Might Doesn’t Make Right: Why Government Contracts Should Not Be Overly Regulated By Executive Orders

“Complacency about this is like the joke about the man who jumped off the top of the Empire State Building. He fell past the 80th floor, then the 60th floor and then the 40th floor. As he passed the 20th floor he shouted, “So far, so good!…”

--Brendt Arends, MarketWatch

The second Trump Administration has come out of the gate with a series of executive orders (“EOs”), part of its shock and awe strategy. The motivations vary. Some  of the EO’s are mean-spirited. Some are social policy driven. Some spring from a desire for deregulation and smaller government. And, in my opinion, many of them are overreaching.

Why for example do we need a special EO to bestow protected immigration status on South American white plantation owners? And how can EOs impound grant and contract monies appropriated by Congress? That strikes me as a classic overreach of executive authority.

But so far, when it comes to core government contracts principles, the new era actions, while hardly immodest, are not revolutionary. Albeit, to me, the revocation of the landmark EO 11246 (and the end of affirmative action) after 60 years was surprising, though not shocking after the Supreme Court’s judicial rulings on private sector affirmative action.

Here is some historical perspective. Procurement-related EOs have for a long time been an early feature of new Presidential administrations. EO 11246 dates back to 1965 and shortly after Lyndon Johnson’s landslide win. President Clinton implemented a so-called non-displacement EO; President George W. Bush, revoked it; President Obama reinstated the non-displacement order; President Trump revoked it; President Biden sleepily but eventually got around to issuing his own non-displacement EO; Now President Trump has revoked it once again. And so it goes, back and forth, like a game of ping pong. No surprises here folks -- keep on moving.

As for the DEI EO, it too is likely to be part of a new ping pong match in the coming years. Yes, Trump is dismantling the bureaucratic apparatus of affirmative action in government contracts. While I agree with the goals of non-discrimination and the desire to balance historic wrongs, much of the bureaucratic effort behind the affirmative action policies was as productive as a hamster on a wheel. That portion of the administrative state is apparently going into the woodchipper.  We will see how much that matters to the 24% of Black male voters and 50% of Hispanic male voters who picked Trump.

But if you don’t like the weather, just wait…. Someday we are likely to get some new “DEI-lite” policies when the pendulum swings back to the Democratic party, albeit some of the perhaps excesses of the past may be gone for good. Why can’t we have a Black History Day or month in schools to educate our children about the sorry legacy of slavery and Jim Crow? Why is that possibly banned and federal education monies withheld from schools? My guess is that some of this extremism will eventually burn itself out.

And most notably, as I predicted, the second Trump Administration has so far not been focused on the special wage and hour “privileges” of government contractor employees, even as it goes after government contractors and terminates contracts. . Of course, time will tell. I don’t have a crystal ball as to exactly where government by decree this is going to lead us. Trump’s  political antenna apparently tells him that his working class constituency isn’t interested in demolishing things like the Davis-Bacon Act, the Service Contract Act (“SCA”), the Contractor Minimum Wage EO, or the Sick Leave EO. Or perhaps the answer is they just haven’t gotten around yet to that portion of their agenda. My best guess is that the architects of the new era might just be waiting for the judicial system to do most of the dirty work for them.

Nonetheless, as a practical matter, if they hit the voters hard in their wage and benefits, then these kinds of pocketbook issues may undo the Republican agenda, dependent as it is especially now on poorly educated but socially conservative voters. But those same voters are unlikely to be pleased by higher prices, crony billionaire capitalism, mass layoffs, and tax breaks for the wealthy, while they get back to office directives, and are told to keep their lips buttoned down.

Eventually, they will figure out they are being duped, especially when their Trump and Melania tokens drop to zero dollars. And it won’t forever escape their attention that Jeff Bezos gave Melania $40 million dollars -- $26 million more than any other broadcaster bid -- for her life story to be featured in an Amazon Prime documentary, in what looks like a quid pro quo for the award of government contracts for his Amazon cloud and space businesses. That kind of shakedown and cronyism between oligarchs may yet eventually prove politically toxic. For that reason, I cancelled my 48 year old Washington Post home delivery subscription yesterday and am looking closely at options to Amazon Prime.

Anyhow, whatever your political beliefs, it is just a fact that EOs are just a terrible way to regulate government contracting. Government contracting needs stability and certainty. Constant political interference and the imposition of social policies unrelated to the task of procurement has made the Government less efficient. In that sense, some portion of  the otherwise lawless DOGE effort has some merit. We don’t need to make federal procurement into a pinata of social causes. We just need an efficient federal government who can spend taxpayer monies wisely on goods and services. Both political parties are guilty of trying to do too much by executive order, albeit for different reasons. While I do not mean to suggest “equivalency” of the behavior of either political party, or call for unilateral disarmament, I do think a truce is national interest.

Efficient government contracting would  be helped by a recognition on both sides that we  don’t need to wildly swing our procurement policies back and forth between the policies of the social justice movement and the MAGA world. And it is especially destructive  to do so by the process of executive orders. By nature, EOs are temporary and thus are just provisional. We need to focus on the basics of our procurement process, and we should carefully make changes thereto by statute and formal notice and comment rulemaking. Complacency with our wasteful procurement process is dangerous. But executive orders are not the best solution.

For example, I recently called for the reform of the commercial exemption to the SCA. See https://www.awrcounsel.com/blog/2024/12/20/doge-are-you-listening-a-call-for-reform-of-the-commercial-exemption-to-service-contract-act-coverage. However, by that I didn’t mean reform by Executive Order. There is a process to promulgate exemptions to the SCA. It is committed by law to the discretion of the US Department of Labor, provided those exceptions are deemed necessary and proper, in the public interest, and consistent with the remedial purpose of the Act. I got a call from DOGE asking if I could write an EO accomplishing my proposed commercial reform. I declined to do so. I thought more about it and I decided that the statute necessitates notice and comment rulemaking. If the Trump Administration wants an expanded commercial exemption, it needs to roll up its sleeves and do it the proper legally prescribed way.

In short, fewer EOs and more formal deregulatory initiatives would be better for the country, and it would be more likely to leave a permanent legacy. Government by decree is a mistake. It is short-term thinking. And when it comes to federal procurement policy, the lesson of history is that it proves ephemeral. If you actually want to be effective, rather than just troll your political opponents, then do it the right way.