When the Clock Runs Out Before the Rules Do
By Marcos Gonzalez and Risheek Priyadarshi | September 22, 2026
If you want to see how a federal agency behaves when it is short on both time and people, pay close attention to what happens this September. Government contracts has its busy season like any other industry, and this year, that season is unfolding on a thinner staff and a rulebook that changed halfway through the game. That combination raises real risk of procedural missteps at exactly the time of year when errors are hardest to catch. Agencies are still digesting a FAR rewrite that touches nearly every part of the regulation, absorbing a 43-day shutdown that squeezed obligations into a shorter window, and doing all of it with fewer acquisition staff.
None of this excuses agency errors. A rushed, understaffed agency is still bound by the same statutes and regulations as a fully staffed one, and a contracting officer’s (CO’s) rushed work, or agency’s misapplication of the law, doesn’t become your legal problem unless you let it. Looking back on September, you may have seen a familiar set of missteps across award actions. Below, we walk through four of them, the regulation each one violates, and the specific tool a contractor has to correct it.
GovSpring is available to help contractors and companies push back when an agency’s Q4 rush produces a legal error that costs you money or work. Click here to schedule a consultation or fill out our online contact form to be contacted by our Managing Attorney.
Improper Consolidation and “Bundling” of Small Business Requirements
When an agency needs to move fast, it may roll two expiring small business requirements into one larger acquisition. Sometimes that takes the form of an unrestricted follow-on; sometimes the agency simply combines the requirements and re-competes the whole thing as one small business set-aside. Either way, if the combined requirement is too large for small businesses to perform competitively, the consolidation itself may be an illegal bundle, regardless of whether the resulting contract is ultimately opened up to full and open competition. The Small Business Act and its implementing regulations require an agency to justify any consolidation of two or more small business requirements into a single acquisition, and the touchstone of that justification is what practitioners call the “Rule of Two.”1 Before an agency may proceed with a full-and-open or unrestricted follow-on, it must determine there is not a reasonable expectation of receiving offers from two or more responsible small businesses that could perform the combined work at fair market prices.
Often, a contracting officer combines the requirements first and works backward to the justification, or takes shortcuts with market research that is supposed to support the consolidation decision before it is made.2 The agency cannot fix this error after award; it is a defect in the acquisition strategy itself. As such, challenging an illegal bundling of requirements requires a pre-award protest at GAO or agency-level protest if you want a faster and cheaper protest option. A successful challenge can force the agency to unbundle the requirement or produce the justification it never did. If you protest after award, you have likely waived the argument.
Botched Option Exercises
FAR 17.207 sets out specific, largely mandatory steps an agency must follow before it can unilaterally exercise an option year, including giving the contractor timely written notice of its intent to exercise, generally well before the option period would begin.3 Contracting officers sometimes let that notice slip, or send it late, or fail to make the required determination that exercising the option is the government’s most advantageous alternative.
A late or missing notice does not just create a technical violation the government can fix later. It can extinguish the government’s unilateral right to exercise the option. Once that right lapses, the agency cannot act as if nothing happened and keep you performing under the old option clause. Continued performance past that point has to rest on a new, bilaterally negotiated agreement, not a one-sided government notice. That distinction matters enormously to pricing and leverage. If the government requires continued performance and its right to unilateral exercise the option is gone, you are negotiating a new deal, not accepting an old one on the government’s terms. Ensure the government meets the notice deadline, and exercise appropriate leverage when undertaking a bilateral modification with the government.
Joint Venture Evaluation Flaws
Mentor-protégé joint ventures exist to provide small businesses with opportunities to work with established firms and pursue work neither could win alone. SBA’s regulations are built around that logic: when an agency evaluates a JV’s proposal, it is supposed to consider the past performance, experience, and capabilities of the individual venturers, including the managing venturer, not just what the joint venture entity itself shows on paper.4
Contracting officers often get this backward. A newly formed JV has little or no history in the System for Award Management or the Dynamic Small Business Search database, so an evaluator pulls up the JV’s own thin DSBS profile, finds almost nothing there, and either downgrades the proposal or excludes it outright for lack of experience. That evaluation approach skips the step SBA’s regulations actually require: looking at the managing venturer’s own profile and past performance, which is precisely the mechanism that makes a mentor-protégé JV viable in the first place. A JV that gets evaluated this way has a strong basis for a size or status protest, or, where the agency is not the SBA, a GAO bid protest arguing the agency failed to evaluate the proposal in accordance with the solicitation and applicable regulations. Do not assume a low or “no experience” rating on a JV proposal was correctly derived. Ask which entity’s history the evaluator actually looked at.
Disguised Cardinal Changes
A contracting officer’s authority to issue administrative changes and minor modifications without the contractor’s consent comes from the contract’s Changes clause, not from FAR Part 43 itself. On a fixed-price supply contract, that clause is FAR 52.243-1, prescribed at Far 43.205(a)(1); other contract types use a parallel version of the same clause.5 That authority has limits. Agencies under time pressure sometimes lean on it to push through changes that go well beyond administrative housekeeping by adding scope, a different performance methodology, or a materially different deliverable that is disguised as a routine modification, allowing it to be issued unilaterally instead of negotiated.
That kind of overreach has a name in procurement law, and that doctrine, called a cardinal change, predates the current FAR rewrite by decades. A cardinal change is a change so significant that it effectively requires the contractor to perform a different contract than the one it bid on. Cardinal changes fall outside the Changes clause’s unilateral authority no matter what label the modification carries.6 Commercial item contracts raise the stakes further. FAR 52.212-4(c) does not just narrow the government’s unilateral change rights, it eliminates them for contract terms and conditions altogether: “Changes in the terms and conditions of this contract may be made only by written agreement of the parties.” If a modification you receive looks administrative in name but is not administrative in substance, you are not required to simply perform it and hope for the best. You can flag the scope concern to the contracting officer in writing before you begin the changed work, and if the government insists, you can perform under protest while pursuing a request for equitable adjustment, or decline to perform the out-of-scope portion and preserve a breach argument. Silence, on the other hand, tends to get read as agreement.
A Note on Retaliation, and Why It Should Not Stop You
Contractors may ask themselves: will pushing back make the agency angry, and will that cost me the next contract? It is a fair worry, but an agency that is understaffed and racing a fiscal year deadline generally is not an agency with the bandwidth or the institutional appetite to retaliate against a contractor who raised a legitimate, well-documented legal issue. Retaliation is also its own violation, and a pattern of it strengthens rather than weakens a contractor’s later legal position. The bigger risk runs the other way. Contractors who let a bundling decision, a blown option notice, a flawed JV evaluation, or a disguised cardinal change go unchallenged, because they did not want to make waves, end up with no record to point to when the same agency does it again next year.
The Strategic Takeaway
None of the four issues above requires burning a bridge. Start with the contracting officer, in writing, and lay out the specific regulation you believe was not followed. Most of the time that alone resolves it, since a CO under deadline pressure often has not had time to catch the error and would rather fix it than defend it. When it does not get resolved informally, match the tool to the problem: a pre-award protest for a bundling or consolidation defect, a hard look at the FAR 17.207 notice timeline before you accept that an option was validly exercised, a GAO bid protest for a flawed JV evaluation, and a request for equitable adjustment or Contract Disputes Act claim for a modification that oversteps its authority. The common thread is documentation. Write down what happened, when, and what regulation it violated, while the file is still fresh and before the agency has moved on to its next Q4 deadline. Do not wait to see how the agency’s story changes next week.
GovSpring is available to help contractors and companies evaluate whether an agency’s end-of-year actions crossed a legal line and, if they did, to pursue the right remedy without unnecessarily damaging the relationship. Click here to schedule a consultation or fill out our online contact form to be contacted by our Managing Attorney.
- 15 U.S.C. § 632(o); FAR 19.202-1; 13 C.F.R. § 125.2(d)-(e) (agencies must conduct market research and make a written determination before consolidating small business requirements). ↩︎
- FAR 7.107 (consolidation and bundling determinations must be based on market research). ↩︎
- FAR 17.207 (conditions for exercise of options, including timely written notice to the contractor). ↩︎
- 13 C.F.R. § 125.8(e) (in evaluating an offer from a joint venture, a procuring activity must consider the past performance and experience of the individual venturers, not solely the joint venture itself). ↩︎
- FAR 52.243-1 (Changes—Fixed-Price), prescribed at FAR 43.205(a)(1); parallel Changes clauses apply to other contract types (e.g., FAR 52.243-2 for cost-reimbursement contracts, FAR 52.243-4 for construction). ↩︎
- See Air-A-Plane Corp. v. United States, 187 Ct. Cl. 269 (1969) (a change of such magnitude that it requires performance of essentially a different contract exceeds the Changes clause and constitutes a cardinal change). ↩︎