The Trump Administration’s Efforts to Deregulate Government

Last week, the Trump Administration issued an executive order (EO) pursuing the president’s campaign promise to reduce the number of federal regulations. The EO comes as no surprise and in fact reflects a similar measure passed in the first Trump presidency. The Unleashing Prosperity Through Deregulation EO mandates that for each new regulation, a minimum of ten existing regulations be identified for elimination.

According to the signed order, the purpose is to, “significantly reduce the private expenditures required to comply with Federal regulations to secure America's economic prosperity and national security and the highest possible quality of life for each citizen.”

Particularities of the EO include:

• Agencies ensuring the total annual incremental cost of all new regulations be significantly less than zero
• Agencies ensuring the costs associated with new regulations is offset by the costs associated with at least 10 regulations
• OMB providing additional guidance on the directive including standards and measures for determining regulatory costs (both new and existing), specifics as to what qualifies as a new regulation, waivers of the EO’s requirements, and methods to oversee compliance of the EO

The EO defines a “regulation” or rule” as, “an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency, including, without limitation, regulations, rules, memoranda, administrative orders, guidance documents, policy statements, and interagency agreements, regardless of whether the same were enacted through the processes in the Administrative Procedure Act.”

 As it stands, exceptions to the EO include regulations related to the military, national security, homeland security, foreign affairs, immigration-related functions, agency organizational or management-related regulations, and any additional categories identified by OMB.

The first Trump presidency issued a similar order in January 2017 called Reducing Regulation and Controlling Regulatory Costs, Executive Order 13771. However, that EO called for the elimination of at least two existing regulations for every new one issued and for annual incremental costs to be no greater than zero. Another key difference between the two measures is that the predecessor EO contained a more general definition for “regulation” and “rule,” allowing agencies more room for interpretation.

As one can see, the latest deregulation EO can be considered more ambitious than its predecessor in many ways, likely due to the successes the administration sees in the previous EO. In a fact sheet released last week alongside the new deregulation EO, the Trump Administration touts that the two to one ratio of deregulation in Trump’s first term actually achieved a five and a half regulation elimination for every new regulation issued.

Though the new EO alludes to further OMB guidance to agencies on deregulation, some agency leaders have already jumped on board in directing their organizations to meet the requirements of the deregulation EO. For instance, the Secretary of the Department of Interior Order 3421 directs the department’s bureaus and offices to streamline financial management practices and reduce unnecessary regulatory burdens.

Contractor Implications

OMB's forthcoming guidelines on the deregulation EO will clarify the new order's scope and impact. For example, the forthcoming guidance may shed light on whether the elimination of a regulation is measured by the removal of a whole or section of an existing rule.

In general, deregulation methodologies tend to favor federal contractors, who face numerous compliance requirements. Small businesses in the sector feel the impact of federal regulations the most, often influencing their decision to remain in the federal market. It is likely that the new EO will ultimately affect acquisition regulations, as foretold by impacts from the previous EO. According to a regulation tracker by Brookings, EO 13771 in the first Trump Administration influenced the streamlining of VA acquisition regulations in 2018.

Regardless, the new EO will slow the pace of new regulations, which is welcome news to many agency contractors.

Be sure to stay informed on the impacts to federal contractors and opportunities from the new Trump Administration through Deltek’s GovWin’s First 100 Days Resource Center.