New Executive Order Reinforces Federal Preference for Procurement of Commercial Products and Services
The federal government has long maintained a preference for selecting commercial products and services in the federal procurement space. This preference has been the case since at least the time President Clinton signed the Federal Acquisition Streamlining Act of 1994 (FASA) into law, and has been reiterated by Congress since then, including in the National Defense Authorization Act for Fiscal Years 2016 and 2017, for example, and the preference is enshrined in Federal Acquisition Regulation (FAR) Part 12.
On April 16, 2025, t President Trump issued an Executive Order, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts, adding to government’s efforts to prioritize commercial products and services. From now on, when agencies choose to utilize non-commercial products or services, they must document that choice and receive approval from an agency’s approval authority (which is defined as the senior procurement executive).
The Executive Order provides specific timelines and requirements for procurement officials:
Within 60 days of the Executive Order, the senior procurement executive must direct their contracting officers to review all solicitations and other open procurement actions where the government was unable to identify a viable commercially available alternative, and all of these procurement actions should be consolidated into a consolidated application requesting approval to purchase noncommercial products or services.
Within 30 days of receiving the application materials, the senior procurement executive shall review the market research supporting the application and make any recommendations to advance the use of a commercial solution.
Within 120 days of the Executive Order (and annually thereafter), the senior procurement executive for each agency must provide a report to the Director of the Office of Management and Budget (OMB) detailing the agency’s compliance with its requirements to prioritize the use of commercial products and services and explaining how it is implementing the Executive Order.
Moving forward, non-commercial procurements will be subject to additional scrutiny:
When a contracting officer proposes to utilize non-commercial products or services, the contracting officer must provide detail to the senior procurement executive of the market research conducted and the justification for choosing that path. The senior procurement executive may accept or deny the contracting officer’s request.
The senior procurement executive may seek additional guidance from the Director of OMB who will notify the agency official in writing of its recommendation after conducting a review.
As a whole, this Executive Order pushes contracting agencies to conduct market research and justify the use of non-commercial products and services, consistent with FASA. Contractors selling non-commercial products and services to the federal government should take notice, especially when there is an arguably commercial alternative, even if the commercial alternative is less advantageous in price or features.
Enhancing Efficiency in Foreign Defense Sales: Key Takeaways from Recent Executive Order
On April 9, 2025, President Trump issued an Executive Order (EO) titled “Reforming Foreign Defense Sales to Improve Speed and Accountability.” This EO aims to reform the foreign defense sales (FDS) system, which encompasses U.S. sales of defense products and services to foreign governments through both Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) by:
Improving accountability and transparency throughout the FDS system;
Consolidating parallel decision-making by granting simultaneous certifications and approvals during the FMS process. The current FMS process involves various steps that generally must be completed sequentially. These steps include securing approvals from multiple government agencies for the Letter of Offer and Acceptance, congressional approvals for sales exceeding certain thresholds and export licenses as necessary;
Reducing rules and regulations involved in the development, execution and monitoring of FDS and transfer cases;
Increasing government-industry collaboration to achieve cost and schedule efficiencies in the execution of the FMS program;
Advancing U.S. competitiveness abroad, revitalizing the defense industrial base and lowering unit costs for the U.S. and its allies and partners by integrating exportability features in the design phase, improving financing options for partners and increasing contract flexibility overall.
The EO will follow a phased implementation. The EO immediately directs the Secretary of State (SecState) and the Secretary of Defense (SecDef) to:
Implement National Security Presidential Memorandum 10 of April 19, 2018 (United States Conventional Arms Transfer Policy) or any successor policy directive;
Reevaluate restrictions imposed by the Missile Technology Control Regime on Category I items and consider supplying certain partners with specific Category I items, in consultation with the Secretary of Commerce (SecCom);
Submit a joint letter to Congress proposing an update to statutory congressional certification thresholds of proposed sales under the FMS and DCS programs in the Arms Export Control Act (22 U.S.C. 2751 et seq.). SecState is also tasked with working directly with Congress to review congressional notification processes to ensure the timely adjudication of FMS and DCS cases.
Additional key deadlines in the EO include:
By June 8, 2025, SecState in consultation with SecDef must:
Develop a list of priority partners for conventional arms transfers, issue updated guidance to Chiefs of the United States Diplomatic Missions regarding this list and update and reissue the list annually;
(1) Develop a list of priority end-items for potential transfer to priority partners, (2) ensure the transfer of priority end-items to priority partners would not cause significant harm to U.S. force readiness and (3) ensure the transfer of priority end-items to priority partners would advance the Trump Administration’s goal of strengthening allied burden-sharing.
By July 8, 2025:
SecState and SecDef, in consultation with SecCom, must prepare a plan to (1) improve transparency of U.S. defense sales to foreign partners by developing metrics for accountability, (2) secure exportability as a requirement in the early stages of the acquisition process and (3) consolidate technology security and foreign disclosure approvals.
By August 7, 2025:
SecDef, in collaboration with SecState and SecCom, must prepare a plan to develop a single electronic system to track all DCS export license requests and ongoing FMS efforts throughout the case life cycle.
Potential Impact on Defense Contractors
Once implemented, these actions will simplify the landscape for contractors to sell defense products and services to foreign governments. These changes should lead to increased opportunities for defense contractors as the approval process is expected to be substantially streamlined and the regulatory barriers reduced. Despite some U.S. allied countries seeking to develop in-country defense manufacturing capabilities, the streamlining of the FDS regulations may lead to increased sales opportunities for contractors with offerings that are sought by foreign militaries.
While not called out specifically in the EO, Foreign Military Financing (FMF) is a popular facilitating mechanism for DCS. FMF provides grants and loans to certain foreign governments to purchase U.S. defense products and services. The FMF rules are also likely to be streamlined by the EO. The specific effects of the EO will remain unclear until the agencies’ final plans are released. In the meantime, contractors should remain diligent in tracking changes to the FDS approval process.
Government Contractors Need to Be Prepared for Significant Reforms to the Federal Acquisition Regulation and Associated Agency Acquisition Supplemental Regulations
On April 15, 2025, President Trump issued Executive Order 14275, Restoring Common Sense to Federal Procurement (EO 14275). EO 14275’s purpose is to reform the Federal Acquisition Regulation (FAR) and associated agency acquisition supplements, such as the Defense Federal Acquisition Regulation Supplement (DFARS), to contain only provisions required by statute or essential to sound procurement. EO 14275 includes several significant provisions and deadlines that government contractors need to be prepared to address. Many of those are highlighted in this alert.
1. Why was EO 14275 Issued?
On January 31, 2025, President Trump issued Executive Order 14192, Unleashing Prosperity Through Deregulation (EO 14192), which expressed concern about the “the ever-expanding morass of complicated Federal regulation”, which “imposes massive costs on the lives of millions of Americans, creates a substantial restraint on our economic growth and ability to build and innovate, and hampers our global competitiveness.” To alleviate unnecessary regulatory burdens, EO 14192 established “that for each new regulation issued, at least 10 prior regulations be identified for elimination . . . to ensure that the cost of planned regulations is responsibly managed and controlled through a rigorous regulatory budgeting process.” EO 14192 applies to any regulation issued by any agency in the entire Federal Government.
Building on the concerns expressed in EO 14192, the recently issued EO 14275 related to government procurement further identified regulatory burdens causing inefficiencies in the government contracting process. For example, EO 14275 referenced a 2024 report written by Senator Roger Wicker, entitled “Restoring Freedom’s Forge – American Innovation Unleashed,” which advocated for various reforms to be made to Department of Defense procurements. EO 14275 also referenced the Section 809 Panel’s 2019 report on streamlining and codifying acquisition regulations, which recommends various acquisition reforms to leverage the dynamic marketplace, allocate resources effectively, enable the workforce, and to simplify acquisition.
Based on the information contained in these referenced reports and the Trump Administration’s goal of reducing regulations overall, EO 14275 establishes that it is the policy of the United States for the FAR to contain “only provisions required by statute or essential to sound procurement, and any FAR provisions that do not advance these objectives should be removed.”
2. Who will have responsibility for identifying which FAR provisions are required by statute or are “essential to sound procurement”?
The FAR is a single Government-wide procurement regulation, which is maintained by the FAR Council. The FAR Council was established by Congress “to assist in the direction and coordination of Government-wide procurement policy and Government-wide procurement regulatory activities in the Federal Government.” 41 U.S.C. § 1302(a). The FAR Council consists of the Administrator for Federal Procurement Policy, the Secretary of Defense, the Administrator of NASA, and the Administrator of General Services. Id. § 1302(a). A key mandate of the FAR Council is to “issue and maintain . . . a single Government-wide procurement regulation, to be known as the [FAR].” 41 U.S.C.A. § 1303.
Pursuant to EO 14275, the Administrator of the Office of Federal Procurement Policy (the Administrator), who also serves on the FAR Council, is required to coordinate with the members of the FAR Council, the heads of agencies, and appropriate senior acquisition and procurement officials from agencies to ensure that the FAR “contains only provisions that are required by statute or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.”
Additionally, in order to review agency supplements to the FAR, each agency “shall designate a senior acquisition or procurement official to work with the Administrator and the FAR Council to ensure agency alignment with FAR reform and to provide recommendations regarding any agency-specific supplemental regulations to the FAR.”
3. What are the timelines associated with these significant FAR reforms?
The FAR must be amended pursuant to EO 14275 by October 13, 2025, which is within 180 days of April 15, 2025 (the date that EO 14275 was issued).
To assist with the enactment of these reforms, the Director of the Office of Management and Budget (OMB), in consultation with the Administrator, “shall issue a memorandum to the agencies that provides guidance regarding the implementation of [EO 14275].” EO 14275 requires that this memorandum be issued by May 5, 2025, which is 20 days after the order was issued. The memorandum is required to “ensure consistency and alignment of policy objectives and implementation regarding changes to the FAR and agencies’ supplemental regulations to the FAR.” Contractors should watch closely for the issuance of this memorandum that will provide greater clarity on the Trump Administration’s expectations for government procurement.
4. What types of FAR reforms should government contractors expect?
EO 14275 references that “the FAR has swelled to more than 2,000 pages of regulations, evolving into an excessive and overcomplicated regulatory framework and resulting in an onerous bureaucracy.” Accordingly, a major focus of the coming reforms will be to reduce the size and scope of the FAR and associated agency supplements.
The Section 809 Panel’s 2019 report on streamlining and codifying acquisition regulations serves as a likely predictor of several potential reforms that will receive close attention. The report includes several specific recommendations related to reforms that should be made to the FAR that will likely be closely reviewed by the Administrator and FAR Council when reforming the FAR.
While EO 14275 eliminates several regulations, it will be interesting to watch how its provisions also align with new regulations imposed by other executive orders impacting government procurement. For example, as we wrote about in a prior alert, Executive Order 14222 requires the creation of a new public database that must record every government payment issued by an agency under a government contract, along with a written justification for the payment, regardless of the size or type of the payment. These written justifications add an extra task for contracting officials and contractors, which may be inconsistent with the Administration’s goals to streamline acquisitions.
The devil will be in the details for how the FAR is amended, but contractors should be aware that the primary regulatory scheme that governs their businesses is about to change significantly.
CONCLUSION
Government contractors should closely review EO 14275 and should further pay attention to the additional memorandums and directives that will be issued as a result of that order.
Incoming Defense Contract Audit Agency Reorganization
On April 7, 2025, the Defense Contract Audit Agency (DCAA) announced a comprehensive reorganization plan aimed at consolidating its Region and Corporate Audit Directorates (CAD) into three primary Directorates in response to increased pressures to reduce costs and improve efficiency. For context, the DCAA provides audit and financial services to the Department of Defense (DoD) and certain other federal government agencies. The DCAA plans to complete the reorganization by September 30, 2025, if not sooner.
As an overview, the proposed reorganization plan aims to reduce the number of DCAA field offices, streamline administrative structures and refocus operations to better align with DoD needs. DCAA plans to close and consolidate 40 offices, immediately impacting approximately 160 employees. Further, there will be a new organizational structure including a central headquarters and three primary Directorates – Land, Sea and Air. The audit offices of the CADs will be merged into one of the aforementioned primary Directorates.
Although the DCAA’s reorganization is meant to result in greater efficiencies, the impact is unclear at this time but may influence audit processes and potentially the frequency of audits. Contractors should stay informed and remain proactive to ensure compliance with future DCAA changes.
Democratic Lawmakers Urge U.S. Department of Labor to Abandon Proposal to Dismantle OFCCP
On April 11, 2025, a group of forty Democratic lawmakers sent a letter to U.S. Secretary of Labor Lori Chavez-DeRemer urging her to “abandon plans to dismantle [the Office of Federal Contract Compliance Programs] and reaffirm the Department’s commitment to protecting equal employment opportunities for federal contract workers.”
Quick Hits
A group of forty lawmakers from the U.S. Senate and U.S. House of Representatives sent a letter to the U.S. Secretary of Labor urging her to abandon proposed plans to drastically reduce and restructure OFCCP.
The lawmakers raised concerns that the cuts could leave federal contractor workers vulnerable to potential discrimination.
The letter comes amidst other OFCCP-related efforts by lawmakers, including the introduction of legislation to codify now-revoked Executive Order 11246.
The April 11 letter, jointly signed by twenty members of the U.S. Senate and twenty members of the U.S. House of Representatives, raises concerns with the U.S. Department of Labor’s (DOL) proposal to reduce the Office of Federal Contract Compliance Programs (OFCCP) by approximately 90 percent through reducing the number of OFCCP personnel, offices, and regions.
Led by Senator Patty Murray (WA) and Representative Shontel Brown (OH), the legislators urged Secretary Chavez-DeRemer to “abandon” the proposed plans while touting OFCCP’s commitment to federal contract workers.
“For decades, OFCCP has worked effectively to prevent and address unlawful discrimination by investigating individual complaints from workers and by proactively reviewing federal contractors’ employment practices,” the lawmakers said in their letter. “This unique power to proactively review whether employers were complying with the law allowed OFCCP to identify discrimination that might have otherwise gone unreported or undiscovered.”
Further, the lawmakers explained that they believe “[d]rastic cuts to staff and shuttered offices in our communities would leave workers vulnerable to discrimination.”
The April 11 letter is signed by several prominent lawmakers, including Senate Minority Leader Chuck Schumer (NY) and Senator Bernie Sanders (VT), among others. Additionally, prior to leading the April 11 letter, Rep. Brown also led sixty-eight of her colleagues in the House on February 5, 2024, cosponsoring and introducing legislation, H.R. 989, that seeks to codify the now-revoked Executive Order 11246.
In early April, Secretary Chavez-DeRemer renewed offers of deferred resignation and voluntary early retirement to OFCCP personnel, after initially offering them in January 2025. These offers were available until April 14. This move comes after the DOL proposed restructuring OFCCP in late February, before the appointment of Catherine Eschbach as the OFCCP’s new director on March 24.
On April 16, 2025, OFCCP may have taken its first steps towards this proposed restructuring through placing much of OFCCP’s workforce on administrative leave.
Exactly how OFCCP may ultimately be restructured or operates in the future remains to be seen as the Department of Labor moves forward amid congressional calls to abandon those same actions.
Preparing for a “Common-Sense” FAR: What Federal Contractors Need to Know About the Trump Administration’s Plans to Streamline the Federal Acquisition Regulation
In a new Executive Order issued on April 15, 2025 titled, “Restoring Common Sense to Federal Procurement,” President Trump has directed his Administration to make major revisions to the Federal Acquisition Regulation (FAR)—the voluminous set of rules governing the U.S. Government’s acquisition of products and services—with the stated purpose of making the federal procurement process more “agile, effective, and efficient.” As with many recent executive actions, the instructions to government officials are to undertake dramatic reforms at a breakneck pace, with a significant impact on the rules of the road for companies doing business or seeking to do business with the federal government. In this alert, Foley’s Federal Government Contracts team provides a summary of the key takeaways for government contractors from this latest Executive Order and the Trump Administration’s initiative to produce a streamlined version of the FAR.
Background:
On January 31, 2025, President Trump issued Executive Order 14192, “Unleashing Prosperity Through Deregulation,” which announced his Administration’s policy of alleviating unnecessary regulatory burdens. This recent Executive Order issued on April 15, 2025 extends the Trump Administration’s deregulatory initiative to the government contracting sector by directing the most significant overhaul of the FAR in more than four decades.
This move represents a dramatic shift in federal procurement policy—one aimed at streamlining the acquisition process, reducing regulatory burdens, and encouraging broader participation in the federal marketplace.
Key Takeaways for Contractors:
A Mandate for FAR Simplification—Fast. The Order establishes an aggressive timetable for the proposed revisions to the FAR. As the Order notes, the FAR now fills more than 2,000 pages, and the Order directs the Office of Federal Procurement Policy (OFPP) Administrator, working with the FAR Council and agency heads, to amend the FAR within 180 days. The objective is to retain only provisions that are statutorilyrequired or “otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.”
Agency FAR Supplements Are Also Under Review. Each agency must designate a senior acquisition official within 15 days of the Order to work with the OFPP Administrator and FAR Council to provide recommendations regarding their agency-specific FAR supplements and identify FAR provisions that are inconsistent with the Order’s objective to streamline the FAR by removing unnecessary regulations.
Internal Guidance Issued to Agencies. Within 20 days of the Order, the Director of the Office of Management and Budget (OMB), with the OFPP Administrator, shall issue a memorandum that provides guidance regarding implementation of these reforms and proposes new agency supplemental regulations that are aligned with the new policy objectives. That guidance from OMB may provide important signals to contractors regarding the portions of the FAR and federal procurement policy most likely to change as part of this reform effort.
Regulatory Sunset for Non-Statutory FAR Clauses. The Order directs the OFPP Administrator and FAR Council to consider amending the FAR to include a regulatory sunset mechanism that would apply to any non-statutory FAR provision retained after this reform—or added in the future. As proposed in the Order, any non-statutory FAR provision would automatically expire after four years, unless renewed by the FAR Council. This sunset mechanism, if ultimately adopted in the revised FAR, would, at a minimum, require a significant amount of periodic review by the FAR Council of existing regulations, and it could introduce uncertainty regarding the long-term status of certain FAR provisions, complicating contractor compliance planning.
Interim Guidance and Deviations Expected. To avoid delays, the FAR Council is empowered to issue deviation and interim guidance as needed during the rulemaking process, suggesting that significant FAR changes could begin impacting procurements well before final rules are issued or the government contracting community is given the opportunity to weigh in on those revisions.
Implementation Uncertainty. While the policy objective of the Order is clear—to simplify the FAR by removing “unnecessary regulations”—it remains to be seen how the FAR Council will execute that objective. The Order allows for retention of some FAR provisions that cannot be tied back to a specific statutory basis, if such provisions are determined “necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.” Given these subjective considerations, it will bear monitoring to see how the Administrator and the FAR Council interpret those concepts in determining which FAR provisions to keep or cut.
What This Means for Federal Contractors:
This Executive Order has potentially far-reaching implications:
Reduced Complexity: Contractors may soon face fewer compliance hurdles, especially in acquisitions of commercial products or commercial services.
Opportunities for Commercial Vendors: By directing the elimination of regulatory burdens and requirements, the Order may lead to reduced barriers to entry for new commercial contractors looking to do business with the Federal Government.
Uncertainty During Transition: Contractors should prepare for a period of regulatory uncertainty, as interim guidance may vary across agencies.
Concrete Steps Contractors Can Take:
Monitor FAR-Related Rulemakings: Contractors should closely track upcoming Federal Register notices, and deviation and interim guidance for indications as to how the FAR Council is carrying out the Order’s instructions to streamline the FAR.
Engage in Public Comment Opportunities: When proposed FAR rule changes are released for public comment, consider submitting comments to influence the final rulemaking.
Be on the Lookout for Agency-Level Changes: Agency supplements to the FAR are also being reviewed. Contractors should monitor changes to agency-specific procurement regulations that may impact contracting opportunities with those agencies.
We will continue to monitor developments and provide updates as additional guidance is released and implementation proceeds.
Executive Order Proposes Big Changes to Federal Procurement
The 2,000 page Federal Acquisition Regulation (the “FAR”) has guided and dictated federal procurement for more than forty years. Periodically, the FAR has been updated to make procurement more efficient and simpler. The Trump administration is now undertaking its own effort with the rollout of an executive order entitled “Restoring Common Sense to Federal Procurement.” It goes without saying that significant changes to the FAR will impact how federal contractors and their subcontractors do business with the federal government.
While changes to the FAR could take some time (though the Executive Order lays out an aggressive timeline, as discussed further below), some changes may come sooner through class deviations. Class deviations can be issued at any time without public comments and may have immediate effect.
What is Staying in the FAR?
The Executive Order provides that the only provisions that should be in the FAR are those required by statute or “or essential to sound procurement.” What falls in the latter category remains to be seen, but will probably be shaped by existing Administration priorities that have been signaled through already-released executive orders impacting procurement.
Recent previous efforts, such as the Section 809 Panel established by the 2016 National Defense Authorization Act (NDAA), proposed comprehensive changes to the FAR, many of which were not adopted because they required Acts of Congress. It remains to be seen how much of this effort will impact Congressionally-required FAR clauses (though the Executive Order seems to explicitly carve those out from consideration for removal).
Congressionally mandated FAR clauses include efforts to protect the supply chain (such as FAR 52.204-25 “Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment” implementing Section 889 of the 2019 NDAA) and domestic preferences (such as FAR 52.225-1 “Buy American-Supplies” implementing the Buy American Act). The origins of other familiar clauses are murkier – such as the ability of the Government to terminate for convenience (see 52.249-2), but will probably fall under a clause that is “essential to sound procurement.”
What is Next?
The Executive Order requires that “Federal Acquisition Regulatory Council (FAR Council), the heads of agencies, and appropriate senior acquisition and procurement officials from agencies” amend the FAR within 180 days to include only provisions that are required by statute “or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.” This will be a massive effort with far-reaching consequences.
Agency supplemental regulations will also be getting a closer look. As government contractors know well, the FAR overlays the entire regulatory system, but individual agencies are able to issue their own regulatory supplements so long as they do not contradict the FAR. See FAR 1.304(B)(2). Designated agency leads will work the FAR effort to identify and streamline agency-specific regulations. This includes, for example, the Defense Federal Acquisition Regulation Supplement, which is almost as lengthy as the FAR in its own right.
The Executive Order also contains a subset provision aimed at any regulatory clauses not required by statute. That provision suggests amending the FAR to subset those regulations unless specifically renewed by the FAR Council (or the individual regulations themselves). If this comes to fruition, contractors and their supply chains will have to pay close attention to a regulatory environment that will be more dynamic with significant changes coming more frequently as provisions are considered for renewal.
The Executive Order may have far-reaching impacts on companies, including retailers, supporting the nearly $1 trillion government marketplace. We will continue to monitor developments and provide updates when appropriate.
Supreme Court Lifts Restraining Order on Grant Terminations
The Supreme Court recently issued a ruling with significant impacts for federal contractors and grantees looking to challenge terminations of their contracts and grants in U.S. district courts. Terminated contractors and grantees may strongly prefer to challenge terminations in the district courts rather than in the Court of Federal Claims, because the Court of Federal Claims does not have authority to grant equitable relief to do things like restore funding or enjoin terminations, and the available grounds for challenging contract and grant terminations in the Court of Federal Claims are significantly limited.
In February 2025, the Department of Education (“DOE”) terminated $600 million in grants for teacher training on the grounds that the training included diversity, equity, and inclusion (“DEI”) concepts and thus no longer effectuated DOE priorities. The grantees challenged these terminations in a lawsuit filed in the U.S. District Court for the District of Massachusetts. The District Court issued a Temporary Restraining Order (“TRO”) directing DOE to restore the terminated grant funding. DOE asked the First Circuit to stay the TRO pending appeal, which the First Circuit denied. DOE then filed an emergency appeal to the U.S. Supreme Court, where a majority of the justices sided with DOE.
In a 5-4 per curiam ruling, the Supreme Court stated that the district court likely does not have jurisdiction under the Administrative Procedures Act because the controlling law for jurisdictional purposes is likely instead the Tucker Act. The majority seems to suggest that the Tucker Act applies to disputes arising under government contracts and grants and requires plaintiffs to file lawsuits in the Court of Federal Claims—rather than the district courts. The immediate effect of the Supreme Court’s ruling is that DOE can proceed with terminating these grants while the plaintiffs’ litigation proceeds.
The dissenting opinions authored by Justices Kagan, Sotomayor, and Jackson took issue with the majority’s decision to focus on jurisdictional arguments that they feel do not require the Supreme Court’s emergency intervention. The dissenters also criticized the majority’s reasoning that by enjoining the termination of the grants, the district court was enforcing “a contractual obligation to pay money,” a type of claim that must be brought in the Court of Federal Claims. The dissenters suggested that the plaintiffs were actually seeking injunctive relief based on allegations that DOE violated a federal statute.
Although the Supreme Court’s decision is not a final, binding ruling on whether district courts have jurisdiction over challenges to contract and grant terminations, the ruling puts the jurisdictional issue front and center for all district court judges who are adjudicating termination challenges. Already we are noticing that the Department of Justice is filing Notices of Supplemental Authority in numerous other litigation challenges, arguing that the Supreme Court believes that government contractors and grantees with disputes against the United States do not belong in U.S. district court.
We will continue to monitor further legal developments as the district court in Massachusetts considers its response to the jurisdictional points that the Supreme Court majority has raised.
Rescission of Regulations Without Notice and Comment? What’s Next for Regulated Industries in the Deregulation Climate
We previously wrote about President Trump’s February Executive Order identifying deregulation as a top administration priority (here and here). That Executive Order, 14219 (the “Deregulation EO”), directed all executive departments and agencies to identify regulations falling within certain enumerated categories of regulations. More recently, on April 9, 2025, the President issued a memorandum providing further direction to executive departments and agencies regarding implementation of the Deregulation EO (available here). This memorandum addresses how the President envisions that Executive Branch agencies will go about rescinding regulations. And—spoiler alert—the vision for rescinding regulations is a departure from the typical notice-and-comment process.
The Specifics
Emphasizing adherence to recent Supreme Court decisions and the use of the “good cause” exception in the Administrative Procedure Act for expedited rulemaking (that is, rulemaking/rescission without the constraints of notice and comment), the memorandum instructs agencies, first, as part of the review-and-repeal efforts required by the Deregulation EO, to assess each existing regulation’s lawfulness under the following United States Supreme Court decisions:
Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024);
West Virginia v. EPA, 597 U.S. 697 (2022);
SEC v. Jarkesy, 603 U.S. 109 (2024);
Michigan v. EPA, 576 U.S. 743 (2015);
Sackett v. EPA, 598 U.S. 651 (2023);
Ohio v. EPA, 603 U.S. 279 (2024);
Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021);
Students for Fair Admissions v. Harvard, 600 U.S. 181 (2023);
Carson v. Makin, 596 U.S. 767 (2022); and
Roman Cath. Diocese of Brooklyn v. Cuomo, 592 U.S. 14 (2020).
Second, most significantly, the memorandum instructs agencies to then begin the rescission of any regulations they identify as unlawful under step one, without undertaking public notice and comment. The memorandum instead directs agencies to rely on the Administrative Procedure Act’s “good cause” exception. That exception allows agencies to bypass the notice-and-comment process when notice and comment is “impracticable, unnecessary, or contrary to the public interest.” The memorandum asserts that leveraging the “good cause” exception is appropriate because retaining and enforcing facially unlawful regulations is contrary to the public interest such that notice-and-comment proceedings are unnecessary in those instances where repeal of a regulation is necessary to ensure consistency with Supreme Court rulings.
The memorandum directs agencies to begin the repeal process immediately following the 60-day review period specified in the February 19 Deregulation EO (i.e., April 20, 2025). It further directs agencies, within 30 days of the review period’s expiration (i.e., May 20, 2025), to submit to the Office of Information and Regulatory Affairs a one-page summary of each regulation that the agency initially identified as falling within one of the categories specified in the Deregulation EO but which is not being targeted for repeal, explaining the basis for the decision not to repeal that regulation.
The Import
In light of this memorandum, industries should brace for potentially significant regulatory changes as agencies undertake the mandated review-and-repeal process.
Chief among the concerns we anticipate from this memorandum is uncertainty. In the first place, the plan for such large-scale use of the good-cause exception will likely draw legal challenges. Regulations promulgated with notice-and-comment procedures typically require notice and comment for their rescission. Legal challenges bring uncertainty as cases wind their way through the courts.
Affected businesses could also face uncertainty with respect to their regulatory compliance costs. For example, if a business spent significant sums to comply with a regulation that is now targeted for rescission, the business will experience a period of budgetary uncertainty until it is known whether that particular regulation will, in fact, be rescinded.
Conversely, industries that benefit from certain regulations or have invested significantly in compliance may want to proactively engage with relevant agencies to ensure these regulatory schemes are preserved. In our earlier writings, we suggested that affected businesses look for ways to proactively engage with agencies in identifying regulations for either rescission or retention, even though the Deregulation EO did not provide a direct pathway for such engagement. In the weeks since its issuance, both the Office of Management and Budget and the Federal Communications Commission have opened specific dockets requesting the public’s comment on regulations that might be targeted. (See here and here.) Potentially affected industries should take advantage of these opportunities to engage with the administration about the regulations that affect it.
Staying proactive and informed about the regulatory landscape is crucial for businesses to navigate the potential opportunities and risks presented by this new directive. Blank Rome’s team of lawyers is available to guide you through these regulatory changes and help you address the implications for your industry.
Case Alert: Repetitious Claims in Adjudication
Executive Summary
The South Australian Court of Appeal (Court of Appeal) in Goyder Wind Farm 1 Pty Ltd v GE Renewable Energy Australia Pty Ltd & Ors has delivered a landmark judgment.
The decision provides much needed clarity as to when, and in what circumstances, a contractor may (and may not) repeat claims made under the statutory security of payment (SoP) regime.
While this is a decision of the Court of Appeal and its direct impact will be limited to projects in South Australia (SA), the decision is likely to be applicable under the equivalent SoP regimes which exist in all other Australian states and territories (except the Northern Territory). The other interstate SoP regimes are drafted in similar, and often exactly the same, terms, albeit the various regimes also differ in other respects.
The Court of Appeal considered the following issues:
Whether the principle of Anshun estoppel, whether described in that way or in terms of an abuse of process, applies to subsequent payment claims and adjudication applications under the SoP regime; and
If so, whether that principle, howsoever described, applied to prevent the contractor from making and prosecuting the second payment claim for delay costs in respect of extension of time claims made by the Contractor.
The Court of Appeal held:
There is no scope under the Building and Construction Industry Security of Payment Act 2009 (SA) (SoP Act) for the common law doctrine of issue estoppel or, consequently, the extended doctrine of Anshun estoppel to operate against a payment claim or an application for an adjudication determination under that Act. This is a finding of some significance, given there was some uncertainty about this issue following earlier authorities.
There, however, remains scope for the operation of a doctrine of preclusion under the SA SoP Act, in regard to conduct which may be characterised as an abuse of the processes of that Act. This is again a significant finding and provides useful clarification as to the limits which may be placed on the alleged repetition of claims.
In this case, it was not an abuse of the processes of the SA SoP Act for the Contractor to have included different categories of delay costs in subsequent payment claims. That is, there was no repetition of claims as a matter of fact, despite that the claims arose out of the same delay events. This is also despite the earlier articulation of the delay costs claim in a Notice of Arbitration.
Background
The case relates to a significant wind farm project in country SA. The joint venture Contractor claimed it was entitled to various extensions of time and delay costs attributable to Principal caused access delays. These access delays were alleged to have been caused by delays in obtaining environmental approvals.
The Contractor issued two separate payment claims (in February 2024 and April 2024) in respect of different reference dates. It subsequently made two separate applications for adjudication of those payment claims, both of which resulted in adjudication determinations. The Principal sought to quash the second adjudication determination by way of judicial review, on the basis that the second adjudication application was a reagitation of the first. Both the primary judge and the Court of Appeal found that there was no overlap between the first and second payment claims.
The judge at first instance dismissed the Principal’s application for judicial review. Whilst the judge accepted that the two claims arose from a common cause of delay, it did not follow that delay costs arising from the same delay constituted a singular claim for delay. The Principal appealed the judge’s decision.
Court’s Findings and Commentaries
The Court of Appeal dismissed the appeal. The Court of Appeal, having regard to the provisions of s32 of the SoP Act, did not consider the common law concept of issue estoppel to be applicable. It then followed that an extended doctrine of Anshun estoppel was similarly inapplicable. The Court of Appeal held that this was not to say that there is no scope for the operation of a doctrine of preclusion under the SoP Act; however, this would likely be made pursuant to an application for an abuse of process.
The Court of Appeal went on to consider whether the Contractor’s submission of two payment claims for delay costs amounted to an abuse of process, however, it could not conceive of a situation where nonoverlapping claims for delay costs amounted to an abuse. That is, there would at least need to be factual repetition of claims for there to be an abuse of process, noting, however, that repetition alone may not be sufficient.
Takeaways
For the construction industry, the key takeaways are:
The SoP Acts themselves set certain limits on the making of claims. In particular, under s13(5), only one payment claim may be made in respect of each reference date. Under s22(4), an adjudicator must value work the same as has been previously determined, unless the value has changed. These provisions provide for some amount of “finality” in the adjudication process. The SoP Act, however, concerns progress payments and expressly does not finally determine the parties’ rights and obligations in respect of payment. The SoP Acts are therefore relevantly different to other sorts of proceedings, in which the doctrines of issue and Anshun estoppel apply. The Court of Appeal rejected the imposition of additional limitations on the making of nonoverlapping claims on the basis of these broader legal doctrines.
A contractor may therefore claim nonoverlapping components of a delay costs claim in separate payment claims (so long as the making of such claims is otherwise within the other limitations set by the SoP Act, such as the requirement for claims to be within the six-month period mandated by s13(4)(b)).
Former DOL Officials Urge Federal Contractors to Continue Lawful Diversity Practices Despite Trump Administration’s Efforts to End DEI
On April 15, 2025, a group of former U.S. Department of Labor officials issued an “open letter” urging federal contractors to continue voluntary diversity practices, including conducting self-assessments, despite the Trump administration’s attacks on diversity, equity, and inclusion (DEI) programs and the revocation of Executive Order (EO)11246, which mandated federal contractors’ affirmative action and non-discrimination obligations.
Quick Hits
A group of former U.S. Department of Labor officials is urging federal contractors to maintain their voluntary diversity practices despite the Trump administration’s revocation of Executive Orders supporting affirmative action and anti-discrimination efforts.
The officials assert that continued diversity, equity, and inclusion programs are essential for compliance with federal laws and for promoting equal opportunity in the workplace.
The open letter, signed by ten former DOL officials, argued President Donald Trump lacks authority to end voluntary programs designed to promote compliance with federal, state, and local antidiscrimination laws, including Title VII of the Civil Rights Act of 1964. The letter said federal contractors “should carefully weigh the risks of backing away from employment practices to promote equal opportunity for all. “
The open letter addressed President Trump’s January 21, 2025, EO 14173, which seeks to end “illegal” DEI and diversity, equity, inclusion, and accessibility (DEIA) programs. The order revoked the former EO 11246, which had prohibited discrimination by federal contractors based on race, color, religion, and national origin, and it stripped the Office of Federal Contract Compliance Programs (OFCCP) of much of its authority to enforce federal contractors’ compliance with federal laws and regulations requiring nondiscrimination.
Additionally, the letter comes after statements from newly appointed OFCCP Director Catherine Eschbach, calling OFCCP’s prior activities “contradictory to the nation’s laws” and indicating the agency is considering enforcement actions to “deter DEI programs and principles.”
However, the former DOL officials argued that President Trump’s actions contradict well-established laws, override congressional mandates to prevent discrimination, violate due process and free speech, and seek to retroactively impose liability on contractors for their good faith efforts to comply with EO 11246 prior to its revocation. They further questioned whether OFCCP even has the authority to investigate and take enforcement actions against contractors for their DEIA programs, particularly following the revocation of EO 11246.
“Because the Administration’s actions are legally unsound and harmful to workers, employers, and America’s economy, we urge federal contractors to carefully evaluate how they can best achieve the equal opportunity commitments they have made through their diversity, equity, inclusion, and accessibility programs,” the letter said. “These programs not only serve important business and risk management objectives, but also uphold fundamental civil rights protections and promote fair treatment and opportunity for all workers.”
The open letter was signed by former OFCCP Directors Jenny R. Yang, 2021-2023, and Patricia A. Shiu, 2009–2016, and joined by Pamela Coukos, OFCCP senior advisor 2011–2016; Donna Lenhoff, OFCCP senior civil rights advisor from 2011–2017; Seema Nanda, solicitor of labor 2021–2025; Patrick O. Patterson, OFCCP deputy director 2014–2017; Maya Raghu, OFCCP deputy director, policy 2021–2023; Dariely Rodriguez, OFCCP chief of staff 2021–2022; M. Patricia Smith, solicitor of labor 2010–2017; and Shirley J. Wilcher, deputy assistant secretary for OFCCP 1994–2001.
‘Lawful and Effective Tools to Ensure Equal Opportunity’
The former DOL officials argued in the letter that federal contracts may and should continue voluntary diversity efforts. The letter pointed to specific practices followed by some leading employers to prevent discrimination:
Proactive Barrier Analyses—The open letter urged contractors to continue self-assessments that identify and remove obstacles to equal employment opportunity, such as examining hiring processes to understand why qualified candidates with certain backgrounds are rejected. The letter argues that such analyses remain fully lawful and prevent discrimination.
Collecting and Analyzing Workforce Data—The letter said that despite the revocation of EO 11246, federal contractors “should continue to collect and analyze applicant flow and workforce data.” Such collection is “a critical part of determining whether an employer has unlawful employment practices,” the letter said.
Well-Crafted Benchmarks—The letter further argued that “well-crafted benchmarks or aspirational goals” remain a “useful tool for employers.” Such appropriate benchmarks should be based on an analysis of the labor pool, “realistic goals” based on the necessary qualifications and location, and safeguards to ensure that job decisions are still focused on qualifications, skills, and merit without excluding qualified candidates based on protected characteristics. The letter said such benchmarks “are not quotas and are not discriminatory.
Next Steps
The Trump administration’s scrutiny of DEI and DEIA programs has caused some uncertainty for federal contractors and other private employers. The former DOL officials’ letter argues that certain programs may be lawful and further antidiscrimination compliance.
The letter comes after a similar letter by a group of former U.S. Equal Employment Opportunity Commission (EEOC) officials, which also included former OFCCCP Director Yang. That letter argued that many employer diversity programs could remain lawful, including antidiscrimination and harassment training, employee resource groups/affinity groups, broad-based recruitment efforts, and data collection, if certain safeguards are followed,
Still, given the uncertainty, employers may want to review or audit all their existing DEI or DEIA programs or initiatives to determine if they align with lawful practices under applicable federal antidiscrimination laws. As part of such reviews, employers may consider internal analysis or assessments conducted under the protection of attorney-client privilege. Additionally, employers may want to consider conducting proactive, privileged, and voluntary analyses of certain workforce analytics to ensure compliance with federal, state, and local laws.
Trump Issues Executive Order on “Restoring America’s Maritime Dominance”
Last week, President Trump issued an Executive Order (EO) titled “Restoring America’s Maritime Dominance,” emphasizing the urgent need to revitalize the domestic maritime industry.
The EO acknowledges the decline of the U.S. flag fleet and the nation’s minimal role in global commercial shipbuilding.To address this, the EO calls for a Maritime Action Plan (MAP), developed by the National Security Advisor and other officials, with the goal of strengthening shipbuilding capabilities, enhancing maritime workforce training, and ensuring adequate commercial vessel capacity for national security. The EO also outlines legislative proposals, funding mechanisms, and deregulatory initiatives to support these objectives, including tariffs on Chinese-built ships, financial incentives for U.S. shipyards, and expanded mariner training programs.
My colleagues recently co-authored an article outlining the more than 20 actions included in the EO. Please refer to the article (or reach out directly) for more detailed guidance on implementation and compliance requirements.
It is the policy of the United States to revitalize and rebuild domestic maritime industries and workforce to promote national security and economic prosperity.
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