To say that the past few weeks have seen unprecedented upheaval in the federal government is, to put it mildly, an understatement. Shortly after taking office, President Trump issued multiple executive orders significantly changing the landscape of federal spending, including one creating the Department of Government Efficiency and one ending DEI programs across the Government. The Office of Management and Budget issued, then rescinded, a guidance memo freezing financial assistance programs. The Government offered nine months of severance pay to federal workers who voluntarily resign. One federal agency may or may not exist anymore, and another one could be on the chopping block.
What’s going to happen next? Frankly, we have no idea. (And we’re very skeptical of anyone who says otherwise.)
But, from the perspective of the government contractor, here are four things we’d look out for in the weeks, months, and years to come:
- Terminations for Convenience. Most government contracts contain a “termination for convenience” clause allowing the government to end the contract early. We would not be surprised to see significant use of this power in the coming weeks and months – both on contracts that fall within the DEI executive order and elsewhere. While this will certainly come as a blow to the terminated contractors, it is important that they not leave money on the table. If your contract is terminated for convenience, you may be entitled to compensation for things like the cost of partially completed work, early termination penalties paid to your subcontractors, and the administrative costs of managing the termination. With our expertise in REAs and claims, we can help you pursue these costs.
- Suspensions of work, delays, and disruptions. The speed and breadth of the new Administration’s actions is leading to some confusion throughout government agencies. We are almost certain to see some ongoing contracts intentionally paused or slowed down as contracting staff analyze the effect of new policies. And, with the federal acquisition workforce already stretched thin, we may see unintentional delay and disruption as resignations or firings impact the government’s ability to administer existing contracts. Any delay or disruption to performance of your contracts may give you a right to compensation. Here, too, we can help you submit an REA or claim.
- New contracting opportunities. This is – we admit – purely speculative. And there is certainly a possibility that any coming decrease in the overall size of the federal workforce will be paired with a decrease in the federal government’s responsibilities. But when there is a mismatch – fewer government employees to do the same job – the Government often turns to contractors. Now would be a great time to make sure that your company is registered in SAM, to get on the GSA Schedule, and to ensure that you are well-positioned to compete for any new contracting opportunities.
- Increased state and local contracting. Another (again, speculative) possibility is that the federal government does give up some of its prior responsibilities. A real possibility for this is in the field of education. The Department of Education – currently in Congress’s sights – spent more than $240 billion in FY24, more than $92 billion of which was through contract awards. If those contracts dry up, look for states and localities to pick up at least some of the slack. We can help you navigate the world of state and local procurement to make sure that you are well positioned to compete for these opportunities.