In an executive order of February 26, President Donald Trump directed the heads of the federal agency to review their contracts and grants and to “rescind or modify them” when possible to reduce or reassign the expense. Lawyers say that contractors who work for the Government should talk to the officers of hiring their agencies to move forward in uncertainty.
The order also directs the Agency’s heads to work with teams from the Trump initiative known as the Government Efficiency Department (DOGE) to build a centralized system to record all the payments that their agencies make with “ written justification ” of the employee who approved each payment and to review his hiring processes, including procedures and staff. The heads of the agency have 30 days to perform the reviews.
There are exemptions for the application of the law, US customs and border protection, United States immigration, and the application of customs and military included in the order. But to a large extent, it leaves “an uncertain situation for how it is implemented,” says Alexander Canizares, a partner and vice president throughout the signing of government contracts in the law firm Perkins Coie Llp.
“We are trying to read the tea leaves a bit to determine how the agency’s heads will make these types of decisions,” he says. “There is very little in the executive order that would identify the factors, but I think it is fair to wait for the agencies to be attentive to this concept of efficiency, because this executive order is apparently implementing the DOGE’s agenda.”
Contracts reviews must focus on reduction or change in spending “to promote efficiency and advance in the policies of my administration,” says Trump’s order. But it is unclear how many construction projects can be applied or if officials would try to end or alter the contracts signed during the Biden administration that include provisions related to articles such as outsourcing with companies owned by women or members of a minority group, the use of “cleaner” construction materials or having work project agreements.
Although the order establishes 30 days for reviews, it does not specify a timeline for the endings or renegotics of the contract.
“ According to the modification and termination of the contract, I would expect to begin to see some results of this in the 30 days, because the review is assumed to be ongoing, and I would expect to take place a level of communication in the contracting community, since it is in progress, ” says Joshua Mullen, a member of the Womble Bondson law firm, who focuses on government contracts and business contracts.
With only 30 days for the review, Mullen asks what the agency analyzes will be like in depth.
“There is not much time to evaluate,” he says.
With such uncertainty, lawyers recommend that contractors working for the Government review their contracts, especially articles such as the termination or change clauses, and what compensation may be entitled to companies.
“Contractors need to be willing to protect their rights and be able to participate in a productive dialogue on all these issues,” says Canizares.
Lawyers also recommend that contractors begin communication with agents of contracting the agency ahead of possible changes. They may have an idea of what direction the agency takes. Although they do not, “communication is key in all this,” he adds.
Contractors will also be able to defend why a project is what the Government should continue.
“I would try to communicate with the agency professionals … why your particular project is an efficient and important project that complies with the priorities of the administration,” says Mullen.
