Recent developments related to government contracting include a False Claims Act (FCA) settlement highlighting defense supply chain compliance, a US Department of Justice (DOJ) Office of the Inspector General (OIG) audit identifying weaknesses involving expired procurement vehicles, a Department of Transportation (DOT) overhaul of its Disadvantaged Business Enterprise (DBE) program, and a White House directive changing how the federal government refers to AI.
Aircraft Parts FCA Settlement Highlights Supply Chain Risk
On September 29, 2026, DOJ announced that Frazier Aviation and its former chief executive agreed to resolve FCA allegations involving aircraft parts sold to the federal government, with the former executive agreeing to pay $4.9 million.
DOJ alleged that Frazier improperly marketed and sold parts using Lockheed Martin’s Commercial and Government Entity (CAGE) code without authorization and used unauthorized subcontractors to manufacture parts that failed to satisfy applicable quality standards. The settlement arose from a qui tam action in which the government declined to intervene but continued investigating while the relator pursued the litigation.
The settlement is notable both for its focus on supply chain representations and for DOJ’s pursuit of a substantial recovery from an individual executive. Contractors that manufacture or source components for government programs should ensure that CAGE codes, approved-source requirements, subcontracting arrangements, and quality certifications accurately reflect how products are actually manufactured.
The case also illustrates that the government’s decision not to intervene in a qui tam action does not necessarily end DOJ scrutiny or eliminate the possibility of a later government-supported settlement.
DOJ Watchdog Flags Expired Contract Vehicles
A September 24, 2026 DOJ OIG audit identified significant weaknesses in DOJ components’ administration of contract and ordering-vehicle expiration dates.
The OIG reviewed 45 orders totaling more than $39 million that appeared from federal procurement data to have been awarded under expired vehicles. Although the OIG concluded that DOJ components generally complied with the prohibition on placing orders under expired vehicles, it identified performance-period irregularities in 37 of the 45 orders reviewed. These included an order issued approximately 23 months after its parent vehicle expired, orders placed during option periods that had not been exercised, and orders under vehicles whose expiration dates had been improperly extended.
The audit also identified inaccurate procurement data and missing contract documentation and resulted in eight recommendations to improve contract management at the FBI, Bureau of Prisons, Federal Prison Industries, and US Marshals Service.
For contractors, the report is a reminder that the validity of an underlying blanket purchase agreement, indefinite delivery, indefinite quantity contract, or other ordering vehicle can matter independently of the validity of an individual order. Contractors approaching a vehicle’s expiration date should pay particular attention to option exercises, extensions, and modifications supporting new orders, particularly because an invalid extension can raise competition concerns and potentially expose later awards to challenge.
DOT Finalizes DBE Overhaul
Effective September 25, DOT finalized its overhaul of the DBE and Airport Concession DBE programs, largely retaining the framework adopted in an October 2025 interim final rule.
The rule eliminates race- and sex-based presumptions of social and economic disadvantage and instead requires owners seeking DBE status to demonstrate disadvantage through an individualized personal narrative supported by evidence of economic hardship, social barriers, or denied opportunities. The final rule also establishes a December 24, 2026 deadline for Unified Certification Programs to reevaluate currently certified firms under the new standard, subject to a possible one-time 90-day extension.
The changes have potentially significant consequences for contractors performing DOT-funded highway, transit, and airport work. During the reevaluation period, DOT has paused the use of DBE contract goals and the counting of DBE participation, and DOT acknowledged that some prime contractors have altered subcontracting arrangements as a result.
Once reevaluations are completed, contractors will need to confirm that firms relied upon for DBE credit remain eligible under the individualized standard. The rule therefore warrants attention not only from existing DBE firms but also from prime contractors whose teaming, subcontracting, and compliance strategies depend on the availability and certification status of DBE partners.
White House Changes AI Nomenclature
In a September 29 executive order titled Inaugurating the Era of Super Intelligence, the White House directed federal agencies to replace references to “Artificial Intelligence” with “Super Intelligence.”
The change is limited to nomenclature, but contractors may begin seeing the new terminology reflected in solicitations, bids, regulations, and other government documents over the coming months.
Looking Ahead
These latest developments reinforce the importance of accurate contractor representations and careful monitoring of changing federal requirements. Defense contractors should continue scrutinizing supply chain and quality representations, while companies using governmentwide contract vehicles should monitor the validity and duration of underlying agreements. DOT contractors should assess how DBE recertification may affect existing and future teaming arrangements, and technology contractors should prepare for the government’s new terminology to appear across federal acquisition documents.