Trump’s Third Month: What’s Happening at the Agencies?
Part I and of this series examined some of the policies towards federal procurement outlined in Trump Administration’s executive orders (“EO”), or that we hypothesized are likely in the pipeline based on policies expressed by these EOs. Part II outlined the numerous legal challenges that have stymied President Trump’s attempts to implement his policy goals. In the final part of this three-part series, this article analyzes how a sample of executive agencies chose to effectuate the Trump Administration’s procurement policies. Contractors with contracts with these agencies, or who intend to do business with them, should take note of these actions to understand how agency-level reforms may impact all phases of the contract lifecycle.
General Services Administration (“GSA”)
In response to the Trump Administration’s numerous EOs and directives, on February 15, 2025, GSA released Class Deviation CD-2025-04 to approve deviations from FAR Subpart 22.8, known as the Equal Employment Opportunity section, and prohibit the implementation of clauses and provisions tied to this subpart. Namely, all open and new GSA solicitations, orders, and contracts must not have any provision or clause referenced in this subpart to comply with EO 14173. As part of the announcement, GSA also hinted at revisions of the FAR to decrease its size and burden on the federal procurement community through work with the FAR Council.
The Deviation also notes that the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced it would cease enforcement action under the 1965 EO, Equal Employment Opportunity and stop promoting diversity, holding contractors and subcontractors responsible for taking “affirmative action,” and stop allowing the same to conduct in “workforce rebalancing” based on protected categories. This office had previously been the enforcing body for such matters.
Contractors who rely on micro purchases (under $10,000) via government charge cards will also be affected by recent changes to the use of charge cards. On March 3, GSA announced that its SmartPay charge cards would be set with a $1 limit on all cardholder accounts agency-wide, requiring cardholders to undergo a review and approval process to ensure purchases “directly support mission-critical activities” and, per the Trump Administration’s policies, prevent all forms of “fraud, waste, and abuse.”
Lastly, on March 20, President Trump issued 14240, Eliminating Waste and Saving Taxpayer Dollars. This EO is a continuation of a long-time strategy spanning several presidencies to consolidate categories of purchases (“common goods and services”) into single purchase vehicles. The theory is that this will reduce redundant contracts and administrative efficiencies. Accordingly, President Trump directed the Administrator of GSA to submit a plan to procure goods and services “across the domestic components of the Government” within 90 days. This proposal is due on June 18, 2025. However, the EO also designated the GSA Administrator as the “executive agent” for all Government-wide acquisition contracts (GWACs) for information technology. Right now, several IT GWACs are administered by different agencies, such as the NASA Solutions for Enterprise-Wide Procurement (SEWP) GWAC and the Chief Information Officer—Solutions and Partners 3 (CIO-SP3) GWAC. We will know soon how this will be accomplished, but look for these vehicles to perhaps be consolidated into GSA’s Alliant 2 or another existing GSA vehicle.
Small Business Administration (“SBA”)
Upon her confirmation and swearing-in as the Administrator of the SBA on February 20, 2025, Kelly Loeffler issued a memorandum focused around three principles: (1) supporting President Trump’s agenda; (2) eliminating wasteful spending and fraud; and (3) empowering small businesses.
Concerning the first principle, among other goals, Loeffler directed the SBA to eliminate the Office of International Trade into the Office of Manufacturing and Trade to effectuate the “Made in America” policies embodied by Trump through fair trade practices, economic independence, and scaling use of innovative manufacturing and technological start-ups. Regarding the second focus, aside from endorsing DOGE’s efforts and appointing a Fraud Czar to prevent fraud, the SBA will perform an agency-wide audit to preserve the solvency of public-private programs such as the 7(a)-lending program and restore prior underwriting standards. Lastly, and arguably most critically, the SBA empowered the Office of Advocacy to identify and eliminate all regulations deemed “burdensome” across all federal agencies and decreased the 8(a) federal contracting goal for small, disadvantaged businesses to the statutory level of 5%. As noted in in the goals released on January 24, subcontract small business goals remain higher, varying by agency, as with the overall prime small business goals (set by statute at a minimum 23%). Only categories of historically disadvantaged businesses fell to the 5% floor, except for HUBZONE businesses, which are at 3%. To illustrate an example of the changes, at the Department of Labor, the prime small business goal is 38.61%, while the Prime Small Disadvantaged Business Goal is 5%. So small businesses continue to benefit from set-asides, with only certain categories falling in percentage.
In addition to the above objectives, on March 21, 2025, the SBA announced an agency-wide reorganization to reverse the Biden Administration’s expansion of the SBA through the Green Leaf Initiative and DEI activities, as well as the $200 billion in alleged fraud tied to the Paycheck Protection Program and Covid Economic Disaster Loan programs. Most of the reduction activities deal with the elimination of almost 10,000 positions from the SBA agency-wide excluding specific offices, centralizing all fraud and risk prevention activities, and placing remaining staff across the nation.
Department of Veterans Affairs (“VA”)
In late February, while celebrating a purported $2 billion in savings on cancelled contracts, reports surfaced that the VA quietly reversed contract cancellations which, if upheld, would have hindered veterans’ access to sufficient medical care and other benefits. Specifically, these reversed cancellations included contracts for inspections of medical equipment that produces radiation (e.g., MRI machines), safety inspection of VA medical facilities, and provisions of workplace and employee benefits for veterans and their families.
Nevertheless, on March 3, 2025, VA Secretary Doug Collins announced that, following a review of almost 2,000 professional service contracts, the VA would cancel 585 “non-mission critical or duplicative contracts,” with a collective estimated savings of $1.8 billion. These contracts, which included a myriad of various administrative services (e.g., staff mentoring, leadership coaching, executive support), were cancelled largely due to the VA’s contention that such services could be performed in-house. Interestingly, as part of this release, the VA stated that “subject-matter expert” employees were leading the VA’s audit and subsequent cancellation of these contracts and will lead future cancellations. Plus, these persons also possess the ability to reverse cancellations if they later determine cancellations would negatively impact “health care, benefits, or services” to veterans and VA beneficiaries. That said, the VA did not provide the guidelines these individuals utilize to determine which contracts warrant cancellations or the procedures in place to reverse a cancellation. As each decision to cancel will likely be supported by internal agency correspondence and guidance, contractors will want to review their option to potentially challenge these terminations, as we have outlined in our article on contesting a termination for convenience.
Department of Transportation (“DOT”)
On January 29, Secretary Sean Duffy, the newly confirmed DOT Secretary, issued the infamous “Woke Rescission” memorandum and subsequent order to effectuate the Trump Administration’s EOs targeted to eliminating DEI. Specifically, Secretary Duffy revoked three Biden-era DOT orders related to climate change, environmental justice, and the formation of a DOT Equity Council. Additionally, all future DOT grants must be accompanied by “rigorous cost-benefit requirements and data-driven decisions,” will no longer consider the social cost of carbon in grantmaking, and require recipients to comply with America First and Buy America requirements. To that end, all DOT Operating Administrators (“OAs”) must review existing grants, loans, and contracts and, when permissible, unilaterally amendthe terms and conditions to abide by the order, federal law, and federal policy.
Related to the Woke Rescission documents, a leaked DOT policy memo from March 12 called for the removal of all project elements related to “bike infrastructure, charging infrastructure, climate change or those that take equity into account” moving forward. This policy would require DOT OAs to identify any of the projects above which Congress previously deemed as “eligible activities” under the Biden-era Infrastructure Investment and Jobs Act for individual scrutiny and, if deemed necessary, cancellation, modification, or continue as planned.
Although DOT’s OA’s—which include the Federal Highway, Transit, and Railroad Administrations (FHWA), holding $51B USD in unobligated funds—must issue guidance to implement Secretary Duffy’s directives, recipients of DOT grants and current contractors must ensure their projects align with federal priorities and policies. However, doing so would require a realignment in a recipient’s narrative or messaging away from DEI and social issues the Trump Administration is denouncing (e.g., gender ideology) to have a chance at avoiding material modifications or even terminations.
Lastly, effective March 17, FHWA has rescinded the Buy America waiver on manufactured products in place since 1983. Pursuant to that rule, projects obligated on or after October 1, 2025 require “manufactured products” to be produced in the United States, and the cost of components “mined, produced, or manufactured” in the U.S. must be 55% or greater.
Department of Defense (“DOD”)
The DoD issued a public statement on January 28 to correct certain media accounts that the DoD paused all contract awards following the issuance of M-25-13 and the subsequent pause on grants, loans, and other financial programs, which was famously revoked the following day.
However, only two months later, Secretary Hegseth issued a formal memorandum on March 20 which announced the cancellation of $580M USD in programs, contracts, and grants. Like the DOT’s directives, Secretary Hegseth clamed DoD has identified $360M in grants meant to fund research and related activities concerning DEI and related social programs, climate change, social science, COVID-19 pandemic responses, and other areas. Additionally, DoD cancelled $30M in contracts with external consulting firms for analysis products, as well as contracts under the Defense Civilian Human Resource Management System software project, which was intended to streamline the DoD’s information technology (“IT”) services in the human resources department. Collectively, these cancellations allegedly saved DoD almost $170M.
Additionally, the DoD’s Office of the Undersecretary for Defense issued a separate directive to
take specific steps, which included a call for all contracting officers to not implement the clauses outlined in FAR Subpart 22.810 and FAR Subpart 22.407(a)(d) in line with the Trump Administration’s restoration of “Merit-Based Opportunity.” The document also identifies a plethora of other solicitation provisions and contract clauses that contracting officers must remove from all open solicitations and modify existing contracts to eliminate these clauses.
National Institute of Health (“NIH”)
On February 7, 2025, the NIH issued supplemental guidance which placed a 15% cap on a grant recipient’s ability to recover “indirect costs” associated with grants as of the guidance’s issuance, which is usually earmarked towards covering overhead and administrative costs. In protest of the NIH’s decision, twenty-two of the United States’ top universities filed suit against the NIH and the Department of Health and Human Services to ensure critical medical research performed at universities would not be devastated and could continue. A judge in the U.S. District Court of Massachusetts granted a temporary restraining order in response to the suit, which has subsequently been extended. These reforms to future grants were also coupled with outright cancellations of federal grants funding research regarding specific subject matters, including the immediate cancellation of LGBTQ+ health-related research in early March.
From this subset of federal agencies, it is apparent federal agencies are dedicated to forwarding the Trump Administration’s objectives in reshaping the future of federal procurement. Whether it be through broad federal contract and grant cancellations, the outright elimination of all social or DEI initiatives, and reforming agency offices and goals to eliminate alleged fraud, agencies are taking decisive actions to abide by President Trump’s America First goals. However, the specific manner in which agencies are taking actions to mirror the Administration’s directives are unclear, with very little information provided by agency heads on their internal processes. This lack of information reinforces the general difficulty in tracking future trends in cancellations and agency actions related to federal contracts and grants.
GovSpring is available to help contractors and companies understand how actions taken by federal agencies may impact their ability to enter into and continuously engage with the federal marketplace. Click here to schedule a consultation or fill out our online contact form if you are in need of legal services.
This article was co-authored with Aaron Silva. Aaron is currently a third-year law student at The George Washington University Law School, with a focus in Government Procurement and International & Comparative Law.