ARTICLE · 22 OCTOBER 2024

DOD Launches Pilot Program For Sole Source Follow-on Awards To ESOPs

Wiley Rein

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On October 10, 2024, the U.S. Department of Defense (DOD) issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to establish a pilot program allowing for sole source follow-on...

United StatesGovernment, Public Sector

On October 10, 2024, the U.S. Department of Defense (DOD) issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to establish a pilot program allowing for sole source follow-on contract awards to S corporations owned by an employee stock ownership plan (ESOP).

The Pilot Program was initially introduced in Sections 874 and 872 of National Defense Authorization Acts for Fiscal Years 2022 and 2024 and published as a proposed rule on May 30, 2024. The Pilot Program is memorialized in DFARS 212.301(f)(xxii), 212.371(b)-(d), 252.270-7000, 252.270-7001, and 252.270-7002, and DFARS Part 270. The effective date for the final rule is November 25, 2024. The Pilot Program is discussed in more detail below.

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