The first 100 days of the second Trump administration have been a whirlwind for the government contracting industry. And many federal contractors have been left dazed and confused, thanks to several executive actions.
These include a course reversal on longstanding diversity, equity, and inclusion policy; the creation of the Department of Government Efficiency, led by Elon Musk; ordering the consolidation of procurement under the General Services Administration; and promising a “comprehensive reform” of the Federal Acquisition Regulation.
FAR Reform
In what could be his most consequential executive action for the government contracting world, President Donald Trump issued an executive order this month to completely overhaul the FAR.
The president wants the entire 2,000 page-plus FAR amended by October “to ensure that it contains only provisions that are required by statute or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.” The order also encourages an automatic four-year expiration for all regulations not directly tied to statutes that can’t otherwise be eliminated.
The Office of Management and Budget must issue guidance in the coming days on implementing the order. Individual agencies must also prepare their own guidance for amending FAR supplements.
This FAR reform will dramatically alter federal procurement in ways that could both help and hurt the industry. Intended reductions in costs, barriers to entry, and administrative burdens will come with confusion and uncertainty that may increase costs, trigger more disputes, and limit opportunities for certain types of contractors, especially small businesses.
Prohibited “Illegal DEI”
In an earlier move, the administration issued a series of executive orders targeting what the president deems to be “radical and wasteful DEI programs” and “illegal discrimination.” Though not expressly defined in the orders, they bar contractors and grant recipients from engaging in “illegal DEI.” Recent guidance from the Department of Justice and Equal Employment Opportunity Commission may consider any employer action “motivated—in whole or in part—by an employee’s or applicant’s race, sex, or another protected characteristic” to be “illegal DEI.”
Notably, the federal government is now requiring contractors to certify compliance with federal anti-discrimination laws as a material condition for payment. Some predict this certification requirement will be used to pursue False Claims Act actions against contractors that don’t end “illegal DEI” programs.
Several lawsuits challenging these orders are moving through the lower courts and could be decided by the Supreme Court. In the meantime, to avoid the risks of a potential enforcement investigation, contractors should cautiously review any DEI and affirmative action programs for compliance with the orders.
DOGE Disruptions
Officially a special initiative of the president and not a formal department of government, DOGE is tasked with rooting out waste, fraud, and abuse. Though the Musk-led initiative has made headlines for its drastic and abrupt reductions in the federal workforce, its efforts go much deeper. An executive order meant to implement cost efficiency throughout the government required nearly every federal agency to establish a DOGE team to assist in implementing Trump’s DOGE agenda.
DOGE-related directives have disrupted contracts and grants across the entire federal government. Its wall of receipts reports the termination of more than 8,400 contracts and more than 9,500 grants as of April 29, totaling approximately $63 billion. Beyond terminations, many agencies have also withheld payments or issued stop-work orders under the auspices of cost efficiency.
Contractors should review their individual contracts and grants to understand their rights for recovery because DOGE promises to continue its cuts for the foreseeable future.
Procurement Consolidation
Trump is also aiming to tackle waste, fraud, and abuse by ordering that the acquisition of common goods and services be consolidated under the GSA, whose administrator has 90 days to submit to OMB a comprehensive plan for procurement of commercial items on behalf of all domestic federal agencies. GSA’s common goods and services that could be affected include, among others, professional services, office management, and transportation and logistics.
Though contractors of all sizes will be forced to adapt to the changes prompted by this executive order, it has the potential for outsized impact on small businesses. A centralized procurement system lends itself to larger and more complex contracts, and, generally, larger and well-established contractors are in the best position to compete for such contracts.
Additionally, housing all acquisition functions under a single roof could lead to unintended consequences. Instead of becoming a one-stop shop of operational efficiency, GSA could become a congested bureaucratic bottleneck delaying the delivery of goods and services to agencies when they need them.
While these actions are among the most significant for federal contractors, many more are pending—most notably the administration’s on-again, off-again tariff plans. If Trump’s first 100 days are any indication, the government contracting industry will endure much more change and uncertainty.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author Information
Jamar King is partner at Thompson Hine and a member of the firm’s business litigation and government contracts practice groups.
Ryan Spiegel is partner in Thompson Hine’s government contracts practice group.
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