Employment Law

What Contractors Can Expect Under the Trump Administration

The federal contracting landscape is undergoing significant changes as the Trump administration reinstates, modifies, and rescinds numerous executive orders established during the Biden era. From diversity, equity, and inclusion (DEI) initiatives to regulations on service contracts and manufacturing policies, contractors must navigate a rapidly evolving regulatory environment.

DEI and Affirmative Action Reversals

One of the most significant changes involves the rescission of Executive Order 11246, originally issued by President Lyndon B. Johnson nearly 60 years ago. This longstanding mandate required federal contractors to maintain affirmative action programs aimed at fostering equal employment opportunities. Its repeal marks a dramatic shift, eliminating a critical framework for diversity and compliance monitoring.

The order calls for “the federal contracting process to enhance speed and efficiency, reduce costs, and require Federal contractors and subcontractors to comply with our civil rights laws.” To support that effort, “It bars the Office of Federal Contract Compliance Programs from pushing contractors to balance their workforce based on race, sex, gender identity, sexual preference, or religion.” In addition, “It requires simple and unmistakable affirmation that contractors will not engage in illegal discrimination, including illegal DEI.”

Service Contract Workforce Protections Repealed

Another notable shift pertains to the non-displacement rule for service contracts. Historically, this rule required incoming contractors to offer positions to qualified workers from the outgoing contractor’s workforce. This provision, introduced during the Clinton administration and subsequently toggled between rescission and reinstatement by successive administrations, was revoked again by Trump on his first day back in office.

Without this rule, contractors now have greater discretion in staffing decisions, enabling them to hire entirely new teams rather than retaining incumbent workers. This newfound flexibility may appeal to incoming contractors but removes job security protections for existing employees.

Revival of Regulatory Burden Reduction Measures

Another significant executive order revived by the Trump administration is the requirement for agencies to eliminate two regulations for every new one introduced. This policy, intended to reduce the regulatory burden on contractors, was first implemented during Trump’s initial term and later rescinded by Biden.

Additionally, a regulatory reform task force for each agency has been re-established, with a renewed emphasis on ensuring that guidance documents are publicly accessible and undergo proper review processes. These measures aim to foster greater transparency and accountability but may also slow the issuance of new regulations.

Manufacturing and “Made in America” Policies

The Trump administration continues to prioritize “Made in America” initiatives, building on policies from both his previous term and the Biden administration. Notably, a longstanding waiver allowing the use of foreign-manufactured products in federal construction projects was revoked in Biden’s final days. This change, set to take effect in the coming years, will require contractors to source materials domestically, potentially reshaping supply chains and encouraging investment in U.S. manufacturing facilities.

Broader Implications for Contractors

The regulatory shifts are expected to activate key federal offices, including the Office of Information and Regulatory Affairs (OIRA), the Office of Federal Procurement Policy (OFPP), and the Office of Federal Contract Compliance Programs (OFCCP). Industry experts anticipate increased scrutiny and enforcement activities as these agencies implement and oversee the revived and new directives.

While some contractors may welcome reduced regulatory burdens and greater staffing flexibility, others face uncertainty as they adapt to new compliance requirements and navigate evolving DEI and manufacturing policies. The impact of all these changes will depend on how swiftly and comprehensively contractors respond to the revived Trump administration’s regulatory priorities.

Looking Ahead

As contractors adjust to this dynamic landscape, the possibility of further regulatory changes remains high. Experts suggest that more funding for OIRA and enhanced regulatory review processes could streamline compliance while promoting accountability. Meanwhile, the future of policies requiring domestic manufacturing will hinge on industry capacity and investment.

In this ever-shifting regulatory environment, federal contractors must stay vigilant and proactive, seeking guidance to navigate the complex and evolving compliance landscape.

The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.