Nontraditional Defense Contractors Are Now Outside the DFARS Property Management System Clause

What changed

The Department of War posted Class Deviation 2026-O0046, Revision 1, Revolutionary FAR Overhaul Part 45, DFARS Part 245, on its class deviation page on 9 September 2026. It is effective immediately and it revises and supersedes Class Deviation 2026-O0046, which was issued on 20 February 2026.

The substantive addition is short. The memo states that section 1826 of the National Defense Authorization Act for Fiscal Year 2026 (Pub. L. 119-60) is partially implemented, and that nontraditional defense contractors are exempt from the clause at DFARS 252.245-7003, Contractor Property Management System Administration, unless the exemption is waived. The remainder of the revision is described as revisions to citations and cross references.

Contracting officers are directed to use the Revolutionary FAR Overhaul version of FAR part 45 published on acquisition.gov, the attached revised DFARS part 245, and the attached revised PGI 245 in place of the codified text. The deviation remains in effect until rescinded or incorporated into the FAR, DFARS and PGI.

Why it matters for estimating and pricing

Section 1826(a) lists ten requirements that nontraditional defense contractors are exempt from, and DFARS 252.245-7003 is item (5) on that list. The Department has been implementing the list one part at a time rather than all at once. The Part 231 deviation issued 4 August 2026 implements section 1826(a)(10), which is FAR part 31. The Part 244 deviation issued 29 July 2026 implements section 1826 as it bears on subcontracting policies and procedures. Government property is now the next piece. Other items on the statutory list, including the accounting system, earned value management system, estimating system and contractor business systems clauses, are still waiting on implementing deviations.

For anyone pricing or evaluating a nontraditional contractor's proposal, the effect is that government property administration is no longer a contractor business system subject to disapproval and payment withholding for that contractor. The cost of controlling government property does not disappear, but the compliance infrastructure that is normally priced to support a 252.245-7003 system review does. That is a real difference in indirect rates and in the basis of estimate, and it does not apply to a traditional contractor bidding the same work.

The exemption can be reversed case by case. Under section 1826(b), one or more of the listed requirements may be applied to a contract with a nontraditional contractor on a written determination approved by the head of the relevant contracting activity, with a justification explaining why applying it is in the best interest of the Government. That approval authority may be delegated no lower than a senior contracting official. Where a waiver is issued, the Secretary must notify the congressional defense committees within 60 days.

Primary sources

Class Deviation 2026-O0046, Revision 1, DARS tracking number 2026-O0046, Revision 1, posted at acq.osd.mil/dpap/dars/dfars_far_overhaul_class_deviations.html. Section 1826 of the National Defense Authorization Act for Fiscal Year 2026, Pub. L. 119-60, 139 Stat. 1249-1250.