The Silly Season in Government Contracting Arrives Early—The Rush Is on to Issue Executive Orders, New Rules, and to Bring Judicial Challenges
Don't you love farce?
My fault, I fear
I thought that you'd want what I want
Sorry, my dear
But where are the clowns?
There ought to be clowns
Quick, send in the clowns
--Send in the Clowns, Stephen Sondheim
This is an opinion piece, so feel free to disagree.
At the end of many administrations, when they realize the opposing party is set to take power, there tends to be a rush of Executive Orders (“EOs”), rulemaking efforts, and interpretive policies. The effort is directed to tying the hand of the incoming administration and implementing the unfinished business of the outgoing one. It has become an American tradition that Federal procurement policies, given the vast power of the Presidency, are often one of the primary focuses of that effort.
It appears that silly season of rushed EOs and rulemaking is upon us early this time. Usually, the incumbent party only makes this kind of effort when they know they are a lame duck, which generally isn’t the case with an incumbent President’s running for a second term of office. But the Trump Administration is giving off an odor of defeat by pursuing these regulatory changes now with little deliberation and an obvious eye to political pandering rather than substance. How many extra votes this will bring is, of course, speculative?
But using the Government contracting community to score political points in not new. However, it is being elevated to a different plane here at what may be the end of the Trump administration. Presumably some of this silliness will pass come November, but then, if the voters choose change, brace yourself for more serious activities up to Inauguration Day to bring the existing rulemaking to a conclusion.
Here is what is happened in just September 2020:
EO on Diversity Training
On September 22, 2020 President Trump issued a new Executive Order on banning certain contractor diversity training. See https://www.whitehouse.gov/presidential-actions/executive-order-combating-race-sex-stereotyping/. The new Order cited several practices that prompted its issuance including a Treasury Department seminar that promoted arguments that “virtually all White people, regardless of how ‘woke’ they are, contribute to racism” and training materials from a Government Owned Contractor Operated Department of Energy facility at the Argonne National Laboratories, claimed that that racism “is interwoven into every fabric of America.”
I am not going to analyze the conduct barred by the EO, since others have done that already. Here is one analysis:
The EO includes the following examples of the concepts it aims to ban from trainings:
· one race or sex is inherently superior to another race or sex;
· an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously;
· an individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex;
· members of one race or sex cannot and should not attempt to treat others without respect to race or sex;
· an individual’s moral character is necessarily determined by his or her race or sex;
· an individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex;
· any individual should feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex; or
· meritocracy or traits such as a hard work ethic are racist or sexist, or were created by a particular race to oppress another race.
Whether you are a Black Lives Matter protester or a limited government conservative, you should be concerned over this erosion of contractor inde[pendence. It crosses ideological boundries for the Executive Department to intrude so deeply into the training policies of private contractors. As President Reagan once said, or something to this effect, “A government big enough to give you everything you want is big enough to take it all away.” Come 2021 query whether a possible Biden Administration not only will revoke this particular EO, a certainty, but will also put in place its own affirmative mandates for diversity training. My point is whatever the excesses of some of the diversity training, and no doubt there are some as these cherry-picked examples show, it still isn’t necessary or appropriate for the Government to stick its nose in every single internal corporate HR function of its contractors.
Of course, this EO is just campaign fodder and not all that serious. But use of the procurement process as a campaign tool degrades the institutions of government contracting.
Short Deadline to Comment on New Independent Contractor Regulations
My next example is the issuance of the proposed Independent Contractor rules. DOL has been duly working its way through these regulations. Unlike the training initiative, this rulemaking has some important implications of how employment relations are structured, workers are paid, and taxes collected. It affects millions of workers. Thus, it is an obvious serious matter, and regardless of where you fall on the political spectrum, it warrants a full deliberate examination and rulemaking process.
Yet on September 25, 2020, the Trump Administration issued proposed regulation and therein only provided for a 30-day comment period. https://www.federalregister.gov/documents/2020/09/25/2020-21018/independent-contractor-status-under-the-fair-labor-standards-act. I am not going to analyze the scope of those regulations here. But they total many pages in the Federal Register. And comments on this very important subject thus come due October 26, 2020. That tight deadline shows a measure of contempt for the notice and comment provisions of the Administrative Procedures Act. While there are undoubtedly emergency situations where a 30-day notice for an interim final rule might be appropriate, this is not self-evidently one of those circumstances.
This is simply no way to run a government rulemaking process. It breaks yet another norm of behavior.
The Trump Administration’s Joint Employer Rule Is Enjoined
Given this rush to issue EOs and rule make, what inevitably comes next is litigation. It happened when the Democrats were last in power. Who doesn’t at least vaguely remember the whimpering ending of the Employer Responsibility EO in the court’s and Congress? And there was also the most commented regulatory initiative of all time — the Obama Administrations new salary basis thresholds for exemption under the Fair Labor Standard Act (“FLSA”) —and its eventual frustration by the courts and dilution by the Trump Administration. And history repeats itself, or at least rhymes.
The most current example of that is the DOL’s recent new so-called Joint Employer rule. See https://www.awrcounsel.com/blog/2020/1/13/dont-bogart-that-joint-dol-set-to-add-clarity-to-joint-employer-standards?rq=Joint%20employer . This rule was designed to relax the application of the joint employer test under the FLSA and take the government boot off the neck of employers with franchisee arrangements. It was an employer friendly change in interpretive practices pushed through the regulatory process. The prior rule was a sloppy, ambiguous mess that meant what ever DOL wanted it to mean.
But on September 8, 2020, the Southern District of New York struck down and vacated the vertical changes to the rule. The court said the DOL regulation was infirmed because it didn’t explain why it departed from the DOL’s prior interpretation; nor did it explain why the benefits of the change outweighed the cost. See State of New York v. Scalia, 1:20-CV-1689 (GHW) (SDNY 2020). The DOL rule was characterized as “thin gruel” and the court said regarding the Government’s arguments in defense that “this dog has yet to bark” citing the great Sherlock Holmes for authority.
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So again, the silly season is here again in government contracting. Brace yourself for more.