Recent developments in government contracting include a notable Government Accountability Office (GAO) decision involving proposal submission requirements, continued US Department of War (DoW) investment in critical defense supply chains, a US Department of Commerce action under the Defense Production Act involving critical materials, and two significant litigation developments involving the state secrets privilege and the Competition in Contracting Act’s (CICA’s) automatic stay provisions.
GAO Reinforces Strict Compliance with Proposal Submission Requirements
GAO recently dismissed a protest arising from the Army’s $50 billion Marketplace for the Acquisition of Professional Services (MAPS) procurement after finding that the protester’s inability to submit its proposal resulted from its own filing errors rather than a defect in the agency’s submission portal.
The protester argued that the solicitation’s file-naming instructions conflicted with the portal’s requirements and prevented proposal submission. GAO rejected that argument, finding that the portal expressly incorporated the solicitation’s naming conventions and that the protester repeatedly attempted to upload files that did not comply with those requirements, including file names that incorrectly incorporated the “.pdf” extension into the file name itself. GAO also noted that more than 1,300 offerors successfully submitted proposals through the same system and concluded that the protester’s arguments effectively amounted to an untimely challenge to the solicitation.
The decision serves as a reminder of the precision required in both proposal submission and bid protest processes. Even seemingly administrative solicitation requirements can prove outcome-determinative where an offeror fails to strictly comply with proposal instructions or timely raise perceived solicitation defects. Contractors should expect additional developments involving the MAPS procurement, which has generated a significant number of protests and continues to produce guidance on procurement administration and protest practice.
DoW Continues Push to Strengthen Critical Defense Supply Chains
The DoW Office of Strategic Capital (OSC) recently announced an $820 million conditional loan commitment to Performance Drone Works to expand domestic manufacturing capacity for critical drone components. According to the department, the financing is intended to support high-volume domestic production of propulsion, power, vision, and control technologies used across the broader US drone industrial base.
The announcement follows OSC’s earlier $500 million conditional loan commitment to Phoenix Tailings to expand domestic rare earth processing capabilities and support construction of a new US-based rare earth separation and metallization facility.
Taken together, these investments reflect the department’s continued willingness to use nontraditional tools to address industrial base needs. In addition to purchasing products and services, the government is increasingly acting as a source of capital to accelerate domestic production in priority sectors such as drones, critical minerals, and advanced manufacturing.
For contractors, supply chain resilience and domestic capacity remain high on the department’s agenda, and companies operating in these areas may continue to see new funding and partnership opportunities.
Department of Commerce Uses Defense Production Act Authority to Keep Critical Materials in the US
On August 6, 2026, the Department of Commerce Bureau of Industry and Security (BIS) published a temporary final rule establishing a one-year Directive Allocation Order under the Defense Priorities and Allocations System (DPAS). The rule follows a July 30 presidential determination authorizing use of Defense Production Act authorities to support the recovery of critical minerals and materials deemed scarce and necessary for national defense.
Beginning August 27, 2026 and continuing for one year, any “US person” selling covered battery-recycling “black mass” or tungsten waste and scrap must allocate 100% of monthly sales to US persons, and covered materials generally must remain physically in the United States unless otherwise authorized by BIS.
The rule applies not only to ordinary commercial transactions but also to certain intracompany movements. “Sale” includes deliveries to affiliates and subsidiaries as well as transfers among branches or divisions under common ownership or control. As a result, transfers to foreign affiliates or overseas processors may require authorization even where processed materials are ultimately expected to return to the United States.
BIS may grant company-specific or generally applicable adjustments or exceptions in circumstances involving exceptional hardship, irreparable harm, additional implementation time, or foreign processing followed by return to the United States. Customs and Border Protection may also detain covered exports while BIS reviews them, and BIS retains authority to investigate and pursue injunctive relief and penalties.
The rule could also serve as a model for future allocation controls. BIS expressly reserved authority to add additional recoverable critical materials through future Federal Register publications, making this an area that contractors and companies throughout critical-material supply chains should continue to monitor.
State Secrets Ruling Highlights Litigation Risks for Contractors Supporting Sensitive Programs
The US Court of Federal Claims recently dismissed a decade-long patent and copyright infringement suit against the United States after concluding that the litigation could not proceed without risking disclosure of protected national security information.
The underlying claims involved alleged infringement of technology related to geospatial intelligence systems. Beginning in 2021, the government successfully invoked the state secrets privilege over several categories of classified information involving intelligence capabilities, research and development activities, software functionality, military systems, and geospatial data. After attempting for several years to exclude protected information while preserving the merits of the litigation, the court ultimately concluded that the government would be severely constrained in presenting its defenses and that proceeding to trial would create an unacceptable risk of disclosure.
The state secrets privilege permits the government to withhold information in civil litigation where disclosure could reasonably be expected to harm national security. Although courts may attempt to allow litigation to continue while excluding privileged evidence, some disputes cannot fairly proceed without that information.
The decision does not materially alter the governing legal standard, but the long-running dispute illustrates the unique litigation risks contractors may face when claims involve classified or highly sensitive programs. In some circumstances, otherwise viable claims or defenses may never be fully adjudicated on their merits because the information necessary to litigate them cannot be disclosed.
Contractor Challenges Alleged Circumvention of CICA Stay Requirements
A contractor recently filed suit in the US Court of Federal Claims challenging the government’s handling of a Strategic National Stockpile procurement for vendor-managed inventory services and alleging that agencies continued transition activities despite CICA’s automatic stay of contract performance.
Under CICA, agencies generally must pause contract performance when a timely post-award protest is pending before GAO. According to the complaint, the contractor timely filed a GAO protest after award, triggering the automatic stay. The contractor alleges that GSA and HHS nevertheless continued directing transition activities and inventory transfers and facilitated ongoing performance by the awardee without issuing the formal Determination and Findings generally required to override a CICA stay.
The complaint follows the Federal Circuit’s recent decision in Life Science Logistics v. United States, which clarified the consequences of an unlawful CICA stay override. The court held that where an agency improperly overrides the automatic stay, the stay remains in effect and may be restored without requiring the protester to satisfy the traditional requirements for injunctive relief.
The new case could provide additional guidance regarding what constitutes a de facto override and how far agencies may go in continuing transition or performance-related activities after a timely GAO protest. Contractors should monitor the dispute closely because the distinction between prohibited performance and permissible transition activities can have significant practical consequences where inventory, government property, personnel, or other assets are already being transferred to an incoming contractor.
Looking Ahead
These latest developments highlight the government's continued use of procurement, financing, and Defense Production Act authorities to strengthen critical domestic supply chains while also reinforcing procedural considerations that can materially affect contractors pursuing federal opportunities or litigating disputes. Contractors should closely review proposal submission requirements, monitor emerging domestic sourcing and allocation measures, and account for the procedural and national security considerations that may shape bid protests and contract-related litigation.