Government Contracts Ramifications Of The Trump Election

The presidential Administration of Donald J. Trump is likely to usher in many changes for government contractors. Through campaign statements, including his "Contract with the American Voter," President-elect Trump has identified multiple planned actions that would affect the way the federal government does business. This Commentary explores those potential changes.

Repeal of Numerous Executive Orders Affecting Government Contractors

President Obama has issued several Executive Orders ("EO") and Presidential Memoranda pertaining to government contracting. These Executive Orders impose numerous additional requirements or restrictions on government contractors. Many government contractors, in turn, have objected to the use of Executive Orders to impose these additional, sometimes costly, requirements. In 2015, four associations—the National Defense Industrial Association, the Aerospace Industries Association, the Professional Services Council, and the IT Alliance for Public Sector—sent a letter to the White House "respectfully request[ing] that no further presidential directives primarily focused on government contractors be issued for the foreseeable future." The letter noted that these additional requirements have required substantial investments of time and systems, even though their actual impact is "exceedingly minimal," which creates problems for current contractors and barriers to entry for potential government contractors.

In his "Contract with the American Voter," President-elect Trump stated that he will "cancel every unconstitutional executive action, memorandum and order issued by President Obama." Similarly, President-elect Trump's campaign website vowed to "[c]ancel immediately all illegal and overreaching executive orders." Although President-elect Trump has not yet supplied details on which Executive Orders he views as unconstitutional, illegal, or overreaching, his planned actions could potentially result in lifting numerous restrictions placed on government contractors. The following Executive Orders affect government contractors:

Economy in Government Contracting,1 which requires that federal agencies treat as "unallowable" the costs of any activities by federal contractors "undertaken to persuade employees ... to exercise or not to exercise ... the right to organize and bargain collectively." Nondisplacement of Qualified Workers Under Service Contracts,2 which requires that when a new contractor replaces a firm doing work under a contract for services, certain service employees must be granted a right of first refusal of employment in positions for which they are qualified. Notification of Employee Rights Under Federal Labor Laws,3 which requires that federal contractors (and subcontractors) covered by the National Labor Relations Act must conspicuously post a notice to employees regarding their rights under federal labor laws, including the National Labor Relations Act. Use of Project Labor Agreements for Federal Construction Projects,4 which encourages executive agencies to consider requiring the use of project labor agreements in connection with construction projects with a total cost to the government of $25 million or more. This Executive Order also sets forth several requirements for project labor agreements. Presidential Memorandum, Memorandum for the Heads of Executive Departments and Agencies on Contractor Tax Delinquency,5 which directs the Commissioner of the Internal Revenue Service to conduct a review of certifications of nondelinquency in taxes submitted by federal contractors and to report on the accuracy of those certifications. It also directs agency heads to submit recommendations on process improvements to ensure that tax-delinquent contractors are not awarded new contracts. Strengthening Protections Against Trafficking in Persons in Federal Contracts,6 which imposes requirements, including additional requirements for compliance plans, certification, and reporting, on federal contractors to strengthen compliance with anti-trafficking laws. Establishing a Minimum Wage for Contractors,7 which raised the minimum wage for workers on government contracts to $10.10 per hour beginning January 1, 2015, and requires that the minimum wage for such employees be determined annually by the Secretary of Labor. Non-Retaliation for Disclosure of Compensation Information,8 which prohibits federal contractors from discriminating or retaliating against employees who discuss their compensation with fellow workers. Presidential Memorandum, Advancing Pay Equality Through Compensation Data Collection,9 which directed the Secretary of Labor to propose a rule within 120 days that would require federal contractors and subcontractors to submit to the Department of Labor summary data on the compensation paid to their employees, including...