On April 9, 2025, President Trump issued an Executive Order (“EO”), “Modernizing Defense Acquisitions and Spurring Innovation In the Defense Industrial Base,” that may have significant implications for federal government contractors doing business with the Department of Defense (“DoD”), and particularly those with touchpoints to Major Defense Acquisition Programs (“MDAPs”).Continue Reading Trump Administration Issues Executive Order Aimed At Modernizing Defense Acquisitions And Spurring Innovation
New Executive Actions Address the Defense Acquisition System, U.S. Maritime Industries, Foreign Military Sales, and “Unlawful” Regulations
President Trump issued a series of executive orders (“EOs”) and presidential memoranda on Wednesday, April 9, that could impact government contractors across a broad range of industries. Among other initiatives, these executive actions seek to reform the defense acquisition system, reinvigorate the U.S. maritime industry, and streamline foreign military sales. The actions also reflect President Trump’s goal of catalyzing innovation and economic growth by reducing regulatory burdens, both in general and in the energy industry specifically.
We briefly summarize below the six April 9 executive actions most likely to impact government contractors.Continue Reading New Executive Actions Address the Defense Acquisition System, U.S. Maritime Industries, Foreign Military Sales, and “Unlawful” Regulations
Fifth Circuit Adds New Wrinkle to Ongoing Fight Over Federal Contract Worker Minimum Wage Requirement
Update: On March 14, 2025, President Trump issued an Executive Order, “Additional Rescissions of Harmful Executive Orders and Actions,” which revoked Executive Order 14026, discussed below. The U.S. Department of Labor has stated it is “no longer enforcing Executive Order 14026 or the implementing rule (29 CFR part 23) and will take steps, including rescinding 29 CFR part 23, to implement and effectuate the revocation of Executive Order 14026.” We will continue to monitor further developments.
Earlier this month, the Fifth Circuit ruled in favor of a Biden administration order raising the minimum wage of many types of federal contract workers. The executive order remains subject to litigation (in both the Fifth Circuit and elsewhere), but is currently effective throughout the country, with a narrow exception for certain state agencies.
President Biden’s Executive Order 14026 (“the EO”), issued in April 2021, raised the hourly minimum wage to $15.00 for federal contract workers for the following contract types:
- Procurement contracts for construction projects covered by the Davis-Bacon Act (“DBA”);
- Service contracts falling under the Service Contract Act (“SCA”);
- Concessions contracts, including those excluded from the SCA by DOL regulations at 29 C.F.R. 4.133(b); and,
- Contracts related to federal property or lands and connected to providing services for federal employees, their dependents, or the general public.
EO 14026 directs the U.S. Department of Labor to annually update the hourly minimum wage. We wrote in October 2024 about DOL’s annual update effective January 1, 2025, which raised the minimum wage for covered contracts from $17.20 to $17.75. More details are below.Continue Reading Fifth Circuit Adds New Wrinkle to Ongoing Fight Over Federal Contract Worker Minimum Wage Requirement
President Trump Issues Numerous Executive Orders with Potential Impacts on Federal Contractors and Grant Recipients
In his first few days in office, President Trump issued several executive orders (“EOs”) and memoranda, many of which may have implications for federal contractors and grant recipients, including the following:Continue Reading President Trump Issues Numerous Executive Orders with Potential Impacts on Federal Contractors and Grant Recipients
It Takes Two: SBA Proposes Applying “Rule of Two” to Multiple-Award Contracts
SBA’s “Rule of Two” often requires federal agencies to set aside an acquisition for small businesses whenever there is reasonable expectation that offers will be obtained from at least two small businesses that are competitive in terms of fair market prices, quality, and delivery.
On Friday, SBA issued a Proposed Rule that would extend the reach of the Rule of Two by applying it to orders issued under many multiple-award contracts. As such, under SBA’s proposal, agencies would be required to set aside an order under a multiple-award contract when there is a reasonable expectation of obtaining competitive offers from two or more small business contract holders, unless an exception – including an exception for Federal Supply Schedule (FSS) contracts – applies.
SBA believes that this rule, if adopted, would: (1) align multiple-award contract purchases with the Small Business Act’s requirement that a fair proportion of the total purchases and contracts for goods and services be awarded to small businesses; (2) resolve confusion created by contradictory interpretations of the Rule of Two; and (3) increase contracting opportunities for small businesses, particularly small disadvantaged businesses (SDBs).
More details are below. Continue Reading It Takes Two: SBA Proposes Applying “Rule of Two” to Multiple-Award Contracts
Public Comments to Proposed Rule Underscore the Need for Additional Clarity on SBA Recertification Requirements
The Small Business Administration (“SBA”) recently issued a proposed rule that would significantly change the rules concerning small business recertification in M&A transactions and other events (the “Proposed Rule”). SBA has framed the Proposed Rule as a consolidation of what is currently a scattered set of regulations, but the rule goes further than consolidating and clarifying existing law. It would expand recertification requirements in several key ways, including eliminating exemptions that currently allow contractors to continue to utilize set-aside multiple award vehicles after a so-called “disqualifying recertification” (i.e., a recertification as other than small or other than disadvantaged).
SBA invited public comment on the Proposed Rule. The deadline for submitting comments passed last week. We have spent some time reviewing the comments submitted thus far, which provide insight into the issues that affect both small business contractors and the industry writ large. As discussed below, many of the comments describe the potential chilling effects of the Proposed Rule, which could deprive contractors of key income streams just as they graduate from small business status and discourage investors and other contractors from acquiring small businesses that hold multiple award contracts.
The sections below describe the Proposed Rule in greater detail and provide an overview of the comments to the Proposed Rule.Continue Reading Public Comments to Proposed Rule Underscore the Need for Additional Clarity on SBA Recertification Requirements
DoD Rolls Out Proposed Changes to Prototype OTA Regulations
On September 4, DoD published a proposed rule updating the other transaction (OT) regulations set forth in 32 CFR part 3. These updates are intended to implement various changes to the prototype OT statute (42 U.S.C § 4022) previously enacted by Congress. Among other things, those changes included:
- An expansion of the “appropriate circumstances” under which a prototype OT may be issued, to include situations involving participation by nonprofit research institutions, participation by small businesses, or opportunities “to expand the defense supply base”; and
- Authority for DoD to issue follow-on “production” OTs on a sole source basis, provided that competitive procedures were used for award of the initial prototype OT.
Although these changes were already applicable to DoD as a matter of statute, the proposed rule would ensure that the CFR is aligned with the statute and that the regulations provide accurate guidance. More details are below.Continue Reading DoD Rolls Out Proposed Changes to Prototype OTA Regulations
Treasury and IRS Release New Guidance on Inflation Reduction Act Domestic Content Bonus Credit
On May 16, 2024, the Internal Revenue Service (“IRS”) and Department of Treasury (“Treasury”) published Notice 2024-41 (the “2024 Guidance”), which provides new guidance for securing the domestic content bonus credit established by the Inflation Reduction Act (“IRA”). As described in more detail below, the 2024 Guidance builds on the existing framework contained in Notice 2023-38 (the “2023 Guidance”), which was released last May. Most notably, the 2024 Guidance expands the range of applicable projects subject to the safe harbor in the 2023 Guidance and adds a “New Elective Safe Harbor” to determine cost percentages for the domestic content calculation in solar, onshore wind, and battery storage projects.Continue Reading Treasury and IRS Release New Guidance on Inflation Reduction Act Domestic Content Bonus Credit
Chips on the Table: FAR Council Releases Advance Notice of Proposed Rulemaking to Implement Prohibition on Purchase and Use of Certain Semiconductors
Today, the Federal Acquisition Regulatory Council (“FAR Council”) released an Advance Notice of Proposed Rulemaking (the “ANPRM”) describing the agencies’ plan to implement Section 5949 of the National Defense Authorization Act (“NDAA”) for FY 23 (Pub. L. 117-263).
Section 5949 prohibits the Federal Government from procuring certain semiconductor parts, products, or services traceable to named Chinese companies and potentially other foreign countries of concern. To that end, the ANPRM invites public comment on the proposed contents of an implementing FAR clause, to take effect December 23, 2027.
As discussed below, the FAR Council proposed applying the regulations broadly to all solicitations and contracts, including commercial item and commercially available off-the-shelf (“COTS”) contracts, subject only to a limited waiver. Although not set out in the statute, the clause would require contractors to conduct a “reasonable inquiry” into their supply chain to detect potential violations. It would also require both disclosure and the taking of corrective action in the event that nonconforming products or services are discovered.
More details are below, and our previous coverage of Section 5949 is available here.Continue Reading Chips on the Table: FAR Council Releases Advance Notice of Proposed Rulemaking to Implement Prohibition on Purchase and Use of Certain Semiconductors
Whose Site Is It Anyway: Trade Groups Challenge DOL’s Prevailing Wage Calculation and Expanded Definition of the Site of Work Under the Davis-Bacon Act
The requirement to pay “prevailing wages” to covered workers is a perennial aspect of many types of government contracting, including construction contracts subject to the Davis-Bacon Act (“DBA”) and certain related laws (collectively referred to as the Davis-Bacon and Related Acts or “DBRA”). In recent years, Congress has also expanded the reach of prevailing wage requirements to new industries: clean energy projects seeking to take advantage of federal tax credits under the Inflation Reduction Act are required to ensure that prevailing wages are paid or may be forced to forfeit valuable credits. Semiconductor manufacturers — as well as manufacturers of materials and equipment used to make semiconductors — that seek to take advantage of the incentives established by the CHIPS Act are likewise required to follow the prevailing wage requirements of the DBA.
It was in this context that the Department of Labor (“DOL”) introduced a 222-page final rule, “Updating the Davis-Bacon and Related Acts Regulations,” that substantially rewrote the implementing regulations under the DBRA. Among other things, the final rule alters how DOL calculates the prevailing wage rates for each locality, and expands the definition of the “site of work” and categories of workers subject to the DBA. Moreover, the final rule imposes the DBA by operation of law on federal construction contracts that would otherwise be covered, but that nevertheless do not include the requisite FAR clauses and wage determinations used to inform contractors of the DBA’s requirements. The potential impact of these changes has not gone unnoticed: last month, two trade associations — the Associated Builders and Contractors of Southeast Texas, Inc. (“ABCSETX”) and the Associated General Contractors of America (“AGC”) — filed separate suits challenging multiple aspects of the final rule, including the changes to prevailing wage calculation methodology and the revised definition of the site of work. We expand on the final rule’s changes — and on the pending legal challenges — below. Continue Reading Whose Site Is It Anyway: Trade Groups Challenge DOL’s Prevailing Wage Calculation and Expanded Definition of the Site of Work Under the Davis-Bacon Act