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.
www.supplychaindive.com/…
Former U.S. Department of Labor Officials Pen Open Letter to Contractor Community Addressing Executive Order 14173 and the Current Administration’s Stance on Diversity, Equity and Inclusion
Ten former Department of Labor Officials, including former EEOC Commissioner and past OFCCP Director Jenny Yang, sent an open letter to federal contractors responding to President Trump’s issuance of Executive Order 14173 and newly appointed OFCCP Director Catherine Eschbach’s recent statements about OFCCP.
The letter is aimed to
“help federal contractors and other employers navigate this complex environment, providing clarity about their options and obligations under the law.”
The 14-page letter details how the current administration’s actions are in contravention of established law, explains compliance with Executive Order 11246 did not require the unlawful use of preferences or quotas, and describes how continued proactive practices, including self-assessments and data analysis to remove discriminatory barriers remain lawful and are essential to prevent discrimination.
The letter concludes reiterating that “America’s enduring promise is that talent and effort – not background or origin – should determine one’s path” and encourages the federal contracting community to “stand firm in your commitments to lawful diversity, equity, inclusion, and accessibility practices that promote civil rights compliance, true merit, and a strong economy.”
Outlining Critical MTS Cybersecurity Requirements
On January 17, 2025, the US Coast Guard published a final rule titled “Cybersecurity in the Marine Transportation System,” setting a baseline for cybersecurity standards. This rule, which is set to take effect on July 16, 2025, introduces mandatory cybersecurity measures for US-flagged vessels, Outer Continental Shelf facilities, and certain facilities regulated under the Maritime Transportation Security Act of 2002.
This article I co-authored with Andy Lee for MarineLink highlights the implications of the rule on the maritime transportation system. We recommend industry participants begin evaluating their current capabilities and developing comprehensive compliance strategies.
The integration of digital technologies and interconnected systems within the MTS has heightened vulnerability to cyber threats. Recognizing these risks, the USCG’s rule sets a baseline for cybersecurity standards, ensuring entities within the MTS can effectively detect, respond to, and recover from cyber incidents.
www.marinelink.com/…
Old North State Report – April 14, 2025
UPCOMING EVENTS
April 14, 2025
Raleigh Chamber Business After Hours – Raleigh
April 16, 2025
Federalist Society Housing Policy and Regulation in NC – Raleigh
April 17, 2025
NC Chamber Building NC – Durham
April 22, 2025
NC Chamber Spring Member Roundtable – Asheville
April 24, 2025
Raleigh Chamber Young Professionals Network Social – Raleigh
RTAC – Association of Corporate Counsel Spring Reception – (Raleigh)
April 28, 2025
Thinkers Lunch: Rob Christensen
LEGISLATIVE NEWS
SENATE BUDGET TO BE RELEASED NEXT WEEK
The Senate is set to release its budget bill Monday afternoon, according to Republican Senate leader Phil Berger (R-Rockingham), who spoke to reporters after the Senate session on Tuesday evening.
This budget is a two-year spending plan that will likely exceed $30 billion, funding raises for state employees and teachers, and replenish the rainy-day fund to get back to the $4.75 billion it contained before Hurricane Helene.
Leadership in the House and the Senate have agreed the budget can grow by 2.75% in fiscal 2025-2026 and 2.25% above that in fiscal 2026-2027. The current budget appropriated $29.7 billion for general fund spending in fiscal 2023-2024 and $30.8 billion in fiscal 2024-2025.
The process begins with the Senate version going through committees on Tuesday, with floor votes on Wednesday and Thursday. The House is expected to pass its version in May, followed by negotiations among Republican leaders for a final budget.
Read more by Under the Dome/The News & Observer
LAST-MINUTE HOUSE PROPOSALS FILED AHEAD OF BILL FILING DEADLINE
Offering on-site childcare for state employees, allowing private school students to take classes at local public schools, addressing issues with loose dogs, and dealing with slow drivers in the left lane are among the last-minute proposals filed by House members before the Thursday deadline. House lawmakers had a deadline to file bills by 3 p.m., resulting in more than 100 new proposals. This brings the total number of bills introduced this session to nearly 2,000, reflecting emerging policy goals.
Education and public safety were key themes among the last-minute bills, with many aimed at attracting and keeping teachers. There were also efforts to increase penalties for loose dogs and new rules for domestic violence cases. A unique proposal allows tax payments in cryptocurrencies, amid fluctuations in the market. Some proposals from Democrats, like those focusing on environmental issues, may not succeed in the Republican-majority legislature, though a few may have potential.
Bipartisan sponsors back some bills, including Jesse’s Law, which would provide training for judges and mediators on recognizing signs of domestic violence and child abuse. This initiative is inspired by the tragic murder of a 3-year-old boy.
Other important bills include reforms to liquor laws to allow Sunday openings for ABC stores, legalizing video poker, creating a disaster response fund, and increasing penalties for various public safety violations. Additional initiatives aim to expand childcare options, support social conservative causes like restrictions on gender-reassignment lawsuits and abortion, and enhance educational transparency and teaching standards. There are also bills addressing drug arrests, protecting teenagers’ social media data, exploring cryptocurrency and AI research, directing the Legislative Research Commission to study the abolition of contributory negligence, and proposing the removal of barriers to employment due to court debt.
The crossover deadline, the date set by the legislature for a bill to be approved in its originating chamber to continue being reviewed by the opposite chamber, is May 8. Lawmakers are anticipated to increase their activity in the weeks ahead to make certain that any important legislation stays eligible for consideration during this session.
Read more WRAL News
PROPOSED HOUSE BILL TO EXPAND AUDITOR’S INVESTIGATIVE POWERS
A North Carolina House panel approved a bill on Tuesday that expands the investigative powers of the state auditor’s office, despite some concerns about which agencies and individuals could be investigated. The Judiciary 1 Committee voted for House Bill 549 after hearing from its sponsor, Representative Brenden Jones (R-Columbus), and Kirk O’Steen, the Director of Government Affairs for the auditor’s office. The bill will next go to the Committee on State and Local Government for further consideration.
If passed, the bill would allow the auditor to investigate any entity receiving state or federal funds for reports of improper activities, including fraud and misappropriation. It would also grant the auditor unrestricted access to necessary databases and exempt the office from certain regulations. Additionally, the Senate approved Senate Bill 474 to create a new team to oversee state spending and job openings.
Read more by NC Newsline (Kingdollar)
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SENATE’S PBM BILL APPROVED BY HEALTH CARE COMMITTEE
The Senate is entering the debate over pharmacy benefits managers (PBMs) with the approval of Senate Bill 479 by the Health Care Committee. This bill provides an alternative to the House’s approach regarding PBMs, which act as intermediaries between drug manufacturers and insurers or drugstores. Unlike the House’s proposal, Senate Bill 479 does not include a provision that would require PBMs to pay drugstores a $10.24 dispensing fee. Senator Benton Sawrey (R-Johnston), a lead sponsor of the bill known as the SCRIPT Act, prefers to avoid any cost increases for consumers.
The bill is supported by key Senate leaders, and it will undergo further revisions as it progresses through additional committees. Key aspects of the Senate bill include allowing insurers to offer higher reimbursements to drugstores in areas without pharmacies, licensing pharmacy services administrative organizations, and requiring PBMs to provide more data to state officials. It also prohibits PBMs from paying pharmacies less than their acquisition costs for medications and from treating independent pharmacies unfairly compared to their owned drugstores. Independent pharmacies could refer patients to other drugstores if necessary.
The bill does not currently impact the State Health Plan, a point of concern for some senators. Meanwhile, the House’s PBM legislation remains under discussion in committee, with its previous iteration receiving unanimous approval before being stalled in the Senate without a counterproposal.
Business North Carolina (Ray Gronberg – [email protected])
LOWER LEGAL ALCOHOL LIMIT FOR DRIVERS PROPOSED
North Carolina lawmakers are collaborating to support a bill introduced this year to reduce the legal blood alcohol concentration limit for driving from 0.08 to 0.05.
House Bill 108 will also increase penalties for adults who help minors buy alcohol, particularly in cases of serious injury, and will allow repeat offenders to regain limited driving privileges by proving sobriety. Additionally, the measure mandates the recording of district court proceedings and public reporting on impaired-driving cases.
Representative Eric Ager (D-Buncombe) will hold a press conference on Tuesday at noon regarding the bill, joined by Ellen Pitt from the WNC Regional DWI Task Force, law enforcement, and families impacted by drunk driving.
Ager and Representative Mike Clampitt (R-Jackson) are the primary sponsors, along with Representatives Keith Kidwell (R-Beaufort) and Brian Echevarria (R-Cabarrus). The bill is currently in the House Alcoholic Beverage Control Committee.
Read more by Under the Dome/The News & Observer
TRAUMATIC BRAIN INJURIES TREATMENT FOR VETERANS
A bill that would enable treatment of traumatic brain injuries in veterans was introduced on March 27. House Bill 572 allows the Department of Military and Veterans Affairs to create a pilot program for veterans, first responders, and their immediate families to treat traumatic brain injuries as well as sleep disorders and substance abuse.
Representative David Willis (R-Union), mentioned that the treatment called eTMS, or electroencephalogram combined transcranial magnetic stimulation, was suggested by veterans seeking similar programs in other states. Willis noted that the program aims to support both first responders and veterans, citing successful outcomes in other states.
Representative Grant Campbell (R-Cabarrus), a former Army Lieutenant Colonel, also endorsed the bill. “There is significant data to show that there are high rates of these patients being able to discontinue current chronic therapy once they undergo this. This is an incredibly promising intervention,” Campbell said.
On Tuesday, the bill received a favorable report and has been referred to the Health Committee.
Read more by State Affairs Pro