State of the Union Address: Potential Contractor Implications

Published: February 08, 2023

Federal Market AnalysisEOPInfrastructureInnovationPolicy and Legislation

Potential contractor implications stemming from last night’s State of the Union Address center around further enactment of existing legislation such as the Buy American Act, Infrastructure Investment and Jobs Act, and the Inflation Reduction Act.

Last night President Biden delivered his second State of the Union Address to a spirited chamber highlighting progress made in the last two years in the areas of COVID response, reduced unemployment, stalled inflation, increased U.S. manufacturing, small business start-ups, and improvements in U.S. infrastructure.

Some of his remarks hinted at potential contractor impacts.

President Biden underscored, “The supply chain begins in America,” announcing new standards requiring all federal infrastructure projects to use American-made construction materials, saying “We’re going to buy American.”

The president also cited provisions of the Inflation Reduction Act which make investments in climate change such as new electric grids that can weather major storms, clean energy to cut pollution, and the creation of 500,000 electric vehicle charging stations. These projects will likely continue to create contract opportunities at the federal and state and local levels.

Additionally, the Inflation Reduction Act established a 15% corporate tax minimum for billion-dollar companies. This legislation affects large contractors that meet the average annual adjusted financial statement income test described in the law. President Biden is promoting additional corporate tax reforms, which if signed into law, could place a heavier tax burden on certain contractors.

In his speech, the president advocated for the passage of the Protecting the Right to Organize (PRO) Act which would prevent companies from blocking workers from forming unions. Passage of this act might impact contractors with workforces inclined to form or join unions, potentially increasing their corporate labor costs.

President Biden also expressed interest in increasing resources for federal Inspectors General to combat fraud. He suggested tripling the anti-fraud strike force, doubling the statute of limitations on fraud crimes, and cracking down on identity fraud. He stated that “the data shows that for every dollar we put into fighting fraud, the taxpayers get back at least 10 times as much.” Increased efforts to fight fraud may present contract opportunities for fraud investigators, case management systems, identity and access management software and services, and analytics.

Speaking about the U.S. in relation to China, the president said the nation is investing in its alliances and working with allies to protect advanced technologies. He went on to say that the U.S. is modernizing its military to “safeguard stability and deter aggression.” These investments may require support from the contractor community.

President Biden also spoke about efforts to fight fentanyl and his desire to stop fentanyl production, sale, and trafficking, “with more drug detection machines, inspection cargo, to stop pills and powder at the border.” Again, federal investments in this area may require contracted inspectors or the purchase of detection equipment.

Another area of focus for the president is supporting veterans, their caregivers, and their families. Specific initiatives cited include job training and job placement for veterans and their spouses as they return to civilian life and veteran suicide prevention. He also cited the passage and implementation of the PACT Act which will provide additional benefits to veterans exposed to toxic substances. All these efforts may require contractor assistance to implement and carry out.

The last area covered by the president that could hold contractor opportunities involves federal initiatives to combat cancer and other diseases. The Biden administration reignited the cancer moonshot and launched the Advanced Research Projects Agency for Health (ARPA-H) to drive breakthroughs for cancer, Alzheimer’s disease, and diabetes. President Biden’s goal is to cut cancer death rates by at least by 50% in the next 25 years. These initiatives may require scientific support, IT infrastructure upgrades, analytics software, or laboratory services.  

With a divided Congress, the passage of new legislation may be difficult but the continued implementation of existing federal initiatives and laws will provide contractors with opportunities to support government agencies.