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12 November 2024

How A Trump Presidency Could Impact Government Contracting

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Holland & Knight

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With former President Donald Trump winning the election to be the 47th president of the United States, Americans should expect sweeping policy and regulatory changes...
United States Government, Public Sector

Highlights

  • With former President Donald Trump winning the election to be the 47th president of the United States, Americans should expect sweeping policy and regulatory changes, including in the federal procurement space.
  • This Holland & Knight alert details several potential changes that the incoming administration may initiate based on Trump's previous administration and plans he has outlined for his next presidency.

With former President Donald Trump winning election to be the 47th president of the United States, Americans should expect sweeping policy and regulatory changes, including in the federal procurement space. Based on Trump's previous administration and plans he has outlined for his next presidency, there are several potential changes that the incoming administration may initiate.

Executive Orders with Immediate Effect

Commonly, if the president issues an executive order that places a requirement on the government contracting community, contractors are not impacted until a regulatory process plays out – which can take months or years – resulting in a rule that is incorporated into solicitations and then contracts. Toward the end of the previous Trump Administration, former President Trump issued Executive Order (E.O.) 13950, "Combating Race and Sex Stereotyping," that sought to eliminate certain equity and inclusion policies and training. That executive order was "effective immediately, except that the requirements of section 4 of this order shall apply to contracts entered into 60 days after the date of this order," meaning contractors needed to comply within 60 days, whether regulations were in place or not. Whether that trend continues will be worth watching, but contractors should pay close attention to executive orders impacting the procurement space in the event immediate action is required.

Acceleration of Onshoring and Buy American Requirements

There was a marked increase of Buy American requirements during the previous Trump Administration that continued under the Biden Administration. Contractors should expect that trend will continue, perhaps even further than the current trajectory. Manufacturers selling "critical" supplies to the U.S. government should expect regulatory actions that require the products and components be fully manufactured in the U.S. The Biden Administration has, in fact, made it a requirement for certain personal protective equipment (PPE) following passage of the Make PPE in America Act.

Prohibition on Outsourcing Jobs

One of former President Trump's platform positions is to ban companies that outsource jobs overseas "from doing business with the Federal Government." There is no detail associated with this policy, but it is possible the next Trump Administration will prohibit outsourcing, whether the outsourcing is connected with a government contract or not.

Continuation of Cybersecurity Regulations

In his previous administration, former President Trump accelerated regulations aimed at protecting information from cyber criminals and foreign adversaries. The centerpiece of those regulations, the Cybersecurity Maturity Model Certification (CMMC), will probably continue in its current form. The CMMC began under former President Trump and continued under President Joe Biden and is about to launch. In his agenda, former President Trump noted that: "Republicans will use all tools of National Power to protect our Nation's Critical Infrastructure and Industrial Base from malicious cyber actors. This will be a National Priority, and we will both raise the Security Standards for our Critical Systems and Networks and defend them against bad actors."

It is pretty clear that the incoming administration will prioritize the prevention of Chinese and other nation-state adversaries from successfully exfiltrating critical information held by the government and federal contractors and their supply chains.

Small Business Set-Asides

Set-asides in the federal procurement space under the 8(a) program and others may find an administration that is less sympathetic to the overarching goals of promoting set-asides based on race or sex. While this may not lead to wholesale rule changes, it may impact how vigorously the new administration enforces certain small business goals.

Expect Repeal of Some Procurement-Related Executive Orders and Regulations Issued Under the Biden Administration

Although this is not an exhaustive list, it would be unsurprising for certain Biden Administration priorities to be abandoned or reversed in the next Trump Administration. They include:

  • O. 14057, "Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability," set a goal to minimize climate change through the reduction of greenhouse gas emissions. This serves as the basis for Federal Acquisition Regulation (FAR) Part 23, "Environment, Sustainable Acquisition, and Material Safety."
  • FAR 52.223-23 was adopted in May 2024 and requires agencies to consider sustainable products and services as opposed to their nongreen counterparts when available.
  • Non-displacement of qualified workers requires contractors with Service Contract Act-covered contracts to give offers of employment to the incumbent nonexempt workforce. The U.S. Department of Labor issued a final rule on Dec. 14, 2023, but the final FAR was never released. In his last administration, former President Trump rescinded the Obama-era regulations on Oct. 31, 2019.
  • Proposed FAR regulation requiring the disclosure of greenhouse gas emissions and climate-related financial risk. The proposed regulation was issued on Nov. 14, 2022, and the FAR Council was still reviewing comments on the proposed rule and drafting the final version of the rule, which has not been released.
  • Executive order and regulations requiring increased minimum wages for certain blue-collar federal contract employees. President Biden issued an executive order (and regulations) that required an increase in the minimum wage for certain federal contractor employees. This followed a similar executive order (and subsequent regulation) that the Obama Administration instituted and the last Trump Administration left untouched. It remains to be seen whether the Biden-era version will also survive a subsequent Trump Administration.

When looking at the larger regulatory picture, the U.S. Department of Defense (DOD) issued 100 final rules covering procurement during the Biden Administration. The vast majority of them are uncontroversial and actually advance onshoring goals that former President Trump had in his administration.

The FAR Council also issued dozens of regulations during the Biden Administration. The incoming Trump Administration will probably also find the vast majority of them mundane and unobjectionable and may agree with efforts to onshoring federal procurement. There are some, however, that run counter to former President Trump's previous policies. They include the regulations that seek to make federal procurement more environmentally friendly, as noted above.

Project 2025

Although former President Trump denied that Project 2025 would guide his administration, it was authored by individuals who will inevitably help shape policy within his new administration, and it is helpful to review to understand how federal procurement may change over the next four years. Project 2025 contains policy initiatives scattered throughout that may impact federal contracting. For example, Project 2025:

  • Emphasizes that the Office of Federal Procurement Policy (OFPP) within the Office of Management and Budget (OMB) should "be should be engaged early and often in OMB's effort to drive policy, including by obtaining transparency about entities that are awarded federal contracts and grants and by using government contracts to push back against woke policies in corporate America," indicating that a return to E.O. 13950, among other things, would be considered
  • Calls for the continuation and strengthening of the Made in America Office, which President Biden established within OMB
  • Reinstates E.O. 13891, which required significant guidance documents to go through a regulatory review; this executive order was rescinded by President Biden
  • Expands funding for the Office of Information and Regulatory Affairs, which reviews regulations before they are released
  • Transforms defense planning, programming and budgeting to allow for the acquisition of emerging technologies; one proposed initiative would create a "Night Court" by the service secretaries to review and terminate "outdated or underperforming programs so that money can be used for what works and will work"
  • Gives defense acquisition officials greater authority to enter into multiyear procurements and block buys, as well as emphasize onshoring and close any Buy American loopholes
  • Expands the Defense Acquisition University's mission to cover the entire government because there is a "critical shortage of trained and certified acquisition personnel"; it also opens the possibility that other organizations could fill the training gap
  • Increases foreign military sales to support U.S. allies by emphasizing exportability, ending informal congressional notifications, decreasing regulations such as some International Traffic in Arms Regulations (ITAR) regulations when dealing with close allies, and reforming the contracting process
  • Calls for congressional action to require federal contractors to require that at least 70 percent of employees be U.S. citizens, with the percentage increasing to 95 percent over a 10-year period

Additional Potential Impacts

The first Trump Administration also issued a series of executive orders impacting the federal procurement space – covering rulemaking, guidance documents and domestic preferences – that were subsequently rescinded by the Biden Administration. Expect at least some of those executive orders to return.

In addition, the incoming Trump Administration will likely have different spending priorities that will emphasize defense spending and deprioritize international aid, for instance. The makeup of Congress will also dictate how much of the new administration's spending priorities will be achieved.

It is not known how the president-elect will reshape public procurement, but contractors should understand that significant changes are probably ahead, starting in January 2025, when President-Elect Trump retakes office. Holland & Knight will issue further alerts and blogs as events warrant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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