Insights

On September 28, 2026, the General Services Administration (GSA) issued a new clause for incorporation into government contracts of artificial intelligence systems, 552.239-7001, Basic Safeguarding of Data within Large Language Model Artificial Intelligence Systems, as a GSA Regulation Deviation (the Final Clause). The Final Clause will become effective on October 19, 2026.

In recent years, the U.S. federal government has taken significant interest in the cybersecurity compliance of its contractor base. In 2025 alone, the U.S. Department of Justice’s (DOJ) Civil Cyber-Fraud Initiative recovered more than $50 million across nine False Claims Act (FCA) cybersecurity fraud settlements, and it has secured almost 20 settlements since its launch in October 2021. Because most defendants facing FCA liability for alleged cybersecurity noncompliance enter into pre-litigation settlements, the last court decision in a cybersecurity FCA case was in 2022. However, earlier this month, on September 2, 2026, in  United States ex rel. Pannek v. Archer Daniels Midland Co., No. 23-cv-15145, 2026 WL 2593317 (N.D. Ill. Sept. 2, 2026), Judge Sunil R. Harjani of the U.S. District Court for the Northern District of Illinois granted a motion to dismiss on materiality grounds and offered additional guidance on what a plaintiff must allege to adequately state an FCA cybersecurity claim.

On September 2, 2026, the National Archives and Records Administration (NARA), through its Information Security Oversight Office (ISOO), released two new Notices on the topic of Controlled Unclassified Information (CUI): ISOO Notices 2026-07 and 2026-08. 

The FAR Council recently released an updated draft of the much-anticipated “FAR CUI Rule” that would apply to contractors government-wide.

The Department of War (DoW) is immediately suspending Cybersecurity Maturity Model Certification (CMMC) Phase II requirements, which had been scheduled to take effect on November 10, 2026.

On July 6, 2026, Illinois Governor JB Pritzker signed SB 315, the Artificial Intelligence (AI) Safety Measures Act (the Illinois Act), to establish a framework for AI safety, transparency, and accountability for the world’s most powerful AI models. The governor’s approval follows unanimous passage of the bill by the Illinois House and nearly-unanimous support in the Illinois Senate in May. 

On June 25, 2026, the Federal Risk & Authorization Management Program (FedRAMP) launched its Consolidated Rules for 2026, marking a significant turning point in how the U.S. government administers security authorizations of private sector cloud offerings. The Consolidated Rules apply to all variants of the FedRAMP ecosystem, including legacy "Rev5" authorization holders, as well as future certifications under the new 20x program. Importantly, the Rules are intended in part to transition Rev5 authorizations over to 20x, with the Rev5 authorization status expected to terminate by the end of 2028. 

On June 18, 2026, the U.S. Department of Justice (DOJ) announced that LOGZONE Inc., a defense contractor based in Huntsville, Alabama, agreed to pay $507,144 to resolve allegations that it violated the False Claims Act (FCA) by knowingly failing to satisfy cybersecurity requirements in its contracts with the U.S. Department of the Navy. The resolution is the latest action under DOJ’s Civil Cyber-Fraud Initiative and the first publicly reported settlement this fiscal year. It underscores a continued enforcement posture in which noncompliance with contractual cybersecurity obligations serves as the basis for potential FCA liability. Notably, this settlement did not arise from a whistleblower complaint but from a government-initiated assessment, signaling to contractors that proactive government assessments can pose enforcement consequences.

On June 22, 2026, President Trump signed two executive orders, “Securing the Nation Against Advanced Cryptographic Attacks” (Quantum Security EO) and “Ushering in the Next Frontier of Quantum Innovation” (Quantum Innovation EO), marking the most significant federal action on quantum technology since the Quantum Computing Cybersecurity Preparedness Act of 2022, which directed agencies to harden their information systems against quantum-enabled hacking. The orders seek to speed the development of quantum computers, which are advanced processors that can calculate multiple possibilities simultaneously and thus solve problems exponentially faster than traditional computers. At the same time, the orders look to protect against the danger that quantum technology can “break” traditional encryption by easily decoding it. Of particular note for government contractors, the Quantum Security EO directs agencies to update federal acquisition regulations to require contractors by 2031 to adopt information processing standards that resist quantum-enabled codebreaking.

On June 2, 2026, President Trump signed a highly anticipated artificial intelligence and cybersecurity Executive Order, “Promoting Advanced Artificial Intelligence Innovation and Security” (the EO), directing several national security and civilian agencies to ramp up scrutiny of cutting-edge AI models and bolster federal cybersecurity defenses against AI-enabled threats.

On May 1, 2026, the U.S. Cybersecurity and Infrastructure Security Agency (CISA), the U.S. National Security Agency (NSA), the Australian Cyber Security Centre, the UK National Cyber Security Centre, the Canadian Centre for Cyber Security, and the New Zealand National Cyber Security Centre, published joint guidance on the “Careful Adoption of Agentic AI Services” (Guidance).

A recent Illinois appellate decision has narrowed a key protection that state and local government contractors have long been able to rely on under Illinois’ Biometric Information Privacy Act (BIPA). In Thomas v. Cornerstone Services, Inc., the Illinois Appellate Court held that BIPA’s government contractor exemption does not provide blanket immunity to contractors simply because they hold a contract or subcontract with a state agency or local unit of government. The ruling carries important compliance implications for contractors and subcontractors operating across both government and private-sector markets.

On March 19, 2026, President Donald Trump and Japanese Prime Minister Sanae Takaichi met at the White House and announced a series of initiatives to strengthen the U.S.-Japan alliance. Among the defense cooperation announcements, the White House fact sheet noted that “[t]he United States welcomed Japan’s commitment to develop a secure and sovereign cloud platform for government data to enhance bilateral information sharing, planning, and coordination.”[1] While it is a single sentence in a wide-ranging Summit document, the commitment represents a step in the growing architecture of allied sovereign cloud infrastructure. If this is operationalized, it will have important implications for defense, intelligence, and cloud services markets. This announcement follows the October 2025 Trump-Takaichi Summit in Tokyo, where the two governments agreed to launch a bilateral working group to deepen mutual understanding on cloud security technical standards and requirements—explicitly including U.S. experience with secure and sovereign cloud development—and to invite Japanese and American firms to participate.[2]

The Federal Risk and Authorization Management Program (FedRAMP) continues to advance its modernization agenda. On April 8, 2026, FedRAMP released RFC-0031, Updated Incident Communications Procedures for public comment. This RFC proposes replacing the current FedRAMP Incident Communications Procedures (ICP) with what FedRAMP calls “a clear set of reporting requirements … established using a modern rules-based format.” 

In its latest attempt to establish a national AI regulatory standard and quash “cumbersome” state AI laws, the White House on Friday, March 20, 2026, released legislative recommendations for a National Policy Framework on Artificial Intelligence. 

On March 6, 2026, the General Services Administration (GSA) issued a significant proposed contract clause, GSAR 552.239-7001, Basic Safeguarding of Artificial Intelligence Systems (“Clause”), for inclusion in GSA Schedule solicitations and contracts for AI capabilities.  The proposed clause would impose substantial new requirements related to AI sources, intellectual property rights, data use, change management, and performance standards.  The Clause would also take precedence over any other contract terms (including commercial licensing terms) related to AI, including a Seller’s terms of sale and service to which the Government had previously agreed.  GSA requests comments by March 20, 2026.

On March 6, 2026, the White House released its National Cyber Strategy (Strategy) and issued an accompanying Executive Order, “Combating Cybercrime, Fraud, and Predatory Schemes Against American Citizens” (EO). These documents outline the administration’s priorities for combating cybercrime and call for coordination across the federal government and the private sector to invest in new technologies, continue innovation, and prioritize the United States’ cyber capabilities. Key sectors of concern include energy, financial services, telecommunications, data centers, water, and health care. The Strategy and EO encourage increased public-private coordination, signal greater latitude for private sector offensive cyber operations, prioritize securing critical infrastructure, elevate cybercrime as a national security priority, outline a path for victim compensation, and promote streamlining cyber regulations.

On February 13, 2026, the U.S. Department of Homeland Security (DHS) announced upcoming virtual town hall meetings scheduled for March 2026 regarding the implementation of the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA).  The meetings will allow industry stakeholders to provide input to DHS to refine the “scope and burden” of the forthcoming CIRCIA final rule.

On January 23, 2026, Office of Management and Budget (OMB) Director Russell T. Vought issued OMB Memorandum M-26-05 (Memo). The Memo rescinds prior OMB memoranda (M-22-18 and M-23-16) that required federal agencies to collect the Secure Software Development Attestation Form from entities selling software or products containing software to the U.S. government. The Trump administration previously retracted a Biden administration directive that called for formalization of the Attestation Form collection process in the Federal Acquisition Regulation (FAR). Many in industry saw this as a sign that the Trump administration disfavored the Attestation Form. Now, the Memo has gone one step further to officially terminate agencies’ obligation to collect the Form from their software suppliers.

The Federal Risk and Authorization Management Program (FedRAMP) is a government-wide initiative established to standardize the security assessment, authorization, and continuous monitoring of cloud products and services used by federal agencies. FedRAMP’s primary objective is to ensure that cloud service providers (CSPs) implement robust security controls to protect federal information in cloud environments. By leveraging a consistent framework for security assessment and authorization, FedRAMP is intended to reduce duplication of effort, cost, and time for both agencies and vendors.