# Federal Headlines: June 26, 2026
A major lawsuit challenging Schedule Policy/Career is intensifying its legal stance. A recently amended complaint now directly targets the reclassifications of 8,000 federal employees that occurred earlier this month. The lawsuit alleges that Schedule Policy/Career violates the Civil Service Reform Act, inhibits due process for federal employees, and intrudes on congressional powers. The plaintiffs in the case are the Government Accountability Project and the National Active and Retired Federal Employees Association.
## Army Establishes New Space Operations Branch
The Army has a new branch. The service announced Thursday it has officially established the space operations branch, formalizing the career paths of the Army’s growing cadre of space professionals. The new branch brings together Army space operations officers and enlisted tactical space operations specialists. Army officials said the move will ease operational pressure on the air defense artillery, signal and military intelligence branches, which previously provided enlisted personnel for space missions on temporary assignments.
## House Democrats Push Back on Proposed Changes to Federal Grant Requirements
More than 125 Democrats in the House are raising alarm bells over the Trump administration’s proposed changes to federal grant requirements. In a letter to Office of Management and Budget Director Russell Vought, the lawmakers say the draft changes to the grant review process will become a political obstacle course and an insider’s game. They are asking the Trump administration to halt any rule changes that will allow grantmaking and research decisions to be made based on the president’s personal or ideological agenda, by political appointees and without congressional authorization. OMB issued draft revisions to 2 CFR Part 200 in early June.
## National Archives to Close Three Facilities
The National Archives will close three of its facilities over the next few years. An email obtained by Federal News Network shows that the agency plans to shutter its locations in Chicago, San Francisco and Seattle. The agency says the reorganization will cut costs and reduce its real estate portfolio. The American Federation of Government Employees is currently in negotiations with the agency over “appropriate arrangements” for impacted employees.
## Small Business Contracting Exceeds Goals in 2025
New data from the Small Business Administration says small business contractors fared well in 2025. Despite all the turmoil in federal contracting over the last year, agencies surpassed the 23% governmentwide goal for awards to small businesses in fiscal 2025. The Small Business Administration said that agencies awarded 28% of all prime contracts to small firms last year. While agencies reached the overall goal, the total dollars going to small businesses dropped to $179 billion last year from $183.5 billion in 2024. SBA says 16 agencies earned “A” grades on their individual scorecards with the General Services Administration, with the Department of Housing and Urban Development and the Department of Commerce earning the top mark of “A+” for achieving 120% of their goals.
## DoD Rolls Out New AI Targeting Tools
The Defense Department said Thursday it is rolling out a new set of AI tools that aim to crunch intelligence data and suggest targets faster than human analysts can. The Agent Network is powered by Palantir Technologies, whose algorithms are used in DoD’s Project Maven, and Lumbra, a firm that looks to coordinate AI systems across defense agencies and military commands. It promises to transform battle management at U.S. Pacific Command, Southern Command and European Command. AI targeting is under scrutiny following a fatal airstrike on an Iranian elementary school that killed more than 170 people, raising questions about the technology’s role.
## Senate Defense Bill Includes Military Housing Reform Measures
A comprehensive set of measures aimed at tackling systemic issues plaguing privatized military housing made it into the Senate Armed Services Committee’s fiscal 2027 defense policy bill, a win for military families who have spent years pushing for stronger protections. The bipartisan Military Occupancy Living Defense Act, or MOLD Act, introduced earlier this year that seeks to set stronger health and safety standards, mandate independent inspections and require greater transparency was included in the Senate’s version of the 2027 National Defense Authorization Bill. If passed, the bill would require private military housing companies to pay for required third-party inspections, maintenance, mold remediation and all relocation expenses for military families who are forced to vacate unlivable units. The Senate bill also seeks to improve the complaint database for privatized military housing and prohibit landlords from requiring current or prospective tenants to sign nondisclosure agreements. The National Military Family Association said the measure is approaching a “critical moment” in Congress and encouraged military families to speak out in support of the legislation. The House Armed Services Committee did not include the MOLD Act in its version of the NDAA.
## Senate Hearing for DoD Nominees Postponed
The Defense Department must wait even longer for Senate-confirmed officials to arrive to four of its senior jobs, after senators abruptly postponed a hearing on the nominees Thursday morning. The meeting was set to consider the nominations of Jay Hurst for Pentagon comptroller, Matt O’Malley to be its deputy undersecretary of defense for acquisition and sustainment, Roger Mason to lead the National Reconnaissance Office, and Erich Hernandez-Baquero to serve as Department of the Air Force’s top space acquisition official. Senators left Washington early amid a clash with President Donald Trump over the mandatory voter ID bill.
