Government Contractors After the Midterms: Preparing for a New Era of Congressional Oversight

Dominique L. Casimir and David L. Bodner ●

On election night, Rep. Robert Garcia, the incoming Chairman of the House Oversight Committee, issued a two-word statement: “Lawyer up.” Sen. Ron Wyden, expected to chair the Senate Finance Committee, offered his own one-word forecast: “Subpoenas.” Democrats will control both chambers when the 120th Congress convenes on January 3, 2027. Information requests that minority members sent this year could then become the basis for subpoenas. Federal contracting appears on nearly every forecast of the new majority’s investigative priorities.

Why Contractors Should Pay Attention

Contractors may face questions about how they won and performed their awards. That line of inquiry builds on Rep. Garcia’s requests for information about how contractors on administration projects were vetted. A company does not need to be accused of wrongdoing to receive a letter. Holding contracts, communications, or other information relevant to Congress’s review of the administration can be enough. Committees also turn to private companies when executive agencies are slow to respond.

The stakes will outlast both the current and incoming Congress. The statute of limitations for false statements to Congress or obstruction of a congressional investigation is generally five years, meaning the Department of Justice (“DOJ”) could review a company’s conduct well after the 2028 election.

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Plaintiffs Voluntarily Dismiss Challenge to EO 14398: What the Dismissal Means for Federal Contractors

Dominique L. Casimir ●

On October 28, 2026, the plaintiffs in National Association of Diversity Officers in Higher Education v. Trump, No. 8:26-cv-01532 (D. Md.) (“NADOHE case”), filed a notice voluntarily dismissing without prejudice their facial challenge to Executive Order (“EO” or the “Order”) 14398, Addressing DEI Discrimination by Federal Contractors, and its Federal Acquisition Regulation (“FAR”) implementation. The notice followed Judge Adam B. Abelson’s October 14 opinion denying a preliminary injunction. Although the plaintiffs did not obtain an injunction, they secured a narrowing construction every federal contractor should understand.

What EO 14398 Requires

Issued March 26, 2026, EO 14398 directs agencies, “to the extent permitted by law,” to include a clause in contracts and contract-like instruments, including subcontracts and lower-tier subcontracts. The FAR Council’s April 17, 2026, guidance directed agencies to implement the clause, through class deviations, as FAR 52.222-90. “[I]n connection with the performance of work under this contract,” the contractor must:

  • not engage in “racially discriminatory DEI activities,” defined as “disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources”;
  • furnish information and reports, including access to books, records, and accounts, as the contracting agency requires;
  • report any subcontractor’s “known or reasonably knowable conduct that may violate this clause”; and
  • recognize that compliance is material to the government’s payment decisions for purposes of the False Claims Act (“FCA”).
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Blank Rome Attorneys Appointed to American Bar Association’s Public Contract Law Section Leadership for the 2026–2027 Term

We are pleased to announce that nine attorneys from Blank Rome’s nationally recognized Government Contracts group have been appointed to leadership roles in the American Bar Association’s (“ABA”) Public Contract Law Section for the 2026–2027 term.

Visit our website to learn more about their roles and ABA’s Section of Public Contract Law.

Trump Administration Restricts Canadian Goods in Federal Procurement

Merle M. DeLancey, Jr. ●

President Trump signed a presidential memorandum titled “Restoring Reciprocity in Government Procurement” on September 16, 2026. The memorandum directs federal officials to take steps to restrict certain Canadian-origin products from the federal civilian procurement system. The action responds to Canada’s “Buy Canadian” policies, which prioritize Canadian suppliers and goods in government procurement. The memorandum aligns with the administration’s broader procurement and trade reforms. Earlier actions include executive orders to streamline the Federal Acquisition Regulation (“FAR”), Buy America and Made in America initiatives, and domestic manufacturing and supply of products such as pharmaceuticals and critical strategic minerals.

Key Provisions of the Memorandum

The memorandum directs the Office of Management and Budget (“OMB”) and the U.S. Trade Representative (“USTR”), in coordination with the FAR Council, to identify Canadian-origin items that may be removed or designated as unavailable for purchase by federal civilian agencies. Importantly, the directive does not impose an immediate government-wide ban. Instead, it establishes a process for evaluating and implementing potential restrictions consistent with applicable law.

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D.C. Circuit Upholds the Anthropic Ban: What It Means for Federal Contractors

Robyn N. Burrows, Michael J. Montalbano, and Justin A. Chiarodo ●


On September 25, 2026, the U.S. Court of Appeals for the D.C. Circuit issued its much-anticipated decision in Anthropic PBC v. U.S. Department of War, No. 26-1049, upholding the Department of War’s (“DOW”) exclusion of Anthropic’s Claude artificial intelligence (“AI”) models from its supply chain under the Federal Acquisition Supply Chain Security Act of 2018 (“FASCSA”), 41 U.S.C. § 4713. The ruling means the Government may continue its efforts to require contractors to cease the use of Anthropic as part of the performance of federal contracts. This post summarizes the decision and steps contractors should consider taking in response.

Background

As we covered in our prior blog post, the dispute between Anthropic and the federal government began with a contract disagreement over AI usage restrictions (Anthropic held a $200 million Pentagon contract and was the first frontier AI company to deploy models on classified government networks). Anthropic maintained two “red lines”: it refused to allow its Claude AI model to be used for mass domestic surveillance of Americans or in fully autonomous weapons systems. When the DOW demanded that Anthropic agree to “all lawful use” of its technology without these restrictions, Anthropic refused. On February 27, 2026, President Trump and Secretary of War Pete Hegseth announced on social media their intention to remove Anthropic from the federal supply chain.

On March 3, 2026, Secretary Hegseth issued a formal determination under FASCSA to take covered procurement actions against Anthropic, finding that the continued integration of Claude into DOW systems presented a “significant supply chain risk,” that removal was “necessary to protect national security,” and that no “less intrusive measures” were “reasonably available.” The Secretary also determined that an “urgent national security interest” required immediate action. The DOW’s Chief Information Officer then ordered removal of all Anthropic products from DOW systems within 180 days and prohibited contractors from using Anthropic products in DOW work.

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Blank Rome Welcomes New Government Contracts Associate Kaitlyn E. Toth in Washington, D.C.

We are pleased share that Kaitlyn E. Toth has joined our Washington, D.C., office as an associate in the Government Contracts group. Kaitlyn joins Blank Rome from Baker Hostelter, LLP.

Kaitlyn focuses on government contracts counseling, compliance, and litigation. 

Read the full press release on our website.

VA OIG Releases Report on the Federal Supply Schedule Program

Merle M. DeLancey, Jr. ●

On September 9, the Department of Veterans Affairs (“VA”) Office of Inspector General (“OIG”) released its findings based on a review of the VA Federal Supply Schedule (“FSS”) Program. See, VA Federal Supply Schedule Contracts. The VA and other government agencies annually purchase approximately $25 billion in medical equipment, pharmaceuticals, and services through the VA FSS Program. The OIG’s findings are based on information identified during its VA FSS contract audits. The report sets forth opportunities to improve the efficiency of the VA FSS Program and strengthen price protections to ensure the government obtains the best possible prices using taxpayer dollars. 

The OIG identified three primary areas for improvement:

1. Improving Tracking Customer Guidance

The Price Reductions clause is unique to FSS contracts. Under the Price Reductions clause, a tracking customer (or basis of award customer) is used to track price reductions FSS contract holders provide to tracking customers during the term of an FSS contract. The FSS contract holder is required to pass on the price reductions to the government. During contract negotiations, the parties agree on the tracking customer or category of customers. The broader the tracking customer, the more transactions an FSS contract holder must monitor.

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SBA Proposes Sweeping Overhaul of Small Business Size Standards: What Government Contractors Need to Know

Elizabeth N. Jochum ●

The U.S. Small Business Administration (“SBA”) has proposed a rule that would reshape how the federal government defines a “small business” across 338 industry groups and industries, dramatically increasing the number and size (by average annual revenue or number of employees) of companies that would qualify as small businesses for government contracts and SBA purposes. The proposed changes touch nearly every sector of the economy—from agriculture and manufacturing to construction, IT, and professional services—and carry significant implications for government contractors, subcontractors, and any business that relies on SBA-backed programs by significantly increasing size standards for hundreds of thousands of businesses.

The chart below provides a few examples of the significant changes in size standards:

NAICSDescriptionCurrent Size
Standard		Proposed Size
Standard
541330Engineering Services$25.5 million$252 million
541519Other Computer Related Services$34 million$531 million
541618Other Management Consulting Services$19 million$295 million
561210Facilities Support Services$47 million$156 million
336412Manufacturing Guided Missile and Space1,250 employees2,800 employees
336611Ship Building and Repairing1,300 employees2,300 employees
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Court of Federal Claims Reaffirms Agency Discretion in TAA Country-of-Origin Determinations for Pharmaceuticals

Merle M. DeLancey, Jr. and Shane M. Hannon ●

On July 28, 2026, the U.S. Court of Federal Claims issued its decision in AvKare, LLC v. United States[1], upholding the Department of Veterans Affairs’ (“VA”) national contract award for Hydroxychloroquine tablets. The opinion is an important reminder of the discretion contracting officers have to evaluate pharmaceuticals for Trade Agreements Act (“TAA”) compliance and reaffirms that the country where a drug’s active pharmaceutical ingredient (“API”) is synthesized can be its country of origin for TAA purposes. The Court also declined to extend the scope of the Federal Circuit’s 2020 Acetris decision which would have conflated “manufacturing” and “substantial transformation.”

Overview of the TAA

The TAA provides that the Government may only acquire “U.S.-made or designated country end products.” See FAR 52.225-5. The TAA states that if a product comprises materials from multiple countries, its country of origin is where it was “substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.” 19 U.S.C. § 2518(4)(B). If a product is “substantially transformed” in a TAA-designated country, the product complies with the TAA.

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DOW Updates Section 1260H List: Expanding Compliance Obligations for Government Contractors

Merle M. DeLancey, Jr. and Samarth Barot ●

Samarth Barot headshot image

The Department of War (“DoW”) updated its 1260H List on June 8, 2026. The update adds approximately 65 new entities and includes an array of Chinese companies across several key areas of China’s economy. For example, the additions include electric vehicle and battery manufacturers, solar equipment manufacturers, display and optical-component manufacturers, drone and robotics companies, and Chinese technology companies including Alibaba.

Among the newly designated entities are several biotechnology-related companies, including WuXi AppTec Co., Ltd., Complete Genomics, Inc., and Novogene Company Limited. WuXi AppTec, a China-headquartered contract research, development, and manufacturing organization with extensive relationships with U.S. pharmaceutical and life sciences companies, has received particular attention given the scope of its partnerships across the biotechnology supply chain. WuXi AppTec has disputed its designation and is pursuing all possible remedies.[1] This post addresses the implications for companies being placed on the 1260H List and how being placed on the 1260H List could also result in consequences under the BIOSECURE Act.

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