Proposed Revisions to FAR Part 34 Signal Stronger Emphasis on Innovation, Competition, and Earned Value Oversight in Major System Acquisitions

The May 2, 2025 lineout of FAR Part 34 represents a comprehensive rearticulation of federal policy governing major system acquisitions, highlighting several meaningful shifts that federal contractors should monitor closely. Although these changes are still in draft form and have not been formally adopted, they provide insight into the direction federal acquisition strategy may take under the Trump Administration’s proposed FAR rewrite. If implemented, these revisions would expand flexibility, reinforce competition, and impose greater rigor around program performance tracking—especially through the increased use of Earned Value Management Systems (EVMS). Contractors competing for or executing major systems work should begin preparing for the likely operational and compliance implications.

A central feature of the proposed changes is a pronounced reaffirmation of the government's commitment to open-ended, mission-oriented acquisition. The revised policy mandates that agencies acquiring major systems focus on expressing needs in terms of mission outcomes, not predetermined system solutions. This approach, consistent with longstanding OMB guidance such as Circular A-109, is intended to encourage innovation, broaden the pool of potential offerors, and ensure that agency missions are met with the best available technologies. Importantly, the language also stresses that agencies should sustain effective competition between alternative system concepts and sources for as long as practicable—a cue that multiple contract paths or down-select strategies should remain in play through early development phases.

The proposed FAR Part 34 also codifies detailed procedural responsibilities for agencies managing major system acquisitions. It requires that program managers, under agency-specific guidance, develop a tailored acquisition strategy that serves as the equivalent of a FAR Subpart 7.1 acquisition plan. This strategy must account for mission need, effectiveness, cost, and timeliness, and is expected to evolve in a way that allows progressive refinement through phases such as concept exploration, demonstration, and full-scale development. The updated sections underscore the importance of planning transitions across acquisition stages in a way that avoids gaps in contractor performance and sustains technical momentum—an issue that often plagues large, multi-phase procurements.

A particularly material feature of the draft revision is its elevation of the Earned Value Management System (EVMS) requirements. EVMS is no longer treated as a compliance accessory; it is now embedded directly into the solicitation and contract structure. The proposed rules make clear that EVMS is mandatory for all major acquisitions involving development efforts, and may be extended to other acquisitions based on agency discretion. Contractors are required to use an EVMS compliant with Electronic Industries Alliance Standard 748 (EIA-748), and must submit either certification of an approved system or a detailed compliance plan prior to award. Notably, offerors cannot be disqualified for not having a compliant system, but they must demonstrate a realistic path toward achieving compliance.

In support of this framework, the revised FAR Part 34 introduces detailed procedures for conducting Integrated Baseline Reviews (IBRs)—joint government-contractor evaluations intended to validate the realism of technical content, cost, and schedule baselines. Whether conducted pre- or post-award, these IBRs are now formalized requirements, and the timing, scope, and conduct must be consistent with agency procedures. The IBR is intended to surface and mitigate performance risk early in the program lifecycle and to ensure that cost, schedule, and performance data used in EVMS reporting are credible and actionable. Contractors will need to devote resources to preparing for and participating in these reviews, and should ensure that they are able to present coherent, cross-functional program plans that withstand scrutiny.

The proposed regulation also outlines the applicability of EVMS to subcontractors. Prime contractors will need to identify key subcontracted efforts subject to EVMS, and secure agreement with the government on their application. Subcontractors, particularly those supporting large DoD programs, should expect a higher level of programmatic oversight and may need to invest in EVMS compliance infrastructure.

In addition to the EVMS enhancements, the revised rule strengthens the government’s ability to integrate industrial base policy into major system acquisition. Under Subpart 34.1, agencies are directed to support the use and qualification of industrial resources developed with Title III Defense Production Act (DPA) assistance. This section ensures that any costs associated with qualifying DPA-backed components for use in major systems will be borne by the government, not contractors. It also mandates contract clauses that require testing of Title III resources upon government request, helping to close the gap between industrial policy and acquisition execution. This is significant for contractors working with emerging manufacturing technologies or non-traditional suppliers that may have benefited from government-backed industrial capacity expansion.

Lastly, contractors should be aware of the accompanying contract clauses (FAR 52.234-1 through 52.234-4), which have been updated to reflect the new EVMS and Title III requirements. These clauses will bind both prime and subcontractors to rigorous planning, reporting, and system maintenance expectations. They also include provisions for the government’s right to review and approve EVMS plans, require pre-approval for system changes, and access all relevant records necessary to ensure compliance with earned value principles.

In summary, while the FAR Part 34 lineout is still in draft form and subject to further revision and public comment, it provides an early roadmap for where federal policy is heading on the management of major system acquisitions. If finalized, these changes would strengthen the role of acquisition planning, encourage competition and innovation in early development stages, and greatly enhance programmatic accountability through EVMS oversight and performance-based contract monitoring. Contractors engaged in large-scale federal development programs should begin preparing for a more performance-intensive environment, ensure EVMS readiness, and align their acquisition strategies with the mission-centric and outcome-based expectations outlined in this proposed rewrite.

Disclaimer: This blog post is based on a proposed draft of FAR Part 34 and reflects a preliminary analysis of changes that have not yet been formally adopted. This summary is intended for informational purposes only and does not constitute legal advice or official guidance. Contractors should consult legal counsel or regulatory experts before acting on any information contained herein.