New DFARS Part 270 Deviation Drops the Justification Requirement for Employee-Owned Business Awards

What changed

On 4 August 2026 the Principal Director, Defense Pricing, Contracting, and Acquisition Policy issued Class Deviation 2026-O0052, extending the Revolutionary FAR Overhaul to DFARS Part 270, Defense Contracting Programs, and PGI 270. Effective immediately, contracting officers use the attached DFARS Part 270 in lieu of the text codified at 48 CFR chapter 2, and the attached PGI 270 in lieu of the PGI published on the DPCAP site.

The substantive change is to DFARS subpart 270.1, Pilot Program to Incentivize Contracting with Employee-owned Businesses. The requirement for a justification and approval is removed. The deviation explains the basis: the overhaul version of FAR 6.103, Other than full and open competition, clarifies at FAR 6.103-5, Authorized or required by statute, that contracts awarded using this authority do not require a justification.

Like the rest of the overhaul deviations, 2026-O0052 is grounded in section 2 of Executive Order 14275, Restoring Common Sense to Federal Procurement, section 4(a) of Executive Order 14265, Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base, and Office of Management and Budget memorandum M-25-26 of 2 May 2025, Overhauling the Federal Acquisition Regulation. It remains in effect until rescinded or incorporated into the FAR, DFARS, and PGI.

What a contractor does differently

For an employee-owned business pursuing defense work under the pilot, the administrative path to a noncompetitive award is shorter. The contracting officer no longer has to draft and route a justification and approval document for the sole-source decision, removing a review step from the award timeline. The underlying authority and the pilot's eligibility conditions are unchanged. Only the documentation requirement moved.

One practical caution: the removal depends on the overhaul deviation text at FAR 6.103-5, not on the FAR codified at 48 CFR chapter 1. A firm should confirm which version of FAR Part 6 the contracting activity is operating under before assuming no justification is needed, since the codified and deviation texts currently say different things.

Primary sources

Class Deviation 2026-O0052 (4 August 2026): https://www.acq.osd.mil/dpap/dars/classdev/DFARS_RFO/Part-270/2026-O0052_TAB_A_Class_Deviation_USA001836-26.pdf

DPCAP index of DFARS Revolutionary FAR Overhaul class deviations: https://www.acq.osd.mil/dpap/dars/dfars_far_overhaul_class_deviations.html