What Are the Differences Between Defense Contracting & FedCiv Contracting?

• Firms that want to do business with U.S. government agencies must understand complex acquisition requirements
• FAR governs federal contracts, but defense and FedCiv agencies have their own supplements
• Some defense contracts have additional requirements not found in FedCiv contracts

The U.S. government is the largest buyer of goods and services in the world. According to the Government Accountability Office, federal contract spending reached about $793 billion in fiscal 2025, an increase of $17.8 billion  from fiscal 2024. 

However, doing business with the government requires a thorough understanding of the complex regulations that govern federal contracting. The rules are often different when working with defense and federal civilian agencies. 

Discover contract opportunities at the Potomac Officers Club’s 2026 FedCiv Summit on Oct. 29. Leaders from federal civilian agencies, including the Department of Labor, Department of Transportation, Department of the Interior, National Oceanic and Atmospheric Administration and Small Business Administration, will be present at the event. You can get your tickets as early as today!

What Is the Federal Acquisition Regulation?

The Federal Acquisition Regulation, better known as FAR, governs the federal contract, whether defense or civilian. Codified in Title 48 of the Code of Federal Regulations, FAR, sets the rules for the purchase of goods and services by federal executive branches. 

The framework provides the guiding principles for federal acquisition, ensuring the timely delivery of the best value products and services to customers. It covers the entire acquisition process, from planning to contract management, and identifies the role of each member of the acquisition team.

FAR was developed by the Office of Management and Budget’s Office of Federal Procurement Policy pursuant to a 1979 statute that mandates policies that promote the development and implementation of a “uniform procurement system.” The framework was officially introduced in 1983, took effect in 1984 and has been revised over the years in response to legislative and policy changes, executive orders, and litigation.

The OFPP oversees FAR and reviews the proposed amendments to FAR and agency FAR supplements. 

Defense Federal Acquisition Regulation Supplement

The Pentagon is the biggest buyer in the U.S. government, accounting for more than half of federal contract commitments. According to the latest data from GAO, DOW committed $491.6 billion on contracts, split across its components, in FY25. 

FAR and the Defense Federal Acquisition Regulation Supplement, or DFARS, govern the majority of these purchases. 

DFARS is an extension of FAR that introduces requirements and procedures unique to the War Department. It provides additional guidance that addresses concerns that FAR does not cover, including matters related to classified information and national security. 

A key feature of the DFARS is its mandatory flow-down clauses, which apply to both prime contractors and their lower-tier subcontractors. Because of the sensitive nature of DOW’s mission, DFARS requires that subcontractors that do not have a direct contract with the department follow the same rules as primes. For instance, the prime will need to include clauses related to the handling of controlled unclassified information, or CUI, in the subcontract. 

FAR and DFARS also apply to contracts awarded in support of foreign military sales customers and North Atlantic Treaty Organization cooperative projects.

Agency Supplements

FedCiv agencies also introduce FAR supplements to meet unique mission requirements. 

NASA, for instance, operates in a high-stakes environment, and its purchases of mission-critical technology, such as spacecraft, require strict safety standards. The NASA FAR supplement, therefore, includes clauses that establish strict health, safety and security protocols. A clause introduced in 2000 gives the government the authority to terminate a contract in the event of a “major breach of safety or security.” 

The Department of Veterans Affairs, meanwhile, implements a veterans-first contracting rule in the Veterans Affairs Acquisition Regulation, or VAAR, its FAR supplement. The rule stems from the Veterans Benefits, Health Care, and Information Technology Act of 2006, which mandates that the VA prioritize and increase contracting opportunities for veteran-owned businesses. 

FAR Overhaul

In April 2025, President Donald Trump issued EO 14275, or Restoring Common Sense to Federal Procurement, which directs the amendment of FAR to remove non-statutory rules with the goal of accelerating acquisition and increasing competition. The OFPP and the Federal Acquisition Regulatory Council are overseeing the Revolutionary FAR Overhaul.

What Are the Key Differences Between Defense & FedCiv Contracts?

Cybersecurity Requirements

Cybersecurity is a requirement for all government contractors, but the Pentagon imposes far stricter standards to protect sensitive data from cyberthreats. While civilian agencies generally rely on the foundational 15 security controls mandated under FAR 52.204-21, the War Department enforces compliance rules for businesses seeking to enter the defense industrial base. 

The Cybersecurity Maturity Model Certification, better known as CMMC, codified at 32 CFR Part 170, is a set of standards for safeguarding federal contract information and CUI. 

CMMC establishes three certification levels to reflect the maturity and security of a company’s cyber infrastructure. 

Level 1 requires annual self-assessment and affirmation of compliance with the 15 security controls under FAR 52.204-21. 

Level 2 requires an evaluation from a certified third-party assessment organization and compliance with 110 security controls under the National Institute of Standards and Technology Special Publication 800-171 Revision 2. 

Level 3 requires compliance with the 110 security controls in NIST SP 800-171 and 24 more security controls in NIST SP 800-172 to protect data against advanced persistent threats. Assessments can only be performed by the Defense Contract Management Agency’s Defense Industrial Base Cybersecurity Assessment Center, or DIBCAC.

DOW contractors and subcontractors are required to achieve specific CMMC levels to handle FCI or CUI as a condition for contract award. 

Learn about evolving federal acquisition processes and priorities directly from agency leaders at the 2026 FedCiv Summit on Oct. 29. William Briggs, deputy administrator of the SBA, and Mangala Kuppa, chief information officer at the Labor Department, will deliver keynote speeches at the event. Sign up today to secure your spot!

Acquisition Lifecycle Management

The Pentagon manages major programs through three statutory processes that all have to align: the Joint Capabilities Integration and Development System, or JCIDS; the Planning, Programming, Budgeting and Execution, or PPBE, process; and the Defense Acquisition System, or DAS. 

JCIDS is a method that identifies, assesses and prioritizes capability gaps among joint warfighters. PPBE is the DOW’s process for strategic planning, program development and resource determination.

DAS is the management process that the department follows for the acquisition of weapon systems, automated information systems and services. Developed in support of the National Defense Strategy, DAS was intended to deliver products and services that meet user requirements and make measurable and timely improvements to mission readiness, capability and operational support.

The defense acquisition process is undergoing a major overhaul following President Donald Trump’s EO 14265, Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base. The EO, issued in April 2025, called for a defense acquisition reform to accelerate the purchase of critical goods and services and directed the Office of the Secretary of War, heads of military services and the Joint Chiefs of Staff to complete a comprehensive review of JCIDS.

Civilian agencies do not run a similar three-process system. OMB Circular A-11, which governs how agencies prepare and execute their annual budgets, is the closest civilian guidance on the acquisition and management of major capital investments, particularly IT systems. 

Export Controls

Defense contracts may carry an additional regulatory layer that many federal civilian contracts do not have: export controls. The International Traffic in Arms Regulations, or ITAR, regulates the export of defense and military-related items and services in the U.S. Munitions List, or USML. 

Export controls in FedCiv contracts typically fall under the standard dual-use Export Administration Regulations, or EAR, rather than ITAR, since civilian agencies rarely procure USML. EAR is a set of export guidelines managed by the Department of Commerce’s Bureau of Industry and Security. It governs dual-use items, which are technologies with military and civilian applications.

However, there are exceptions. FedCiv agencies with sensitive missions are also subject to export restrictions. NASA, for instance, uses technologies that are designated under the USML as defense articles or services and, therefore, subject to ITAR, such as satellites, spacecraft and launch vehicles.

Certain technologies that Department of Homeland Security and Department of Justice components use, such as drones, are governed by ITAR. 

Additionally, the Energy Department has its own export controls surrounding nuclear technology. The 10 C.F.R. Part 810 also restricts the transfer of unclassified nuclear technologies and assistance to foreign atomic energy activities, with a few exceptions. Certain nuclear technology and assistance may also need to be evaluated under Part 810 and EAR or ITAR.

Personnel Vetting & Security Clearance

Defense and FedCiv agencies vet contractor personnel under Homeland Security Presidential Directive 12, which requires executive departments to conduct background checks on federal and contractor employees who need routine physical access to federally controlled information technology systems and facilities. FAR 52.204-9 implements the requirement across defense or civilian contracts. 

Positions that do not require access to classified information but oversee major programs, develop policies or perform other duties that require public trust undergo another layer of vetting. “Public trust” is a suitability category that applies to government-wide civilian positions, including FedCiv and DOW, evaluated based on criminal history, financial integrity and personal conduct. 

For classified defense work, contractor employees must also obtain the appropriate security clearance. The process differs from a suitability review because obtaining clearance requires a thorough evaluation of whether an individual poses a national security threat. The process usually involves a reference check of former employers or coworkers, friends and neighbors. A person’s police, tax and credit records may also undergo a review.

There are three levels of security clearances: Confidential, Secret and Top Secret. Security clearances are not exclusive to defense contracts. However, the vast majority of security clearances are issued to defense, civilian, military and contractor personnel. DHS and DOE issue about 3 percent and 1 percent of all security clearances, respectively. 

The Defense Counterintelligence and Security Agency, which primarily handles investigative services for the government, recently updated its continuous vetting guidance for National Industrial Security Program contractors. Under the updated policy, contractor personnel enrolled in continuous vetting are required to submit their personnel vetting questionnaire every five years, regardless of clearance eligibility level.

The National Industrial Security Program was established to ensure that classified information remains protected when cleared U.S. defense industry firms work on contracts, programs, research and development, and bid efforts. DCSA oversees the program.

Funding Predictability

The Pentagon has five major appropriation categories:

• Research, development, test and evaluation
• Procurement
• Operation and maintenance
• Military personnel
• Military construction

Also called the colors of money, each category has a set of rules that govern purpose, time and amount appropriated. 

Other agencies have similar frameworks that divide appropriations based on purpose. DHS, for instance, has operations and support; procurement, construction and improvements; research and development; and federal assistance. 

However, funding predictability is often where defense and FedCiv contracting landscapes vary. 

The War Department generally has more flexibility. Defense RDT&E funds can be obligated for approximately two years, procurement funds for three years and military construction funds for five years.

Among civilian agencies, discretionary appropriations are generally available for new obligations within one fiscal year. While multi-year windows exist, those require explicit approval from Congress. DHS’ PC&I funding will remain available until Sept. 30, 2028. 

There are also no-year appropriations that provide funding “until expended.” GAO’s Red Book, the Principles of Federal Appropriations Law, states that “[all] appropriations are presumed to be annual appropriations unless the appropriation act expressly provides otherwise.” 

Multi-year funding brings stability to procurement programs. For one, it insulates programs from continuing resolutions, or when Congress fails to pass an annual budget. 

Defense and FedCiv agencies both operate under continuing resolutions, but the Pentagon and the military services have mechanisms to minimize the impact of temporary funding.

GAO noted that, in previous years, DOW obligated a lower percentage of the department’s annual budget or postponed nonessential training in the first quarter when it is more likely to operate under a continuing resolution. 

The Pentagon also received unique provisions for defense spending under H.R. 1968, which extended the current continuing resolution in fiscal 2025, according to the Center for Strategic and International Studies.

Why Understanding the Difference Between Defense & FedCiv Contracting Matters

Defense and FedCiv contracting share a common foundation in the FAR, but their requirements differ in many critical areas. 

For companies pursuing either market, knowing and understanding the difference between defense and FedCiv contracting can guide strategy. It could mean being better positioned to win a contract opportunity in a highly competitive market.

The Potomac Officers Club’s 2026 FedCiv Summit on Oct. 29 will bring together leaders from government and industry to discuss new regulatory mandates and national priorities. After POC’s summer of informative defense-focused events, not miss the chance to engage with the people who make acquisition and policy decisions at federal civilian agencies. Register today!