Recent developments in government contracting include a major Department of Commerce initiative to fund domestic quantum computing capabilities, continued implementation of the administration’s fixed-price contracting directive, and legislative efforts to codify the small business “Rule of Two” into statute. Together, these developments reflect continued emphasis on industrial policy, procurement reform, and preservation of longstanding small business contracting requirements.
Department of Commerce Announces Quantum Funding Agreements Under CHIPS and Science Act
On May 21, 2026, the Department of Commerce announced that it had signed nine letters of intent to provide more than $2 billion in federal incentives under the CHIPS and Science Act to support US quantum companies.
While the specific terms of each agreement have not yet been released, the planned investments are significant. IBM is expected to receive approximately $1 billion to establish a new quantum foundry subsidiary focused on quantum-grade superconducting wafers. GlobalFoundries is expected to receive just under $400 million to establish a secure domestic quantum foundry supporting leading architectures and multiple modalities used in large-scale quantum computing. Seven additional companies are expected to receive approximately $100 million in funding, with one award valued at up to $38 million.
Importantly, as a condition of receiving the funding, the US government will receive a minority, noncontrolling equity stake in each company as part of an effort to enhance returns for taxpayers.
Taken together, the initiative represents another example of the federal government pursuing nontraditional investment and funding structures to prioritize industries viewed as strategically important to the US industrial base and national competitiveness.
Agencies Continue Implementation of Executive Order 14402 on Fixed-Price Contracting
Federal agencies continue increasing their use of fixed-price contracting following Executive Order 14402, Promoting Efficiency, Accountability, and Performance in Federal Contracting.
On May 13, 2026, the Department of Defense announced the execution of several framework agreements with four prime contractors to launch the Low-Cost Containerized Missiles program, while a separate agreement with another contractor is intended to support scaling low-cost hypersonic capabilities. According to the department’s announcement, the agreements establish terms for future firm-fixed-price production contracts and include firm-fixed material-unit pricing for production lots spanning 2027 through 2029.
As previously discussed, contractors that do not typically operate under fixed-price arrangements should continue assessing the potential operational and financial impacts of these structures. Fixed-price contracts generally shift responsibility for cost overruns, particularly on less-defined projects, to the contractor.
In addition, contractors may face increased exposure to import costs, inflationary pressures, supply chain disruption, and other economic headwinds that could affect contract performance after award. Contractors should therefore consider these variables during contract capture and pricing processes, particularly because economic price adjustments are not guaranteed.
Legislative Push Continues to Codify “Rule of Two” for Small Business Set-Asides
On May 20, 2026, the House Committee on Small Business considered HR 2804, the Protecting Small Business Competitions Act of 2025, which would amend Section 15(j) of the Small Business Act to codify the longstanding “Rule of Two.”
Under the proposed legislation, agencies would be required to set aside procurements exceeding the simplified acquisition threshold for small business concerns when the contracting officer reasonably expects both that at least two small businesses will submit offers and that award can be made at a fair market price.
The Rule of Two has long served as a central mechanism for encouraging small business participation in federal procurement. However, to date, the requirement has existed through Federal Acquisition Regulation implementation rather than statute.
The legislation reflects concern that procurement reforms under the current administration could otherwise alter or remove the requirement through the regulatory process. If enacted, the bill would effectively embed the Rule of Two into statutory law, making it more difficult to eliminate absent congressional action.
The proposal would place the Rule of Two alongside other statutory small business contracting requirements already reflected in the Federal Acquisition Regulation, including subcontracting obligations tied to small and disadvantaged businesses.
Looking Ahead
This week’s developments highlight continued government efforts to reshape procurement and industrial policy through both executive action and legislation. Contractors should continue monitoring evolving contract structures, assess the risks associated with increased use of fixed-price arrangements, and track potential statutory changes affecting small business participation and procurement strategy.