise and TS/SCI clearances. A strong brand needs to answer “Why us?” for the engineer, technologist or cleared professional deciding where to take their talent just as convincingly as it does for a customer or teaming partner.

If a company’s primary competitive message is what category we qualify for, rather than what value we deliver and why people want to work with us, a more crowded marketplace could expose that vulnerability quickly.

Companies given a longer runway before graduation should use it wisely. Strengthen the brand, differentiate capabilities, deepen customer relationships, build strategic partnerships and establish a compelling employer value proposition.

Build a market position that survives your size designation.

The bigger question

SBA’s proposal addresses a legitimate problem: successful companies shouldn’t be disadvantaged simply for succeeding.

But as we reconsider where to draw the lines, we should look at the entire lifecycle those lines create.

Are we preserving opportunities for emerging businesses? Giving growing companies a viable path through the mid-tier? Encouraging productive partnerships? And retaining the innovative companies, specialized talent and institutional knowledge government missions require?

Ultimately, the goal shouldn’t simply be to create more companies that qualify as small.

It should be to create a stronger, more competitive and innovative industrial base capable of delivering the best solutions for the mission.

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How Salesforce built itself into a prime contractor

Nick Wakeman — Thu, 27 Aug 2026 16:08:58 -0400

It would be easy to correlate Saleforce’s prime contracting strategy to the Trump administration’s efforts to forge more direct relationships with commercial technology providers.

But the company’s shift from working predominantly through partners to also being the lead contractor for defense and intelligence community customers goes back years.

“Being able to deliver on both trust and customer success requires a level of intimacy with the customer and connectiveness that you can only get by being a prime contractor,” said Bill Pessin, senior vice president for national security at Salesforce. His business goes to market under the brand Missionforce.

To make the shift, the company has built the infrastructure needed to be a prime. Those investments stretch back several years and include the 2021 acquisition of Acumen, which was a 100% Salesforce professional services firm. Before the Acumen deal, it acquired Computable Insights in 2019 to move more deeply into the defense and intelligence market.

“Our IC customers expect us to be able to operate and hold security clearances and to operate in classified spaces,” Pessin said. “We had already been partnering with Computable Insights and so we acquired their tech and their facility clearance.”

Computable Insights is a wholly owned subsidiary and is the name on some of Salesforce's large recent wins including a $5.5 billion Army contract. The Army contract is also available across all of DOD and will be a primary vehicle for Salesforce’s go-to-market defense strategy, Pessin said.

For example, in May, the Air Force used the contract to sign a $72 million enterprise license agreement with Salesforce.

Salesforce also has a similar contract vehicle that can be leveraged across the intelligence community, where the company is deploying an air-gapped Salesforce implementation. That work has accelerated Salesforce push to be a prime, Pessin said.

“We are not looking to have dozens and dozens of new IDIQs,” he said.

Salesforce also is not abandoning its work with partners. When the project is primarily based on Salesforce, the company will be the prime. When a Salesforce solution is more of a support feature, a traditional prime is more likely to take the lead.

“What’s really cool about this is our partners are finding this new motion to be truly exciting for them,” Pessin said. “We’ve always had a partner friendly approach to the business, and this move opens up a whole new dimension.”

Being a prime takes more than just adding a new label or marketing tag. In addition to the Acumen and Computable Insights investments, the company also has created a program management office, a beefier business development organization, and a larger contracts and legal apparatus.

“There are prime contractor responsibilities that you don’t necessarily get burdened with when you are just a vendor to a prime,” Pessin said. “You have to have the people, processes and technologies in place to do the things prime contractors do.”

But the benefits of being the prime outweigh the costs and added responsibilities, Pessin said.

“When a customer picks Salesforce for a mission critical capability or solutions, that’s our brand,” he said. “A direct relationship removes any daylight between us and our customers.”

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Army selects 5 companies to build nuclear microreactors on bases, under new $2 billion deal

Thomas Novelly — Thu, 27 Aug 2026 10:00:00 -0400

Army officials have selected five firms to build nuclear microreactors at U.S. military bases as a bid to create energy independence, though the nation still relies heavily on imported enriched uranium for such projects.

The service and the Defense Innovation Unit unveiled the initiative, dubbed “Project Janus,” at last year’s Association of the U.S. Army Conference in Washington, D.C. Now, officials are awarding up to $2.2 billion to the pool of five companies through a milestone-based Other Transaction Authority contract with fixed-price milestones to build out their microreactor technology on Army bases. Those firms and bases, announced on Wednesday, are:

Antares Nuclear, Inc. – Fort Bragg, North Carolina
BWXT Advanced Technologies, LLC – Fort Campbell, Kentucky
General Atomics Electromagnetic Systems – Fort Hood, Texas
Radiant Industries, Inc. – Fort Benning, Georgia
Westinghouse Government Services – Fort Drum, New York

“We now know that our domestic electric grid is potentially at risk in a conflict. We also know that we will not necessarily be able to move fossil fuels easily wherever we need them to go,” said Jeff Waksman, the Army’s principal deputy assistant secretary for installations, energy and environment. “Right now, all critical infrastructure that the Army has is backed up by some form of liquid fossil fuel, primarily diesel. So that makes nuclear energy just a natural game changer for the Army.”

Janus project officials said with additional private investment from the firms, they anticipate up to 20 microreactors across the bases. The service competition paves the way for a program of record to deliver a small nuclear powerplant to an Army installation by 2028. Currently, the U.S. doesn’t have operational nuclear microreactors, and the country only enriches a very small percentage of the world’s uranium supply. Energy Department and National Nuclear Security Administration efforts to grow the supply and produce high-assay low-enriched uranium, or HALEU, are still underway. However, service officials remain optimistic the supply chain problems will not set back their microreactor plans.

“We expect sufficient prioritization to ensure that we have the uranium that we need for our fastest moving reactors,” Waksman said, acknowledging that the microreactor effort is “probably going to push beyond what our supplies are as a nation.”

“This is really an all-of-government effort. We are tied in very closely with the folks at DOE and NNSA, trying to stand up new enrichment capability, and we will do what we can to deliver what we need through stockpile, and then to hopefully have fresh enrichment capable of delivering some of the HALEU for the later reactors in this program.”

In November, the Army named nine bases as finalists for the microreactors, but excluded Fort Wainwright, Alaska; Holston Army Ammunition Plant, Tennessee; Joint Base Lewis-McChord, Washington; and Redstone Arsenal, Alabama; from the final five.

Waksman said it was a “matching process” between the firms and the sites, and some contractors prefer to work in certain areas due to their relationships with utility companies near the bases they were paired up with. While one of the goals of the Janus Project is to cut down on energy supply chain issues for U.S. bases overseas, planners said they want to prove the technology can work stateside first.

“The intent here is to choose the lowest hanging fruit, we want to choose sites that we think are going to be the cheapest and fastest to deploy and the easiest,” Waksman said. “This is already very difficult. There's a reason no one has actually built a fully operational commercial nuclear microreactor before, so we don't want to make this harder on ourselves by trying to deliver this to some island or some foreign country. We want to demonstrate that we can do this here in the 50 U.S. states, and then if this is a success, then we can talk about possibly deploying somewhere else in the future.”

Project Janus is not the first military microreactor initiative. The Army is taking lessons from Project Pele, the Defense Department’s mobile reactor project, and based the contracting mechanism off of NASA’s Commercial Orbital Transportation Services program.

The Army’s selection of firms also follows an Air Force initiative to build a nuclear microreactor at Eielson Air Force Base, near Fairbanks, Alaska. Waksman said the Army should have an announcement in the “not too distant future” about how the services are working together on those projects.

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CMMC phase II is paused, but the adversary threats are not

Gary Barlet — Wed, 26 Aug 2026 17:17:39 -0400

Nation-state actors are not pausing their operations or waiting for contractors to get their plans in order. They are attacking now, targeting sensitive defense information that can strengthen their capabilities and weaken ours.

The Department of Defense recently suspended Phase II of its Cybersecurity Maturity Model Certification program, pausing the expansion of third-party assessments for contractors handling controlled unclassified information. While the compliance process may have paused, the threats have not.

That pause reinforces that contractors cannot treat compliance as the finish line. Meeting compliance requirements does not guarantee resilience; it only establishes a baseline. To remain truly resilient, contractors need visibility into how critical systems communicate, segmentation to eliminate unnecessary pathways, and containment capabilities to stop an attack from becoming a mission-wide failure.

Attackers are stealing a strategic advantage

Defense contractors hold sensitive government information, including weapons-system designs, technical specifications, operational data, supply chain communications, and critical infrastructure details.

Nation-state actors target this information because it can strengthen both their offensive and defensive capabilities. Stolen technical data can help an adversary replicate or improve advanced systems, refine its own military capabilities, and better understand how U.S. technologies are designed to operate.

That same information can also reveal weaknesses, dependencies, and potential points of failure, enabling adversaries to develop countermeasures and improve their defenses against U.S. weapons and systems.

Because contractors often support multiple defense programs, one attack can give adversaries access to a broader set of sensitive systems and data, increasing the potential impact on national security and mission readiness.

AI is shrinking the defense window

Artificial intelligence is making the threat move faster. We have seen that evolution with Anthropic’s Mythos and the OpenAI–Hugging Face incident. While AI may make attacks faster and more automated, the underlying techniques remain familiar: exploiting vulnerabilities, abusing credentials, bypassing traditional prevention, and moving through connected systems to reach valuable data.

AI increases the speed and scale of an attack without changing the basic path. Patching and prevention remain essential, but contractors must also be prepared to contain attacks before they move laterally and reach mission-critical data.

Containment must be the priority

Recent research highlights the containment gap: While 95% of IT and cybersecurity leaders are confident they can detect unauthorized lateral movement, 46% struggle to stop attackers once they are inside, and only 17% can isolate a compromised asset in near real time.

Detection alone cannot protect the mission when security teams lack the ability to restrict lateral movement. Contractors need to isolate compromised systems, close unnecessary pathways, and protect critical assets.

Contractors must identify which information is most sensitive, which systems cannot go down, how critical workloads communicate, and which controls can stop lateral movement.

Risk-based visibility makes those decisions possible. Understanding how users, applications, workloads, and systems connect allows teams to identify dangerous pathways and focus protections on the assets that matter most. The goal is to keep one compromised workload from becoming an enterprise-wide breach or a pathway into multiple government programs.

Segmentation is risk management

Segmentation is a strong component of CMMC, particularly for contractors supporting multiple government customers. Strong boundaries help prevent information associated with one program from becoming accessible from another environment, reducing unauthorized access and cross-program exposure.

However, many contractors are approaching segmentation in ways that make an already difficult problem unmanageable. Segmentation isn’t simple. Contractor environments include workloads with complex dependencies. Understanding those relationships and applying policies without disrupting operations takes real effort. The problem grows when contractors assume they must tackle the entire network at once, driving costly redesigns and stalled projects.

A more practical approach treats segmentation as risk management rather than an infrastructure overhaul. Contractors should start by understanding which systems actually need to communicate. Network visibility can reveal legitimate dependencies, unnecessary connections, and pathways an attacker could use to move laterally.

Teams can then prioritize the systems, users, and environments carrying the greatest mission and national security risk. They can reduce unnecessary connectivity, enforce least-privilege communication, and establish stronger boundaries around sensitive program data.

During an attack, those boundaries become enforcement policies. They isolate affected assets, restrict lateral movement, and reduce the blast radius before an adversary reaches additional systems or steals more information.

Despite the pause of CMMC, contractors remain responsible for protecting sensitive defense information. Strengthening visibility, segmentation, and containment can limit the impact of a breach, protect critical data, and keep the mission running.

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Contractor may have used AI to falsify payment dispute financial documents, appeals board finds

Christian Robles — Wed, 26 Aug 2026 13:17:00 -0400

The Civilian Board of Contract Appeals recently found that a contractor may have used Grok to alter financial documents during discovery for a contract termination dispute.

The board concluded that if the Department of Veterans Affairs had not “detected the manipulations and redactions to the financial statements, it would unfairly and unknowingly have to defend itself against” a claim overinflated by more than $1.1 million dollars, according to an August 18 filing.

The case

In October 2023, Venergy, a construction management company, appealed a VA contract termination and later requested the government pay it back roughly $4.23 million in damages for delaying the contract.

In December 2024, a VA contracting officer denied the request and asked Venergy to pay the government about $1.84 million because of the contractor’s failure to complete a project by a specified deadline. Those two cases were consolidated into one in January 2025.

Venergy produced audited financial documents during discovery for the combined case. A VA construction damages expert, however, struggled to reconcile the documents with previous information the department received, according to the filing.

VA alleged someone at Venergy used electronic white boxes to manually hide schedules of earnings from contracts, schedules of contracts in progress and schedules of completed contracts, the filing adds. The alterations were found on the 2020, 2022 and 2023 financial statements.

Venergy called VA’s allegations inaccurate and produced clean copies of the financial documents in February 2026, the filing states.

Last month, VA and Venergy held a fact-finding hearing on alleged misconduct during discovery. The company’s CEO and external certified public accountant testified that neither of them altered financial records.

But the CEO indicated “that a now-former employee who was assisting with the production and who was a proponent of Grok, an artificial intelligence (AI) tool, would have had access to the CEO’s Adobe Acrobat account but does not know if that employee manipulated” the documents, according to the filing.

Venergy had not contacted the former employee for information or undertaken an internal investigation to figure out who manipulated the financial documents, the board found.

The board dismissed Venergy’s $4.23 million claim as a sanction but did not toss out the company’s appeal of the contract termination or the government’s request for $1.84 million.

Counsel for Venergy did not return multiple requests for comment on the board’s finding.

The repercussions

The case is the first of its kind, in which a procurement tribunal found generative AI may have manipulated documents in discovery, David Timm, a partner at the Burr & Forman law firm, posted on LinkedIn.

“There could be criminal, not just civil, but also criminal penalties if [the Justice Department] were able to prove who [falsified financial documents] and who did it with intent” under the False Claims Act, Timm told Nextgov/FCW. Such a case would go hand in hand with an ongoing Office of Inspector General investigation into the manipulated financial records, he added.

But the Venergy-VA case could have broader lessons for the federal government as it looks to clamp down on suspected procurement fraud.

Detecting AI-driven fraud “either depends on whistleblowers or something so obviously bad that a human can detect it. But as AI tools get more sophisticated, it's going to be increasingly difficult for people to detect AI fraud, whether that's in the procurement process itself or it's in some sort of documentation,” Jessica Tillipman, associate dean for government procurement law studies at George Washington University Law School, told Nextgov/FCW.

“We are underestimating or we are fully unprepared for how bad this is going to get,” she added.

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Marines want to move Camp Lejeune armory off paper and into the web

Nick Wakeman — Wed, 26 Aug 2026 11:25:54 -0400

The Marine Corps wants a contractor to move the Camp Lejeune armory out of the world of paper and into the cloud.

A request for quotations posted on Aug. 26 is looking for a company to offer an automated armory tracking system that is a software-as-a-service solution. The Camp Lejeune provost marshal’s office wants an automated armory tracking system that will streamline operations as well as maintain accurate custody tracking.

The Marines also want to maintain strict compliance with Marine Corps inventory standards.

The current system is manual and primarily paper based. The replacement should include features such as real-time asset tracking, digital check-in and check-out, automated receipt generation, and instant digital audit trail.

The Marines also want the contractor to deliver the system as a turnkey solution that uses standard web browsers on authorized Defense Department devices.

The contract is set aside for service-disabled, veteran-owned small businesses. It will have a one-year base and two one-year options.

Interestingly, the solicitation refers to the Revolutionary FAR Overhaul for its authority, and not the standard Federal Acquisition Regulation. FAR Overhaul is still in the proposed rule phase, but contracting officers are already applying it through class deviations like this one which makes this an early real-world test of the new rules.

Proposals are due Sept. 9.

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How Rocketdyne is re-entering the space sector as a standalone entity

Ross Wilkers — Tue, 25 Aug 2026 14:17:19 -0400

From early negotiations and onward, little doubt existed at AE Industrial Partners that the name “Rocketdyne” would come back after acquiring controlling ownership of the business from L3Harris Technologies.

In fact, AE Industrial’s agreement to acquire its 60% stake in the space propulsion and power business dictated that the now-standalone company would revive the name.

Rocketdyne was officially relaunched on Aug. 4 following the closure of the transaction, under which L3Harris keeps the other 40% and stays involved as a key strategic partner.

“We have some employees in the company today that have been with Rocketdyne for 45-plus years, and the last thing we wanted to do was pay a marketing company for some new name and try to go out to the market as a new space company when we have six decades of heritage,” Jon Luszakoski, a partner at AE Industrial, told Washington Technology.

This new iteration of Rocketdyne does look slightly different from the Aerojet Rocketdyne that L3Harris acquired in 2023.

Rocketdyne’s focus areas under AE Industrial’s ownership cover launch vehicle engines like the RL-10, in-space propulsion thrusters, space electronics, and systems for nuclear power and energy.

L3Harris kept the solid rocket motor and other missile-focused portfolios, which are part of the Missile Solutions business now scheduled to go public in 2027. The RS-25 engine used to power NASA’s Space Launch System is also staying with L3Harris.

For Rocketdyne and its 1,300 employees, the focus on propulsion means the company is positioned as a key supplier of thrusters and other similar systems to larger defense hardware companies.

Many of those larger companies then incorporate Rocketdyne’s products into full satellites for delivery to U.S. government agencies like Space Force, Luszakosk said.

Rocketdyne’s revival in the market also comes amid Space Force’s overall effort to be more mobile in space, which will involve satellites and other systems having greater maneuverability.

“We’re probably going to see a 2-to-3 times increase in the number of thrusters we’re producing over the next three years, all fulfilling demand that we’re getting directly from our customers,” Luszakoski said. “It’s going to require some investment to meet that demand.”

Luszakoski said those investments will include Rocketdyne’s manufacturing capabilities to increase production, along with acquisitions around other types of propulsion technology to expand the company’s product offerings.

Rocketdyne will also look to explore greater use of modern manufacturing techniques like automation tools to aid workers and three-dimensional printing, the latter of which is a path the company already has traveled down.

The new version of the RL-10 has a handful of 3D-printed parts and that has brought down the total part count down by 90% for some of the engine’s subsystems, Luszakoski said. Rocketdyne has also looked at 3D printing for other end-space propulsion systems.

“As we sell more of the same thruster, we’ll be able to make investments in the manufacturing and particularly around automation that will be a better return to the company,” Luszakoski said. “For a lot of the demand that we’re seeing, we’re trying to focus on a couple of different propulsion systems to get build times down, lead times down and use automation to help with that.”

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GAO tosses QinetiQ's protest of TCOM's $625M Polish aerostat deal

Nick Wakeman — Tue, 25 Aug 2026 14:11:58 -0400

QinetiQ has lost is challenge of a $625 million contract to provide tethered aerostats to the Polish Armed Force.

TCOM LP won the task order under the Aerostats MATOC vehicle. The sale to the Polish Army is part of the foreign military sales program. The U.S. Army Contracting Command at Aberdeen Proving Ground manages the contract.

QinetiQ filed its protest on June 15 and challenged how the U.S. Army evaluators assigned weaknesses and risks to its proposal. They also argued that the Army failed to identify alleged flaws in TCOM’s proposal.

Other challenges involved compliance with security assistance management manual requirements and implementation of the Arms Export Control Act.

The Government Accountability Office denied QinetiQ’s claims about the evaluation and dismissed the allegations of a failure to comply with security manual because it is just a guidance, not procurement law or regulation. GAO made its decision on Aug. 24.

The decision allows TCOM to move forward and provide four airspace and surface radar reconnaissance aerostat systems to the Polish Army.

The systems are tethered, high-altitude platforms that can provide early warning, surveillance and target tracking across land, air and sea domains. TCOM says its aerostats can stay afloat for 30 days at a height of 16,000 feet.

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GSA claims $13 billion in suspected fraud

Nick Wakeman — Tue, 25 Aug 2026 13:42:10 -0400

The General Services Administration claims it has uncovered more than $13 billion in suspected fraud by federal contractors since launching its anti-fraud task force in March.

The White House Task Force to Eliminate Fraud is using governmentwide contract data, public reporting, and inspector general enforcement information to uncover the fraud, GSA said in its announcement.

“Let this serve as a warning to any bad actors thinking of stealing from the federal government: we will catch you, we will work with law enforcement to ensure your arrest, and we will do everything in our power to help recover every dollar you stole,” said GSA Administrator Edward C. Forst.

The GSA announcement doesn’t offer examples of the fraud but links off to a Breitbart News article that cites examples the organization says GSA provided it.

But the examples Breitbart cites predate the launch of the fraud task force and at least one case predates the Trump administration.

The alleged fraud of the cases adds up to about $117 million, and the companies paid $29 million to settle the allegations.

GSA did not respond to a request to confirm the Breitbart story or provide information on the number of fraud cases it has referred to the Justice Department. Generally, GSA turns over suspected fraud to GSA inspector general, who then can decide to work with the Justice Department to investigate the alleged fraud.

While not actually uncovered by the fraud task force, the allegations at the three companies cited by Breitbart are egregious.

Sierra Nevada Corp. agreed to pay $7.75 million to settle False Claims Act allegations because it hired a consultant, Michael Henry, while he was still employed by the Defense Department’s Joint Staff/J6.

He formed a business with another, unnamed Sierra Nevada employee, but took that person’s name off the business to hide any connection, according to Henry’s 2025 plea agreement. DOJ indicted Henry in 2024 of “acts affecting a personal financial interest,” the court document states.

Henry helped the company win three contracts with DOD. Breitbart reports that Sierra Nevada allegedly committed $44 million in suspected fraud.

Sierra Nevada’s settlement with the Justice Department was announced last month. DOJ said the company “knowingly made, or knowingly caused to be made, material false statements, material false certifications, and material omissions” involving organizational conflicts of interest.

According to court records, Sierra Nevada didn’t put any OCI mitigation practices in place when it hired Henry.

The agreement with DOJ settles the allegations but is not a finding of civil liability, according to the Justice Department.

The second case Breitbart cited involves two companies and their senior executives. Broadway Electric and Cornerstone Contracting created a scheme to win contracts reserved for service-disabled, veteran-owned small businesses as well as other small businesses. Cornerstone is a subsidiary of Broadway Electric.

Broadway and Cornerstone were not qualified to bid on the contracts, as they were not service-disabled small businesses.

The Justice Department said the companies and their senior executives, John Oehler and Christian Blake, would enlist a SDVOSB to be the prime. While Broadway and Cornerstone did the work of preparing bids, securing bonding, and performing most of the work, they would pay the small business a fixed fee of between 1 and 3%, according to the settlement.

Part of the $21.3 million settlement will go to two whistleblowers, who will share $3.7 million.

The companies ran their scheme from 2019 to March 2025. The companies and the executives “admit, acknowledge, and accept responsibility” for their actions, according to DOJ.

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New contract aims to keep Space Force’s multi-billion-dollar projects on budget

Thomas Novelly — Tue, 25 Aug 2026 12:00:00 -0400

As the Space Force takes on new, multi-billion-dollar national security programs, the service has awarded a new contract to keep those projects on track and on budget, Defense One has learned.

The service’s Space Systems Integration Office awarded Integrate, a Seattle-based firm, a multi-million dollar contract for its AI-enabled project management program. Last year, the company netted a $25 million contract with the Space Force’s Mission Manifest Office to manage the service major multi-payload launch operation project. Now, as the service embarks on massive programs such as building the Space Data Network and the Space-Based Airborne Moving Target Indicator, the service is expanding its use of the company’s software to help keep program managers on the right track.

“SSIO serves as the central nervous system for the Space Force and the singular integrator

across the majority of the national security space enterprise,” Integrate told Defense One. “To maintain the U.S. advantage in space, the office is actively pursuing technological advancements to ensure programs are executed within cost and schedule constraints, and to provide leaders with real-time visibility into the entire Space Force portfolio.”

The Space Systems Integration Office, which is within Space Systems Command and oversees its acquisitions programs, has a growing list of national security projects. So far, seven of the nine newly-established Space Force Portfolio Acquisition Executives are using the program, with the others to be onboarded in the near future. The service’s $71.3 billion budget request this year, if passed, would mark the largest percentage increase for any military branch since 1952, according to the Aerospace Corporation. Service leaders say the new program is necessary to keep everything on the right track.

“As the speed of acquisition becomes increasingly critical to the success of our programs, the

Space Force is prioritizing technologies that equip our leaders with more timely, data-driven

decision-making capabilities,” Helen Ying, the Space Force’s system of systems engineering lead, said in a statement. “Integrate’s project management platform strengthens our capacity to visualize the minute details and track broader objectives within the Space Force’s programs.”

The existing—and antiquated—project management system can lead to mismanagement, miscommunication, and missed deadlines, the company said.

“They might get a hand-drawn PowerPoint with triangles on it sent over in an email or a table in an email with Gantt bars colored in, literally to show this is happening in September and this is happening in August. They don't have any granularity. It's like the minimum that meets the contract requirements in some cases,” John Conafay, Integrate’s CEO, said in an interview. “The most advanced is Microsoft Project Server, which, Microsoft Project was released the same year as Tetris.”

Conafay said his program differs from the current workflow dominated by sending emails and downloading files, and instead offers a clear single schedule that is modified in real-time and across multiple organization levels and classification levels to easily manage sprawling national security work.

Integrate’s contract with the Space Systems Integration Office comes as one of the Trump administration’s major programs, the Golden Dome missile defense shield, is facing budgetary headwinds. Gen. Michael Guetlein, the program's direct reporting program manager, warned attendees at the Space and Missile Defense Symposium in Huntsville, Alabama, this month that if Congress doesn’t sort crucial supplementary funding, the program will be in dire straits.

Golden Dome is not a Space Force program, but the service is helping develop key technology for the architecture. Conafay said Integrate’s system helps in budget-controlled environments to ensure "things are done on time and within budget” and holds contractors accountable. He said the service’s adoption of an upgraded project management system shows they’re taking those budget constraints seriously.

“It shows an incredible amount of responsibility to the taxpayer to use a software that can fundamentally modernize something that hasn't been since 1984,” Conafay said.

Correction: An earlier version of this report misstated which organization wrote about the the service’s budget request. It was the Aerospace Corporation.

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