The Impact of Executive Orders on Agency Contracting & Federal Procurement At-Large

Executive Orders and their Power in the GovCon Realm

An executive order (EO) is a written instruction that Presidents may use to enforce their interests and alter legislation; many times, going against the common denominator. This year, there has been over 30 instances an executive order has been issued. According to the Federal Register, 38 executive orders have been published in 2019 under the Trump administration.

Executive orders play a big role in government contracting as certain orders have the power to affect agencies overall efforts and direction, funding, and the amount of spending/where spending can be utilized.

On October 3, 2019, President Trump issued executive order #13890, “Executive Order on Protecting and Improving Medicare for Our Nation’s Seniors.” This initiative focuses “to modify Medicare FFS payments to more closely reflect the prices paid for services in MA [Medicare Advantage] and the commercial insurance market, to encourage more robust price competition, and otherwise to inject market pricing into Medicare FFS reimbursement.” Moreover, this affects the pricing of services, and follows Trump’s efforts to improve private Medicare plans for seniors.  The plan also will promote competitiveness within the health market, improve access of network providers to beneficiaries, enforce regulations and streamline the “approval, coverage, and coding process” to bring innovative products to the market faster.

According to CNBC, Health and Human Services Secretary Alex Azar stated the president has “directed HHS to take a number of specific, significant steps that will meaningfully improve the financing of Medicare, advance the care American seniors receive from their doctors, and improve the health they enjoy.” This is a prime example of how agencies are affected through executive orders. In this case, HHS was challenged to leverage medical technologies while also creating a more affordable program.

More recently, on October 10, 2019, the Trump administration issued two EOs; #13891 and #13892, to “improve the transparency and fairness of government agencies and ensure that they are held accountable.” The two orders will require government agencies to seek public input on the most important guidance they issue, give civilians the ability to inquire about guidance they believe is wrong and have them withdrawn. Agencies will also be prohibited from enforcing rules that are not available to the public.

Another example of how executive orders affect government contracting can be seen shortly after President Trump took office. In May 2017, three months into his term, President Trump issued an executive order to establish the American Technology Council. The Council was created in order to assist in the transformation and modernization of the government’s information technology infrastructure. The Council was tasked to not only show the problems and ratings more commonly performed through FITARA, DCIO, CDM, FedRAMP and other initiatives; but to develop a roadmap to determine how to prioritize and apply network consolidations, the adoption of cloud services and email and improving shared services. Fast forward, and the Modernizing Government Technology (MGT) Act was created in December 2017 which was joy to many government contractors as agencies were provided more funding for IT solutions and services.

Prior to Trump taking leadership of the Oval Office, former President Obama also issued some noteworthy EOs. In 2017, prior to handing over his duties, Obama issued executive order #13764 to plan the administration’s goal to modernizing IT within the federal government which included focusing on making security clearances for government employees and contractors more secure and timely while also delegating the National Background Investigations Bureau (NBIB) as the primary provider for majority of the government’s security clearance efforts.

More notably, an action taken by President Obama in 2016, was the category management initiative. Although not an EO,  but an equal display of presidential power, this initiative derived in the effort to  solve an internal issue government-wide by reducing duplication in contracting, better leveraging the government's buying power, delivering more value and encouraging cost efficiency while promoting the use of best in class solutions government-wide.

Executive Orders and Presidential Administrations

As executive orders are executed by the Presidents of the United States, variances per administration are expected. However, just how much of a variance is seen between each President and their respective orders? Are there any notable trends from one administration to the next? In this section, we will dive into published executive order data from the past four administrations with an extra emphasis on the orders of Presidents Obama and Trump.

Once a President signs an EO, the White House sends it to the Office of the Federal Register (OFR). The OFR numbers each order consecutively and publishes it in the daily Federal Register. Looking at orders issued since 1994 offers an interesting insight from one presidential administration to another. The total number of EOs by President, from Bill Clinton to Donald Trump, are outlined in the following chart. At first glance, it appears Trump has issued a significant less number of EOs than the previous three Presidents. Nonetheless, the data does not give a true picture since the information reported for Clinton, Bush, and Obama contained orders throughout their entire 8-year terms, minus any orders issued under Clinton prior to the online data available through the Federal Register. Thus far, Trump has issued roughly half as many orders within the first three years of his administration.

Year over year analysis offers further insight into EOs for these four administrations. Trump and Bush issued the most EOs within their first year with 55 and 54, respectively.  There is a notable variance of orders per year between these presidents. However, within their individual data lines, the earliest three administrations show a spike of EOs issued around Years 3 and 4. This increase could either be due to non-recurrent circumstances and occurrences during those specific timeframes or it could be due to each president’s approaching second term elections.

Since the four aforementioned presidents occurred over a timespan of approximately twenty-five years, analyzing EOs over the past ten years, by both President Obama and President Trump, may lead to additional insight on the more recent political climate and occurrences. Based on data contained within the EOs for both administrations and determining the general scope per order, both Obama and Trump have issued a comparable amount of orders focusing on national and international topics.

Regarding EOs focused around international subjects, some notable topics under Obama were concerning greater international organizations/issues, Iran, and Africa. Some notable topics under Trump have been surrounding Venezuela, terrorism, and Iran. Orders focusing on a more domestic nature had a wide range of topics under both administrations. Some examples of EOs within this category for both Presidents are:

• Obama
  • Federal Leadership in Environmental, Energy, and Economic Performance
  • Establishment of the Financial Fraud Enforcement Task Force
  • Establishing the National Prevention, Health Promotion, and Public Health Council
  • White House Initiative on Educational Excellence for Hispanics
• Trump
  • Border Security and Immigration Enforcement Improvements
  • Preventing Violence Against Federal, State, Tribal, and Local Law Enforcement Officers
  • Buy American and Hire American
  • Supporting Our Veterans During Their Transition From Uniformed Service to Civilian Life

Contained within the data presented by the Office of the Federal Register are disposition notes per order, if applicable. The text of the notes delineates if the specific orders revoke, amend, or supersede previous EOs. Outlined in the below pie charts are the percentages of issued orders falling under the aforementioned. EOs that fall under the “Other” category include orders with no notes and orders that reference previous entries.

President Trump is still within the first three years of his first term and his administration tends to buck the Presidential status quo among both of the major parties within the United States political sphere. As a result, it is difficult to predict exactly how Trump will approach future EOs and how they will shape the above EO data points and categories as a whole. Based on trends identified within the data to this point, future EOs may continue to focus around major political points of this administration, such as American-centric interests and actions corresponding with its particular foreign policies.

Executive Orders and the Impacts on Spending

Executive orders can have an effect on overall government spending, pending overall scope of the order. One example is the EO issued by President Trump early in his administration on March 13, 2017. Per the Federal Register, EO #13781, titled “Comprehensive Plan for Reorganizing the Executive Branch”, was issued in attempt to “propose a plan to reorganize governmental functions and eliminate unnecessary agencies (as defined in section 551(1) of title 5, United States Code), components of agencies, and agency programs.”

The Office of Management and Budget (OMB) was tasked with coming up with a plan to restructure the federal executive branch and get rid of unnecessary programs and/or agencies. If the plan is completely enacted and successful long term, it has a potential of reducing waste and spending by making the government more efficient and eliminating or consolidating similar programs.

The topic of contracts and executive orders does not begin with Trump or his administration. While in office, President Obama issued multiple EOs having an emphasis on the federal contracting sphere. Signed on February 4, 2009, EO #13494 was enacted to define which costs are payable under contracts and which costs are not allowed/non-reimbursable. Other examples of executive orders signed by Obama include EO #13658 to establish a minimum wage for contractors, EO #13502 on the use of PLAs for construction projects, and EO #13706 to establish paid sick leave for federal contractors.

Furthermore, Trump has issued two executive orders within his presidency focusing on buying American. The first executive order, EO #13788, was issued on April 21, 2017 and announced the policy of the executive branch is to buy American and hire American. The purpose of the second, EO #13858, signed on February 5, 2019, and titled “Strengthening Buy-American Preferences for Infrastructure Projects” is “to use, to the greatest extent practicable, iron and aluminum as well as steel, cement, and other manufactured products produced in the United States in every contract, subcontract, purchase order, or sub-award that is chargeable . . .”

If these orders are truly enacted with strict policy guidelines for agencies to follow, it may have a trickle-down effect on vendors choosing to contract with the government. This could not only influence company time and resources to comprehend and maintain standards to meet these policies, but also could affect pricing on materials, pending individual contract terms and requirements.

As seen in the above examples, EOs can have either a direct or indirect impact on government contracting and overall cost to vendors or the industry as a whole. What type of EOs are issued in the future by the current President and whether the orders will be a more general guidance or if they will more directly impact the contracting industry is to be seen. However, the remaining certainty is that EOs will continue to have some sort of impact on the industry continuing forward into the future.

Emphasis on Defense and National Security

Legislation shows the trend under Trump’s Administration focuses on defense and national security. In fact, one of the first Executive Orders signed by President Trump is EO #13769 of January 27, 2017 named “Protecting the Nation from Foreign Terrorist Entry into the United States and aims to protect the United States of America from domestic terrorist attacks.” In order to protect America and its citizens, the government must ensure that those admitted to this country do not bear hostile attitudes towards America, its Constitution, and its founding principles. This EO provides stricter screening process and vetting protocols for U.S. Visa issuance. On March 6, 2017, EO #13780 superseded EO #13769, which added restrictions and limitations on travel to the U.S. from seven countries namely: Iran, Libya, Syria, Yemen, Somalia, North Korea and Venezuela. It also blocked entry for all refugees who do not possess either a Visa or valid travel documents.

On January 25, 2017, President Trump signed executive order #13767 titled “Border Security and Immigration Enforcement Improvement”. The EO directed the construction of a wall across the Mexican-United States Border. The President demands $5.6 billion in federal funds to fund this project. In late 2017, the Department of Homeland Security spent about $3 million for the construction of eight prototype walls near San Diego, California. Local taxpayers paid about $2.3 million in security. In February 2018, construction began to replace an existing 2-mile wall in Calexico, California under an $18 million contract awarded to SWF Construction. As of March 2019, U.S. Customs and Border Protection confirmed that although they had begun replacement fencing, no new walls have been built. As of October 2019, 15 construction sites are currently planned or under way along the Southern US border to construct various segments of both new and replacement border barrier.

President Trump also signed executive order #13800, known as “Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure”, on May 11, 2017. The EO was established to advance and develop the United States’ position and capabilities against cybersecurity threats. This includes the modernization of outdated systems across all agencies for a more effective and proficient digital environment. This also addresses the need for adequately educated and trained cybersecurity-capable workforce to ensure that the United States maintains or increases its advantage in national-security-related cyber capabilities.

Related Opportunities

Executive Orders influence procurements and contracts issued by the government. Some notable acquisitions tracked by Deltek that have or may have been affected by EOs are:

GovWin ID 165724 – JEDI CLOUD

The Joint Enterprise Defense Infrastructure (JEDI) requirement currently solicited by the Department of Defense, Washington Headquarters Services is a large cloud-computing contract that has a potential 10-year period of performance for an anticipated maximum value of 10 billion dollars. The JEDI contract goal is to put a single cloud service provider at the center of hosting and dispensing mission-critical assignments and classified military secrets to warfighters around the globe. The JEDI Cloud will allow the DOD to use technologies like artificial intelligence and will place the DoD into the modern digital age. JEDI Cloud will provide the ability for people, regardless of their location around the globe, to use and operate data as needed. It will also support advances in Artificial Intelligence.  

GovWin ID 178972 - USACE AEC HORIZONTAL CONSTRUCTION CONTRACTS FOR BORDER INFRASTRUCTURE PROGRAM ALONG THE US MEXICO BORDER

The Border Infrastructure Program currently solicited by the Army Corps of Engineers has an anticipated total value of $8 billion. The proposed projects include a mix of border fence, levee wall, border patrol roads, border access roads, border lights, border gates (for access to border monuments for maintenance, and for Border Patrol operational use), border drainage improvements, and other miscellaneous improvements, repairs, and alterations along the US-Mexico border. Multiple contracts are expected to be issued under this program.

GovWin ID 110643 - AE SERVICES FOR NIST’S CAPITAL ASSET MANAGEMENT PROGRAM

This requirement is for Architect-Engineering services for NIST's Capital Asset Management Program at its campuses in Boulder, Colorado and Gaithersburg, Maryland, and field sites in Fort Collins, Colorado and Kauai, Hawaii. As a result of executive order #13693 for Planning for Federal Sustainability in the Next Decade, enhancement on infrastructures need to be made to ensure energy optimization, efficiency, and performance. According to the Sources Sought Notice issued for this effort, A/E services provided under this contract will include, but are not limited to the following: conducting facility condition assessments using BUILDER (includes horizontal infrastructure and utilities assessments); conducting sustainability assessments and recommissioning; generating and revalidating plant replacement values; providing ASHRAE Level I and II energy audits, computer aided design (CAD) services; BUILDER data input and management; and consulting services related to capital asset reporting and project planning.

Conclusion

In summary, executive orders have the power to affect agencies missions and overall efforts, funding, and the amount of spending/where spending can be utilized. Additionally, the president not only has the ability to create new orders but also review, revise and revoke past EOs released by previous presidents. Even though there is limitation to the President’s powers, only a minority of EOs have been overturned through history. Moreover, the affect EOs have is evident in government procurement with the addition of specific requirements procured and agency budget planners, along with industry feedback and information government officials share. Thus far, Trump has focused on modernizing IT, strengthening US defense and combatting agency negligence and unfairness.

 

Sources

The White House

Federal Register

CNBC

Federation of American Scientists