Trump’s Executive Order on Government Efficiency—A Must-Know for Federal Contractors President Trump has signed an Executive Order (EO) aimed at transforming federal spending on contracts, grants, and loans. The order emphasizes that it “commences a transformation in Federal spending on contracts, grants, and loans to ensure Government spending is transparent and Government employees are accountable to the American public.” Here’s what government contractors need to be aware of. The EO primarily targets Agency Heads and outlines that each Agency Head will collaborate closely with their Department of Government Efficiency (DOGE) Team Lead on various initiatives. The EO applies only to “covered contracts and grants,” which are defined as “discretionary spending through Federal contracts, grants, loans, and related instruments.” However, the EO excludes direct assistance to individuals, spending related to immigration enforcement, law enforcement, military operations, public safety, and the intelligence community. Other types of critical or emergency spending may also be exempt as determined by the relevant Agency Head. Agencies are required to notify their DOGE Team Lead about any exclusions. Notably, the EO excludes contracts and grants associated with federal criminal or immigration law enforcement, U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement, the Uniformed Services, classified information, and other areas that Agency Heads may exempt with written consent in consultation with the DOGE Team Lead and the Director of the Office of Management and Budget (OMB). Agency Heads are required to do the following: - Develop centralized systems to record payments to contractors and grantees. -Review “covered contracts and grants” within 30 days in collaboration with the DOGE Team Lead. - In the same 30-day period, Agency Heads must also review their contracting policies, procedures, and personnel. - Implement a new system for recording approvals for federally funded travel, particularly for conferences or other non-essential purposes. Employees will be prohibited from engaging in federally funded travel unless there is a written justification in the system from the official approving the travel. What Can Contractors Do? - Assess whether their contracts fall under the exclusions outlined in the EO, and consult with legal counsel to explore whether their contracts might be excluded from the EO’s provisions. - Closely monitor the prompt payment requirements under existing contracts. According to the Prompt Payment Act, the government is required to pay contractors within 30 days of receiving a properly submitted invoice. For prime contractors working with small businesses, payments should be made within 15 days. This EO is a significant shift in the way federal agencies manage and track their spending, and our DC Employment attorneys recommend government contractors stay informed and prepared for potential changes.
