House lawmakers are discussing a reauthorization of the National Quantum Initiative, with lawmakers eyeing agency prize challenges, workforce issues and supply chain concerns among other key updates. During a hearing hosted by the House Committee on Science, Space and Technology on Thursday, lawmakers sought input from agencies leading quantum information science efforts. Chairman Brian Babin (R-Texas) said he is working with Ranking Member Zoe Lofgren (D-Calif.) on a reauthorization of the NQI. “This effort seeks to reinforce U.S. leadership in quantum science, technology and engineering, address workforce challenges, and accelerate commercialization,” Babin said. The National Quantum Initiative Act of 2018 created a national plan for quantum technologies spearheaded by agencies including the National Institute of Standards and Technology, the National Science Foundation and the Energy Department. As the House committee works on its bill, Senate lawmakers earlier this month introduced a bipartisan National Quantum Initiative Reauthorization Act. The bill would extend the initiative for an additional five years through 2034 and reauthorize key agency programs. The Senate bill would also expand the NQI to include National Aeronautics and Space Administration’s (NASA) research initiatives, including quantum satellite communications and quantum sensing. Meanwhile, in September, the White House named quantum information sciences as one of six priority areas in governmentwide research and development budget guidance. “Agencies should deepen focused efforts, such as centers and core programs, to advance basic quantum information science, while also prioritizing R&D that expands the understanding of end user applications and supports the maturation of enabling technologies,” the guidance states. During the House hearing on Thursday, lawmakers sought feedback on several proposals to include in the reauthorization bill. Rep. Valerie Foushee (D-N.C.) said the Energy Department had sent lawmakers technical assistance in December, including a proposal to provide quantum prize challenge authority to agencies that sit on the quantum information science subcommittee of the National Science and Technology Council. Tanner Crowder, quantum information science lead at Energy’s Office of Science, said the prize challenges would help the government use “programmatic mechanisms” to drive the field forward. “We’ve talked a little bit about our notices of funding opportunities, and the prize challenge would just be another, another mechanism to drive the field forward, both in potential algorithmic designs, hardware designs, and it just gives us more flexibility to push the forefront of the field,” Crowder said. Crowder was also asked about how the reauthorization bill should direct resources for sensor development and quantum network infrastructure. “We want to be able to connect systems together, and we need quantum networks to do that,” Crowder responded. “It is impractical to send quantum information over classical networks, and so we need to continue to push that forefront and look to interconnect heterogeneous systems at the data scale level, so that we can actually extract this information and compute upon it.” Lawmakers also probed the witnesses on supply chain concerns related to quantum information sciences. James Kushmerick, director of the Physical Measurement Laboratory at the National Institute of Standards and Technology, was asked about U.S. reliance on Europe and China for components like lasers and cooling equipment. “One of the things we are looking for within the reauthorization is to kind of refocus and kind of onshore or develop new supply chains, not even just kind of duplicate what’s there, but move past that,” Kushmerick said. “Through the Quantum Accelerator Program, we’re looking to focus on chip-scale lasers and modular, small cryo-systems that can be deployed in different ways, as a change agent to kind of move forward.” Several lawmakers also expressed concerns about the workforce related to quantum information sciences, with several pointing out that cuts to the NSF and changes to U.S. immigration policy under the Trump administration could hamper research and development. Kushmerick said the NIST-supported Quantum Economic Development Consortium polled members in the quantum industry to better understand workforce challenges. “It’s not just in quantum physicists leading the efforts,” Kushmerick said. “It’s really all the way through to engineers and technicians and people at all levels. So I really think we need a whole government effort to increase the pipeline through certificates to degrees and other activities.”The post Workforce, supply chain factor into reauthorizing National Quantum Initiative first appeared on Federal News Network.

For Gen Z military families, navigating life in their early-to-mid 20s means wading their way through unique challenges that can get overwhelming pretty quickly. Between frequent relocations, long deployments, unpredictable life schedules and limited early-career earnings, financial planning is more than a good idea — it’s essential for long-term stability. According to the Congressional Research Service, 40% of active-duty military personnel are age 25 or younger, right within the Gen Z age group. Yet these same service members face the brunt of frequent moves, deployments and today’s rising cost of living. This guide is designed specifically for Gen Z service members and their spouses, helping them understand their financial situations, insurance options, avoid common financial pitfalls and build stable careers, all while dealing with the real-world pressures of military life. Financial pressures Gen Z military families face While budgeting, insurance and retirement planning are critical, it’s also important to get a real sense of the actual financial stressors younger military families are grappling with: Living paycheck to paycheck. Even with basic allowance for housing and basic allowance for subsistence, many junior enlisted families still find it hard to keep up with rising living costs. This becomes even more of a precarious situation when you add in dependents. Delayed reimbursements during permanent change of station (PCS) moves, creating short-term cash crunches. Limited emergency savings. The Military Family Advisory Network’s (MFAN) 2023 survey found 22.2% of military families had less than $500 in savings. Predatory lending, with high-interest auto or payday lenders near bases disproportionately targeting young servicemembers. Military spouse underemployment, leaving household income vulnerable when frequent moves disrupt career continuity. MFAN also found that nearly 80% of respondents spend more on housing than they can comfortably afford, and 57% experienced a financial emergency in the past two years. These aren’t abstract concerns that most young servicemembers and their families can just ignore, hoping that they’ll never be impacted; these are everyday realities for Gen Z military families. Insurance best practices Adult life is just getting started in your 20s, and navigating insurance options can feel overwhelming. But taking the time to learn your choices will set your family up for a secure financial future. Life insurance: Most servicemembers are automatically enrolled in Service Members’ Group Life Insurance (SGLI), with Family Servicemembers’ Group Life Insurance (FSGLI) extending coverage to spouses and children. Review coverage annually. Also, compare options across SGLI, FSGLI and trusted military nonprofits to find what fits your family best. Disability insurance: Often overlooked, this protects your family if an injury prevents you from working, even off-duty. Supplemental private coverage can be wise if your lifestyle expenses exceed your military pay. Renters insurance: Essential for families who move often; it protects your belongings through relocations. Healthcare: TRICARE provides strong coverage, but learn the details on copays and referrals, especially when stationed overseas. Common financial missteps and how to fix them Mistake #1: Overbudgeting and lack of budgeting BAH and BAS are designed to offset housing and food costs, not fund lifestyle inflation. Stick to a budget that keeps fixed expenses well below your income. Free tools from Military OneSource can help track spending. Mistake #2: Not saving for retirement Retirement may feel far away, but starting early has an outsized impact. Contribute at least 5% to your Thrift Savings Plan (TSP) — a military contribution retirement program similar to that of a 401k — to secure the full Defense Department match. Even small contributions now can grow into hundreds of thousands later. Mistake #3: Misusing credit or loans Predatory lenders near bases often target young servicemembers. Try to avoid any predatory or misleading lenders. Instead, consider a secured credit card or an on-base credit union to build credit responsibly. Always be sure to pay your balance in full. Mistake #4: Skipping an emergency fund PCS moves, car repairs or medical costs can’t always be predicted. Start small: Even $10 to $20 per week automatically transferred to savings helps to build a safety net. According to MFAN’s 2023 survey, enlisted families with children that have undergone recent PCS moves are most likely to face financial hardship, making an emergency cushion critical. In addition to avoiding pitfalls, here are realistic strategies to strengthen your finances: Tap military relief organizations like Army Emergency Relief (AER) or Navy-Marine Corps Relief Society (NMCRS) for interest-free loans or grants during emergencies. Plan for post-military life: Keep in mind that SGLI and other benefits change once you leave active duty. Compare nonprofit alternatives early to avoid gaps. Leverage nonprofits you can trust: Some offer competitive life insurance, savings products or financial counseling designed for servicemembers’ long-term interests. Budget with inflation in mind: Rising costs are hitting Gen Z hard. Nearly 48% say they don’t feel financially secure, and over 40% say they’re struggling to make ends meet. Prioritize life’s essentials and be realistic about what you can afford outside of them. Maintaining a career as a military spouse Frequent relocations are undoubtedly disruptive, but they don’t have to end career growth. Military spouses may want to focus on careers that can easily move around with them, like healthcare, education, IT or freelancing. Take advantage of programs like MyCAA, which offers $4,000 in tuition assistance for career training; Military OneSource, which offers resume assistance, free career coaching and financial counseling; and Hiring Our Heroes, which offers networking opportunities and job placement assistance for military spouses. These programs can help reduce underemployment and strengthen household stability, especially during tempestuous times like during and after a PCS move. Putting it all together Starting adulthood, a military career and a family all at once is an incredibly challenging undertaking. The financial pressures are real, but with the right knowledge and proactive steps, Gen Z military families can turn instability and uncertainty into long-term security. By understanding insurance options, making smart money moves, tapping into military-specific resources and planning ahead for life after service, families can not only weather the unpredictability of military life, but also build strong financial foundations for the future. Alejandra Cortes-Camargo is a brand marketing coordinator at Armed Forces Mutual.The post Navigating insurance, maintaining careers and making smart money moves as a Gen Z military family first appeared on Federal News Network.

Interview transcript Terry Gerton The IRS Criminal Investigations Division just published your 2025 annual report, and there’s some really interesting statistics in here, including $10.6 billion in identified financial crimes. And that’s a big leap up from the 2024 numbers. What do you think is going on? What factors contributed to that increase? Justin Campbell Well, IRS criminal investigation has approximately 3,000 employees. We hover around that number annually. The key difference this year that we’ve noticed is we brought in a large number of new special agents. So we brought, we graduated 14 different classes this year through our academy. That means those are agents that are hitting the field and opening up new cases and detecting fraud. That has a large impact on our measurables, such as fraud identified. I think that’s a big piece of it. The other piece of is there’s a lot of fraud out there and we are the best in the world at identifying it. And the folks we’re hiring are coming to us from all kinds of backgrounds, well suited for this kind of work in the finance field and legal field. And so when our agents do hit the ground from training, they are well equipped from their prior background as well as their training we give them at the academy to quickly identify that fraud. Terry Gerton You mentioned a lot of fraud. One of the other numbers that jumps out at me is the seizure of 2.3 petabytes of digital data. So not only is fraud happening, but it sounds like a lot it is happening digitally. In addition to the extra agents, are there new tools that you’ve used or new methods that you have of detecting that fraud and indicting it? Justin Campbell Well, what we’re learning is all law enforcement agencies are dealing with is, more and more, our society is becoming paperless. And so even on what we would consider more traditional fraud cases, more data is being pulled digitally as opposed to from filing cabinets. When I was an agent, we would plan to seize filing cabinets full of records. And nowadays, professionals, business professionals, third-party money launderers in some cases, others that are committing criminal violations, are really good at scanning evidence, right? And a lot of us do that, a lot of legitimate people do that. I do that in my own personal life. I try to keep as much digital records as possible. What the challenge that presents for us though is, as you saw, we have petabytes of data we seize now. And so when we do these enforcement operations, we do search warrants or search subpoenas for records. A lot of times they are digital in nature. One thing we’re doing is trying to lean into artificial intelligence, large language models to help us more quickly identify fraud and to be more efficient with it. One example of that is we modeled a program this year called our case viability model. And essentially what it does is it looks across the data from our case management system for the past decade plus and says, hey, what is the likelihood success on this case. And it uses large language model technology to give the decision makers some view into the likelihood of success on a given case based on the inputs. So yeah, we are using data or technology, I should say to our advantage. And we are also grappling with the increased use of digitized data by taxpayers on our investigations. Terry Gerton In addition to your annual report, you’ve also just released your top 10 cases list. It’s the season for top 10 lists. But I was struck in relation to what you just described by a statement that says financial trails are the criminal’s downfall relating to your data comment there. When you think of the top 10 lists, are there one or two that really caught your attention? Justin Campbell Yeah, there’s two of them in particular that really highlight our skill set. I’ll start with one that’s in the news right now, the Feeding Our Future Investigation based out of Minneapolis. That’s over $250 million in fraud. Our agents have been at the table since day one, along with the FBI and U.S. Postal Inspection Service identifying that fraud. We are very proud of the work that our agents have done on that case. It’s been going on for a number of years now, and it really highlights where our agents can impact program fraud in particular. Another case that I think really speaks to something that only CI can do effectively is large investigations involving financial institutions. This past year, TD Bank was subject to a $670 million investigation related to failure to maintain the anti-money laundering program, and they pleaded guilty, or agreed, I should say, to pay a record-breaking $1.8 billion in penalties associated with that case. That’s a very large, complex case that I think speaks to the work that CI can do. And then the last point I’ll make, a case that really gets my attention in the role I’m in now, and it should catch the attention of taxpayers because these types of cases compound and this is an unscrupulous return preparer. We had an individual by the name of Rafael Alvarez in the Bronx, New York, submitted false tax returns on behalf of his clients to the tune of $145 million in fraud. And that particular case was sentenced this year. Mr. Alvarez was sentenced to prison and he helped his company generate approximately $12 million in fraudulent proceeds over the duration of the fraud. So, you know, those kinds of cases really do have a big impact on taxpayers because that comes out of the treasury, it comes out of the taxes that they paid in, and it really gets our attention. Terry Gerton I’m speaking with Justin Campbell. He’s the acting deputy chief of IRS Criminal Investigations. Well, speaking of tax fraud, I mean, this administration has made the uncovering of waste, fraud, and abuse one of its key tentpoles in policy and programs. Your report says you identified $4.5 billion in tax fraud in 2025. Are there trends that are driving that increase? Justin Campbell I wouldn’t say a trend that we have detected that, we would say has caused an uptick in fraud. Look, fraud’s there. It’s always going to be there. As much as many of us are frustrated by that, we are very accustomed to it at the IRS. As I stated earlier, I think the uptick in-part is related to the number of agents that hit the ground running in fiscal year ’25. That enables us to identify fraud quicker. And I think there’s also the fact that the agents that we are hiring are really sophisticated. I’ve been really impressed with their backgrounds when they start. So we aren’t training someone with no background in finance, for example, or law. These are very sophisticated individuals that come on board with us. So I would attribute the uptick primarily to the agents onboarding in fiscal year ’25. I couldn’t necessarily point to a specific trend. Now, we all know that we’re seeing a lot of program fraud reference in the news. There’s been a number of program of fraud cases brought related to COVID, different COVID programs. That could be driving some of that up, but we haven’t necessarily detected what we would point to as a specific trend on a specific type of fraud. Terry Gerton That helps clarify the background here. I want to shift gears just a little bit because your annual report also talks about some new partnerships initiatives that IRS Criminal Investigations is undertaking, both with global partners and with financial institutions. Can you tell us a little about how those partnerships work and how they impact the findings that your agents make. Justin Campbell Yeah, one of the partnerships that we’re really proud of is, we call it CI First, and it’s a program with banks where we work closely with them to provide them feedback on their regulatory responsibility to report certain types of transactions. And we have found over the years and working with our partners at the financial institutions that they are seeking feedback. They want to comply with the law, but they also want to know how well they’re doing in certain areas. And so we have a specific effort called CI First that provides feedback to them to ensure that they’re getting the feedback they need, and it ensures we get a high quality product from the banks as a result of their contributions. Terry Gerton And how does that help amplify your reach, your enforcement reach? Justin Campbell When we get strong relationships with financial institutions, we get great results. I’ll give you an example. So as an agent, I had personal relationships with certain bankers after years of conducting financial investigations. And they knew I was an IRS special agent. And so when someone walks into their bank and one of their lobbies and says, hey, I have a six-figure treasury check, I want to cash, their spide-y senses went up, right? And they called me directly and said, hey, this doesn’t seem right. Can you look into this? We’re filing an SAR on this. This doesn’t seem right, so anyway, that’s the kind of example I think that I would point to, strong relationships result in better cooperation from the banks. Terry Gerton You’ve described a pretty busy environment with your agents and the level of fraud. As you look towards 2026, are there any particular trends or areas that are on your radar for enforcement? Justin Campbell Well, we want to focus heavily on tax gap efforts. What I mean by tax gap is at the IRS, we know that there’s a certain amount of taxes owed as opposed to what is actually paid. And so that difference is what we call the tax gap. And some percentage of that is criminal in nature. We of course would never investigate someone for an unintentional failure to report income, but when there’s intentional failure to report income and intentional filing of a fraudulent return, that’s when an IRS criminal investigation is absolutely going to get involved. And so one of our big efforts this year is to look at where we can impact the tax gap more effectively. We are looking at high income non-filing, particularly. We would really want to focus in on that, as well as a few other case program areas, I should say that we have noted in the past, require constant policing. Employment tax fraud is another great example of an area that is subject to fraud based on our experience and we’ll continue our efforts this year in policing employment tax fraud.The post IRS CI posts a record year: $10.6 B in financial crimes uncovered and cyber seizures soaring first appeared on Federal News Network.

var config_5795249 = {"options":{"theme":"hbidc_default"},"extensions":{"Playlist":[]},"episode":{"media":{"mp3":"https:\/\/mgln.ai\/e\/345\/rss.art19.com\/episodes\/414d8d89-90c3-4ad1-9c2f-69fb60480e41.mp3?rss_browser=BAhJIg5Xb3JkUHJlc3MGOgZFVA%3D%3D--466d26bc6c0e932b4a48b1403433bf1814d4975e"},"coverUrl":"https:\/\/federalnewsnetwork.com\/wp-content\/uploads\/2018\/12\/FedNewscast1500-150x150.jpg","title":"DoD failed to provide Congress with details on $23B Golden Dome effort","description":"[hbidcpodcast podcastid='5795249']nn[federal_newscast]"}}; Lawmakers are still waiting for the Defense Department to provide details on how it plans to spend $23 billion already approved for the Golden Dome effort. Congressional appropriators say the Pentagon has not provided key budget information such as deployment schedule, cost, schedule and performance metrics, as well as a finalized system architecture. The White House has estimated the project could cost as much as $175 billion over the next three years. As a result, House and Senate appropriators were unable to conduct oversight of Golden Dome programs for fiscal 2026. Lawmakers want Defense Secretary Pete Hegseth to submit a detailed spending plan within 60 days of the bill’s enactment.(DoD failed to provide budget details to Congress for $23 billion Golden Dome effort - House.gov)GSA is giving agencies access to a software to develop AI capabilities. The General Services Administration signed an enterprise agreement with Broadcom, becoming the 24th deal under its OneGov strategy. GSA says agencies can receive up to a 64% discount off Broadcom's schedule prices for access to several platforms, cybersecurity and development tools. Agencies can purchase software packages from Broadcom ranging from VMWare's data intelligence platform to its vDefend cybersecurity tools to its Tanzu starter kit to speed up AI prototyping and deployment. The OneGov deal will be in place through May 2027. GSA's agreement with Broadcom is the third OneGov deal since January and sixth since December.(GSA signs 24th OneGov deal - General Services Administration)Senate Democrats want to bar political appointees from moving into leadership positions at agency watchdogs. A new bill called the Inspectors General Independence Act would prevent presidents from nominating their own political appointees as Inspectors General. The legislation comes after recent reporting showing that many of Trump’s confirmed IGs were previously political appointees in his administration. Senator Tammy Duckworth, who introduced the bill, says it would help restore public trust and keep IG offices free from conflicts of interest.(Inspectors General Independence Act - Sen. Tammy Duckworth (D-Ill.))The acting director of the Cybersecurity and Infrastructure Security Agency faces questions about steep staffing cuts at his agency. Acting CISA Director Madhu Gottumukkala told lawmakers that there are no reorganizations in the works at CISA. But he offered few specifics on how the cyber agency would continue to meet its mission after losing roughly one-third of its staff last year. During a House Homeland Security Committee hearing yesterday, Gottummukkala said CISA was getting back on mission and that he would communicate with lawmakers about any future reorganizations. (Lawmakers press acting CISA director on workforce reductions - Federal News Network)The IRS is abandoning a customer service metric it’s been using for the past 20 years. An independent watchdog within the IRS told Congress last year that this old metric is “misleading” and that it doesn’t “accurately reflect the experience of most taxpayers who call” the IRS. Agency leadership says it will use a new measurement that better reflects its interactions with the public. The IRS is pursuing these changes as part of a broader shakeup of its senior ranks less than a week out from the start of the tax filing season. (Ahead of filing season, IRS scraps customer service metric it’s used for 20 years - Federal News Network)Agencies have more guidance on how to implement the “rule of many.” But actually adopting the new federal hiring practice may still be put on the backburner. Without enough funding or staffing, agencies are not likely to overhaul their current and already well-established hiring practices in the short term. That’s according to Jenny Mattingley, vice president of government affairs at the Partnership for Public Service. “The rule of many is a good tool, but until those ingredients are all put together, I don’t know that you’ll see it rolled out immediately,” Mattingley said. The “rule of many,” a change that’s been several years in the making, aims to create broader pools of qualified candidates for federal jobs, while adding flexibility for agency hiring managers. (OPM details expectations for the ‘rule of many’ in federal hiring - Federal News Network)President Donald Trump has turned to the Marine Corps to find the next leader of the Defense Intelligence Agency. Trump this week nominated Marine Corps Lt. Gen. James Adams to serve as director of DIA. Adams is currently deputy commandant for programs and resources at Marine Corps headquarters, where he helped lead the Marines to achieving two clean financial audits. DIA has been without a permanent leader since Trump ousted its former director, Air Force Lt. Gen. Jeffrey Kruse, last August. (General officer announcements - Defense Department)A third-party arbitrator ruled the Trump administration’s return-to-office memo doesn’t override telework protections in a union contract. The arbitrator is ordering the Department of Health and Human Services to rescind its return-to-office directive and restore telework and remote work agreements for thousands of employees represented by the National Treasury Employees Union. The arbitrator says HHS committed an unfair labor practice by unilaterally terminating these agreements without regard to its five-year collective bargaining agreement with NTEU. HHS officials argued a return-to-office memorandum signed by President Trump on his first day in office supersedes its collective bargaining agreement with the union. (Trump’s return-to-office memo doesn’t override telework protections in union contract, arbitrator tells HHS - Federal News Network)While the full impact of operating under continuing resolutions is difficult to quantify for the Defense Department, the Government Accountability Office says the funding lapses have led to delays, increased costs, administrative burdens and operational challenges. GAO found that at Joint Base San Antonio, the cost of a facilities sustainment contract more than doubled after CR-related delays in fiscal 2024. Officials told GAO the contract, which was originally estimated at around $580,000, increased to $1.45 million after a final appropriation was passed. U.S. IndoPacific Command said a funding lapse in 2024 disrupted training and exercises. F-35 program officials told GAO that roughly 20% of their financial management staff’s time is spent adjusting budgets to manage through CR constraints. (Continuing resolutions cause delays, increased costs across Pentagon programs - Government Accountability Office)The Defense Department is putting some details behind Secretary Pete Hegseth's decision to audit the 8(a) small business contracting program. In a new memo released yesterday, DoD is giving combatant commanders, military services and defense agencies until Jan. 31 to identify three types of contracts: 8(a) sole source, 8(a) set-aside and any small business set-aside contract worth more than $20 million. Once identified, Hegseth says these contracts will undergo further reviews by DoD's DOGE team to ensure they are not pass-throughs to larger firms or to ensure they are critical to DoD warfighting capabilities. That review is scheduled to be completed by Feb. 28.(Hegseth lays out plans for 8(a) audit reviews - Department of Defense)The post DoD failed to provide Congress with details on $23B Golden Dome first appeared on Federal News Network.

Interview transcript Terry Gerton You have done some analysis looking at the pattern of senior military officers being relieved with very little explanation from the Department of Defense. We’ve all read some of the headlines, but what is it about this issue that concerns you? Virginia Burger For me, the biggest concern was that, like you said, there’s little to no justification for many of these firings. Or if we get any, it’s very oblique references in tweets from senior leaders like Secretary Hegseth, and we’re never provided any follow-up or any true validation that the relief was actually warranted. And for me, that is a red flag because it seems like we’re probably politicizing a organization that is meant to be apolitical, right? The military was always supposed to be an apolitical body, it’s not supposed to serve a party, it is supposed to serve the people, and if we are firing the most senior leaders of that organization for overtly political reasons, which is what we are left to surmise, given lack of any other information, that should be a serious point of pause for all Americans. Terry Gerton As I mentioned, we’ve seen some headlines, but we may not know about all of the reliefs. Can you talk about how widespread this has become? Virginia Burger So obviously I think the ones that everyone’s probably most familiar with were right away, the chairman of the Joint Chiefs, General C.Q. Brown, was relieved and then the chief of naval operations, Admiral Lisa Franchetti, were both relieved. They were probably the two biggest ones that everyone saw. And again, Hegseth characterized it very generally as cleaning house. I need new leadership, new generation for context. Neither of them were due to be turned over at that point in time, they were both still, well — had several years left in their tenure in those positions. And everyone sort of was left to guess, well, maybe they relieved General Brown because he was African-American and maybe they relieved Admiral Franchetti because she was a woman. I don’t have a ton of familiarization with General Brown, but I know a lot of friends in the Navy who were incredibly proud [of] and respected Admiral Françhetti. She was considered the pick for CNO and so her relief was quite shocking to a lot of people because she was by far and way, if we’re gonna talk about merit for positions, she was the person for that position. Some other ones that have maybe not gone as noticed are in some lower, more subordinate commands, but certainly still across the board, there were several women relieved in the Air Force and the Army that were senior leaders, and also notably the head of the NSA was relieved, and that position was gapped for several months. In fact, the replacement was only announced in the last few weeks, and that was both concerning for, why was the person relieved, but also from a strategic decision. If the NSA doesn’t have a leader, that’s a hugely powerful arm of national security. That was a big bipartisan concern as well that many senators and representatives expressed concern over. Terry Gerton Let’s follow that because you also documented some patterns about gaps in leadership and transition and readiness. Tell us more about that. Virginia Burger So when a senior leader is relieved, and it’s not on the normal timeline, because most of these positions you hold for a period of usually two to three years, that’s the typical timeline for command, especially at those senior leader levels of lieutenant generals and vice admirals, generals and admirals. When one of those positions is relieved suddenly, you do not have a replacement lined up. And for a lot of these senior leaders the replacement has to be confirmed by Congress, right? For combatant commanders, for service chiefs, that person has to nominated, they have to be reviewed by the Senate Armed Services Committee, and then voted on by the Senate. If you fire someone off timeline, that position is going to be gapped, and these are our most senior military leaders who are in the positions that are making the most pivotal decisions for our national strategy, and who are making the decisions that America’s sons and daughters in service are going to have to execute. And so when they’re fired very suddenly, that position is empty and there is a power vacuum, there is a void and naturally the executive officer, the deputy is going to step up and do their best and maybe they’ll rush to put in someone who’s acting. But you know, an acting person in that position does not have the same legal authorities. They don’t have the same authorities for command and it’s just going to cause headaches and issues that will roll all the way down the chain. And it can be very, very difficult for a unit to run. And then when we’re talking about people in positions of such amount of power, that’s going to have a lot of ramifications on national security, morale, and making sure our service members are well taken care of. Terry Gerton So, Virginia, these positions that have been relieved have been at the top of chains of command. Have you heard any response from within the military or within DoD about the impact? Virginia Burger I can only speak to like anecdotes I’ve been given from people I know. I haven’t seen any significant reports or anything from the DoD officially because they aren’t releasing any information like that, right? Like, Secretary Hegseth has not come out and said, hey, here’s a survey or here’s an investigation we did to see if the very dramatic relief of Admiral Franchetti had negative impacts to naval readiness. He’s not doing that kind of work or if he is, he’s not going to publish it. What I can say, and what I’ve heard, like I said, I spoke to several peers and friends of mine who are in the Navy, and it was quite a morale blow when she was relieved. I know many women in service, as a veteran myself, I still have many friends on active duty, and they have watched as many of those relieved look like them. They are women, and they’re sort of questioning, is there a future for me in this organization? I have friends who have sort of passed the 10-year mark, they’re trying to make it to 20, and they are looking to see, is that even really an option? Will I be able to continue to dedicate my life to this service that I’ve chosen? And that’s going to have ripple effects across the force and that’s not gonna have great implications when it comes to readiness, morale, etc. Terry Gerton I’m speaking with Virginia Burger. She’s the senior defense policy analyst for the Center for Defense Information at the Project on Government Oversight. Virginia, in your paper, you talk about some opportunities that Congress might have to have some more say in this. Walk us through your suggestions. Virginia Burger Like I said earlier, Congress has to review these nominees for the senior positions, right? And we’re talking specifically about the highest ranking officers. These are three and four-star generals and admirals. So those are the positions that have to go before Congress, they have to be cleared by SASC, Senate Armed Services Committee, and then voted on before they can take their seat in that position. And so Congress, and specifically the Senate, exists in that advisory capacity to the president’s nomination. And that’s written in law. That’s in Title 10, which is the section of U.S. Code that governs the United States military. There is a specific section, Section 601, that talks about the appointment of these officers, and it also talks about the removal and the replacement of them in some level of detail, but without any mention of Congress’ role, because there isn’t one in law for their removal. My suggestion is that we actually amend Section 601, so that there is some official oversight. Now, granted, Congress has avenues for oversight over these decisions now, right? The Senate, congress, they have the ability to conduct hearings, open investigations. If they wanted to, they could open an investigation into the relief of General Brown or Admiral Franchetti and subpoena them or subpoena Secretary Hegseth and have them come in and answer questions about that incident. The Senate could do that tomorrow. Politics aside, with all of that, there are things they could do to change the law. So my recommendations would be that they include explicit requirements for formal congressional notification, right? So when a senior leader, one of these three or four stars, is relieved, within 24 hours, it should be in the law, within twenty four hours, Congress must be formally notified of that decision. Right? Because again, these are the people whose relief is going to have the biggest impact to our national security. Our legislative body should be told that. That is something that I think would be a no-brainer to include, in my opinion. Another one is make sure that the DoD has to show their work, right? There should be a full investigative report. You and I have both been executive officers, I think you, for a very large battalion. You’re aware that the military loves to investigate everything. Someone sneezes in the wrong direction and an investigation is triggered. My guess is there’s probably investigations when these reliefs happen, I would hope there is, at the very least. If there isn’t, that’s maybe another question that we need to also pull the thread on. But at the least, I think Congress should be in receipt of that investigative material. Whatever investigation was done at that command level for the relief of that general or admiral should be provided to them, along with a statement from either the service secretary or the secretary of defense as to the justification for the relief and an optional response from the relieved officer stating their perspective. And that, I believe, should be included in 601 as a requirement to be given to Congress following the relief of one of these officers within 30 days. That way, Congress has this information. Does it need to be public? Maybe not. You could argue if someone is relieved for maybe personal misconduct that they don’t want in the public eye, sure, then the Senate or Congress can handle that with discretion, but at the very least, those legislators need that information so that they can make sure that the Secretary of Defense, the service secretaries, are not engaging in overt politicization in the removal of these officers. Terry Gerton Virginia, I want to push on that a little bit because those proposals would give Congress oversight, but it still doesn’t address the issue of remediation or reinstatement that Congress might have that authority, if they were to receive all of that information and find that, in fact, in their opinion, that individual should continue on active duty. How do we get to a corrective measure that might help address this problem, or are you thinking that the additional oversight is its own deterrent? Virginia Burger I think the oversight would be a deterrent in its own right because, you know, my guess is the secretary of defense does not want to be hauled in front of the Senate Armed Services Committee to answer for these should the Senate read the report and realize that the decision was overtly political. But there are, you now, like you said, ways that we could do it. They could impeach the service secretary or the secretary of defense if they feel like they are making these political decisions. That’s available to them now. I believe articles of impeachment for Secretary Hegseth were put forward in the House I think last week in light of Venezuela, I think one of the representatives did. I don’t think they went anywhere, but it’s something that they could do any day of the week if they feel like they are inappropriately handling their position, right? So that’s something they could to enforce this. Unfortunately, a lot of the rules governing the appointment of officers are established through case precedence. It’s not necessarily reflective explicitly in Title 10 or in the Constitution. So, a lot of the limitations that say the president is the one who should be appointing officers comes from case law, specifically before the Supreme Court. So that gets a little bit murky when it comes into the reinstatement of officers. But certainly, in my opinion, the easiest way would be if we believe a secretary of defense is mishandling their position by relieving officers for political reasons. If you impeach them, potentially the next secretary could then reinstate them. And then it’s very clean because it’s the secretary and the president who are then reinstating them.The post Quiet firings with big consequences, why the lack of transparency when relieving military leaders matters first appeared on Federal News Network.

This article contains references to products from our advertisers and/or partners, and we may receive compensation when you click on links to products and services U.S. President Donald J. Trump officially signed the charter for his “Board of Peace” while at the Economic Forum in Davos, Switzerland Trump has frequently lamented not winning the Nobel Peace Prize and this could tie in with his Board of Peace and its goals Prediction markets are gauging who will win the Nobel Peace Prize with Trump in the running to win the award he so covets President Trump has been the center of attention at the Economic Forum in Davos, Switzerland. Much of that is due to his continuing demands for a U.S. takeover of Greenland. However, there are other issues on his, and by proxy, the world’s, agenda. In addition to his continued aggressive rhetoric on Greenland, he signed the charter for his newly formed “Board of Peace.” Initially created to oversee the rebuilding of war-torn Gaza, it has since expanded its objectives to addressing conflicts all over the world. Trump anointed himself as the chairman of the Board of Peace. However, there is no term limit in the charter. So Trump can stay as long as he likes, even after his presidency concludes. With final say authority over decisions, he makes all determinations as to how the board will operate. It’s something Emperor Palpatine might come up with. The European Union has largely steered clear of the Board of Peace with the underlying implication that its existence will undermine the United Nations. Notably, Israel, Egypt, Saudi Arabia, the United Arab Emirates, and Jordan have joined. South American ally Argentina has joined. So too has Turkey and Pakistan. President Donald J. Trump signs and ratifies the Board of Peace charter, officially making the Board of Peace an international organization. THE PEACE PRESIDENT ️ pic.twitter.com/J7v8d0S8m7 — The White House (@WhiteHouse) January 22, 2026 While the effectiveness of the new endeavor is in serious question, the mere attempt to create a new body with grandiose plans to solve worldwide conflict circles back to Trump’s oft-repeated complaint that he warrants the Nobel Peace Prize. He desperately desires the award and, if history is a guide, will not stop until he gets it. See Odds for Who Will Win the Nobel Peace Prize in 2026 { "eventTicker": "KXNOBELPEACE-26", "colorTheme": "light", "height": "300px", "width": "100%", "period": "all", "widgetSize": "large", "utmSource": "sportradar.com", "promoCode": "FEDNEWS" } Currently, the markets have Trump third to win the Nobel Peace Prize in 2026 behind Sudan’s Emergency Response Rooms (ERRs), and Doctors Without Borders (Médecins Sans Frontières). One of the candidates close to Trump in the prediction market is Ukrainian President Vlodymyr Zelenskyy. It might be worth it for Zelenskyy to win just to see Trump’s reaction. While Trump’s insistence he should win this historic honor sounds like another plea for recognition, he has legitimately tried to put a stop to various conflicts with Israel’s bombing campaign in Gaza theoretically in a cease fire and his repeated attempts to get Russian President Vladimir Putin to negotiate in good faith with Zelenskyy to resolve the Russia-Ukraine conflict. If the current leader, ERRs, wins the Nobel Peace Prize in 2026, the market will resolve to Yes. The outcome is verified by the Nobel Prize organization itself. By using the Kalshi promo code, new users get a $10 Sign Up Bonus once they have completed $100 in trades. Will Trump’s Pressure Campaign Net Him the Nobel Peace Prize? Already, Trump’s persistent insistence that he deserves the Nobel Peace Prize has secured him custody of a Nobel Peace Prize if not the Nobel Peace Prize. After the U.S. removed Venezuelan President Nicolás Maduro, the Venezuelan opposition leader María Corina Machado gave Trump the medal she received for winning the Nobel in 2025. Trump, as is his wont, beamed and held up the award like a photo op from a pro wrestling convention holding up Ric Flair’s “ten pounds of gold” classic NWA World Championship. That it was someone else’s accomplishment seems to matter little to Trump. This is not unusual among world leaders with designs on praise, respect, and receiving gifts they didn’t earn. Putin famously took one of New England Patriots owner Robert Kraft’s Super Bowl rings, in what Kraft thought was a closer look at it, only to see Putin pocket the ring and walk away with it. A stunned Kraft wanted the ring back, but chose to avoid an international incident by grudgingly saying that he gave the ring to Putin as a gift when he did not give the ring to Putin as a gift. Putin was not in the slot catching passes from Tom Brady. Trump was not fighting for the freedom of his country and Machado was. Prediction markets have Trump relatively high in the market, but that could be due more to his griping and the history of him getting his way through bullying than anything else. As for the award itself, it has been given to a wide range of people whose accomplishments vary greatly. President Barack Obama won it in 2009 with comparable bona fides to Trump. It has generally gone to people or entities who were at the center of peace agreements, had make courageous contributions to a better world through human rights and humanitarian programs, battled for equality, or brought attention to looming crises. By that metric, Trump certainly has a case to win the award. However, the Norwegian Nobel Committee votes on the award. Trump’s bellicosity regarding Greenland, his campaign to remove Maduro, and threats against Iran are likely to work against him. Doctors Without Borders won the award in 1999. With that and the odds heavily in favor or Sudan’s Emergency Response Rooms being precisely the type of program voters want to promote, it is the likeliest winner despite Trump’s demands.The post Tracking Odds for Nobel Peace Prize After Trump Signs Board of Peace Charter first appeared on Federal News Network.

WASHINGTON (AP) — The House will look to pass this year’s final tranche of spending bills on Thursday, an effort that is being complicated by Democratic lawmakers’ concerns that the measure funding the Department of Homeland Security inadequately addresses President Donald Trump’s mass deportation efforts. The House has already passed eight of the 12 annual appropriations bills that fund federal agencies and programs. If the final four bills pass on Thursday, action would then move to the Senate, with final passage needed before a Jan. 30 deadline to avoid a partial government shutdown. House Democratic leaders Rep. Hakeem Jeffries of New York, Rep. Katherine Clark of Massachusetts and Rep. Pete Aguilar of California announced in a closed-door meeting that they would oppose the Homeland Security bill. Their members are demanding a forceful stand in response to the Republican president’s immigration crackdown, most recently centered in the Minneapolis area, where more than 2,000 officers are stationed and where a U.S. Immigration and Customs Enforcement officer fatally shot Renee Good, a mother of three. “There’s a very big concern about ICE being out of control,” said Rep. Rosa DeLauro, the ranking Democratic lawmaker on the House Appropriations Committee. But Democrats have few good options to express their opposition. DeLauro said that passing a continuing resolution to fund Homeland Security at current levels for the remainder of the budget year would cede spending decisions to Trump. There’s also little appetite for another shutdown, even if it would affect only a portion of the federal government. “There is much more we must do to rein in DHS, which I will continue to press for. But the hard truth is that Democrats must win political power to enact the kind of accountability we need,” said Sen. Patty Murray, the top Democrat on the Senate Appropriations Committee. This year’s Homeland Security bill holds spending for ICE roughly flat from the prior year. It also restricts the ability of Homeland Security Secretary Kristi Noem to unilaterally shift funding and allocate federal dollars as she sees fit. “It’s not everything we wanted. We wanted more oversight. But, look, Democrats don’t control the House. We don’t control the Senate or the White House. But we were able to add some oversight over Homeland,” said Rep. Henry Cuellar, D-Texas, a member of the Appropriations panel. He said he intends to vote for the bill. Democrats voice their concerns privately and publicly But most Democrats who emerged from the closed-door caucus meeting on Wednesday had a different view. “I never support lawless operations,” said Rep. Marcy Kaptur, D-Ohio. “If it’s the status quo, I’m a no,” said Rep. Brad Schneider, D-Ill. DeLauro, along with Cuellar, made a presentation about the bill to House Democrats during their closed-door meeting. Rep. Pramila Jayapal, D-Wash., said she told her colleagues why she thought it was a mistake. Others who spoke up agreed, she said. “I think this is just a really horrific time, and people understand what’s at stake,” Jayapal said. “We can’t treat this like it’s anything else. Our eyes are not lying to us.” She explained that extra money for body cameras and other changes was insufficient. The bill provides $20 million that must be used for ICE and Customs and Border Protection officers when conducting enforcement actions. She said she told her colleagues, “Nobody should try to sell this as an improvement. It’s not an improvement.” But some Democrats in key swing districts will likely be seeing campaign ads targeting them if they vote against the Homeland Security funding bill. The campaign arm for House Republicans issued press releases on Wednesday targeting some 20 Democrats, saying they “will do anything to appease the ‘defund ICE’ crowd even if it means risking national security.” Meanwhile, liberal advocacy groups are also applying pressure, saying Congress must take clear, immediate action to rein in the department. “The DHS bill that was released clearly falls far short, and should be roundly rejected. Every Democrat should be voting against this funding bill, and Democratic leadership in both chambers should be actively whipping their caucus in opposition,” said Andrew O’Neill, national advocacy director for the group Indivisible. Republicans are confident the bill will pass Speaker Mike Johnson, R-La., was optimistic that the funding bills would pass, including the Homeland Security measure. He can afford a few defections given the GOP’s razor-thin majority. “All we do is win,” Johnson said. The overall funding package before the House on Thursday contains roughly $1.2 trillion in spending. About two-thirds of that will go to the Defense Department. Other departments that are funded through the package include Health and Human Services, Education, Transportation and Housing and Urban Development. Most federal spending is unaffected by the yearly battles in Congress, most notably Social Security and Medicare.The post House moves to finish government funding as Democrats decry Homeland Security bill first appeared on Federal News Network.

Interview transcript Terry Gerton You’ve published some interesting analysis lately. You looked at stock closing prices from January 21st to November 25th for the 100 largest publicly traded federal vendors. Why? What were you looking for? Paul Murphy Well, what we wanted to do was get an indication of whether all the procurement changes and budget turmoil that occurred during President Trump’s first year affected the attractiveness of the large publicly traded vendors as investments. So what I did was I used Bloomberg’s contracts database, which I’m in every day, I use it to rank all the vendors by their fiscal 2024 obligations, and then I merged this list with Bloomberg’s terminal data. To assign company tickers and pull the historic trading price data to compare closing stock prices in January and December. Then we assign each company to their GICS market. GICs is an acronym for Global Industry Classification Standard. It’s not like the government to define markets like category management or product service code. Wall Street uses its own market definitions. And that’s how we analyze the price differences. We included stocks traded domestically and overseas, and we used the terminal data to convert prices into US dollars. It’s been a crazy year, as you know, for companies. And the last year, we’ve seen spending pauses, agency closures, contract terminations, clawbacks and consolidations, big markets like consulting targeted for reductions, various efficiency initiatives, particularly at GSA and DOD. There’s been an year-long CR and an extended shutdown, even tariffs. So we wondered, you know what’s the impact of all these events on investors? Terry Gerton Pretty hard to do market planning and business modeling with that kind of turmoil. What’s the big headline? What were the big trends that you found as you looked at the data? Paul Murphy Well, among the top companies, as you read, the average stock price went up, but let me back up a second and say, even though we have all this data, it’s important to keep in mind that federal contracts are just one indicator of a company’s financial health and its desirability as an investment. Many factors, as you know, contribute to stock price fluctuations, such as state and local contracts, commercial sales, earnings, profitability, debt load, interest rates. So the trend we wrote about broadly aligns with the Trump administration’s prioritization of big defense contracts and cuts to certain civilian agencies. And so what we’re seeing from our year end data, which we have in hand now, and we’re about to come out with a new year end analysis, is despite all of this financial turmoil, fiscal 2025 will go down as a strong year for contract spending. Certain parts of professional and IT services have taken hits, but there’s been steady spending, let me say, across a broad range of sectors, including defense aircraft, shipbuilding, missiles, satellites and surveillance, as well as strong spending by the VA, DOE, NASA, and DHS. So, we don’t want to go into too much detail to give away what we’re about to come out with, but, yeah, it’s been a strong spending year, and it’s not surprising to me that stock prices reflect that. Terry Gerton It looked like about two-thirds of the vendors that you analyzed averaged returns of 23%, which is significantly higher than the broader market. When you look at the details, kind of, who came out on top as the big winners? Paul Murphy Well, I think the companies that did the best, kind of looking at it from a broad lens, the companies that did the best were the ones that benefited from these numerous executive orders and directives that we’ve seen, as well as through actual contract spending. I mean, there is multi-year spending that sustains companies year to year without having to endure the ups and downs of the annual appropriations process. But the Trump administration has sent numerous signals to industry, which companies might be attractive as investment targets. For instance, January’s executive order to remove barriers to the deployment of AI, a June executive order to relax cyber mandates, the July triple directive AI action plan to remove regulatory barriers all send signals that companies like Palantir, Oracle, and Microsoft are in the mix for having a strong year. The April executive order about restoring America’s maritime dominance. And the recently successful review of the AUKUS security agreement with Australia and the UK sends signals that companies like General Dynamics, Huntington Ingalls, and even Fincantieri, although that’s an interesting company, are, you know, in the mix again for strong spending. But again, it’s important to keep in mind that contract revenue is just one indicator of a company’s investment attractiveness. And a government spending fundamentally is a political decision. So, you know, there’s risks, even as companies are doing well, there’re risks there that, you know, the seats in Congress or the presidency can change, policy and spending priorities can change as a result. So, these equity returns can change quickly, but this has been the snapshot since from January to December. Terry Gerton I’m speaking with Paul Murphy. He’s a senior contracts analyst with Bloomberg Government. Paul, you mentioned Fincantieri. Talk to us a little bit more about the shipbuilding sector broadly and what’s going on particularly with that company. Paul Murphy I think what’s happening broadly in the shipbuilding sector is that there’s a kind of a fundamental shift going on in national security strategy from one focused on land-based war fighting in Europe and the Middle East to a more naval focus covering the broad expanse of the Pacific Ocean in order to counter especially China and the Far East. And so you see the U.S. building relationships with countries like Australia and strengthening alliances with Japan and the Philippines. And there’s been big buildouts of base infrastructure at Guam. So companies in the shipbuilding sector, in the sectors that support shipbuilding, you know satellite surveillance, C2, uncrewed drones, there’s a big shift going on in the Navy’s dependence on heavy ships, you know, which can be disabled through the swarms of drones. I mean, there’s a real fundamental shift going on in their thinking. And, so I think companies in these sectors are — you’re seeing spending going there. Terry Gerton You talked a little bit about the upside, companies that did really, really well. What’s your takeaway from folks who may be underperformed? Paul Murphy Well, it’s interesting, even in periods of spending growth, and even when you have big companies, you can have, you know, underperforming contracts. I think it helps to be able to dig deep into, you know, company financials and, you know, descriptions of contract performance. And one company, obviously, that stands out as Lockheed. Their stock was down 10.5 percent from January to December. After flagging sales and lower profits mid-year, they were working on the big upgrade, what’s called the F-35, their big fighter contract, the big F- 35 Block 4 upgrade. And they were years behind schedule. They were experiencing difficulties upgrading and integrating the software. And so a pause was initiated in April and Lockheed attributed the decline in stock in part to this pause in F-35 spending. And they worked out a phased modernization approach with DoD and F-35 spending has picked back up as of December. So we may see a reversal of this trend. But even in periods of growth, you can see big companies struggle. And again, you know, with Fincantieri, similar kind of a story, except in shipbuilding. They had four of the six planned Constellation class frigates canceled after they experienced up to three years of delay. And they were three years behind on the second frigate in this six-boat contract. And so the Navy announced it was pulling the plug on the remaining four boats. And so Fincantieri’s stock late in the year plunged in double digits. And interestingly, they blamed their delays and problems in part in the inability to hire enough trained shipyard workers. So I think that’s actually an area, I think, of potential growth, training the workforce in advanced technology, both in shipbuilding but also in other technologies as well. Terry Gerton Well, your analysis of 2025 is pretty deep as you turn your eyes toward 2026. What will you be watching for? Paul Murphy Well, of course, we’re going to be watching defense and national security. I think shipbuilding, shipyard infrastructure, related training services, command and control modernization, drones, uncoupled vehicles, satellite communications, you know, they’re trying to build an integrated defense capability that will span  particularly the Pacific — but we’re not going to end relations with Europe, but it’s, it’s going to change fundamentally and I think they’re going try and rely on a lot more advanced technology to interconnect the services and tie more closely to the allies. President Trump just announced he was seeking a big increase in the fiscal 2027 budget, so we’ll see if he’s able to implement that if Congress goes along. Enterprise IT, and cybersecurity, still very resilient. Big emphasis on AI, zero trust, and secure cloud. Expect continued consolidation, I think, in the software licensing under OneGov, and GSA has this big OneGove initiative, and they’re one by one, they’re negotiating enterprise agreements with the big IT companies. And that will, you know, spread their software across the government. And civilian agencies, I think watch for Veterans Health Services, continued strong spending with Veterans Health Service. The VA has reinitiated the electronic health records deployment, Oracle’s big software contract. Space commercialization, we’re seeing in our top 20 every couple of weeks, you know, new elements of NASA’s commercialization of near space and deep space. Moving ahead, there’s, you know, energy plants, mobile energy plants going to be deployed on the moon. So that’s going to involve not only space companies, but energy companies and so there’s a lot of prototyping going on. There’s the national big national airspace modernization initiative by FAA. Right now they’re involved in a huge procurement to replace 600 radars across the country to better protect towers and airports. Border security, obviously a big area of spending. There’s a lot going on, not just in defense. I think it’s important to emphasize that the civilian sector continues to show strong spend signals.The post Market data shows surprising winners and losers among top federal contractors after a year of turmoil first appeared on Federal News Network.

Interview transcript: Terry Gerton A couple of months ago, we covered your first report in this disaster assistance high-risk series where you looked at the federal response workforce. You’re back with report number two, looking at state and local response capabilities. Talk to us about the headlines. Chris Currie The headline for this report is that the capabilities of state and local governments across the country vary drastically for a disaster or other type of event. You know, what we did is we actually look at data that the states prepare and provide to FEMA as part of their justification for federal preparedness grants. It’s meant to be a very, very honest self-assessment of capabilities. And for that reason, we actually don’t provide states individually, we sort of roll it up and wrap it up anonymously because some of that information, as you imagine, could be sensitive. We looked at states that have been involved in major disasters over the last two to three years, and some of these states are very experienced, large states, and even they vary in terms of their capabilities. There’s actually 32 capabilities that FEMA sets in the National Preparedness System that you want to achieve to be prepared to respond for a disaster or a large event. And states vary. Some of the areas, they were less than 10% prepared — met less than 10% of those capabilities — and others, they were much more. So the reason that’s important right now is to understand that if you were to change the support that FEMA and the federal government provide to states quickly, then they’re going to have capability gaps that are going to have to get filled. Terry Gerton Let’s talk about some of the support that FEMA does provide. One of the ways that they support the states is through preparedness grants, and those help build local capacity. What did you find as you dug into the preparedness grants? Chris Currie Those preparedness grants started after 9/11, and since 9/11, there’s been over $60 billion provided to states. It’s the main way that the federal government transfers funds to state and local governments to get them ready to handle something bad that could happen, not just a natural disaster, but it could be a terrorist attack. And those grants have built capabilities tremendously over the years. But those capabilities change over time, and we identify through real-world events and exercises the gaps that still need to be addressed. So I’ll give you a great example. After Hurricane Helene and after other disasters, housing for disaster survivors is always a perennial challenge. Housing is a capability area that is assessed and we want to build up through these preparedness grants. It’s an area that states, even very experienced disaster states, still fall short of in terms of their capabilities. And the federal government kind of comes in after a disaster and provides a lot of that support because states don’t. So if the federal governments not going to provide it, then someone else is going to have to provide it. And that’s going to be someone at the state or local level. Terry Gerton Talk to me about the flexibility and the allocation framework for these grants. Is it meeting requirements? Does it seem to be focused on the places that have the greatest need? Chris Currie There’s a couple different ways they’re given out. There’s a portion of the grants that are supposed to go towards certain national priorities, and FEMA sets those targets. So think about things like election security or other national priorities. But then a large part of the grant, they’re discretionary, and the states can use them and they’re supposed to use them in the areas where they assess they have gaps. And that’s the data I was talking about earlier that we provided. For example, certain states may have gaps in their ability to handle a mass casualty situation or may struggle to house disaster survivors because they don’t have a lot of housing stock or rental. So those are things they’re supposed to identify and then target those grants towards those specific areas, which makes sense. You want to close your gaps so you’re ready to go when something happens. Terry Gerton FEMA also provides a great deal of training and technical assistance. How effective has that been in helping states be ready? Chris Currie This is, I think, one of the biggest success stories since Hurricane Katrina. If you remember Hurricane Katrina, the issue was the role of various levels of government was not clear, and thus, nobody stepped up and was proactive in responding to that event. And people lost their lives. Since that time, the National Preparedness System and FEMA leading that has been extremely effective through exercises, through training, through just regional relationships in taking care of a lot of those problems. So today we are way more proactive and responsive to disasters than we were 20 years ago in Hurricane Katrina. So that’s a huge success story. Having said that, a disaster is a disaster. There’s always going to be things that happen that you don’t expect. And there’s areas where states still have major gaps and require resources and people to address those. And the federal government comes in fills a lot of those gaps. Here’s a great example. Hurricane Helene happened and devastated a very remote part of our country in places like rural Tennessee and North Carolina and Virginia. States and localities don’t have the search and rescue assets for such a large swath of that kind of terrain. Federal government provided a lot of that. They provided a lot of the air support, the land support, the temporary bridges — Army Corps of Engineers. You know, the federal government really kicks in when something’s too big for a state or locality to handle. Terry Gerton I’m speaking with Chris Currie. He’s director, Homeland Security and Justice at GAO. So Chris, all of this begs the question. This administration has been very clear that it wants states and localities to pick up more of the disaster response mission and that it wants a much smaller FEMA. Given what you found in your first study about the federal response workforce and the impacts of downsizing there, and now the variability in state and local readiness, what are the implications for national disaster response? Chris Currie I want to make one thing really clear, because all I know is what we know now and the data that we’ve looked at. And I want it to be clear that nothing has changed in terms of FEMA’s responsibilities today. There’s been a lot of talk about it. There’s the president’s council that studied it. But there has been no change so far. So FEMA is still responsible for what it was responsible for two years ago. They have lost some staff. We looked at that in our first report, as you mentioned. They have lost about 1,000 staff, and maybe a little bit more than that, at this point, but they haven’t been cut drastically or cut in half as has been discussed. So they still have the same responsibilities and they’re still performing the same functions on disasters throughout the country, even though last year we didn’t have a huge land-falling hurricane. So what’s important about that is that everybody’s waiting to hear what the next steps are going to be and what’s going to happen to FEMA. One of the things we wanted to do in this report is we wanted to provide a comprehensive picture of preparedness to show what’s going to be necessary if that FEMA support is pulled back or FEMA is made smaller. And the bottom line is that states and localities are going to have to do more. However, it’s going to be critical that they have the time to prepare for that. For example, a lot of the assistance that’s provided to individual survivors, like cash payments and housing, that comes from the federal government. It does not come from the state or local government. So if FEMA is not going to be providing that, the state of the locality is going to have to fill that need. And that requires a lot of money and a lot preparation and planning that you can’t just turn on in a heartbeat. You don’t want to start figuring out programs to help people after a disaster happens. Terry Gerton You bring up a good point on that time to prepare. As you did the survey, you talked to lots of state and local response officials. What did they tell you, beyond time to prepare, that they were going to need to be effective? Chris Currie Very simple: Just tell us what we need to do. Tell us what were going to expect from you, the federal government. Nobody knows right now. The FEMA Council has not finished its work. There has been reform legislation introduced in the House and in the Senate, but nothing has passed yet. So the key message is, tell us what the roles and responsibilities are going to be so we know what to prepare for, so we don’t get caught flat-footed in the case of something really bad happening. One of my fears is that last year, like I said, we didn’t have a large land-falling hurricane. It was the first year in a long time we did not. We did not have a catastrophic disaster, other than Los Angeles fires early in the year. So my fear is that folks are going to look at last year and say, hey, things have gone pretty well. We don’t need to be thinking about it. And that is an absolute mistake. Because we’ve seen in years like 2017, 2018, 2024 — my fear is we’re going to have another situation this year or next with multiple concurrent disasters, and we’re just not going to the resources to deal with them. Terry Gerton So what will you be watching for in the next few months to see if Congress and the federal government and the states have taken your recommendations on board? Chris Currie Well, when the FEMA Council report comes out, I would like to see, in whatever the execution is for FEMA reform or the changes in how the system works now, an understanding of how this needs to be rolled out so states and localities can prepare and have as clear roles and responsibilities as possible. We’d also like to see them address many of the problems that we’ve pointed out. And to be clear, we’ve pointed out a number of issues with FEMA, particularly in the frustrating recovery phase. I want to see that they’re making sure that we don’t break what’s not broken and we fix the issues that are broken. And there are a number those things.The post Readiness gaps may leave communities vulnerable when the next disaster strikes first appeared on Federal News Network.

Agencies are getting more information on how to implement the recently finalized “rule of many.” The federal hiring strategy, several years in the making, aims to create broader pools of qualified job candidates while adding flexibility for federal hiring managers. A series of guidance documents the Office of Personnel Management published earlier this month outlined the steps agencies should take to begin using the “rule of many” when hiring. OPM’s new resources also detail how the “rule of many” intersects with other aspects of the federal hiring process, such as shared certificates, skills-based assessments and veterans’ preference. Under the “rule of many,” federal hiring managers score job candidates on their relevant job skills, then rank the candidates based on those scores. From there, hiring managers can choose one of several options — a cut-off number, score or percentage — to pare down the applicant pool and reach a list of qualified finalists to select from. OPM’s new guidance comes after the agency finalized regulations last September to officially launch the “rule of many.” The concept was initially included in the fiscal 2019 National Defense Authorization Act, and OPM during the Biden administration proposed regulations on the “rule of many” in 2023. “Coupled with the use of functional skills assessments … the [rule of many] gives hiring managers the much-needed flexibility to distinguish candidates based on their demonstrated functional merit-based qualifications for the role in question,” OPM Director Scott Kupor wrote in a Sept. 8 blog post, the same day OPM issued the final rule. The “rule of many” aligns with some aspects of the Trump administration’s merit hiring plan, OPM said, such as using technical assessments and shared certificates. OPM said the “rule of many” in particular aligns with skills-based hiring, since it can expand candidate pools with applicants who have more fitting skillsets. The “rule of many” also encourages agencies to use more “comprehensive” assessments, like structured interviews or job simulations, OPM said in its new guidance. And it can “support improved hiring outcomes, particularly for nontraditional candidates, veterans and those with varied career paths,” OPM added. But for many agencies, the actual adoption of the “rule of many” may be put on the back burner, according to Jenny Mattingley, vice president of government affairs at the Partnership for Public Service. She said without enough funding or staffing, agencies are not likely to overhaul their current and already well-established hiring practices in the short term. “The ‘rule of many’ is a good tool, but until those ingredients are all put together, I don’t think that you’ll see it rolled out immediately,” Mattingley said in an interview. OPM’s finalization of the “rule of many” last September officially ended agencies’ ability to use the past “rule of three” hiring practice. The older candidate assessment technique already had been largely phased out, but previously restricted agencies to only selecting from the top three ranked applicants. The “rule of many” also differs from most agencies’ current candidate-vetting technique, called “category rating,” which lets federal hiring managers assort job applicants into categories such as “qualified,” “better qualified,” and “best qualified,” then select a candidate for the job from the highest category. When “category rating” was introduced years ago, it was an improvement over the “rule of three,” but Kupor said “category rating” created other challenges — namely, that all candidates within a single category would be considered equally qualified. “In other words, the categories are minimum hurdles for consideration, but they don’t distinguish between applicants within a category,” Kupor said in September. “For example, if a score of 80% is the minimum hurdle to qualify into the ‘best qualified’ category, an applicant who scores 100% is treated no differently than one who scores 80%.” OPM said in its new guidance that the “rule of many” uses the strengths of “category rating,” while adding flexibility to the process. It also allows for “finer distinctions” between candidates and broadens the range of applicants available for selection. In most cases, OPM said the “rule of many” is preferable over “category rating.” But there are also best use cases for each hiring mechanism. Higher-level positions with more robust assessments will usually require the finer distinctions between candidates that the “rule of many” provides. But for more entry-level positions that don’t require highly technical qualifications, the “category rating” system may be just as effective. Adopting the “rule of many” will also require a significant cultural shift at agencies, which the Partnership’s Mattingley said can be difficult. Existing strategies like skills-based hiring have not yet been fully adopted at agencies, which may indicate that the uptake of the “rule of many” will also be slow, she explained. “Until agencies crack the nut on really leveraging skills-based hiring, I don’t think it’s going to be this big change in the immediate future,” Mattingley said. “You need skills-based hiring in order to leverage the rule of many, because you have to be able to make much finer technical assessments on the skills between candidates if you’re going to rank them in the way rule of many does.” OPM’s “rule of many” guidance comes a few months after President Donald Trump officially lifted the governmentwide hiring freeze. But the White House has emphasized that when hiring, agencies should still focus on maintaining their now-smaller staffing sizes. “Hiring is still a big question this year,” Mattingley said. “It does look like the administration is going to encourage agencies to hire, except at the same time, agencies are still facing budget uncertainty. They’re facing downward pressure on headcount.”The post OPM details expectations for the ‘rule of many’ in federal hiring first appeared on Federal News Network.

The Cybersecurity and Infrastructure Security Agency’s acting director testified that CISA is “getting back on mission,” but he provided few specifics after the agency lost nearly a third of its staff over the past year. Acting Director Madhu Gottumukkala testified in front of the House Homeland Security Committee on Wednesday. Asked by Chairman Andrew Garbarino (R-N.Y.) about reports of plans for a reorganization at CISA, Gottumukkala said there are no plans to reorganize the cyber agency. “We do have a lot of changes in the last year, but we have not planned any organizational changes,” Gottumukkala said. “But we are continuing to look at how we rescope our existing work that we have so that we can get back on our mission of protecting the critical infrastructure. And if there is any organizational changes, I will assure that we will communicate with you.” CISA has gone from roughly 3,400 staff at the start of last year to 2,400 employees at the end of December. Most of CISA’s workforce departed as part of the Trump administration’s workforce reduction programs, with many leaving government service earlier than planned due to uncertainty at the agency under the Trump administration. Gottumukkala is leading CISA as the Senate has yet to approve Sean Plankey to serve as director. During Wednesday’s hearing, Gottumukkala declined to provide details on recent reports that he failed a polygraph exam needed to access a sensitive cyber program and that he had worked to oust CISA’s chief information officer. Gottumukkala also said multiple times that CISA was “getting back on mission.” But he said little about what the agency was doing differently with markedly less staff. “The way we are supporting back on mission is to make sure that we are protecting our critical infrastructure from physical and cyber threats, and our divisions are properly equipped, and we are making sure that we are aligning our existing resources,” he said. Asked by Ranking Member Bennie Thompson (D-Miss.) about potential vacancies at CISA after the mass wave of departures, Gottumukkala said, “we have the required staff that is supporting the mission we do.” Thompson said that was contrary to a November memo CISA shared with the committee. Lawmakers are advancing a homeland security spending bill that would provide CISA with funding to fill some “critical” positions. It would also stipulate that CISA “not reduce staffing in such a way that it lacks sufficient staff to effectively carry out its statutory missions.” Gottumukkala was also asked by Rep. Tony Gonzales (R-Texas) how many cyber intrusions CISA expects from foreign adversaries as part of the 2026 midterm elections. “We look at it as incident by incident, and we look at what the risks are. I don’t have a specific number in mind,” Gottumukkala said. “Well, we should have that number,” Gonzales shot back. “It should first start by how many intrusions that we had last midterm and the midterm before that. I don’t want to wait. I don’t want us waiting until after the fact to be able to go, ‘Yeah, we got it wrong, and it turns out our adversaries influenced our election to that point.’” CISA’s budget request for fiscal 2026 would eliminate its election security program. But the appropriations agreement released this week would continue funding CISA’s election security work. Rep. James Walkinshaw (D-Va.) pressed Gottumukkala on whether CISA had analyzed if it could meet its mission with current staffing levels. “The work that we do is mission focused, which means capability is measured by outcomes, not headcount,” Gottumukkala said. Walkinshaw also asked about threats to state and local governments after CISA pulled funding for the Multi-State Information Sharing and Analysis Center in September. But Gottumukkala didn’t address the question head on, frustrating the Virginia lawmaker. “You’ve managed to answer none of my questions. You haven’t answered a single question. But thank you for coming,” Walkinshaw said.The post Lawmakers press acting CISA director on workforce reductions first appeared on Federal News Network.

Interview transcript: Terry Gerton Deltek has a new report out that’s looking ahead for federal contractor intelligence for 2026. But before we look forward, I want to look back a little bit. When you think of everything that happened in the contracting space in 2025, what stands out for you as the biggest trends? Kevin Plexico Well, chaos reigns supreme this past year, for sure. And what I find just super interesting is that some companies happen to find themselves in really good places and align to the goals of the new administration and did really well. And others that happened to be in sort of the wrong place at the wrong time had profound impact. I think 2025 was a year where companies had to really take stock of the organizations that they’re selling to and their offerings to make sure they’re aligned to the goals of the administration and the mission that the government agencies have been asked to take on by that administration. That’s probably, to me, the biggest change. There’s been so much movement of money, in some cases money coming out of certain agencies. We’ve all heard about Agency for International Development and Department of State and Education. But then you look at organizations like the VA, DHS, and DoD that have continued to do really well. So, a lot of haves and have-nots this year, and I think for companies it’s just trying to figure out, based on this new administration, where should we really be aiming to be able to capitalize on it going forward? Terry Gerton Every administration comes in with different priorities, but it seems like this one was able to make the pendulum swing really fast, and that may have caught companies off guard. What are some of the hard conversations that had to happen inside those boardrooms? Kevin Plexico Well, early on, it was all about DOGE and the DOGE organization really putting some unprecedented pressure on some vendors. I mean, some of the letters I saw sent to professional services companies and some of demands that were made of value-added resellers were not anything I’ve seen a federal agency communicate to a vendor that was otherwise performing to the jobs that they were asked to do. And I think it’s, in some respects, a bit surreal that the administration was asking companies to identify wasteful spending. It’s just an awkward situation to be in if you have a customer, and the customer already hired you to do the work, and you’re now being asked to identify where there’s wasteful spending in that and sort of serve up cuts. So I think that was the early part of the year. We did see that start to sunset a bit and fade as we got into the summertime. But then all of a sudden, all eyes were turning to appropriations and funding for 2026. And we all know where that’s landed, which it hasn’t. We’re still waiting for full-year 2026, with just a couple agency exceptions. We bought some time ending the shutdown, which was, as you know, the longest on record. But there’s nothing to say that we might not have another shutdown here at the end of January. I still think where there’s that bit of uncertainty, the one silver lining this past year for the contracting community is the One Big Beautiful Bill, just because it had so much opportunity in it for contractors that really cut across the gamut of aerospace, defense, professional services, training, architecture, engineering, construction. There was literally something in there for everybody, but it does require really an honest assessment by a company to figure out, okay, how do we get after this? Because that might not be in the agencies that they’re used to doing business in. Terry Gerton Right. And a lot of those funds haven’t been dispersed yet. So they’re still maybe in the RFP or RFQ stage. This unpredictability of funding flows is something you don’t normally see in government contracts. Everything from stop-work orders and termination notices earlier in the year to unpaid bills at the end of the fiscal year and the CR. Has that caused the GovCon community to sort of re-evaluate and re-adjust their planning for predictable cash flows? Kevin Plexico I think this year, while it was a record-setting shutdown, is not an unusual year in that we don’t have a line of sight on what line appropriations are going to get done. I think industry has become used to that scenario. And while shutdowns are certainly not good for anyone, they’re usually relatively short-lived because of what happens. The pain gets so severe that finally Congress is like, we’re inflicting a lot of pain on rank-and-file Americans, we need to resolve this. I’m hoping that cooler heads will prevail the next time that this comes around. What I think is perhaps different this time versus what we’ve seen, say, the last decade or so is we’ve always had a bipartisan budget agreement or resolution that sort of set the top line that appropriators were negotiating towards. I think we’ve had that literally for about a decade, since back during the Budget Control Act, and we don’t have that for ’26. So there was no goalpost that Congress was working towards on a bipartisan basis that that they agreed on previously. And I think that’s the same for 2027. That’s what’s unique about this, is there’s nothing that says, here’s the goal that we’re working towards, and then how do we allocate it by the different appropriations bills that are negotiated? Terry Gerton Kevin Plexico is senior vice president of information solutions at Deltek. Kevin, let’s turn our attention to the windshield and not the rear-view mirror now. With all of that disruption in 2025, what is at the top of Deltek’s intelligence report for 2026? Kevin Plexico Well, I think 2026 is going to be a better year than 2025, thanks primarily to the One Big Beautiful Bill. As you pointed out, it’s not a single-year appropriation. The funding in that legislation lasts through, I think it has to be committed in contracts essentially by the end of 2029; then expenditures can take longer. So that gives us a bit of time and it certainly doesn’t mean that it has get rushed out the door like we’ve seen — some emergency supplemental appropriations have had that shape. And so that provides some longer-term opportunity and ability for companies to reposition, to get after some of that money. The biggest challenge on the base-level appropriations, we’ve got this ambitious goal of growing defense spending, paid for by significant cuts in civilian spending, and we saw that under the prior Trump administration. But they were never able to get appropriators to buy off on that. And I think that’s the dynamic that we have in the Senate, where it has to get 60 votes to get past the filibuster. It does really need a bipartisan-level agreement to get appropriations done. That’s particularly challenging in these contentious times, but I do think it helps prevent those draconian cuts that could be put in place for some civilian agencies that we’ve seen this and the prior Trump administration ask for that usually have not been enacted. Terry Gerton One of the sectors that’s really struggled this past year is small businesses. What do you see in the future for them? Kevin Plexico This is an interesting one, because on the one hand, the government has done a really good job of spending money with small business. But if you look at the level of participation in terms of prime contracts, it’s going down. The number of small businesses I think has declined by close to 30% over the last several years in terms of prime contracting. And I think that’s a problem that the administration really has to take a look at. Unfortunately, some of the things that we’re seeing them do around relying on best-in-class contracts, don’t create a new contract if there’s already an existing contract that you can place a task or delivery order under — those really favor the companies that already have those prime contracts. I think it makes it challenging for small businesses to enter the market. On the research and development side, we’re still waiting for Congress to extend the SBIR and STTR programs, which are Small Business Innovative Research-related work. So it’s a challenging market for all companies, but in particular for small businesses. They’re dependent on cash flow; shutdowns particularly impact small businesses. The rule changes that are being made in the FAR overhaul are pretty profound in terms of their impact on small business. I think it’s unpredictable to understand how much is it going to affect a service-disabled veteran-owned business versus an 8(a) company versus a women-owned business. It seems like they’re gravitating more towards a preference of just small business set-asides and trying to get away from sole-source awards. And that’s a big change for the small business community for sure. So I think getting smart about the new rules and how they’re going to be applied agency by agency is going to be super important for small businesses. Terry Gerton Well, speaking about the FAR overhaul, let’s talk about GSA for a minute. They’ve really worked over this last year to centralize a lot of buying strategies, centralize lot of contracts. They’ve updated the OASIS contract. What are you seeing and what should contractors be expecting to hear from GSA? Kevin Plexico Well, I think the thing that’s created a lot of confusion is the way they’re rolling it out. Usually when FAR changes are rolled out, they go through a rulemaking process, they issue drafts, take comments and then go to a final rule or interim rule. What they’ve done in this particular situation is instead of approaching it in that traditional way, they’ve rolled out the revised FAR and basically said that agencies can adopt it if they get a class deviation. So, you have to literally go to the FAR overhaul website and see which agencies have adopted these FAR clauses. And right now you basically have different agencies using different versions of the FAR. The DoD is still using the traditional FAR and DFAR. They don’t have any class deviations that I’m aware of, but many civilian agencies do. So it just puts a lot of onus on the contracting community to really be mindful of what regulations are being followed by the agency you’re selling to, because it’s not the same as everybody’s following the FAR anymore. Which version of the FAR? Is it this class deviation or is it the traditional FAR? And that’s just an example of the chaos that we talked about. Terry Gerton If you could give contractors one piece of advice as they’re trying to put their 2026 business strategies together, what would it be? Kevin Plexico I go to what we call the four Cs. Customers: Who are the right customers that you’re going to be focused on selling to? Contracts: What vehicles are they going to be using to get access to those providers? Compliance: What do you need to be able to comply with, and I know the CMMC is a big one, but even with all the FAR overhaul changes, I haven’t seen what I would call a deregulation of compliance requirements. There’s pressure on agencies to use more fixed-price; that would potentially take away some of the accounting requirements that come along with a cost-plus contract. I think I might have missed a C in that, but you get the gist of it, right? It’s really just being more strategic and being more thoughtful about how you’re going to go to market. You can’t just afford to live off the agencies you’ve been doing business with, because they might be starving for money going forward. So you really have to take an honest assessment of where you are today, where you want to play, and how are you going to position yourself to get there? Because it’s not a quick pivot by any stretch.The post New year, new opportunities? Here’s where contractors should focus in 2026 first appeared on Federal News Network.

Interview transcript: Terry Gerton Last time we spoke, we were talking about the potential of a patchwork of state laws that might stifle AI innovation. Now we don’t have a federal law, but we have an executive order from the president that creates a federal preemption framework and a task force that will specifically challenge those state laws. Last time we talked, we were worried about constitutionality. What do you think about this new construct? Kevin Frazier Yeah, so this construct really tries to set forth a path for Congress to step up. I think everyone across the board at the state level in the White House is asking Congress to take action. And this, in many ways, is meant to smooth that path and ease the way forward for Congress to finally set forth a national framework. And by virtue of establishing an AI Litigation Task Force, the president is trying to make sure that Congress has a clear path to move forward. This AI Litigation Task Force is essentially charging the Department of Justice under the Attorney General to challenge state AI laws that may be unconstitutional or otherwise unlawful. Now, critically, this is not saying that states do not have the authority to regulate AI in certain domains, but merely giving and encouraging the AG to have a more focused regulatory agenda, focusing their litigation challenges on state AI laws that may have extra-territorial ramifications, that may violate the First Amendment, other things that the DOJ has always had the authority to do. Terry Gerton Where do you think, then, that this sets the balance between innovation and state autonomy and federal authority? Kevin Frazier So the balance is constantly being weighed here, Terry. I’d say that this is trying to strike a happy middle ground. We see that in the executive order, there’s explicit recognition that in many ways there may be state laws that actually do empower and encourage innovation. We know that in 2026, we’re going to see Texas, my home state, develop a regulatory sandbox that allows for AI companies to deploy their tools under fewer regulations, but with increased oversight. Utah has explored a similar approach. And so those sorts of state laws that are very much operating within their own borders, that are regulating the end uses of AI, or as specified in the executive order, things like data center locations, things like child safety protections and things like state government use of AI, those are all cordoned off and recognized by the EO as the proper domain of states. And now, the EO is really encouraging Congress to say, look, we’re trying to do our best to make sure that states aren’t regulating things like the frontier of AI, imposing obligations on AI development, but Congress, you need to step up because it is you, after all, that has the authority under the Constitution to regulate interstate commerce. Terry Gerton Let’s go back to those sandboxes that you talked about, because we talked about those before and you talked about them as a smart way of creating a trial and error space for AI governance. Does this EO then align with those and do you expect more states to move in that direction? Kevin Frazier Yes, so this EO very much encourages and welcomes state regulations that, again, aren’t running afoul of the Constitution, aren’t otherwise running afoul of federal laws or regulations that may preempt certain regulatory postures by the states. If you’re not doing something unconstitutional, if you’re trying to violate the Supremacy Clause, there’s a wide range for states to occupy with respect to AI governance. And here, those sorts of sandboxes are the sort of innovation-friendly approaches that I think the White House and members of Congress and many state legislators would like to see spread and continue to be developed. And these are really the sorts of approaches that allow us to get used to and start acclimating to what I like to refer to as boring AI. The fact of the matter is most AI isn’t something that’s going to threaten humanity. It’s not something that’s going to destroy the economy tomorrow, so on and so forth. Most AI, Terry, is really boring. It’s things like improving our ability to detect diseases, improving our ability to direct the transmission of energy. And these sorts of positive, admittedly boring, uses of AI are the very sorts of things we should be trying to experiment with at the state level. Terry Gerton I’m speaking with Dr. Kevin Frazier. He is the AI innovation and law fellow at the University of Texas School of Law. Kevin, one of the other things we’ve talked about is that the uncertainty around AI laws and regulations really creates a barrier to entry for innovators or startups or small businesses in the AI space. How do you think the EO affects that concern? Kevin Frazier So the EO is very attentive to what I would refer to, not only as a patchwork, but increasingly what’s looking like a Tower of Babel approach that we’re seeing at the state level. So most recently in New York, we saw that the governor signed legislation that looks a lot like SB 53. Now for folks who aren’t spending all of their waking hours thinking about AI, SB 53 was a bill passed in California that regulates the frontier AI companies and imposes various transparency requirements on them. Now, New York in some ways copy and pasted that legislation. Folks may say, oh, this is great, states are trying to copy one another to make sure that there is some sort of harmony with respect to AI regulation. Well, the problem is how states end up interpreting those same provisions, what it means for example, to have a reasonable model or what it means to adhere to certain transparency requirements, that may vary in terms of state-by-state enforcement. And so that’s really where there is concern among the White House with respect to extra-territorial laws, because if suddenly we see that a AI company in Utah or Texas feels compelled or is compelled to comply with New York laws or California laws, that’s where we start to see that concern about a patchwork. Terry Gerton And what does that mean for innovators who may want to scale up? They may get a great start in Utah, for example, but how do they scale up nationwide if there is that patchwork? Kevin Frazier Terry, this is a really important question because there’s an argument to be made that bills like SB 53 or the RAISE Act in New York include carve-outs for smaller AI labs. And some folks will say, hey, look, it says if you’re not building a model of this size or with this much money, or if you don’t have this many users, then great, you don’t to comply with this specific regulation. Well, the problem is, Terry, I have yet to meet a startup founder who says, I can’t wait to build this new AI tool, but the second I hit 999,000 users, I’m just going to stop building. Or the second that I want to build a model that’s just one order of magnitude more powerful in terms of compute, I’m just going to turn it off, I’m going to throw in the towel. And so even when there are carve-outs, we see that startups have to begin to think about when they’re going to run into those regulatory burdens. And so even with carve-outs applied across the patchwork approach, we’re going to see that startups find it harder and harder to convince venture capitalists, to convince institutions, to bet and gamble on them. And that’s a real problem if we want to be the leaders in AI innovation. Terry Gerton So let’s go back then to the DOJ’s litigation task force. How might that play into this confusion? Will it clarify it? Will it add more complexity? What’s your prognostication? Kevin Frazier Yes, I always love to prognosticate, and I think that here we’re going to see some positive litigation be brought forward that allows some of these really important, difficult debates to finally be litigated. There’s questions about what it means to regulate interstate commerce in the AI domain. We need experts to have honest and frank conversations about this, and litigation can be a very valuable forcing mechanism for having folks suddenly say, hey, if you regulate this aspect of AI, then from a technical standpoint, it may not pose any issues. But if you calculate this aspect, now we’re starting to see that labs would have to change their behavior. And so litigation can be a very positive step that sends the signals to state legislators, hey, here are the areas where it’s clear for you to proceed and here are areas where the constitution says, whoa, that’s Congress’s domain. And so I’m optimistic that under the leadership of the attorney general and seeing folks like David Sacks, the AI and crypto czar, lend their expertise to these challenges as well, that we’re going to get the sort of information we need at the state and federal level for both parties to be more thoughtful about the sorts of regulations they should impose. Terry Gerton All right, Kevin, underlying all of the things you’ve just talked about is the concern you raised at the beginning. Will Congress step up and enact national legislation? What should be at the top of their list if they’re going to move forward on this? Kevin Frazier So the thing at the top of Congress’s list, in my opinion, has to be novel approaches, number one, to AI research. We just need to understand better how AI works, things like that black box concept we talk about frequently with respect to AI, and things like making sure that if AI ends up in the hands of bad actors, we know how to respond. Congress can really put a lot of energy behind those important AI research initiatives. We also need Congress to help make sure we have more data be available to more researchers and startups so that we don’t find ourselves just operating under the AI world of OpenAI, Microsoft and Anthropic. But we want to see real competition in this space. And Congress can make sure that the essential inputs to AI development are more broadly available. And finally, I think Congress can do a lot of work with respect to improving the amount of information we’re receiving from AI companies. So SB 53, for example, is a great example of a state bill that’s trying to garner more information from AI labs that can then lead to smarter, better regulation down the road. But the best approach is for Congress to take the lead on imposing those requirements, not states.The post With a new executive order clearing the path for federal AI standards, the question now is whether Congress will finish the job first appeared on Federal News Network.

A third-party arbitrator is ordering the Department of Health and Human Services to walk back its return-to-office mandate for thousands of employees represented by one of its unions. Arbitrator Michael J. Falvo ruled on Monday that HHS must “rescind the return-to-office directive,” and must immediately reinstate remote work and telework agreements for members of the National Treasury Employees Union. HHS rescinded those workplace flexibility agreements early last year, after President Donald Trump ordered federal employees to return to the office full-time. Falvo is also ordering HHS to post a signed notice, “admitting that the agency violated the statute by repudiating the collective bargaining agreement.” The arbitrator wrote that his ruling does not limit NTEU from “seeking additional remedies to the extent permitted by law.” The ruling will impact thousands of HHS employees represented by NTEU. Its members include employees at the Food and Drug Administration, the Substance Abuse and Mental Health Services Administration, the Administration for Children and Families, the Administration on Community Living, the Health Resources and Services Administration, the National Center for Health Statistics and the HHS Office of the Secretary. Falvo found that HHS committed an unfair labor practice by unilaterally terminating telework and remote agreements, without regard to its five-year collective bargaining agreement with NTEU. The labor contract, which covers 2023 through 2028, states the agency can only terminate telework and remote work agreements “for cause.” That includes emergency situations and cases when an employee falls short of a “fully satisfactory” performance rating. HHS officials argued that Trump’s return-to-office presidential memorandum supersedes the collective bargaining agreement. But the 1978 Federal Services Labor-Management Relations Statute makes it an unfair labor practice for an agency “to enforce any rule or regulation … which is in conflict with any applicable collective bargaining agreement if the agreement was in effect before the rule or regulation was prescribed.” According to Falvo, the Federal Labor Relations Authority set a precedent in previous labor disputes that a presidential memorandum “is not a governmentwide rule or regulation that the employer is obligated by law to implement immediately upon issuance.” “These cases compel the conclusion that the agency breached the agreement and violated the statute,” he wrote. The arbitrator decided Trump’s return-to-office memo does not override telework and remote work protections outlined in NTEU’s collective bargaining agreement. Federal News Network has reached out to HHS and NTEU for comment. More than a year into the second Trump administration, several recent exceptions to its return-to-office policy have emerged. The Labor Department’s Office of Workers’ Compensation Programs recently told employees that some of its employees will be eligible for remote work, because the agency is “extremely challenged” covering rent expenses for a fully in-office workforce. Meanwhile, a second arbitrator ruled that the Centers for Medicare and Medicaid Services “violated statutory obligations” to bargain with the American Federation of Government Employees over implementation of the administration’s return-to-office directive. The arbitrator in this dispute determined CMS wasn’t required to negotiate with the union over the administration’s return-to-office mandate, but did have an obligation to ensure implementation complied with its collective bargaining agreement with AFGE. The arbitrator ordered CMS to meet and negotiate with AFGE over the “effects of the implementation of the directive on work/life balance of employees.” Trump touted his return-to-office mandate at a White House press briefing on Tuesday, where he looked back on the accomplishments of his first year in office.. Trump told reporters that when he took office last year, “we had so many of our federal workers who wouldn’t come into work.” “We don’t want them sitting in their home, on their bed, working. We want them in an office that we’re paying for in Washington, D.C., or wherever it may be. And we’ve largely taken care of that mess,” Trump said. “I guarantee you they’re out on the ballfields. I guarantee you they’re out playing golf. And you can’t run a country or a company that way.” Trump’s presidential memorandum directed agencies to terminate remote work and telework agreements, but also stated that the return-to-office mandate must be “implemented consistent with applicable law.” “Reasonable persons could have different notions whether a presidential memorandum (or an executive order) is such a ‘rule or regulation’ under ‘applicable law.’ On January 20, 2025, what ‘applicable law’ required was not a matter of first impression,” Falvo wrote. NTEU filed a grievance against HHS last February, after the agency issued a directive requiring all bargaining unit employees to report to the office on a full-time basis. Union officials argued that HHS refused to negotiate with NTEU before the return-to-office memo took effect, and would agree to “post-implementation bargaining.” HHS officials denied the grievance and told the union that an agency head “retains the statutory right to determine overall telework levels and to exclude positions from telework eligibility.” Christina Ballance, the executive director of the agency’s National Labor and Employee Relations Office, told the arbitrator that HHS “was obligated to comply with the presidential memorandum.” “Ultimately, the president is our chief, and if he directs that employees return to offices in person, the agency is required to do so,” Ballance said in her testimony. HHS officials rejected NTEU’s claims that it terminated all telework and remote work agreements. They said the agency still allows situational and ad-hoc telework, as well as workplace flexibilities for military spouses and reasonable accommodations for employees with disabilities. But Federal News Network first reported last month that a new HHS policy restricts employees with disabilities from using telework as an interim accommodation, while the agency processes their reasonable accommodation request. HHS is also centralizing the processing of reasonable accommodation requests on behalf of its component agencies. As a result, it is inheriting a backlog of requests that HHS officials expect will take about six to eight months to review.The post Trump’s return-to-office memo doesn’t override telework protections in union contract, arbitrator tells HHS first appeared on Federal News Network.

The federal government is preparing to undertake one of the most ambitious IT transformations in decades: Modernizing and unifying human resources information technology across agencies. The technology itself is not the greatest challenge. Instead, success will hinge on the government’s ability to establish an effective, authoritative and disciplined governance structure capable of making informed, timely and sometimes difficult decisions. The central tension is clear: Agencies legitimately need flexibility to execute mission-specific processes, yet the government must reduce fragmentation, redundancy and cost by standardizing and adopting commercial best practices. Historically, each agency has evolved idiosyncratic HR processes — even for identical functions — resulting in one of the most complex HR ecosystems in the world. We need a governance framework that can break this cycle. It has to be a structured requirements-evaluation process, a systematic approach to modernizing outdated statutory constraints, and a rigorous mechanism to prevent “corner cases” from derailing modernization. The framework is based on a three-tiered governance structure to enable accountability, enforce standards, manage risk and accelerate decision making. The governance imperative in HR IT modernization Modernizing HR IT across the federal government requires rethinking more than just systems — it requires rethinking decision making. Technology will only succeed if governance promotes standardization, manages statutory and regulatory constraints intelligently, and prevents scope creep driven by individual agency preferences. Absent strong governance, modernization will devolve into a high-cost, multi-point, agency-to-vendor negotiation where each agency advocates for its “unique” variations. Commercial vendors, who find arguing with or disappointing their customers to be fruitless and counterproductive, will ultimately optimize toward additional scope, higher complexity and extended timelines — that is, unless the government owns the decision framework. Why governance is the central challenge The root causes of this central challenge are structural. Agencies with different missions evolved different HR processes — even for identical tasks such as onboarding, payroll events or personnel actions. Many “requirements” cited today are actually legacy practices, outdated rules or agency preferences. And statutes and regulations are often more flexible than assumed, but in order to avoid any risk of perceived noncompliance or litigation. Without centralized authority, modernization will replicate fragmentation in a new system rather than reduce it. Governance must therefore act as the strategic filter that determines what is truly required, what can be standardized and what needs legislative or policy reform. A two-dimensional requirements evaluation framework Regardless of the rigor associated with the requirements outlined at the outset of the program, implementers will encounter seemingly unique or unaccounted for “requirements” that appear to be critical to agencies as they begin seriously planning for implementation. Any federal HR modernization effort must implement a consistent, transparent and rigorous method for evaluating these new or additional requirements. The framework should classify every proposed “need” across two dimensions: Applicability (breadth): Is this need specific to a single agency, a cluster of agencies, or the whole of government? Codification (rigidity): Is the need explicitly required by law/regulation, or is it merely a policy preference or tradition? This line of thinking leads to a decision matrix of sorts. For instance, identified needs that are found to be universal and well-codified are likely legitimate requirements and solid candidates for productization on the part of the HR IT vendor. For requirements that apply to a group of agencies or a single agency, or that are really based on practice or tradition, there may be a range of outcomes worth considering. Prior to an engineering discussion, the applicable governance body must ask of any new requirement: Can this objective be achieved by conforming to a recognized commercial best practice? If the answer is yes, the governance process should strongly favor moving in that direction. This disciplined approach is crucial to keeping modernization aligned with cost savings, simplification and future scalability. Breaking the statutory chains: A modern exception and reform model A common pitfall in federal IT is the tendency to view outdated laws and regulations as immutable engineering constraints. There are in fact many government “requirements” — often at a very granular and prescriptive level — embedded in written laws and regulations, that are either out-of-date or that simply do not make sense when viewed in a larger context of how HR gets done. The tendency is to look at these cases and say, “This is in the rule books, so we must build the software this way.” But this is the wrong answer, for several reasons. And reform typically lags years behind technology. Changing laws or regulations is an arduous and lengthy process, but the government cannot afford to encode obsolete statutes into modern software. Treating every rule as a software requirement guarantees technical debt before launch. The proposed mechanism: The business case exception The Office of Management and Budget and the Office of Personnel Management have demonstrated the ability to manage simple, business-case-driven exception processes. This capability should be operationalized as a core component of HR IT modernization governance: Immediate flexibility: OMB and OPM should grant agencies waivers to bypass outdated procedural requirements if adopting the standard best practice reduces administrative burden and cost. Batch legislative updates: Rather than waiting for laws to change before modernizing, OPM and OMB can “batch up” these approved exceptions. On a periodic basis, these proven efficiencies through standard processes to modify laws and regulations to match the new, modernized reality. This approach flips the traditional model. Instead of software lagging behind policy, the modernization effort drives policy evolution. Avoiding the “corner case” trap: ROI-driven decision-making In large-scale HR modernization, “corner cases” can become the silent destroyer of budgets and timelines. Every agency can cite dozens of rare events — special pay authorities, unusual personnel actions or unique workforce segments — that occur only infrequently. The risk is that building system logic for rare events is extraordinarily expensive. These edge cases disproportionately consume design and engineering time. And any customization or productization can increase testing complexity and long-term maintenance cost. Governance should enforce a strict return-on-investment rule: If a unique scenario occurs infrequently and costs more to automate than to handle manually, it should not be engineered into the system. For instance, if a unique process occurs only 50 times a year across a 2-million-person workforce, it is cheaper to handle it manually outside the system than to spend millions customizing the software. If the government does not manage this evaluation itself, it will devolve into a “ping-pong” negotiation with vendors, leading to scope creep and vulnerability. The government must hold the reins, deciding what gets built based on value, not just request. Recommended governance structure To operationalize the ideas above, the government should implement a three-tiered governance structure designed to separate strategy from technical execution. The executive steering committee (ESC) Composition: Senior leadership from OMB, OPM and select agency chief human capital officers and chief information officers (CHCOs/CIOs). Role: Defines the “North Star.” They hold the authority to approve the “batch exceptions” for policy and regulation. They handle the highest-level escalations where an agency claims a mission-critical need to deviate from the standard. The ESC establishes the foundation for policy, ensures accountability, and provides air cover for standardization decisions that may challenge entrenched agency preferences. The functional control board (FCB) Composition: Functional experts (HR practitioners) and business analysts. Role: The “gatekeepers.” They utilize the two-dimensional framework to triage requirements. Their primary mandate is to protect the standard commercial best practice. They determine if a request is a true “need” or just a preference. The FCB prevents the “paving cow paths” phenomenon by rigorously protecting the standard process baseline. The architecture review board (ARB) Composition: Technical architects and security experts. Role: Ensures that even approved variations do not break the data model or introduce technical debt. They enforce the return on investment (ROI) rule on corner cases — if the technical cost of a request exceeds its business value, they reject it. The ARB enforces discipline on engineering choices and protects the system from fragmentation. Federal HR IT modernization presents a rare opportunity to reshape not just systems, but the business of human capital management across government. The technology exists. The challenge — and the opportunity — lies in governance. The path to modernization will not be defined by the software implemented, but by the discipline, authority, and insight of the governance structure that guides it. Steve Krauss is a principal with SLK Executive Advisory. He spent the last decade working for GSA and OPM, including as the Senior Executive Service (SES) director of the HR Quality Service Management Office (QSMO).The post Governing the future: A strategic framework for federal HR IT modernization first appeared on Federal News Network.

var config_5793910 = {"options":{"theme":"hbidc_default"},"extensions":{"Playlist":[]},"episode":{"media":{"mp3":"https:\/\/mgln.ai\/e\/345\/rss.art19.com\/episodes\/3921f587-96e4-46a3-82c6-730ac6909c8c.mp3?rss_browser=BAhJIg5Xb3JkUHJlc3MGOgZFVA%3D%3D--466d26bc6c0e932b4a48b1403433bf1814d4975e"},"coverUrl":"https:\/\/federalnewsnetwork.com\/wp-content\/uploads\/2025\/04\/The-Federal-Drive-with-Terry-Gerton-Podcast-Cover-150x150.png","title":"DoD looks to audit 8(a) sole source contracts","description":"[hbidcpodcast podcastid='5793910']nnThe 8(a) small business contracting program is coming under the microscope of its biggest user.nnThe Defense Department is joining a growing list of agencies auditing the use of sole-source contracts through the 8(a) program.nnExperts warn that DoD\u2019s decision to launch this new audit signals that this 40-year-old small business development program is teetering further on the edge.nn\u201cIt's not a death knell, but it's absolutely going to leave a mark. It's absolutely going to hinder our ability to bring some of that new technology, that new manufacturing capability to the federal marketplace. That's probably my bigger concern,\u201d said Norm Abdallah, executive vice president at Hui Huliau, a Native Hawaiian-owned firm in the 8(a) program, in an interview with Federal News Network. \u201cWe're behind in terms of the ability to manufacture here in the U.S., and have outsourced that beyond what one should in the defense of their own country, and so hindering the ability for us to help bring some of that to bear in the U.S. marketplace is probably the biggest concern.\u201dnnAbdallah said the 8(a) program is an avenue for companies to enter the market, obtain past performance experience in the federal sector and learn the ropes so DoD, and really every agency\u2019s, ongoing distrust and scrutiny of the program is likely going to impact the government in bigger ways than expected.nnSecretary Pete Hegseth posted a <a href="https:\/\/x.com\/SecWar\/status\/2012302240594170106?s=20" target="_blank" rel="noopener">video on X<\/a> on Friday explaining that the Pentagon is worried about two main things: The 8(a) program is a diversity, equity and inclusion (DEI) program, and it\u2019s wrought with fraud.n<blockquote class="twitter-tweet">n<p dir="ltr" lang="en">We are taking a sledgehammer to the oldest DEI program in the federal government\u2014the 8(a) program. <a href="https:\/\/t.co\/c9iH8gcqG7">pic.twitter.com\/c9iH8gcqG7<\/a><\/p>n\u2014 Secretary of War Pete Hegseth (@SecWar) <a href="https:\/\/twitter.com\/SecWar\/status\/2012302240594170106?ref_src=twsrc%5Etfw">January 16, 2026<\/a><\/blockquote>n<script async src="https:\/\/platform.twitter.com\/widgets.js" charset="utf-8"><\/script>nn\u201cProviding these small businesses with opportunities is a laudable goal, but over the decades, as it happens, the 8(a) program has morphed into swamp code words for DEI, race-based contracting. And here's the worst part, in many, many instances, these socially disadvantaged businesses, they don't even do work. They take a 10%, 20%, sometimes 50% fee off the top, and then pass the contract off to a giant consulting firm, commonly known as beltway bandits. For decades, this program, 8(a) has been a breeding ground for fraud, and this administration is finally doing something about it,\u201d Hegseth said. \u201cEffective immediately, I'm ordering a line-by-line review of every small business sole source, 8(a) contract that is over $20 million, and we'll look at everything smaller than that too. The Department of War has the biggest chunk of 8(a) spending by far, 10 times more than any other agency. So our cleanup, it's going to be 10 times tougher.\u201dnn<iframe id="datawrapper-chart-gdtpE" style="width: 0; min-width: 100% !important; border: none;" title="Total obligations for DoD 8(a) and 8(a) sole source contract awards" src="https:\/\/datawrapper.dwcdn.net\/gdtpE\/3\/" height="389" frameborder="0" scrolling="no" aria-label="Grouped Bars" data-external="1"><\/iframe><script type="text\/javascript">window.addEventListener("message",function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}});<\/script>nnDoD\u2019s audit will include two phases. Hegseth said if a contract doesn't make meet the DoD\u2019s goal of increasing lethality, they will terminate it.nn\u201cWe have no room in our budget for wasteful DEI contracts that don't help us win wars, period, full stop. Second, we're doing away with these pass through schemes. We'll make sure that every small business getting a contract is the one actually doing the work, and not just some shell company funneling your money to a giant consulting firm,\u201d he said. \u201cThis approach is, of course, not meant to hurt small businesses, and that's not the point. America is full of great, amazing small businesses. This is part of a larger effort to transform our acquisition ecosystem into one that makes sense for the threats we face in the 21st century.\u201dnnAn email to DoD seeking more details about the audit and a timeline for the audit wasn\u2019t returned.nnExperts say Hegseth\u2019s decision to review sole source contracts worth at least $20 million is directed at Native American, Alaskan Native, Hawaiian Native and other tribal companies. Congress raised the sole source threshold for these firms to $100 million from $22 million in 2020. Firms not belonging to one of these groups have a sole source threshold of $5.5 million for manufacturing and $8.5 million for non-manufacturing contracts. These non-tribal or native firms can receive a sole source contract up to $20 million with certain justifications and approvals.nn<iframe id="datawrapper-chart-Ieqkf" style="width: 0; min-width: 100% !important; border: none;" title="Total number of awards for DoD 8(a) and 8(a) sole source contract awards" src="https:\/\/datawrapper.dwcdn.net\/Ieqkf\/3\/" height="362" frameborder="0" scrolling="no" aria-label="Grouped Bars" data-external="1"><\/iframe><script type="text\/javascript">window.addEventListener("message",function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}});<\/script>nnWhile experts say Congress may not act to change the law, the ongoing audits by the <a href="https:\/\/federalnewsnetwork.com\/acquisition-policy\/2025\/12\/sba-audit-lawsuit-puts-8a-program-deeper-in-cross-hairs\/" target="_blank" rel="noopener">Small Business Administration<\/a>, the Treasury Department, the General Services Administration and now DoD are sending signals that, at least for sole source contracts, the program doesn\u2019t work.nnA former DoD acquisition executive, who requested anonymity because their current company still does business with DoD, said he believes federal small business goals are at risk across the board, and while they may not be affected this year, in two to four years, agencies will see a huge reduction in their industrial base.nnThe former DoD executive said the administration is sending an inconsistent message to the federal contracting community. The audits and the reduction of staff in small business offices are sending one message that small businesses aren\u2019t important. But then the White House, and DoD particularly, are expressing the desire to attract new participants to the federal market, including non-traditional companies. The executive said these companies typically depend on small business offices and programs like 8(a) to help them get a foot in the door.nnJohn Shoraka, a former associate administrator of government contracting and business development at SBA and now the co-founder and managing director of GovContractPros, an advisory services firm specializing in federal procurement, said DoD\u2019s audit is part of a concerted effort by the administration to <a href="https:\/\/federalnewsnetwork.com\/acquisition-policy\/2025\/10\/sba-sends-another-shot-across-8a-program-bow\/" target="_blank" rel="noopener">undermine the 8(a) program<\/a>.nn\u201cI think if you look at the dollars in the 8(a) program, especially at DoD, some will point to the fact that they actually went up in 2025. But the challenge that we saw across a lot of our clients was that offer letters that have to go through the district office in order for a sole source award to happen were being held up and or never being processed. So we saw a slowdown in sole source awards,\u201d he said. "I think given what we've seen with respect to the SBA audit, given what we've seen with respect to the number of 8(a)s being approved, in 2024 there was something like 500 plus 8(a)s approved. In 2025, I think the last count I saw was 66 approved. So given the audits, the slowdown in processing, I think contracting officers are looking over their shoulders. I think in the short term, given the current administration and the current congressional makeup, if you will, we will see a trend away from the 8(a) program.\u201dnnDoD\u2019s decision to audit the 8(a) program comes after Treasury and SBA announced similar audits earlier this fall. SBA is looking at the entire program and companies had to submit data to the agency by Monday.nnThe SBA general counsel\u2019s office is driving the audit, which is unusual because usually these things are either done by the inspector general or program office.n<h2>Fraud, DEI concerns unfounded<\/h2>nShoraka said while the questions being asked by SBA, and now eventually DoD, are legitimate questions, the approach is causing some chaos.nn\u201cA lot of our clients reached out to their district office and the district office was actually unaware that those letters had originally gone out with respect to the audit, so there was a disconnect there. The field offices aren't sure how the data is going to be used, or who's going to use it, or what they're looking at,\u201d he said. \u201cFrom my perspective, given the types of questions that were asked, I think it leads to the question, are there pass throughs happening? Because there was a lot of questions with respect to, who are your subcontractors, who are your vendors, et cetera. So the question is, and I think what SBA was looking at is, are there pass throughs and who's really in control? Is the disadvantaged individual really owning, operating and benefiting from the 8(a) company? And I think those are legitimate questions. But again, there are legitimate processes and mechanisms to monitor that, including the annual review, which occurs every year on every single 8(a) company.\u201dnnThe former DoD acquisition executive said while there are concerns about the use of sole source awards over $20 million to tribal companies, the allegations of fraud and the belief that the 8(a) program is a DEI program are unfounded. He said DoD should go to Congress and change the law to reduce the risk of large sole source contracts turning into pass throughs.nnExperts agreed that while no program is perfect and there probably are some challenges, the 8(a) program is typically well overseen and maintained.nnIn fact, Abdallah, from Hui Huliau, said most 8(a) firms spend a lot of time meeting the compliance requirements. But he said it\u2019s also a shared responsibility for oversight with the government.nn\u201cThere are several folks that have responsibility in there. The first one is the contracting officer. In some cases, they've got to approve subcontracts. But more basically, with SBA, we go through a review every year where we have to submit our financials, what work did we do and what work happened?\u201d he said. \u201cThey worry about the business mix, how much of your work was set aside versus not set aside? Quite honestly, what means you got the work by some means other than the 8(a) program, be that a subcontractor to another straight commercial, et cetera. So there are lots of hooks to watch it. Do they audit the books, per se, to check for percentages? That's less common. But it's part of your overall review.\u201dnnShoraka added there are a significant number of regulations or requirements to mitigate the risk of pass throughs, and most rules allow for legitimate subcontracting.nnOne thing all of the experts pointed out is that the program is set up to help the 8(a) firm grow and learn, but they still have to do at least 51% of the work under services contracts and 15% of the work under construction contracts.nnShoraka said what is being lost in this entire discussion is there is more fraud in non-small business socio-economic programs across government than there are in the 8(a) and other small businesses initiatives."}}; The 8(a) small business contracting program is coming under the microscope of its biggest user. The Defense Department is joining a growing list of agencies auditing the use of sole-source contracts through the 8(a) program. Experts warn that DoD’s decision to launch this new audit signals that this 40-year-old small business development program is teetering further on the edge. “It’s not a death knell, but it’s absolutely going to leave a mark. It’s absolutely going to hinder our ability to bring some of that new technology, that new manufacturing capability to the federal marketplace. That’s probably my bigger concern,” said Norm Abdallah, executive vice president at Hui Huliau, a Native Hawaiian-owned firm in the 8(a) program, in an interview with Federal News Network. “We’re behind in terms of the ability to manufacture here in the U.S., and have outsourced that beyond what one should in the defense of their own country, and so hindering the ability for us to help bring some of that to bear in the U.S. marketplace is probably the biggest concern.” Abdallah said the 8(a) program is an avenue for companies to enter the market, obtain past performance experience in the federal sector and learn the ropes so DoD, and really every agency’s, ongoing distrust and scrutiny of the program is likely going to impact the government in bigger ways than expected. Secretary Pete Hegseth posted a video on X on Friday explaining that the Pentagon is worried about two main things: The 8(a) program is a diversity, equity and inclusion (DEI) program, and it’s wrought with fraud. We are taking a sledgehammer to the oldest DEI program in the federal government—the 8(a) program. pic.twitter.com/c9iH8gcqG7 — Secretary of War Pete Hegseth (@SecWar) January 16, 2026 “Providing these small businesses with opportunities is a laudable goal, but over the decades, as it happens, the 8(a) program has morphed into swamp code words for DEI, race-based contracting. And here’s the worst part, in many, many instances, these socially disadvantaged businesses, they don’t even do work. They take a 10%, 20%, sometimes 50% fee off the top, and then pass the contract off to a giant consulting firm, commonly known as beltway bandits. For decades, this program, 8(a) has been a breeding ground for fraud, and this administration is finally doing something about it,” Hegseth said. “Effective immediately, I’m ordering a line-by-line review of every small business sole source, 8(a) contract that is over $20 million, and we’ll look at everything smaller than that too. The Department of War has the biggest chunk of 8(a) spending by far, 10 times more than any other agency. So our cleanup, it’s going to be 10 times tougher.” window.addEventListener("message",function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}); DoD’s audit will include two phases. Hegseth said if a contract doesn’t make meet the DoD’s goal of increasing lethality, they will terminate it. “We have no room in our budget for wasteful DEI contracts that don’t help us win wars, period, full stop. Second, we’re doing away with these pass through schemes. We’ll make sure that every small business getting a contract is the one actually doing the work, and not just some shell company funneling your money to a giant consulting firm,” he said. “This approach is, of course, not meant to hurt small businesses, and that’s not the point. America is full of great, amazing small businesses. This is part of a larger effort to transform our acquisition ecosystem into one that makes sense for the threats we face in the 21st century.” An email to DoD seeking more details about the audit and a timeline for the audit wasn’t returned. Experts say Hegseth’s decision to review sole source contracts worth at least $20 million is directed at Native American, Alaskan Native, Hawaiian Native and other tribal companies. Congress raised the sole source threshold for these firms to $100 million from $22 million in 2020. Firms not belonging to one of these groups have a sole source threshold of $5.5 million for manufacturing and $8.5 million for non-manufacturing contracts. These non-tribal or native firms can receive a sole source contract up to $20 million with certain justifications and approvals. window.addEventListener("message",function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}); While experts say Congress may not act to change the law, the ongoing audits by the Small Business Administration, the Treasury Department, the General Services Administration and now DoD are sending signals that, at least for sole source contracts, the program doesn’t work. A former DoD acquisition executive, who requested anonymity because their current company still does business with DoD, said he believes federal small business goals are at risk across the board, and while they may not be affected this year, in two to four years, agencies will see a huge reduction in their industrial base. The former DoD executive said the administration is sending an inconsistent message to the federal contracting community. The audits and the reduction of staff in small business offices are sending one message that small businesses aren’t important. But then the White House, and DoD particularly, are expressing the desire to attract new participants to the federal market, including non-traditional companies. The executive said these companies typically depend on small business offices and programs like 8(a) to help them get a foot in the door. John Shoraka, a former associate administrator of government contracting and business development at SBA and now the co-founder and managing director of GovContractPros, an advisory services firm specializing in federal procurement, said DoD’s audit is part of a concerted effort by the administration to undermine the 8(a) program. “I think if you look at the dollars in the 8(a) program, especially at DoD, some will point to the fact that they actually went up in 2025. But the challenge that we saw across a lot of our clients was that offer letters that have to go through the district office in order for a sole source award to happen were being held up and or never being processed. So we saw a slowdown in sole source awards,” he said. “I think given what we’ve seen with respect to the SBA audit, given what we’ve seen with respect to the number of 8(a)s being approved, in 2024 there was something like 500 plus 8(a)s approved. In 2025, I think the last count I saw was 66 approved. So given the audits, the slowdown in processing, I think contracting officers are looking over their shoulders. I think in the short term, given the current administration and the current congressional makeup, if you will, we will see a trend away from the 8(a) program.” DoD’s decision to audit the 8(a) program comes after Treasury and SBA announced similar audits earlier this fall. SBA is looking at the entire program and companies had to submit data to the agency by Monday. The SBA general counsel’s office is driving the audit, which is unusual because usually these things are either done by the inspector general or program office. Fraud, DEI concerns unfounded Shoraka said while the questions being asked by SBA, and now eventually DoD, are legitimate questions, the approach is causing some chaos. “A lot of our clients reached out to their district office and the district office was actually unaware that those letters had originally gone out with respect to the audit, so there was a disconnect there. The field offices aren’t sure how the data is going to be used, or who’s going to use it, or what they’re looking at,” he said. “From my perspective, given the types of questions that were asked, I think it leads to the question, are there pass throughs happening? Because there was a lot of questions with respect to, who are your subcontractors, who are your vendors, et cetera. So the question is, and I think what SBA was looking at is, are there pass throughs and who’s really in control? Is the disadvantaged individual really owning, operating and benefiting from the 8(a) company? And I think those are legitimate questions. But again, there are legitimate processes and mechanisms to monitor that, including the annual review, which occurs every year on every single 8(a) company.” The former DoD acquisition executive said while there are concerns about the use of sole source awards over $20 million to tribal companies, the allegations of fraud and the belief that the 8(a) program is a DEI program are unfounded. He said DoD should go to Congress and change the law to reduce the risk of large sole source contracts turning into pass throughs. Experts agreed that while no program is perfect and there probably are some challenges, the 8(a) program is typically well overseen and maintained. In fact, Abdallah, from Hui Huliau, said most 8(a) firms spend a lot of time meeting the compliance requirements. But he said it’s also a shared responsibility for oversight with the government. “There are several folks that have responsibility in there. The first one is the contracting officer. In some cases, they’ve got to approve subcontracts. But more basically, with SBA, we go through a review every year where we have to submit our financials, what work did we do and what work happened?” he said. “They worry about the business mix, how much of your work was set aside versus not set aside? Quite honestly, what means you got the work by some means other than the 8(a) program, be that a subcontractor to another straight commercial, et cetera. So there are lots of hooks to watch it. Do they audit the books, per se, to check for percentages? That’s less common. But it’s part of your overall review.” Shoraka added there are a significant number of regulations or requirements to mitigate the risk of pass throughs, and most rules allow for legitimate subcontracting. One thing all of the experts pointed out is that the program is set up to help the 8(a) firm grow and learn, but they still have to do at least 51% of the work under services contracts and 15% of the work under construction contracts. Shoraka said what is being lost in this entire discussion is there is more fraud in non-small business socio-economic programs across government than there are in the 8(a) and other small businesses initiatives.The post 8(a) program pushed further to the edge by DoD audit first appeared on Federal News Network.

  Senate Homeland Security and Governmental Affairs Committee Chairman Rand Paul (R-Ky.) is facing calls to ramp up oversight of the Department of Homeland Security. Democrats on the committee are calling on him to investigate the Trump administration’s immigration enforcement operations. They said Paul should issue subpoenas if necessary and have senior officials like Homeland Security Secretary Kristi Noem testify in front of the panel. Their letter comes in the wake of the fatal shooting of Renee Good in Minnesota.(Democrats letter to Chairman Paul - HSGAC)DOGE representatives at the Social Security Administration discussed sharing agency data with an advocacy group looking to “overturn election results” in some states. The Justice Department said one of the DOGE staffers even signed a “voter data agreement” with the unnamed group. DOJ referred the two DOGE employees for potential violations of the Hatch Act which bars federal employees from using their positions for political purposes. (Trump administration admits DOGE accessed personal Social Security data - Washington Post)A Republican in Congress is looking to remove federal employees from their jobs if they have been convicted of a violent crime. The so-called “No Violent Criminals in the Federal Workforce Act” seeks to bar individuals with a violent criminal record from working for the federal government. The requirements of the bill would also apply to federal contractors. Rep. Nancy Mace (R-S.C.) introduced the legislation this week, calling it "common sense."(No Violent Criminals in the Federal Workforce Act - Rep. Nancy Mace (R-S.C.))As he marked one year in office yesterday, President Trump called his administration’s cuts to the federal workforce “tremendous.” But some good government groups are painting a much darker picture. Agencies saw a loss of about 320,000 federal employees governmentwide over the course of 2025. The White House touted the staffing cuts as a step toward efficiency. But organizations like the Partnership for Public Service tell a much different story of the administration’s impacts on the federal workforce. “It tells a disturbing story about who we’ve lost in our government and what is actually happening to the workforce,” said Max Stier, president and CEO of the Partnership.(Trump lauds ‘tremendous’ federal workforce cuts. Good government group calls them ‘disturbing.’ - Federal News Network)Congressional appropriators approved all 13 line-item consolidations requested by the Army in its fiscal 2026 budget, but flatly rejected the service’s “agile funding” request to raise notification threshold for reprogramming or transfers from $15 million to $50 million for procurement programs and to $25 million for research and development efforts. Lawmakers said that increasing reprogramming thresholds alone won’t improve program execution and cautioned that unilaterally moving funding without proper oversight could create uncertainty for programs and the industrial base. Appropriators also said they “discourage the Defense secretary and the service secretaries from submitting future requests of this nature.”(Congressional appropriators reject Army’s ‘agile funding’ request - Federal News Network)The latest minibus spending measure includes some big cybersecurity updates. The minibus appropriations agreement released this week would extend the Cybersecurity Information Sharing Act of 2015 until the end of September. It would do the same for the State and Local Cybersecurity Grant Program. Both authorities were set to expire at the end of this month. Cyber experts have particularly stressed the need to reauthorize the liability protections in the information sharing law. If the appropriations agreement passes, lawmakers will have more time to hash out their differences over a longer term extension of CISA 2015. (DHS spending bill bolsters staffing at CISA, FEMA, Secret Service - Federal News Network)Congressional appropriators are backing the Pentagon’s push to speed up weapons buying, but warn that speed “must be factored alongside cost, performance and scalability.” Congressional negotiators said they support the Defense Department’s acquisition reform agenda but remain skeptical about the Pentagon’s push for greater budget flexibility. While Defense Secretary Pete Hegseth has directed the department to work with Congress to improve budget flexibility, lawmakers said the reforms are “internal in nature” and that the department needs to “demonstrate progress on those internal procedures” first. Lawmakers also raised concerns about joint requirements process reform and deep cuts to the department’s acquisition workforce that could jeopardize its ability to carry out Hegseth’s acquisition reforms. (Congress pushes back on parts of DoD’s acquisition reform agenda - Federal News Network)Lawmakers are seeking a higher pay raise for air traffic controllers. Congressional appropriations propose giving the Federal Aviation Administration funds to implement a 3.8% pay raise for air traffic controllers, as well as supervisors and managers who oversee air traffic. That’s the same pay raise the Trump administration already approved for federal law enforcement. The spending deal would also give FAA enough funding to hire 2,500 air traffic controllers. Current controllers are working six days a week, including mandatory overtime.(3.8% pay raise for air traffic controllers, Education Dept cuts rejected: Highlights from final FY 2026 spending bills - Federal News Network)The post Senate Democrats call for greater oversight of DHS and ICE first appeared on Federal News Network.

Interview transcript: Terry Gerton There’s a lot to talk about, but it strikes me as strange that here we are two weeks before all of the continuing resolutions expire. The Senate is out this week. The House is planning to be out next week. Are they going to finish in time? Loren Duggan There’s a path for them to do so and unlike other deadlines, when they’re approaching, everyone’s hair on fire — we haven’t felt that dynamic on this one. The House and Senate appropriators, they’re reaching deals, releasing packages, processing them through the House in the Senate, and there’s a way to get this all done by Jan. 30, or if they need a week or something, appropriators are already saying we could do another short-term. But there’s not a panic about this deadline that’s only two weeks away or so. Terry Gerton Well, let’s recap, which bills are through and who would you say are the big winners in those bills? Loren Duggan So we had the three bills go through last year. We’ve had another three-bill package get through both chambers this year. The House sent another two-bill package over to the Senate, who can deal with that when they come back. And then there’s this four-bill package, the remaining outstanding ones that they still need to tackle and get through both chambers. So there’s a lot of progress there. The last one’s big — Defense, Labor, HHS — and thorny in the case of the Homeland Security Department, given everything that’s going on there with ICE in Minnesota and concerns about lawmaker oversight there. Terry Gerton Well, Homeland and Defense both got big chunks of money in the summer that they’re continuing to operate. So does it feel like maybe there’s a little less urgency around those bills? Loren Duggan A little less urgency on the Defense side, where I think if you put that together with the reconciliation bill, it’s like $1 trillion. Of course, the president wants to take that to $1.5 trillion next year. We can deal with that another time. And Homeland, that extra pool of money has helped. They’ve used that to hire staff, to open centers. But there was a little controversy because DHS said if an ICE facility is funded with the reconciliation dollars, some of the oversight is different there than if it was regular appropriations. So we’ve seen a distinction made there. But definitely having that money earlier, locking that in for the administration, was really key to their plans for the year. Terry Gerton What are the big controversies that are still on the table that are going to have to be hashed out before that last bill package gets through? Loren Duggan DHS has been the sticking point. That was initially supposed to be in the last package; it ended up only being two bills instead of three as they worked through some of these discussions. And you could see a deal being made there and getting that through, maybe both chambers. But there could be a fight on that one in either chamber, depending on what you need. What we have seen are very bipartisan packages where the votes have been widespread, some opposition obviously, but they’ve gotten through very comfortably after all the fights that we went through ahead of this point in time. Terry Gerton It does also seem, at least on the bills that have gotten through so far, that Congress has largely rejected the cuts that the administration proposed for 50% reductions are higher. Most of the reductions are very minor. So since agencies have already been downsized in many cases, what does this mean? How will relative increases, I guess, compared to where they’re operating today — how will that come into effect? Loren Duggan In some cases, it’s less than they had last year, but still more than the administration wanted and more than House Republicans wanted in their initial versions. So we’re seeing a classic compromise being hashed out here between the House and the Senate, enough money for Democrats to support these bills, not the drastic cuts. And they’ve hastened to say “no poison pills” when they’ve released these different packages. But we’ll see how the agencies respond to more money. That’s been a fight over the course of the administration, where they’ve wanted to impound funds, rescind them, but if you put them back out there the agencies can use them. And even something like foreign aid is going to the State Department now, rather than USAID, after USAID was disestablished by the administration. Terry Gerton I’m speaking with Loren Duggan. He’s deputy news director for Bloomberg Government. Loren, outside of the appropriations, what other sorts of legislative discussions are taking place on the Hill these days? ACA subsidies still on top? Loren Duggan ACA subsidies has been a big driver of discussion. We are now at the end of open enrollment without an answer to what to do with these credits, if they’ll be extended. I assume the senators are still talking this week and when they come back. Donald Trump’s proposal last week didn’t necessarily change the dynamic too much. But one thing that might: We’re going to see insurance company executives brought to the Hill before two different House committees this week. They’ll have to answer some tough questions. Probably get a little beaten up by both sides in this case, because both parties have some concerns with them. So we’ll see how that plays out. The ACA, that’s now a deadline that’s passed; they’re still trying to figure out how to resolve that debate. Terry Gerton There was also a lot of news last week about the crypto bill in the Senate. Tell us what’s going on there. Loren Duggan There were markups that had been scheduled in two committees, and then they got pulled back as they continue to work through the issues and deal with the industry feedback. I think it was the Coinbase CEO who was up there weighing in pretty directly with lawmakers. So they pulled back, didn’t move forward, and they’re going to recalibrate the bill. This is the market structure bill, not to be confused with the stablecoin legislation, which is part of the crypto universe. This is a broader market structure bill, who has regulatory authority. I assume they’ll rejoin that debate when they return next week, if they’re not working up while they’re gone. But there’s big interest, big money, big stakes in this legislation. Terry Gerton All of the things we’ve talked about so far are sort of normal order: appropriations bills, although late, getting through other sorts of legislative activities. Let’s talk about Greenland for a minute, because it seems like it has the potential to really upend all kinds of conversations and agreements that are going on. President Trump made tariff threats over the weekend. We have a congressional delegation on the ground in Denmark. What does this all mean when it comes back to domestic politics? Loren Duggan We’ll have to see, there hasn’t been a ground swell against this. There are some members of Congress who concede it might be a good idea if Greenland was part of the United States, given its geostrategic importance. But then there’s other members of Congress who have said, maybe we’ll have to impeach Trump if he goes too far on this, so there’s not a consensus. There’s definitely a lot of range of opinions on this one. And it’s something that Donald Trump’s going to hear directly from other world leaders when he goes to Davos, Switzerland, this week and he’ll be side-by-side with some of the people who he’s threatened to tariff or have strong opinions on this, given their proximity to Denmark. Terry Gerton We usually focus here on domestic politics, but this seems like it will flow over into lots of conversations. What are you expecting to hear out of Davos as that conversation gets started? Loren Duggan Well, we had expected a domestic announcement with the president talking about his home ownership plan, maybe taking money from 401(k)s to make a down payment, part of his broader affordability discussion, home ownership discussion. So that’s a domestic thing, but we’re definitely going to hear the global things. Not just Greenland, but his “Board of Peace” that he’s talked about, where he wants world leaders to chip in money and be part of this arrangement. I’m sure those discussions will continue and there’ll be lots of feedback, given the compact nature of Davos and everyone who will be there. There’s a little bit of domestic, but it’s more of a foreign play given who’s there. It is the World Economic Forum after all, and the world will be there and talking to Donald Trump directly. Terry Gerton When everybody gets back, what will you be watching for on the Hill? Loren Duggan We’ll see if they can wrap up the spending debate and then they’ll be turning to February and eventually the fiscal ’27 process is right there. We’ll just get done with this one and really have to turn the page pretty quickly.The post Crypto overhaul, Greenland, ACA subsidies, spending bills: Lawmakers’ January juggling acts first appeared on Federal News Network.

Congressional appropriators are backing the Pentagon’s push to speed up weapons buying, but warn that speed “must be factored alongside cost, performance, lethality and scalability.” The House released the final 2026 minibus funding package early Tuesday, which includes money for the Departments of Defense, Homeland Security, Labor, Education, Housing and Urban Development, Transportation and Health and Human Services. If passed, the bill would increase defense spending to more than $839 billion — roughly $8.4 billion above the White House’s fiscal 2026 request. House leaders plan to vote on the package later this week.  Congressional negotiators said they “strongly support” the Defense Department’s acquisition reforms, but pushed back on the Pentagon’s efforts to seek additional authorities or changes to its budget and appropriations framework until it fixes its internal processes.  “Rapid delivery of ineffective weapon systems at exorbitant cost will not serve the warfighter well,” the appropriators wrote.  Lawmakers also raised concerns about joint requirements process reform and deep cuts to the department’s acquisition workforce that could jeopardize its ability to carry out Defense Secretary Pete Hegseth’s acquisition reform agenda. Budget flexibility Hegseth recently unveiled a plan to overhaul the department’s acquisition system — some of those reform proposals made it into the fiscal 2026 defense policy bill, which became law in December. At the very end of the document, Hegseth instructs the department to “improve budget flexibility.”  “Where additional authorities are required, the [undersecretary of defense for acquisition and sustainment], in coordination with the military departments, shall develop a legislative engagement plan to ensure Congress is informed of and aligned with proposed reforms requiring any statutory change,” Hegseth wrote. “All actions will comply with applicable statutes, appropriations law, and procurement integrity requirements.” That language was likely to become a friction point with Congressional leaders, and now appropriators are saying that reforms laid out in Hegseth’s memo are “internal in nature,” and that the Defense Department needs to “demonstrate progress on these internal procedures and administrative measures” before pursuing additional budget flexibility. For instance, lawmakers said above-threshold transfer and reprogramming requests are often slowed because “a significant amount of the subcommittees’ time is consumed by waiting for the department to provide requested additional details and justification for these requests.” “Providing this information alongside the submission of the request would accelerate consideration and create a nimbler process without altering existing authority or reprogramming thresholds,” the appropriators said. Congressional leaders urged the department’s comptroller and the services’ assistant secretaries to work with the House and Senate Defense Appropriations Subcommittees to improve the amount of detail and justification provided in reprogramming submissions. Congress gave the department some budget flexibility in 2024 but stopped short of granting broader authorities the department and reform advocates have been seeking that would allow DoD to move money more freely within its accounts without explicit congressional approval. The Defense Department has also been pushing to change the hardware-centric budgeting model Congress uses to plan and execute the Pentagon’s spending by moving away from the traditional “colors of money” tied to different phases of weapons development. And while DoD has run several pilot projects to test the idea, lawmakers have been hesitant to authorize broader adoption of the approach due to the department’s inability to provide Congress with sufficient data showing the new approach would be more effective than traditional appropriation practices. “To date, the agreement observes no new or compelling justification or quantitative analysis to support proposals that would alter the current appropriations framework, including with respect to reprogramming thresholds, notification requirements, new start guidelines, or consolidation into a single color of money,” the appropriators said. “Consideration of legislative changes to the appropriations structure is premature until the Department has demonstrated full and effective use of its existing flexibilities and addressed persistent internal delays,” they added. Army’s agile funding request rejected While appropriators approved all 13 budget line-item consolidations requested by the Army in its fiscal 2026 budget, they flatly rejected the Army’s “agile funding” request to raise notification threshold for reprogramming or transfers from $15 million to $50 million for procurement programs and to $25 million for research and development efforts. “The Department already has sufficient authorities to restructure its internal programming and budgeting processes, and many current challenges with execution can be solved by actions within the Department and do not require statutory change or congressional intervention … Increasing reprogramming thresholds alone is unlikely to improve program execution. Decisions to unilaterally move funding in the year of execution without sufficient oversight introduce uncertainty to both the programs impacted and the industrial base, increasing the risk of development and procurement delays,” the appropriators said. “The House and Senate Defense Appropriations Subcommittees discourage the Secretary of Defense and the Service Secretaries from submitting future requests of this nature,” they added. Joint requirements reform risks The Defense Department kicked off the process of dismantling its decades-old Joint Capabilities Integration and Development System (JCIDS) process last year — and Hegseth ordered the Joint Requirements Oversight Council (JROC), which oversees the process, to stop validating service-level requirements to the “maximum extent permitted by law.” House and Senate appropriators said they support the reform but want more detail on how defense officials plan to mitigate potential risks, such as the military services potentially prioritizing service-specific solutions over joint ones or top-down decision-making stifling bottom-up innovation. The deputy secretary of defense, vice chairman of the Joint Chiefs of Staff and service secretaries have 60 days to brief appropriators on how they plan to address those risks.  Workforce is the linchpin of acquisition reform DoD leaders have long warned that the depth of this administration’s workforce cuts could cripple the department’s ability to execute Hegseth’s acquisition reforms. Appropriators echoed those concerns, saying they are “concerned that recent reductions to the acquisition workforce, the effects of which have yet to be realized, will negatively affect the Department of Defense’s ability to achieve the initial speed and agility sought by this reform effort.” Lawmakers directed the defense secretary along with service secretaries to submit an acquisition workforce strategy, including a comprehensive assessment of the personnel needed to execute Hegseth’s and Congress’ proposed acquisition reforms. If you would like to contact this reporter about recent changes in the federal government, please email anastasia.obis@federalnewsnetwork.com or reach out on Signal at (301) 830-2747.The post Congress pushes back on parts of DoD’s acquisition reform agenda first appeared on Federal News Network.

As he marked one year since being sworn into office, President Donald Trump on Tuesday touted the actions of his administration — including praising the major reductions to the federal workforce throughout 2025. “I don’t want to cut people, but when you cut them and they go out and get a better job, I like to cut them,” Trump said during a nearly two-hour press briefing, while also stating his administration “slashed tremendous numbers of people off the federal payroll.” The White House on Tuesday also released a list of “365 wins” over the last year, commending the administration’s efforts to ensure a “merit-based” federal workforce. The list includes federal workforce actions overhauling the probationary period; eliminating diversity, equity and inclusion across government; requiring employees to work on-site full-time; slashing federal jobs; and limiting agencies to one new hire for every four employees who exit the civil service. “I say, get rid of everybody that’s unnecessary, because that’s the way you make America great again,” Trump said. “When you have all these jobs where people are sitting around doing nothing and they get a lot of money from the government, it’s no good.” But good government groups such as the Partnership for Public Service tell a much different story of the administration’s impact on the federal workforce. Max Stier, the Partnership’s president and CEO, described 2025 as “the most significant reduction in federal government capacity that we’ve ever experienced in our history.” “And that reduction in capacity is best represented in our most important asset: our federal workforce,” Stier told reporters on a press call last week. Governmentwide, federal workforce data shows that about 320,000 federal employees left government during 2025, while just tens of thousands joined the civil service. The Office of Personnel Management reported a net loss of about 220,000 federal employees over the course of the year. “It tells a disturbing story about who we’ve lost in our government and what is actually happening to the workforce,” Stier said. “But it doesn’t tell you anything about what is truly most fundamental — their morale and what they think about what’s happening right now.” The Partnership, a non-profit organization that advocates for non-partisan, “good government” reforms, released a report on Tuesday, noting that the Trump administration’s actions over the last year created “confusion, distrust and stress within the federal workforce.” “There were large-scale layoffs of employees, cuts to government programs and the ending of many grants, altering how the government does — or does not — serve the public and the outcomes it can achieve,” the report states. “Not only did the government lose invaluable expertise, it became less responsive to public needs and less prepared to keep Americans safe.” “It is impossible to gain a full picture of the layoffs and their impact,” the Partnership added. “The administration has provided few specifics about what positions have been eliminated and which personnel have been laid off or incentivized to resign.” The Partnership’s report also detailed the specific impacts of federal workforce losses over the last year, including effects at agencies like the IRS, Social Security Administration, Department of Health and Human Services, FEMA and many others. As a result of the governmentwide staffing cuts, the Partnership argued, agencies are less prepared to deliver disaster assistance during emergencies, and less efficient in administering crucial government programs, leading to delays in basic services and increased wait times. By contrast, OPM Director Scott Kupor has argued that the Trump administration’s federal workforce overhauls will lead to better employee accountability, merit and performance across government. Kupor also touted the loss of one-third of OPM’s internal workforce during 2025, while saying the agency’s service delivery improved. “President Trump was clear from day one: The federal workforce must be accountable, performance-driven and focused on serving the American people,” Kupor said in a Dec. 31 press release. “This year, OPM delivered on that vision — modernizing government operations, rewarding excellence and putting taxpayers first.” But Rob Shriver, director of the Civil Service Strong program at Democracy Forward, questioned the Trump administration’s workforce reductions, saying there are no forward-looking plans for continuing to effectively deliver services after the cuts. “The singular focus on headcount reduction as a blunt instrument reveals that DOGE was never about efficiency,” Shriver, a former acting director of OPM during the Biden administration, said in commentary on Tuesday. “It was about retribution and stifling dissent by intimidating federal workers into leaving their jobs or, if they decided to stay, intimidating them into not questioning their political leaders.” At the same time, information on the federal workforce’s perspective over the course of 2025 will likely be limited. After months of postponing, OPM last year opted to cancel the 2025 Federal Employee Viewpoint Survey. In an attempt to fill the data gap, the Partnership conducted its own federal workforce survey. The results of the Partnership’s survey are expected to be released in March. But Partnership officials have said it will still be difficult as an external organization to replicate the depth of data OPM can attain through FEVS. Going forward, the Trump administration is looking to make further changes for the federal workforce, including overhauls to the probationary period and federal hiring processes, as well as performance management and senior executive development. OPM’s Kupor said the upcoming changes will make government “leaner,” while making federal employees more results-oriented, accountable and efficient. But some painted a darker picture for federal employees throughout 2026. “The harms caused by these cuts have already begun to play out, and we’ll see more and more of that in 2026, when the impacts of the thoughtless workforce cuts are felt more deeply around the country,” Shriver said. The Trump administration is also expected to soon issue a final rule to implement “Schedule Policy/Career.” The forthcoming regulations will let agencies reclassify career federal employees in “policy-influencing” positions, in effect removing their civil service protections and making them easier to fire at-will. “The change of our federal government into one that is a loyalist workforce, as opposed to a professional one, is a process that we anticipate moving forward in 2026,” Stier said. “As challenging as 2025 was, I think we can expect even harder days ahead in 2026.”The post Trump lauds ‘tremendous’ federal workforce cuts. Good government group calls them ‘disturbing.’ first appeared on Federal News Network.

Lawmakers are moving to extend key cybersecurity information authorities and grant programs, while also providing funds for the Cybersecurity and Infrastructure Security Agency to fill “critical” positions. The “minibus” appropriations agreement released by House and Senate negotiators on Tuesday includes fiscal 2026 funding for the Department of Homeland Security. DHS funding could be a sticking point in moving the bill forward, as some Democrats want more restrictions around the Trump administration’s immigration enforcement operations. The bill also extends the Cybersecurity Information Sharing Act of 2015 (CISA 2015) and the State and Local Cybersecurity Grant Program through the end of fiscal 2026. Both laws are set to expire at the end of this month. The extension would give lawmakers more time to work out differences between competing versions of CISA 2015 reauthorizations in the House and Senate. Ross Nodurft, executive director of the Alliance for Digital Innovation, also applauded the extension of the Technology Modernization Fund included in the minibus. “Reauthorizing the Technology Modernization Fund and the State and Local Cyber Grant Program for the rest of the fiscal year allows the government to invest money in new technology modernization and cyber security projects at the federal and state level while we work on more permanent, longer term reauthorizations and funding,” Nodurft said. “I am encouraged to see Congress put forward these stop gap measures and will continue to work with members to reauthorize these critical programs beyond 2026.” CISA funding The bill would include a cut for the agency CISA, with fiscal 2026 funding level set at $2.6 billion, about $300 million less than its current annual budget. But CISA has already seen steep workforce cuts and program reductions under the Trump administration. The Trump administration proposed cutting CISA’s budget by roughly $500 million. The appropriations agreement would specifically provide $20 million for CISA to hire additional staff to “critical positions,” according to the joint explanatory statement on the DHS appropriations measure. That funding would be evenly split across five CISA programs: Threat Hunting; Vulnerability Management; Continuous Diagnostics and Mitigation; Security Programs; and Security Advisors. The bill would also require CISA to “not reduce staffing in such a way that it lacks sufficient staff to effectively carry out its statutory missions.” Both Democrats and Republicans have expressed concerns about CISA losing roughly one-third of its staff over the past year. Secret Service burnout Appropriators are also taking aim at burnout within the Secret Service’s ranks. The funding measure provides $3.3 billion for the Secret Service as it embarks on a major recruiting initiative over the next two years. That total would allow the Secret Service to “maintain ‘zero-fail’ mission by funding aggressive recruitment and retention to eliminate officer burnout, while modernizing high-tech training facilities and armored fleets to stay ahead of evolving threats to our nation’s leaders,” according to a DHS spending bill summary provided by Senate appropriators. The bill includes an increase of $46 million for Secret Service hiring in fiscal 2026. It also provides the agency with advance funding to prepare for the 2028 Olympic and Paralympic Games in Los Angeles. But appropriators also want updates on the Secret Service’s recruitment and retention efforts. The explanatory statement directs the agency to provide briefings on its employee resiliency program and hiring projections, respectively. “The briefing shall also include ongoing efforts to decrease the time to hire and increase yield rates from applicants to hires, as well as the impact that these hiring efforts will have on overtime costs,” lawmakers wrote. FEMA staffing The spending agreement also includes a “rejection” of staffing cuts made at the Federal Emergency Management Agency in fiscal 2025, according to the joint explanatory statement. The bill would provide $32 billion for FEMA, including $26.4 billion for the Disaster Relief Fund. FEMA lost more than 2,000 employees to workforce reduction programs last year. And the agency has undertaken further staff reductions by not renewing Cadre of On-Call Response/Recovery Employees (CORE) in recent weeks. FEMA headquarters officials have also contemplated cuts totaling up to 50% of its workforce as part of a planning exercise shared with agency leaders in December. Now, appropriators want FEMA to provide monthly briefings on the agency’s staffing levels and workload requirements. “Such briefings shall also include projected staffing levels for the remainder of the fiscal year in light of the agreement’s rejection of the position reductions implemented in fiscal year 2025,” the joint explanatory statement reads. The bill also requires FEMA to maintain staff “necessary to fulfill the missions” required of the agency by six separate laws and various other authorities. That staffing requirement, lawmakers emphasize, also applies to FEMA reservists and CORE staff. The Trump administration has moved to shift more emergency management responsibilities to state and local governments. FEMA staffing reductions and policy changes over the last year have sparked concerns that the administration is implementing that plan despite there being no changes in the agency’s lawful responsibilities.The post DHS spending bill bolsters staffing at CISA, FEMA, Secret Service first appeared on Federal News Network.

Congressional appropriators are one step closer to reaching a comprehensive spending deal for the rest of the fiscal year before a stopgap spending bill expires at the end of the month. Members of the House and Senate appropriations committees released a four-bill “minibus” of fiscal 2026 spending bills on Sunday. Congress is roughly halfway to passing a spending plan for the rest of FY 2026. The current continuing resolution expires on Jan. 30. The latest “minibus” covers annual appropriations for the departments of Defense, Homeland Security, Labor, Health and Human Services, Education, Transportation and Housing and Urban Development, as well as some smaller related agencies. House Appropriations Committee Chairman Tom Cole (R-Okla.) said in a statement that the spending package delivers “results without waste.” “At a time when many believed completing the FY26 process was out of reach, we’ve shown that challenges are opportunities. It’s time to get it across the finish line,” Cole said. Here are a few highlights from the spending package: 3.8% pay raise for air traffic controllers The spending deal would give the Federal Aviation Administration a $1.58 billion budget for fiscal 2026, as well as funding to hire 2,500 new air traffic controllers The FAA is about 3,500 air traffic controllers short of its staffing goals. Many current air traffic controllers are working six days a week, including mandatory overtime. As part of this budget plan, the FAA would receive $140 million to implement a 3.8% pay raise for air traffic controllers, as well as supervisors and managers who oversee air traffic. The Trump administration approved a 3.8% pay raise for 2026 federal law enforcement personnel. Air traffic controllers were not on the Office of Personnel Management’s list of positions receiving a higher pay raise. The spending bill states that the 3.8% pay raise “shall be implemented for all such employees only to the extent that the administrator determines, in his sole discretion, that improvements in workforce scheduling, staffing utilization, or other operational efficiencies are achieved that contribute to addressing workforce shortfalls and enhancing aviation safety.” If the FAA administrator determines these conditions, the pay raise would retroactively go into effect for the first pay period in January 2026. Spending cuts for a smaller federal workforce Republican appropriators applauded overall spending cuts in the spending bill that funds the Transportation Department, HUD and related agencies. GOP lawmakers on the House Appropriations Committee wrote that the spending deal “codified DOGE recommendations to reduce the federal bureaucracy” of Transportation, HUD and related agencies by 29%. More specifically, GOP lawmakers said the spending package reflects a 24% reduction in HUD staffing achieved partially through layoffs last year. Lawmakers said a smaller HUD workforce will save $348 million in salaries and related expenses. Republican appropriators said the spending deal reflects the Transportation Department “right-sizing” its workforce through a 5% staffing reduction, “all without compromising transportation safety.” President Donald Trump told reporters at a White House press briefing on Monday that his administration “slashed tremendous numbers of people off the federal payroll” during his first year in office. OPM data shows over 300,000 federal employees left government last year. That’s about a net loss of 220,000 employees, when accounting for new hires. Trump said downsizing the federal workforce was necessary, because “they had 10 people for every job,” and that terminated federal employees have moved on to higher-paying jobs in the private sector. “I don’t feel badly, because they’re getting private sector jobs, and they’re getting sometimes twice as much money, three times as much money,” Trump said. “They’re getting factory jobs, they’re getting much better jobs and much higher pay.” Higher HHS spending, proposed cuts rejected The spending bill gives the Department of Health and Human Services $116.8 billion in discretionary spending — a $210 million increase in discretionary spending. By contrast, the Trump administration proposed a nearly 20% cut to HHS discretionary spending this year. The congressional spending deal rejects the administration’s calls for deep cuts within HHS. The administration sought a 50% spending cut for the Centers for Disease Control and Prevention. Instead, the compromise reached by lawmakers essentially keeps CDC funded at current levels, and includes funding increases for some of its pandemic preparedness programs. The spending package would give $7.4 billion to the Substance Abuse and Mental Health Services Administration (SAMHSA) a $65 million increase over current funding levels. The bigger budget reflects increased spending to address a rise in opioid overdoses, especially from fentanyl, as well as boosts to substance abuse disorder prevention and mental health services. Lawmakers rejected a 15% cut to SAMHSA funding proposed by the Trump administration. The spending deal also rejects the administration’s plan to reorganize SAMHSA into the Administration for a Healthy America (AHA), a new office envisioned by HHS Secretary Robert F. Kennedy, Jr. Democrats on the appropriations committees said the spending deal ensures SAMHSA remains its “own, independent agency to help ensure substance use and mental health remain a priority at HHS” and “includes new guardrails to ensure SAMHSA funds are allocated as intended.” NPR reported last week that HHS briefly terminated $2 billion in addiction and mental health grants, but quickly walked back those cuts. Education Department budget remains intact Lawmakers are largely rejecting the administration’s proposal to dismantle the Education Department, and move many of its functions to other federal agencies. The spending bill gives the department $79 billion in discretionary spending — a roughly flat budget compared to current spending levels. The Trump administration proposed cutting the Education Department by $12 billion, or about 15% of its current discretionary budget. The Education Department has already signed six interagency agreements to transfer some of its programs and employees to HHS and the departments of Labor, Interior and State. Education Secretary Linda McMahon told employees last November that the department is soft-launching plans to reassign its work to other parts of the federal government, before calling on Congress to permanently shutter the agency. Senate Appropriations Committee Vice President Patty Murray (D-Wash.) said in a statement that “Congress will not abolish the Department of Education, and the people’s representatives will have the final say on how taxpayer dollars get spent.” Budget boost for Social Security The Social Security Administration would see a higher budget under this spending plan. Lawmakers propose giving SSA $15 billion for its administrative budget in fiscal 2026 — a $554 million increase compared to current spending levels. Lawmakers from both parties agreed that the funding will help the agency improve customer service for the public. Democratic appropriators urged SSA to use these increased funds to resume hiring. SSA currently has about 50,000 employees in total, according to the latest data from the Office of Personnel Management. The agency lost more than 7,000 employees through voluntary incentives last year. It also relocated many of its employees from its headquarters and regional offices to field offices. SSA Commissioner Frank Bisignano told staff at an all-hands meeting last week that the agency is continuing to hire, according to several employees in attendance. Those employees, however, said the agency still faces a hiring freeze. Labor Dept. federal contractor watchdog spared from elimination The spending bill provides $13.7 billion in discretionary spending to the Labor Department — a slight increase compared to its current $13.5 billion discretionary budget. The department’s Office of Federal Contract Compliance Programs would receive a $101 million budget, about a 9% cut to current spending levels. OFCCP ensures federal contractors aren’t discriminating against their employees. OFCCP, however, would remain largely intact, after the Trump administration proposed major staffing cuts. An earlier funding proposal from House Republicans also proposed fully eliminating OFCCP. The agency sent layoff notices to 90% of its staff, but rescinded those layoffs last August. Instead of being reinstated to their jobs at OFCCP, the agency said impacted employees would be “reassigned to a new position” at the Labor Department. Small agencies marked for closure stay open The spending bill also includes funding for small, independent agencies marked for elimination by an executive order last year. Lawmakers propose giving the Institute of Museum and Library Services a $292 million budget — a $3 million cut compared to current spending levels.  The spending bill also proposes $3 million in funding for the Interagency Council on Homelessness. President Trump signed an executive order last March, eliminating these agencies and five others “to the maximum extent consistent with applicable law.” A federal judge in Rhode Island ordered a permanent injunction last November, putting the Trump administration’s plans to shutter these small agencies on hold. House Appropriations Committee Ranking Member Rosa DeLauro (D-Conn.) said in a statement that the funding package “continues Congress’s forceful rejection of extreme cuts to federal programs proposed by the Trump administration.” “Where the White House attempted to eliminate entire programs, we chose to increase their funding. Where the administration proposed slashing resources, we chose to sustain funding at current levels,” DeLauro said.The post 3.8% pay raise for air traffic controllers, Education Dept cuts rejected: Highlights from final FY 2026 spending bills first appeared on Federal News Network.

  Interview transcript: Terry Gerton I want to start with Secretary Hegseth’s Arsenal of Freedom tour. He’s taking his pitch on the road and recently spoke at the Lockheed Martin Air Force plant in Fort Worth, Texas. I know you’ve been following this, the developments in defense procurement for quite a while. What are you hearing at this point? Stephanie Kostro So Terry, this “Arsenal of Freedom” is a month-long tour, and it really is Secretary Hegseth going around to various places. He started out in Newport News, here in Virginia, talking with shipbuilders about what it means to be part of the team, right? Being part of the arsenal of freedom and in making things faster, more efficiently, etc. He then went out to California and spoke with folks, and then most recently, just last week in Texas, visiting Lockheed Martin as you mentioned, but also SpaceX. And so talking to folks about, what does it mean to be part of the arsenal of freedom? This is building on his November 7th Arsenal of Freedom speech that he gave here at Fort McNair in the D.C. area. And it is really about reviving this team mentality of, “we are in this together.” Against that backdrop, of course, we have recent activity in acquisition transformation, but also an executive order that came out earlier this month about limiting executive compensation for defense contractors, limiting dividends and also share repurchases or stock buybacks. And so this is a very interesting time to be in the defense industry. Terry Gerton Stephanie, with all of the changes in the FAR and the DFAR and now the Defense Appropriation Act that’s in law, do you think that DoD has the policy tools it needs and wants to accomplish its transformation? Stephanie Kostro There are two elements of the answer here. One is, with the fiscal year 2026 National Defense Authorization Act, which was just signed into law last month, they received a lot of new authorities, a lot of a sense from Congress about the ways in which this should be tackled. There is language there about technical data rights and intellectual property. There were things in there about how to define a nontraditional defense company, etc. But I don’t think that was sufficient; we still have work to do. And so does the department have all of the authorities and resources it needs to move forward? I think we’re going to see a lot of legislative proposals come out of the department for this next round of the NDAA, the fiscal year ’27 NDAA. And I think we’ll see things about acquisition workforce. We’re going to see things about working outside of the Federal Acquisition Regulation way of doing contracts. That is code for things like Other Transaction Authority or commercial solutions openings, etc. I don’t think they have everything they need. Part of the Arsenal of Freedom tour and the rollout of this acquisition transformation is to look at how the department can buy things more effectively and more efficiently. That’s time, not having cost overruns, etc. And so all of this is sort of coming together, in a way, to ultimately really transform the way the department buys. And I’m very excited to be part of this. Terry Gerton Having the rules and authorities is only one piece. What’s your sense of whether the acquisition culture and workforce are aligned to actually accomplish the goals? Stephanie Kostro Culture is the hardest element of any kind of transformation, right? I do think they’re trying to empower contracting officers and other key members of the acquisition workforce, program managers, contracting officer representatives, etc. This is a longer-term issue, and I think they are trying to tackle it through training programs, etc., letting folks know tools are at their disposal and giving them the authority to go ahead and use those tools. Now, folks don’t get into acquisition within the civil service because they’re risk-loving. A lot of times they get into it because they want to do things very smartly, very efficiently and oftentimes they look back on precedent to see how things were done before. Layer over that, Terry, the fact that we lost a lot of contracting personnel through deferred resignation programs, voluntary early retirement programs and reductions in force. So we are trying to rebuild the workforce in numbers as well as in training. I don’t think they’re there yet; I do think there’s a path to get them there. I’m eager for industry to work with the Department of War and others about how to train effectively and to let industry folks sit in the same training as the government folks, so everyone’s hearing the same thing. Terry Gerton Stephanie, before we leave this topic, you touched on the executive order about defense contractors and compensation and buybacks. There’s a lot of unknowns still in how that will play out, but what are you hearing from your members? Stephanie Kostro Our members were very eager to hear how the Professional Services Council would summarize that EO. So we did put out — based on the fact sheet from the White House, based from some interactions we’ve had with administration officials — our interpretation of it. That said, we’ve also asked our member companies, and we have 400 member companies and the majority of them do business with the Department of War and the intelligence community, “hey, what questions for clarification would you like us to ask?” And that list is growing. It is very long. It’s things like, is this really just for publicly traded companies? What about privately owned, or S corps and LLCs? The reason I mentioned that, Terry, is S corps and LLCs will often pay out a dividend to an executive at the company so that executive can pay taxes. They pay out of dividend, so it’s not only a dividend payment, it’s executive compensation, but it’s really just to go ahead and pay federal taxes. What do people do in that regard? How do they explain this? If they have a parent company that is overseas in Europe or elsewhere, how do they explain this executive order to those folks? And that executive compensation, there’s a limit if the company is underperforming, and all of this is predicated on the company’s underperforming — either cost overruns or schedule overruns. How do they explain this to folks? And is it really just about government contracts, or what if you’re a commercial and a government company and your executive compensation is based usually on both elements, commercial and government? So how do you go ahead and limit compensation there? This is a fascinating area to be engaged with the government on. We are all learning this together. Terry Gerton As Secretary Hegseth tries to walk this tightrope between encouraging defense contractors to be on the team and work with us, and at the same time kind of tightening the screws on enforcement and compensation, the president has said he wants to spend $1.5 trillion on defense next year. That’s a lot of money. How is that going to get spent, do you think? Stephanie Kostro Oh, it is an eye-catching number, right? $1.5 trillion when we are roughly $1 trillion now are just under, and it is a huge increase. Now, we’ve had large increases in the defense budget in other times in U.S. history. In the early 1950s with the Korean War, the Reagan buildup that some of us remember from the ’80s. Some of us who are listening may not remember it. They may not have been born yet, and that’s okay too. You know, there is some precedent for huge increases in the defense spend. The question here becomes, if the department and the military services are going for commercial-first mentality to prioritize speed of award and innovation, etc., they certainly can spend that money throughout the defense ecosystem. The question that we have is really, what is the organizing construct for this? What would we be spending the money on? Would it be shipbuilding, combat aircraft, the logistics piece, which always tends to be an issue? We also know operations and maintenance accounts are sometimes used and reprogrammed away if they’re not spent by a certain time, because it’s one-year money at the department, it gets reprogramed away. It’s going to be an interesting mathematical problem to tackle. In addition, I would mention, we had the reconciliation bill, the One Big, Beautiful Bill Act that passed and was signed into law last July. That infused a bunch of cash into both the Department of Defense and the Department of Homeland Security. I understand some of that money hasn’t been apportioned and provided to the departments yet, but we are now at this point in January of 2026 talking about, what would a reconciliation bill look like for 2026? Congress can pass one per fiscal year. The one that was passed last July was the one for fiscal ’25. What happens this year? There are a lot of different mechanisms to get that money through Congress and over to the government to apportion to the department. Terry Gerton Well, speaking of 2026 appropriations, it looks like Homeland Security and Defense will be two of the last bills out, hopefully before the end of this month. What are you hearing from folks on the Hill? Stephanie Kostro I’m hearing that they’re trying really, really hard to avert a shutdown. And I think we’re going to get there. I’m not a betting person, Terry, you know, I’ve talked about that in the past. And I’m not in this case, either. The chance for a shutdown is never zero. That said, the experience that we all had back in October and November last year would indicate that there really is no appetite for a shutdown this year. The National Defense Appropriations Act and the DHS [bill] I think are probably the last because they want to get everything done before they tackle those. Those are the two departments that received the lion’s share of the money from the reconciliation bill, One Big Beautiful Bill Act last year, and they are looking to get more money in a reconciliation bill this year. So I’m not surprised to hear that those are last, but I actually don’t think that indicates that they’re very far apart on the numbers. Terry Gerton And on those two departments, PSC is sponsoring a trip in January to the border to do some on-site research. Tell us about that plan. Stephanie Kostro I am so excited about this. PSC has not typically done this. I do know other entities have done this, I used to be at a think tank where we would do things like this. We are bringing almost 30 different companies out to California next week, Jan. 28 and 29, to do a behind-the-scenes access with the Customs and Border Protection folks who are out there. And the ports of LA and Long Beach, the ports at entry, the land ones over at San Ysidro and Otay Mesa, really talking with folks on the ground there about what their requirements are. This is really focused on technology. How do we use technology and the art of the possible to protect our borders? Now, I would hasten to add, Terry, border security is not a partisan issue in many, many ways. The Biden administration, the Obama administration, the previous Trump administration all focused on border issues in different ways. Our companies really want to mention to folks on the ground, here is technology that you may not have experience with that is up-and-coming. How can we leverage it to better secure our borders? Talking about cargo screening, etc. I think this is a really good opportunity for companies to sit down with folks who are in the field and hear about what they need.The post Can key visits to cities anchoring U.S. national security spur a new American “arsenal”? first appeared on Federal News Network.

As the federal government accelerates artificial intelligence adoption under the national AI Action Plan, agencies are racing to bring AI into mission systems. The Defense Department, in particular, sees the potential of AI to help analysts manage overwhelming data volumes and maintain an advantage over adversaries. Yet most AI projects never make it out of the lab — not because models are inadequate, but because the data foundations, traceability and governance around them are too weak. In mission environments, especially on-premises and air-gapped cloud regions, trustworthy AI is impossible without secure, transparent and well-governed data. To deploy AI that reaches production and operates within classification, compliance and policy constraints, federal leaders must view AI security in layers. Levels of security and governance AI covers a wide variety of fields such as machine learning, robotics and computer vision. For this discussion, let’s focus on one of AI’s fastest-growing areas: natural language processing and generative AI used as decision-support tools. Under the hood, these systems, based on large language models (LLMs), are complex “black boxes” trained on vast amounts of public data. On their own, they have no understanding of a specific mission, agency or theater of operations. To make them useful in government, teams typically combine a base model with proprietary mission data, often using retrieval-augmented generation (RAG), where relevant documents are retrieved and used as context for each answer. That’s where the security and governance challenges begin. Layer 1: Infrastructure — a familiar foundation The good news is that the infrastructure layer for AI looks a lot like any other high-value system. Whether an agency is deploying a database, a web app or an AI service, the ATO processes, network isolation, security controls and continuous monitoring apply. Layer 2: The challenge of securing AI augmented data The data layer is where AI security diverges most sharply from commercial use. In RAG systems, mission documents are retrieved as context for model queries. If retrieval doesn’t enforce classification and access controls, the system can generate results that cause security incidents. Imagine a single AI system indexing multiple levels of classified documents. Deep in the retrieval layer, the system pulls a highly relevant document to augment the query, but it’s beyond the analyst’s classification access levels. The analyst never sees the original document; only a neat, summarized answer that is also a data spill. The next frontier for federal AI depends on granular, attribute-based access control. Every document — and every vectorized chunk — must be tagged with classification, caveats, source system, compartments and existing access control lists. This is often addressed by building separate “bins” of classified data, but that approach leads to duplicated data, lost context and operational complexity. A safer and more scalable solution lies within a single semantic index with strong, attribute-based filtering. Layer 3: Models and the AI supply chain Agencies may use managed models, fine-tune their own, or import third-party or open-source models into air-gapped environments. In all cases, models should be treated as part of a software supply chain: Keep models inside the enclave so prompts and outputs never cross uncontrolled boundaries. Protect training pipelines from data poisoning, which can skew outputs or introduce hidden security risks. Rigorously scan and test third-party models before use. Without clear policy around how models are acquired, hosted, updated and retired, it’s easy for “one-off experiments” to become long-term risks. The challenge at this level lies in the “parity gap” between commercial and government cloud regions. Commercial environments receive the latest AI services and their security enhancements much earlier. Until those capabilities are authorized and available in air-gapped regions, agencies may be forced to rely on older tools or build ad hoc workarounds. Governance, logging and responsible AI AI governance has to extend beyond the technical team. Policy, legal, compliance and mission leadership all have a stake in how AI is deployed. Three themes matter most: Traceability and transparency. Analysts must be able to see which sources informed a result and verify the underlying documents. Deep logging and auditing. Each query should record who asked what, which model ran, what data was retrieved, and which filters were applied. Alignment with emerging frameworks. DoD’s responsible AI principles and the National Institute of Standards and Technology’s AI risk guidance offer structure, but only if policy owners understand AI well enough to apply them — making education as critical as technology. Why so many pilots stall — and how to break through Industry estimates suggest that up to 95% of AI projects never make it to full production. In federal environments, the stakes are higher, and the barriers are steeper. Common reasons include vague use cases, poor data curation, lack of evaluation to detect output drift, and assumptions that AI can simply be “dropped in.” Data quality in air-gapped projects is also a factor. If your query is about “missiles,” but your system is mostly indexed with documents about “tanks”, analysts can expect poor results, also called “AI hallucinations.” They won’t trust the tool, and the project will quietly die. AI cannot invent high-quality mission data where none exists. There are no “quick wins” for AI in classified missions, but there are smart starting points: Build upon a focused decision-support problem. Inventorying and tagging mission data. Bringing security and policy teams in early. Establishing an evaluation loop to test outputs. Designing for traceability and explainability from day one. Looking ahead In the next three to five years, we can expect AI platforms, both commercial and government, to ship with stronger built-in security, richer monitoring, and more robust audit features. Agent-based AI pipelines with autonomous security accesses that can pre-filter queries and post-process answers (for example, to enforce sentiment policies or redact PII) will become more common. Yet even as these security requirements and improvements accelerate, national security environments face a unique challenge: The consequences of failure are too high to rely on blind automation. Agencies that treat AI as a secure system — grounded in strong data governance, layered protections and educated leadership — will be the ones that move beyond pilots to real mission capability. Ron Wilcom is the director of innovation for Clarity Business Solutions.The post Securing AI in federal and defense missions: A multi-level approach first appeared on Federal News Network.

 Interview transcript:  Terry Gerton There’s been a lot of controversy around polygraphs in government over the past few months. So let’s start with some of the basics. Why do agencies like CISA and DoD continue to rely on polygraphs for certain positions? Dan Meyer So that’s a great starting point. The first thing we have to recognize is that polygraph technology is so questionable that it’s generally not admissible in courts. So as evidence, it’s pretty thin, and that’s been a generational trend. It used to be accepted far more back in the 1930s and 40s than it is now. So we use polygraphs in the United States for counterintelligence. That’s what it’s for, reliability of the workforce. We want to be able to test and employ statements, various questions against some empirical basis of truth. The challenge with the polygraph is that it measures not truth, but physiology. It measures the way the body reacts. And science, over the years, has started to show that women and men, for instance, don’t react the same. They don’t have the same physiology. That’s why we have to do different types of medical research now, because women were traditionally ignored, because we always thought that men were the baseline, and everybody would be the same as men. Well, that turned out not to be true. The same situation exists with polygraphs, and there can be differences across the board which polygraphers can never accept, and they can’t accept because that starts to undermine their position within the professional community. So that’s the challenge, is that it measures physiology and not actual truth or veracity of the individual. At some point we’ll be out of this problem because we’ll have a tool that’s better than the polygraph and I do think that artificial intelligence will create it, but we in the United States use the polygraph to catch spies, other countries don’t. And that’s our only tool we really have. We’re not good at actually doing assessment of human potential from other types of analysis. So we’re stuck with it. It’s the only tool that we’ve got and it’s the one we use. And if you’re in the intelligence community or if you are in law enforcement, the chances are you’re going to be under a polygraph at some point in your career, if not your entire career. Terry Gerton There was a recent controversy around the acting CISA director’s failure of a polygraph test. Can you fill us in a little bit on what went on there? Dan Meyer I’m not privvy to the exact details of his particular case, but the alarming part of that is it was CISA. CISA is the heart of our cyber defense, and for much of the Biden administration, it was under very, very close scrutiny from a variety of congressional oversight authorities. Senator Grassley, at one point, was doing an inquiry. So there was concerns that CISA was being used politically. So on top of that concerns, the Trump administration came in with a commitment to reform it. And then you have this problem. And the problem seems to have developed around two questions. One is, did the individual fail a polygraph? You really don’t fail a polygraph, either there’s a detection or a non-detection. It’s really not like a test you can fail. But clearly did not pass, to use the vernacular, according to the reports. And then there’s the open question about whether that individual should have been under a polygraph, and there’s this allegation out there in the press that somehow he was set up. And so those are the two concerns there. The second one is kind of unique in that polygraphs are given based on the position and what’s called the criticality of the position. So it’s really about the classification of one’s job that determines whether you get a polygraph. So there really should be no question as to whether a person should have a polygraph or not have a polygraph, so if there was an open question, that should have been elevated to the appropriate authority to decide that. My understanding is that’s the DNI, is the DNI is in charge of reliability issues, security clearance issues across the board for the president in her capacity as the DNI, but not as the spymaster in the United States. It’s a collateral duty. That should have been resolved and it should not be at the point now where employees are being accused and somebody who’s now being seen as a victim of a wrongful polygraph process, that’s ugly. We should have never gotten to that point. That should have been raised and clarified before the polygraph went forward. The second use goes back to my original comment about physiology. People can fail polygraphs for a variety of reasons. There’s the famous guilt-grabber complex, which is that an individual is very at attention in their thoughts, very self-reflective, very self-aware. People who are that way about events in their lives may start to have feelings of guilt. Feelings of guilt can trigger physiology. And sometimes your feeling of guilt that you didn’t feed the cat on time this morning can bleed over into a question that when you were asked whether you committed an act of terrorism against the United States. Well, let’s put it this way. If you’re a sociopath, the chances are you’re going to pass a polygraph because the way you’re constructed in your behavioral mental health diagnosis is ideally suited to not triggering the physiology cues that exist for the polygraph. But if you’re a deeply religious person or spiritual person, it’s in the community, this is known as the Jewish and Catholic issue. People who are Jewish and Catholic all had a Jewish or a Catholic mother. You were taught to always think you were doing something wrong. I’m laughing because I was raised by a Catholic mother, and so I was always looking at my behavior and always questioning my behavior. That can be a disaster on a polygraph. Terry Gerton I’m speaking with Dan Meyer, he’s an equity partner at Tully Rinckey. With all of the challenges with the polygraph that you’ve just articulated for us, if an employee or a contractor is facing one for their position, what are the best practices to prepare and protect themselves? Dan Meyer Okay, so on the big picture, let’s talk about from the administration perspective. We ought not to have separate rules for separate people about polygraphs, we’ve got to stick with the structure. If the position requires it, it has to be performed. There should not be special exceptions. I know you always want to have special exceptions, but that’s a bad idea. For the individual, the first thing you do is do not watch videos and do not study the polygraph because you are going to be asked questions that ask you if you did that, and then you’re going to be in the awkward situation of trying to explain whether you adopted countermeasures to make it look like you’re telling the truth when you’re not telling the truth. Do not try to game the polygraph because if the polygraph has trouble figuring out truth or falsity, it does not have trouble figuring it out whether you’re gaming it, and that’s a huge reason why people fail polygraphs. It’s good to retain a law firm to get advice on your security profile to help you understand where your liabilities are and how to accurately report them. The whole key to the security paradigm is you’ve got to be comfortable with the way you resolve the issues in your life so that when you talk to security officials and you talk about those issues, you’re open and candid and there’s a complete and transparent flow of information between those people about that situation. Then you won’t fail the polygraph, then you’re going to do fine on your security review. The challenge we have in American culture at this point in time is everybody thinks you have to withhold information to game the process. Game the process in our commercial lives as consumers, game the process in our private lives as family members. This is an evil that has drifted into American culture, and it really is harmful on the polygraph. So you’ve got to think through about whether you’re open and honest about your life, and you’ve got to incorporate that principle into your job application.The post Why agencies still use polygraphs and what a recent failure means for trust and reform first appeared on Federal News Network.