Insights

Late on Friday, a federal judge in Maryland issued a preliminary injunction pausing certain elements of the Trump Administration’s two recent executive orders (“EOs”) addressing “illegal DEI programs.” The two EOs, Exec. Order 14151, Ending Radical and Wasteful Government DEI Programs and Preferencing (the “J20 Order”) and Exec. Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (“J21 Order”), contain a number of provisions that, among other things, direct the federal government to dismantle “illegal DEI programs” within federal agencies and federal contractors. Please refer to our prior alert on these EOs for a full breakdown of the provisions in each.

On January 20, 2025, the White House issued an Executive Order (EO) that revoked 78 executive orders and presidential memorandums issued by President Biden between January 21, 2021 and January 19, 2025 that do not align with Trump Administration policies.  Of those revoked by the EO, several impact government contracts and federal procurement, including, but not limited to:

Among the flurry of executive actions taken during his first day in office, President Trump formally established the U.S. Department of Government Efficiency Service (DOGE) via executive order (EO) on January 20, 2025, reconstituting the formerly named U.S. Digital Service that was created in 2014 by President Obama within the Office of Management and Budget. 

Late on the night of January 21, 2025, President Trump signed the “Ending Illegal Discrimination And Restoring Merit-Based Opportunity” Executive Order (the “EO”). This EO, like a number of the executive orders issued on his first day in office, took aim at Diversity, Equity, and Inclusion (“DEI”) programs by, among other things, broadly directing executive agencies and departments to terminate all “discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements;” curtailing the Office of Federal Contract Compliance Programs’ (OFCCP) operational authority and directing agencies to scrutinize the DEI practices of private sector employers. Additionally, this language raises questions about the future and status of certain programs, preferences, and set-aside procurements administered by the U.S. Small Business Administration, U.S. Department of Transportation, and other agencies. 

On January 15, 2025, the Federal Acquisition Regulatory Council issued a Proposed Rule that would implement changes to the Federal Acquisition Regulation (FAR) Organizational Conflict of Interest (OCI) rules as required by the 2022 Preventing Organizational Conflicts of Interest in Federal Acquisition Act (P.L. 117-324).  Comments on the Proposed Rule are due on March 17, 2025.  (Note that pursuant to President Trump’s January 20, 2025 “Regulatory Freeze Pending Review” Executive Order, the Proposed Rule is subject to further review, which may result in revisions and an extension of the 60-day comment period.)

As Crowell covered in a recent alert, the Department of Defense (DoD) on October 11, 2024 released a final rule (the “Final Program Rule”) formalizing the requirements, assessment processes, and related governance for its Cyber Maturity Model Certification Program (CMMC).

The federal government’s response to Hurricanes Helene and Milton will increase its reliance upon government contractor support to perform critical tasks in the coming months.  The Federal Emergency Management Agency and other federal, state, and local agencies charged with disaster response and recovery will look to contractors to provide everything from logistics to housing, construction, and security services.  National disaster contracting provides contractors with immediate opportunities to assist in the recovery effort, but given the time sensitivity, evolving customer needs, and critical nature of the work, contractors must be prepared to: (i) perform under tight deadlines and high scrutiny; (ii) seek clarity with respect to the scope of work they are asked to perform; (iii) properly manage contract and change order documentation; and (iv) maintain contract files for subsequent audits and other inquiries which can take place years after the recovery effort has ended.  One of the most common contract risks associated with disaster response efforts is the inevitable “scope creep” as contractors encounter ever-changing events on the ground, which puts an emphasis on record keeping and timely communications with government customers, to ensure payment for work performed.

On Monday, September 23, 2024, the Department of Justice (DOJ), released an update to its Evaluation of Corporate Compliance Programs (ECCP) guidance.  The ECCP guidance was last revised in March 2023, which brought a number of significant changes, including a focus on compensation and incentive structures (e.g., clawbacks), and third party messaging applications.  This 2024 update, while not as significant in scope as its predecessor, nonetheless highlights the DOJ’s focus on new and emerging technologies, such as artificial intelligence (AI), as part of its evolving assessment of what makes a corporate compliance program truly effective, and how prosecutors should evaluate risk assessments and other management tools at the time of a corporate resolution.

On June 24, 2024, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction, stopping the U.S. Department of Labor (“DOL”) from enforcing three key elements of regulations related to the Davis-Bacon Act and Related Acts (“DBA” or “Act”).  The court order issued in Associated General Contractors v. U.S. Department of Labor will provide significant comfort and certainty to contractors that perform work on federally funded construction projects.

On May 30, 2024, the Department of Defense (DoD) issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 803 of the 2023 National Defense Authorization Act, which modified 10 U.S.C. § 3455 to provide additional guidance regarding data requirements needed to support determinations of commerciality and price reasonableness under procurements for major weapon systems.  The rule applies to products that (i) have not previously been deemed commercial by the DoD; and (ii) are proposed as either a subsystem of a major weapon system or as a component or spare part of a major weapon system or subsystem. 

Following a January 29, 2024 White House announcement and Fact Sheet, on January 30, 2024, the Federal Acquisition Regulation (FAR) Council issued a Notice of Proposed Rulemaking (Proposed Rule) on salary-history bans and pay transparency for applicants and employees of federal contractors and subcontractors. On the same day, the Office of Federal Contract Compliance Programs (OFCCP) issued some FAQs on the compensation history issue. These actions by the federal government to ban prior salary information and require compensation information in job postings echo the efforts of multiple states and municipal governments that have enacted similar salary history bans and/or compensation disclosure requirements:

On January 11, 2024, the Department of Defense (DoD) announced its first-ever National Defense Industrial Strategy (NDIS) focused on building a modernized industrial ecosystem that provides a sustained competitive advantage to the US over its adversaries.  Specifically, the NDIS provides a strategic framework to guide the DoD’s engagement, policy development, and investment in the industrial base over the next three to five years.  As part of this investment strategy, the NDIS highlights several investment tools and opportunities that DoD is already using to spur growth and innovation in key industries.

On January 9, 2024, the FAR Council issued a proposed rule, seeking to amend the Federal Acquisition Regulation (FAR) in order to enhance consistency and alignment between the suspension and debarment procedures in the FAR and in the Nonprocurement Common Rule (NCR) system (contained in 2 CFR Part 180).  The FAR and NCR are two separate suspension and debarment regulatory regimes, with the former governing procurement matters and the latter governing grants, cooperative agreements, contracts of assistance, and loan guarantees.  While these suspension and debarment regimes are similar, the proposed rule would remove some differences—definitional and procedural—between the FAR and NCR.  

The Department of Defense recently issued a long-awaited final rule prohibiting DoD prime contractors from “flowing down” FAR and DFARS clauses in subcontracts for commercial products or services, unless flowdown is specified by regulation. This rule implements language, dating from the 2017 National Defense Authorization Act, intended to reduce administrative burdens on DoD contractors and subcontractors by adding a prohibition on extraneous flowdowns at DFARS 252.244-7000 Subcontracts for Commercial Products or Commercial Services.

On November 8, 2023, the Biden-Harris Administration announced the Better Contracting Initiative (BCI), a four-pronged initiative to ensure that the federal government is getting the best terms and prices when purchasing goods and services.  The federal government purchases billions of dollars’ worth of goods and services each year; however, the Administration is concerned that agencies pay inconsistent prices and often more than market price.  The BCI strategy is to improve how federal agencies procure innovative technologies and leverage data to make smart buying decisions by utilizing the following four steps as detailed below.

On October 4, 2023, Deputy Attorney General (DAG) Lisa O. Monaco announced the Department of Justice’s (DOJ) new safe harbor policy for voluntary self-disclosures made in connection with mergers and acquisitions (Safe Harbor Policy).  Following other announcements from DOJ over the past two years aimed at encouraging voluntary self-disclosures, the Safe Harbor Policy was adopted because DOJ does not want to “discourage companies with effective compliance programs from lawfully acquiring companies with ineffective compliance programs.”  Through this new policy, DOJ is aiming to incentivize acquirers to timely disclose misconduct discovered during the M&A process (including pre-closing diligence and post-closing integration).

Last week, the U.S. Department of Defense (“DoD”) issued a memorandum explaining new requirements in its efforts to “Counter[] Unwanted Foreign Influence in Department-Funded Research at Institutions of Higher Education” (the “Memorandum”). The Memorandum discusses DoD’s new processes to review proposals from higher education institutions for fundamental research opportunities, with a focus on security threats posed by China, Russia, and other malign actors.

On May 1, 2023, the Biden Administration announced its plan to issue an Executive Order in the coming days to rescind the existing executive order that imposes COVID vaccine requirements and safety protocols on federal contractors.  Specifically, Executive Order 14042 on Ensuring Adequate COVID Safety Protocols for Federal Contractors will be rescinded effective May 12, 2023, and agencies have been instructed not to require compliance with the COVID-related requirements from covered contractors and subcontractors nor to enforce the implementing clause. 

This week, the Department of Labor (DOL) and Office of Management and Budget (OMB) issued a memo directing all agencies to designate “agency labor advisers” who are responsible for advising agencies on “Federal contract labor matters.”  FAR Part 22 contemplates the appointment of “agency labor advisors,” and requires contractors to contact them about potential labor disputes or questions; however, DOL and OMB found not all agencies have such a role.