Federal Contracts Over $100K Off-Limits to Companies Boycotting Israel Starting 2026

Starting January 1, 2026, the federal government plans to shut out any company that boycotts Israel from securing high-value contracts. The Countering Hate Against Israel by Federal Contractors Act mandates that federal agencies cannot award any contract worth more than $100,000 to a company unless that company certifies it is not currently engaged in a boycott of Israel. Furthermore, if a company wins a contract, they must agree not to start a boycott while the work is underway. This is a significant change for the contracting world, tying access to federal dollars directly to a company’s stance on foreign policy.

The New Compliance Checkpoint

For businesses with more than 10 employees—which covers everything from mid-sized tech firms to large construction outfits—getting a federal gig just got more complicated. If you bid on a “covered contract” (anything over $100,000), you’ll now have to sign a certification saying you aren't boycotting Israel. If you’re a subsidiary or affiliate of a larger company, this rule applies to the whole corporate family. Think of it like a new checkbox on your federal contracting paperwork, except ticking the wrong box means you lose the bid. The bill defines “Engaging in a Boycott of Israel” as taking action to limit business with Israel or Israeli-licensed entities based on calls for a boycott, or discriminating based on nationality or religion without a valid business reason. This definition is broad and could potentially snag companies for actions they didn’t intend as political statements.

What Happens If You Break the Rule?

If a company lands a contract and then starts boycotting Israel, the consequences are clear and swift. If the agency head learns of a violation—say, through a public report—they have to notify the company in writing. The company then gets a 30-day window to stop the boycott “to the agency head’s satisfaction.” If they don't reverse course, the contract must be terminated. This puts a lot of power in the hands of the agency head to subjectively decide if a company has sufficiently ended its boycott activities, which could be a source of friction and legal appeals down the line. For companies that rely heavily on federal work, this 30-day clock is a massive pressure point.

The Real-World Impact on Business Decisions

This legislation presents a direct challenge to companies that support the Boycott, Divestment, Sanctions (BDS) movement or similar political boycotts. For a company that has taken a principled stance against doing business with Israel, this bill forces a tough choice: maintain the boycott and forfeit access to lucrative federal contracts, or drop the boycott to keep the government business flowing. This isn’t just about large defense contractors; it affects every company providing goods or services to the government, from office furniture suppliers to IT consultants. While the bill explicitly states it respects First Amendment rights and doesn't take a position on the Israeli-Palestinian conflict, the practical effect is that it penalizes a specific form of political expression—economic boycott—by restricting access to the federal marketplace. For many, this feels like compelled speech: you must certify what you don't do politically to earn a living.