After 100 days, the dawn of the Trump administration reveals to contractors a variable horizon. Changes to the procurement process and shifting budget priorities threaten certain contracts. Conversely, anticipated streamlining of acquisition regulations and spending increases promise expanded contract activity. Contractors need to know how they will respond to these challenges and opportunities to survive and thrive in coming years.
Addressing Challenges
The challenges posed to federal contractors by the new administration are twofold. First, President Trump intends to reduce waste, fraud and abuse by enacting changes to the federal acquisition system. Second, the administration plans to curb spending in many areas including rolling back DEI programs, federal office space and reductions in the budgets for the departments of Education and Health and Human Services, and the Environmental Protection Agency.
The procedural changes to date center on four executive orders issued by the president. Executive Order (EO) 14222 signed Feb. 26, 2025, is titled “ Implementing the President’s ‘Department of Government Efficiency’ Cost Efficiency Initiative.” Among other things, this order directs agency heads, in consultation with the agency’s Department of Government Efficiency (DOGE) Team, to:
- Build a centralized technological system to record every payment issued by the agency, along with a written justification for each payment. The system is to include a mechanism for the agency head to pause and review any payment lacking a justification.
- Review all covered contracts and, where appropriate and consistent with applicable law, terminate or modify these contracts to reduce overall federal spending or reallocate spending to promote efficiency and advance the president’s policies.
- Issue guidance on signing new contracts or modifying existing contracts to promote government efficiency and administration policies.
Exempt from the order are law enforcement officers, customs and border protection agencies, the uniformed services, classified information or classified information systems, and any other contract exempted by the agency head, in consultation with DOGE and the director of the Office of Management and Budget (OMB).
Another executive order aimed at procurement reform is EO 142240 signed March 20, 2025, titled “ Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement.” This order begins with a policy statement reciting that consolidating federal procurement in the General Services Administration (GSA) as the agency designed to conduct procurement, will eliminate waste and duplication, while enabling agencies to focus on their core mission of delivering the best possible services. The order then requires the OMB to designate the GSA administrator as the executive agent for all governmentwide acquisition contracts for information technology. Next, the order provides that:
- Agency heads shall submit proposals to the GSA to have GSA conduct domestic procurement of common goods and services for the agency, where permitted by law.
- The GSA will submit a comprehensive plan to the OMB for the GSA to procure common goods and services across the domestic components of the government, where permitted by law.
The combination of spending cuts and systemic changes imposes reductions or terminations on many contracts. Contractors facing loss of revenue need to be aware of the legal tools they have at their disposal to reverse or mitigate these effects. Refusal by the government to pay monies due may be a breach of contract. If negotiations with the contracting officer concerning adverse contract actions fail to yield satisfactory outcomes, contractors ought to be prepared to proceed under the Contract Disputes Act. 41 USC 7101 et seq.
As the name implies, the Contract Disputes Act offers a process by which contract disputes may be resolved. The act is incorporated by reference in the disputes clause of procurement contracts. If negotiations with the contracting officer fail to reach a mutually satisfactory resolution of adverse contract actions, the act provides for the contractor to submit a written claim to the contracting officer. Claims of more than $100,000 must be certified. The contracting officer then has 60 days to issue a written decision or notify the contractor of the time within which a decision will be issued.
The contracting officer’s decision is final unless within 90 days of receipt of the decision, the contractor appeals to an agency board of contact appeals. Alternatively, within 12 months of the decision, the contractor may bring an action on the claim in the U.S. Court of Federal Claims.
Agency spending cutbacks may take the take the form of a contract termination. Procurement contracts include as a matter of law a termination for convenience (TFC) clause. The Federal Acquisition Regulation (FAR) includes a variety of such clauses for incorporation into different types of contracts. A TFC clause allows the government to terminate performance of the work in whole or in part if the contracting officer decides that termination is in the government’s interest. See, e.g. FAR 52.249-2 Termination for Convenience of the Government (Fixed Price) (Apr 2012).
The TFC clauses prescribed by the FAR require that after receiving notice of a termination for convenience, the contractor must stop work as specified in the notice and halt associated subcontractor performance. The contractor shall then submit a certified termination settlement proposal seeking compensation for the amount to be paid because of the termination. If the contractor and contracting officer fail to agree on the whole amount, the contracting officer shall pay the contract price for completed supplies or services accepted by the government. In addition, payment must be made for the effects of the termination, including: (1) costs incurred in the performance of the work terminated, (2) the cost of settling with subcontractors, (3) profit on the costs incurred in performance of the terminated work, and (4) reasonable costs of settlement of the work terminated.
If the contractor is not satisfied with the agency’s termination payment, it has the right to appeal this determination. The appeal shall proceed in accordance with the contract’s disputes clause, as outlined above.
Pursuing Opportunities
At the same time that contractors are coping with budget cuts, the spending priorities of the Trump administration offer the prospect of increased procurement in many sectors, including national security (missile defense, drone technology, cybersecurity, artificial intelligence), border enforcement and infrastructure.
The administration looks to maximize the impact of increased procurement dollars with two additional executive orders. To facilitate defense spending, on April 15, 2025, President Trump signed EO 14265 titled “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base.” This order recites it is the policy of the federal government to accelerate defense procurement and revitalize the defense industrial base to restore peace through strength. A plan to reform the Department of Defense’s (DOD) buying processes to promote streamlined procurements is to be submitted to the president by the secretary of defense.
The order further indicates that the DOD is willing to move on from existing major defense acquisition programs mired in performance deficiencies. Such programs more than 15% behind schedule, 15% over cost, unable to meet key performance parameters or unaligned with mission priorities will be considered for cancellation as the administration seeks more bang for its buck.
Along similar lines, also on April 15, the president signed EO 14275 titled “Restoring Common Sense to Federal Procurement.” This order seeks “to create the most agile, effective and efficient procurement system possible.” It requires a comprehensive review of the FAR to ensure it contains only provisions that are required by statute or are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system or protect economic or national security interests.
Contractors looking to take advantage of new contracting opportunities can boost their chances with the following strategies:
- Finding the right contracts: The federal government offers resources to prospective contractors looking for the right contracts to bid. Contractors may search the System for Award Management (SAM) for opportunities using various filters, including keywords, agency, product/service, set asides and dates at SAM.gov. Similarly, at www.fbf.gov, the General Services Administration offers the Forecast Tool to view contract opportunities before the formal requirements are posted in SAM. The tool provides a searchable database of anticipated contracts for the current and future years. Available filters are essentially the same as in SAM.
- Showcasing capabilities: Many contractors open doors with federal agencies by presenting them with a capability statement. These statements typically include critical information about the company such as core competencies, major goods/services offered, past performance, differentiators, corporate data, certifications and contact information. A sample capability statement can be found at (Sample) Capability Statement | HHS.gov.
- Connecting with funding sources: Contractors can engage government relations and strategic advisors to help position themselves with policymakers at the forefront of the federal appropriations and authorization process, which is where most funding vehicles originate. Building relationships with and educating these officials can lead to opportunities to compete for contracts the company is qualified to win.
- Legal review of draft proposals: Competition for federal contracts is intense, especially for known administration priorities. Outside review of draft contract proposals by procurement lawyers can increase the chances for award by assessing the impact of mandated contract clauses, questioning the agency about solicitation requirements, crafting proposal narratives and formulating technical discriminators.
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