White House Orders Agency Contracting Reviews to Improve Opportunities for American Citizens

Key Takeaways

• Agency heads will be reviewing contracts and sub-contracts awarded in fiscal 2018 and 2019 for compliance with federal hiring practices.
• Contractors may be required to bring foreign outsourced work back to the United States in order for work on those contracts to continue.
• Reviews of foreign employees’ backgrounds may be conducted to ensure compliance with federal hiring statutes. 

With unemployment high due to the ongoing COVID-19 public health emergency, President Trump signed an “Executive Order Aligning Federal Contracting and Hiring Practices With the Interests of American Workers” on August 3. This order, motivated by the “policy of the executive branch to create opportunities for United States workers to compete for jobs,” directs federal agency heads to review contracts and sub-contracts awarded by their agencies in fiscal years 2018 and 2019 in order to determine the extent to which work on those contracts is being performed by guest workers.

Specifically, the executive order requests that agency heads assess:

1. Whether contractors and sub-contractors used temporary foreign labor for contracts performed in the United States and, if so, the nature of the work performed by temporary foreign labor on such contracts
2. Whether contract employment opportunities for United States workers were affected by the hiring of foreign labor.
3. Whether any potentially detrimental effects on national security were caused by hiring foreign workers.
4. Whether contractors (including subcontractors)  performed work in foreign countries that was previously performed in the United States and, if so, whether opportunities for United States workers were affected by such offshoring, including the potential for damage to American national security.

Following the completion of their assessments, the President’s executive order directs agency heads to

1. Address any negative impact on the U.S. economy or national security that is identified and propose appropriate actions to make contract changes that support the economy, improve the efficiency of federal procurement, and protect U.S. national security.
2. Coordinate with the Director of the Office of Personnel Management (OPM) a review of agency employment policies to assess compliance with Executive Order 11935, dated September 2, 1976, concerning Citizenship Requirements for Federal Employment.
3. Submit by February 3, 2021 a report to the Director of the Office of Management and Budget (OMB) summarizing the results of the required reviews that recommend, if necessary, any corrective actions to be taken.

Lastly, the order directs the Secretaries of Labor and Homeland Security to take all necessary actions by September 17, 2020 “to protect U.S. workers from any adverse effects on wages and working conditions caused by the employment of H-1B visa holders at job sites.”

Implications for Contractors

Should the review process find that agencies awarded contracts for work previously performed in the United States, the possibility exists that contracts could be canceled unless corrective steps are taken to bring that work back to U.S. soil. In light of this possibility, contractors should review their agreements with federal customers to ensure that their work arrangements meet all federal guidelines.

Technology contractors, those working in research and development, and other highly-skilled professional services could be adversely affected by the provision concerning H-1B visa holders, including the levying of fines by the U.S. government and/or other penalties. It would probably be prudent for contractors to review the paperwork for foreign employees hired in the last five years to ensure compliance with federal laws. Enhanced background checks for members of the contract workforce may also be advisable to get ahead of any potential challenges that may arise.