In his first day as President of the U.S., Trump wasted no time—he signed 12 Executive Orders (EOs), one of them placing a hiring freeze on the federal civilian workforce. This is not a first time a hiring freeze has been instituted, and not the first under Trump either. Many federal employees as well as federal contractors are wondering what this means for the future of the federal workforce. In this blog, we’ll discuss the current freeze, what we’ve seen in past hiring freezes, and ways this could impact the world of government contracting.
Under the Trump Administration’s EO, all agencies are under a 90-day hiring freeze, except for military personnel, armed forces or positions related to immigration enforcement, national security, or public safety. Until this freeze is lifted, agencies cannot fill any vacant positions or create any new roles. The Office of Personnel Management (OPM) has the authority to grant further hiring exemptions if needed.
The freeze will last up to 90 days, until the Office of Management and Budget (OMB), OPM, and the Department of Government Efficiency (DOGE) submit a plan to reduce the federal workforce. This can be accomplished through efficiency improvements and attrition.
When the freeze lifts, all agencies but the Internal Revenue Service (IRS) will be able to hire new employees. The IRS will remain under a hiring freeze until the Treasury Secretary, OMB, and DOGE determine it’s in nation’s best interest to lift it.
Trump instituted a nearly identical freeze in 2017 which lasted almost 3 months, and followed similar measures laid out by both Jimmy Carter and Ronald Regan. Historically, hiring freezes were created to shrink the workforce by attrition.
On average, the federal government has an annual attrition rate of 5%-7%. Since the workforce has around 2 million employees, it’s estimated about 100,000 to 150,000 people leave every year whether it’s to new positions or retirement, etc. We can see this percentage grow a bit with the addition of Voluntary Early Retirement Authority and Voluntary Separation Incentive Pay. If these positions aren’t backfilled right away with the hiring freeze, this would result in significant short-term savings without making sudden cuts. If the goal is to shave spending in the short-term, this could be accomplished relatively easily.
However, these freezes have caused disruption to agency operations in the past and can create skill imbalances. Some of the most skilled and/or top employees may voluntarily leave, especially with the EO mandating the return to the office 5 days a week. Some of the vacant positions will inevitably need to be filled to bridge skill and experience gaps, which is where we could see another shift in the federal workforce—turning to federal contractors.
If the attrition rate rises due to the freeze, there are positions that eventually need to be backfilled. This could change how federal agencies operate, including relying more on contractors to fill the gaps in essential positions such as cybersecurity, defense, facilities, training etc. Currently, contracting outside of the federal government to find a way around this freeze is prohibited by the EO. However, agencies could rely on current contracts and increase scopes of work to fill their needs. As a result of this, there could be an uptick in Professional Services spending through vehicles such as the General Services Administration (GSA) Multiple Award Schedule (MAS) Program both during and after the freeze is lifted.
Since the new administration’s main focus is cutting waste and improving efficiency, they may turn increasingly toward the GSA MAS Program. The MAS Program is designed to provide government customers with pre-vetted contractors at pre-negotiated prices streamlining the acquisition process, while also guaranteeing best value in price.
Additionally, as a self-funded agency, GSA does not put a strain on the federal government budget. GSA continues to operate during shutdowns and economic uncertainty, making the GSA MAS Program more appealing to federal government customers, and aligns with DOGE’s mission of increasing efficiency while trimming costs.
However, as there will inevitably be vacant positions and new personnel coming in from the department head level, there is also room for contract award delays, cancellations, and new regulations that could impact contractors. This is expected of any administration change, so it's something to be prepared for.
It’s clear this new administration plans to make big changes in the federal government, from budget to structure and operations. As contractors, we need to be prepared to adapt to these changes as well as be ready to meet the government’s needs. Now is a great time to ensure your GSA Schedule contract is up to date on pricing and you are keeping up with compliance measures. If you don’t have a GSA Schedule, now is also the time to consider acquiring a contract to support future government endeavors.
If you have questions about managing your contract or getting a GSA Schedule, reach out to one of our consultants today. To stay updated on future changes in the new administration, check out our blog.