What contractors should expect from the Trump administration

Government contractors are in the dark about what President Donald Trump’s administration has in store, just like everyone else. But government contract lawyers from the law firm Crowell and Moring are making some speculations.

The long view

Robert Burton, partner at Crowell and Moring and former deputy administrator of the Office of Federal Procurement Policy, said the overarching goal of the administration seems to be a more efficient procurement system at much lower prices.

“I think that’s going to translate into increased opportunities for federal contractors, as well as some challenges,” Burton said in a Jan. 26 webinar.

The administration’s top priority, Burton said, seems to be reducing the number of regulatory and compliance burdens contractors function under, especially those imposed by the Obama administration. Burton said he expects the Fair Pay and Safe Workplaces Executive Order, among others, to be rescinded soon.

Your opinion matters. Take Market Connections’ survey about how you consume media.

Advertisement

“We’ll just stay tuned to see what happens, but I think you can be sure that there’ll be some changes with respects to those executive orders,” he said.

Burton is expecting increased competition in the federal marketplace as these regulations are eased, with commercial item procurements emerging as a prime target.

“It’s interesting to note between 1996 and 2012, the number of laws and executive orders applicable to commercial item procurement increased from 17 to 50, and the level of oversight has expanded dramatically,” he said. “I think that we’re going to see a reduction in the growing burden on commercial contracting and I think we’re going to see a reduction in contractor compliance costs. This may actually attract more commercial contractors to the federal marketplace.”

Burton said acquisition staff, at least in the short term, are going to have difficulty shifting priorities and implementing new policies while functioning under a hiring freeze. With no new personnel, managers are going to have to shift resources to achieve the new administration’s goals, which Burton said will most likely revolve around bringing projects in on time and under budget.

In addition, he foresees increased interest in reducing waste, fraud and abuse, with the emphasis on waste.

Executive Orders and Labor matters

In addition to the Fair Pay and Safe Workplaces executive order, Rebecca Spring, counsel in Crowell and Moring’s labor and employment group, said she expects to see the most changes in labor regulations that impose financial burdens on contractors, such as paid leave and pay transparency.

House 2018 budget proposal lays groundwork for federal retirement cuts.

For example, as of Jan. 1, employers are required to provide employees working on government contracts with at least 56 hours of paid sick leave every year.

“I think this requirement may remain, at least in the short term,” she said. “I don’t think it’s a top priority, but it may be on the chopping block at some point.”

She also mentioned both President Trump and his daughter Ivanka forwarded the idea of implementing some sort of paid maternity leave policy, which may be something to look out for in the future. This also raises the possibility, she said, that some of these orders could be applied more widely to all employers, not just government contractors.

In addition, Trump will have the opportunity to nominate at least two members to the National Labor Relations Board, which will have significant implications for labor, but not for some time.

International Issues

“‘America First. Buy American. Hire American.’ We’ve all heard these slogans, and at first blush, they would not appear to conflict with the national security concerns that often predominate when you’re talking about international public procurement,” said Alan Gourley, Crowell and Moring partner. “But translating those slogans into workable policies is likely to present quite a challenge to the new administration and indeed conflict with some long-held views of the Republican members of Congress.”

For example, requirements to hire American workers and buy American products would have to be reconciled with existing trade agreements, or other requirements that may mandate opening competition up to foreign contractors. In addition, determining a country of origin may be difficult for some companies. And how far down the supply chain will these restrictions apply?

Gourley also warned that this could lead to conflicts involving foreign investors, as the waiting period for investigations into foreign investors has been steadily creeping upward, and likely won’t stop anytime soon.

“If you’re expecting investment from China, good luck,” Gourley said.

Cybersecurity

Kate Growley, counsel for Crowell and Moring’s privacy and cybersecurity group, said to expect a greater emphasis on controlled unclassified information (CUI) and personally identifiable information (PII) in the upcoming years.

In September 2016, the National Archives released a final rule establishing a central framework for how agencies are required to treat CUI. One of the functions of the rule is to ensure that agencies are marking and handling the information in the same way. Documents that may have been marked “proprietary” or “official use only” will now be marked “CUI.”

This will help standardize not only handling within agencies, but how information is treated when it gets transferred between them. Right now, the same information that is stringently protected at one agency could be vulnerable at another.

Regulations on how contractors have to handle CUI haven’t come down yet, but some agencies, like the Homeland Security Department, are proactively changing their own acquisition regulations.

Likewise, Growley said there is now a final Federal Acquisition Regulation clause regarding the handling of PII. It requires any contractor employee handling PII to undergo specific training that must be regular and documented. The FAR clause includes other information for dealing with PII as well.

Small Businesses

Amy O’Sullivan, partner at Crowell and Moring, said that small businesses should keep an eye on the Small Business Administration’s expanded mentor-protégé program. In October 2016, SBA expanded the categories of small businesses that could apply for protégé relationships.

“First and likely, the most time-consuming part of this process in terms of adapting to the new expanded program for companies both large and small has been to find the best partner, particularly because the SBA regulations have upper limits on the number of mentor-protege relationships each participant can have,” O’Sullivan said. “So we’ve seen a fair amount of time devoted to debates on decisions on obtaining the best competitive edge from this relationship. And in particular, the most beneficial access to key set-aside procurement opportunities.”

In addition, SBA has updated its website to provide more information about the process and streamline the application.

O’Sullivan said SBA has seen 65 new agreements since the program opened up, and declined only five as of mid-January. The process takes only eight days, an improvement over the previous system, which was known to take up to three months.