Two Class Deviations Put Nontraditional Defense Contractors Outside FAR Part 31

What changed

On 29 July 2026 the Principal Director, Defense Pricing, Contracting, and Acquisition Policy (DPCAP) issued Class Deviation 2026-O0015, Revision 1, revising DFARS Part 244, Subcontracting Policies and Procedures. On 4 August 2026 DPCAP issued Class Deviation 2026-O0032, Revision 1, revising DFARS Part 231, Contract Cost Principles and Procedures. Each supersedes its December 2025 original, and each implements section 1826 of the National Defense Authorization Act for Fiscal Year 2026 (Pub. L. 119-60).

The Part 231 deviation adds a new DFARS 231.001-70, Applicability, directing that DFARS Part 231 and FAR Part 31 not be applied to contracts with nontraditional defense contractors, citing section 1826(a)(10). The same deviation corrects DFARS 231.205-22, Lobbying and political activity costs, to make clear that certain costs are unallowable when the associated research, development, test and evaluation is incomplete, and revises cross-references, cited statutes, and paragraph numbering.

The Part 244 deviation implements section 1826(a)(6), which exempts nontraditional defense contractors from the requirement to establish and maintain an acceptable purchasing system. Section 1826(b) gives the head of the contracting activity authority to waive that exemption when doing so is in the best interest of the government. The deviation also updates the cross-reference at PGI 244.301-70(c)(3)(ii)(A) from 252.242-7005, Contractor Business Systems, to the deviation clause 252.242-7998, Contractor Business Systems (DEVIATION 2026-O0050), and updates cross-references to text relocated from DFARS Part 239 to the new Part 240.

Why it matters for estimating and pricing

FAR Part 31 supplies the allowability, allocability, and reasonableness framework underneath nearly every cost analysis on a defense contract. Removing it for a class of offerors changes what a cost realism or price reasonableness analysis can rest on. Where a nontraditional defense contractor sits in the competitive range or in the subcontract structure, the selected-cost treatment at FAR 31.205 cannot be assumed to govern that entity's proposed costs, and any independent estimate or should-cost analysis needs to state plainly which cost basis was applied to which participant.

Both exemptions turn on the statutory definition of nontraditional defense contractor, which keys to whether the entity has performed a Department of Defense contract or subcontract subject to full cost accounting standards coverage during the period preceding the solicitation. That definition, not company size or self-description, is what controls. The purchasing system exemption is also reversible at the contracting activity's discretion under section 1826(b), so a nontraditional contractor cannot treat it as settled for every award.

Primary sources

Class Deviation 2026-O0032, Revision 1 (4 August 2026): https://www.acq.osd.mil/dpap/dars/classdev/DFARS_RFO/Part-231/2026-O0032_Rev1_TAB_A_Deviation_Memo_USA002167-26.pdf

Class Deviation 2026-O0015, Revision 1 (29 July 2026): https://www.acq.osd.mil/dpap/dars/classdev/DFARS_RFO/Part-244/2026-O0015_Rev1_TAB_A_Class%20Deviation_DFARS_244.pdf

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