The Trump Administration has produced a flurry of Executive Orders (EOs) since the inauguration just over 2 weeks ago. If you do business with the federal government, you may be wondering how some of these executive actions will impact your contract. You’re certainly not alone.
While we don’t have all the answers yet (as we know, changes in the federal government can take time and are often met with resistance) we can address what impacts we do anticipate coming out of these EOs. In this blog, we’ll touch on key Executive Orders and how they may impact you.
Hiring Freeze Executive Order
One of the first EOs to be signed placed a 90-day hiring freeze on the federal civilian workforce. This excludes military personnel, armed forces or positions related to immigration enforcement, national security, or public safety. With this freeze, agencies cannot fill any current vacant positions or create any new roles. During this time, agencies need to draft a plan to cut spending and reduce inefficiencies.
This hiring freeze paired with a mandated return to in-office work and a letter offering 8 months pay for resignation will certainly prompt federal workers to leave voluntarily. This means after the 90-days are up, there will inevitably be gaps to fill in the workforce in essential areas such as cybersecurity, defense, facilities, and training. As a result, there could be a rise in Professional Services spending through vehicles such as the General Services Administration (GSA) Multiple Award Schedule (MAS) Program. The GSA MAS program is a self-funded agency and focuses on best value and price, so it will be a tempting vehicle for the new administration to lean on.
On the other hand, a change in administration means we can still expect contract delays, terminations, and regulation changes with an Executive Order like this.
America Trade First Policy Executive Order
I think we all could guess that this Executive Order was coming sooner rather than later—the America First Trade Policy EO is focused on prioritizing American interests in international trade.
A main part of the EO requires the U.S. Trade Representative to review the impact of all trade agreements and make recommendations to ensure they favor domestic workers and manufacturers over foreign nations. This means there will inevitably be changes favoring domestic preference when it comes to federal procurement. This is not new with the Buy American Act (BAA), especially as the domestic end product threshold was increased last year, but we could see additional regulations supporting this such as the recently imposed tariffs we’ll cover below.
Executive Orders Imposing Tariffs on Imports from Canada, Mexico, and China
On February 1st, Trump signed three EOs imposing tariffs on imports from Canada, Mexico, and China. The Trump Administration said the threat posed by drugs and border security constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA).
Currently, Trump has agreed to pause tariffs on Canada and Mexico for 30 days after they pledged to boost border enforcement. Before the pause, Trump imposed an additional 25% tariff on imports from Canada and Mexico, and an additional 10% tariff on imports from China. China’s tariff is still in place. This ruling could impact contractors who source some of their materials from these countries. While China is not Trade Agreements Act (TAA) compliant, Mexico and Canada are.
We expect to see an influx of contract modifications adjusting pricing and manufacturer information as contractors attempt to shift under these tariffs.
Executive Order Establishing the Department of Government Efficiency (DOGE)
In his first day of office, Trump established the Department of Government Efficiency (DOGE), which is taking place of the U.S. Digital Service (USDS). DOGE is led by Elon Musk, and its primary mission is to reduce inefficiencies, cut wasteful spending, and restructure federal agencies.
There are several actions already put in place by DOGE. One of the first was to end remote work for federal employees. This Executive Order mandates federal employees to return to the office 5 days a week. The Trump Administration has also announced their intention to shift some offices out of DC. DOGE has also terminated a few leases in the DC of mostly empty office space, and plans to relocate tenants to nearby buildings in the General Services Administration (GSA) portfolio.
Another action was to begin terminating contracts, specifically consulting contracts mostly focused on “strategic communication” and “executive coaching.” So far, DOGE has terminated over 35 contracts, totaling about $165 million across 6 agencies.
So, what does all this mean for federal contractors? Here are some ways we see DOGE impacting the government contracting realm:
- Increased technology and software opportunities: DOGE plans to launch a software modernization initiative, which would improve government systems. They will be looking for contractors to fulfill this.
- GSA Public Building Service and other facilities needs: as federal workers return to office, there will inevitably be a need for facilities services, office management, and furnishings. If DOGE ends leases in DC, they will turn to the GSA Public Building Service to find them new office space.
- Reduction in certain contracts/programs: As we’re already seeing, some contracts will be terminated by DOGE, and down the line we can expect some programs to be eliminated by the budget as well.
- Less sole sourcing and increased use of GWAC and BICs: Since the new administration is focused on taxpayer savings and government accountability, we expect to see less sole sourcing and a larger reliance on established Governmentwide Acquisition Contracts (GWACs) and Best-In-Class (BIC) contracts.
Unleashing American Energy Executive Order
The EO on Unleashing American Energy encourages energy exploration and production on federal lands and waters. It also seeks to establish the U.S. as a leading producer and processor of non-fuel minerals, including rare earth minerals. Additionally, this EO removes the electric vehicle (EV) and terminates the Green New Deal.
We expect this EO to have a significant impact on several federal contracts, especially those that are tied to EVs, and those that are funded by the Infrastructure and Jobs Act of 2021 or the Inflation Reduction Act of 2022.
On the other hand, we anticipate an increase in contracts relating to facilities, transportation, construction, land surveying, etc. as the government looks to expand production of non-fuel minerals and other resources.
Removing DEI Executive Order
In the Executive Order “Ending Illegal Discrimination and Restoring Merit Based Opportunity”, the Trump Administration seeks to remove all Diversity, Equity, and Inclusion (DEI) policies and programs within the federal government. While this EO makes clear that it does NOT currently impact veterans and persons with disabilities, it will certainly impact contracts that relate to DEI.
In direct response to this EO, GSA plans to immediately begin forbearing enforcement of all contract clauses, provisions, terms, and conditions related to DEI.
These clauses are defined by GSA but not limited to:
- Clauses that mandate diversity-related obligations
- Any reporting or record keeping requirements specifically related to diversity-related obligations
- DEI requirements imposed on contractors on a firm-wide basis
Multiple Award Schedule (MAS) contractors do not need to take any action at the moment, more information is to come soon.
Strategies for Adapting to the New Administration
There’s clearly going to be a lot of change in the next 4 years, and we know that can make you feel uncertain about your future as a contractor. We assure you that the government has needs to fill and is always buying. You will most likely have to make some changes to your marketing strategy and to your contract to align with the new administration, but this doesn’t necessarily mean you’re at risk of losing your government business.
Now is the time to reevaluate your brand, your networking, and your contract offerings to see where you can make changes and adapt to the shifting market. You should also keep up with relevant government news and insights. Subscribe to our weekly blog email and monthly newsletter to get recent administration and other relevant news.
It never hurts to have professional guidance to navigate these uncharted waters. Reach out to us today if you need help managing your GSA Schedule contract.
