1 year ago



President Trump’s

President Trump’s Impact on Government Contractors By John R. Prairie and Cara L. Lasley It’s been a whirlwind first few weeks in office for President Trump. From taking initial steps to dismantle the Affordable Care Act, to restricting immigration from seven predominantly Muslim countries, President Trump has moved swiftly to implement several of his key campaign pledges. Despite heavy criticism of many of these initial actions, President Trump clearly is not afraid to disrupt the status quo. President Trump has not spared government contractors from this initial flurry of activity. Within hours of his inauguration, Trump ordered the Environmental Protection Agency (EPA) to temporarily suspend all contract and grant awards. Predicting what Trump may do next has proven to be a fool’s errand. But based on his campaign promises and initial actions since taking office, here are a few areas where we expect President Trump to impact government contractors: ■ Pressure contractors to lower costs on major programs. Although presidents traditionally have not weighed in on individual government contracts or programs, President Trump clearly is no traditionalist. Even before taking office, Trump tweeted his displeasure with the costs of several major programs and threatened to cancel orders and/or use alternative sources. These initial attacks were successful, according to Trump, who recently claimed that Lockheed Martin has agreed to cut $600 million from its next lot of F-35 Joint Strike Fighter planes. It is clear that Trump, who sees himself as the ultimate dealmaker, is not afraid to use the bully pulpit to pressure contractors to cut costs. If Trump sets his sights on contractors on other major programs, they too may need to be prepared to strike a “deal” with Trump to cut costs or otherwise demonstrate how they are saving U.S. taxpayer dollars. ■ Rescind executive orders and regulations. Trump has pledged to overturn “unconstitutional” and “burdensome” executive orders and regulations issued by the Obama administration, several of which were targeted at government contractors. These include executive orders and regulations governing paid sick leave, minimum wage and disclosure of labor law violations. Although it was widely predicted that President Trump would swiftly rescind many of President Obama’s executive orders in a single action as soon as he took office, he has not done so yet. He has, however, issued an executive order requiring that for every one new regulation, two must be revoked. Thus, it appears likely that many regulations issued under the Obama administration will yet be undone as new regulations are issued going forward. This would be universally welcomed by government contractors. ■ Increase defense spending. Notwithstanding his attempts to cut costs on specific programs, it still seems a safe bet that overall defense spending will rise under President Trump. Trump has announced his intent to work with Congress to repeal federal sequester caps on defense spending without balancing increased defense spending with any offsets in non-defense spending. Trump may have difficulty finding support in Congress, however; historically, Republicans have been unwilling to pass budget-busting bills without offsets. Trump’s planned increase in defense spending will support a larger Army and Navy and an increased focus on cybersecurity. Trump’s plan involves building a 350-ship Navy, increasing the Air Force’s active fighter inventory to 1,200, growing the Marine Corps from 27 continued on page 11 Page 2 Government Contracts Issue Update

OGE Amends the Executive Branch Gift Regulations By Robert L. Walker Effective January 1, 2017, there are noteworthy changes to the portions of the Standards of Ethical Conduct for Executive Branch Employees that govern the solicitation and acceptance of gifts from outside sources. Of most interest are the changes to the executive branch gift regulations that: ■ Prohibit executive branch employees from accepting alcoholic beverages under the exclusion for modest items of food and refreshment; ■ Clarify the method of calculating the market value of a ticket to an event when that ticket lacks a face value; ■ Require executive branch employees to obtain written authorization before accepting gifts of free attendance to widely-attended gatherings; ■ Provide guidance on whether a social media contact may qualify as a personal friend for purposes of the exception for gifts based on a personal relationship; and ■ Create a new exception permitting employees to accept gifts of informational materials. Alcohol. Under a long-standing exclusion to the definition of what constitutes a “gift” under the executive branch Standards of Conduct, executive branch employees have been permitted to accept “modest items of food and refreshment, such as soft drinks, coffee and donuts, offered other than as part of a meal.” The executive branch Office of Government Ethics (OGE) has stated that it “has long treated alcoholic beverages as not being part of the class of modest refreshments covered by this exclusion.” Reflecting this interpretation, the relevant provision has been amended to exclude from the definition of “gift” “modest items of food and non-alcoholic refreshments, such as soft drinks, coffee, and donuts, offered other than as part of a meal.” Tickets with no face value. As part of an amended definition of “market value” as used in the gift regulations, OGE has now included a new example illustrating and clarifying how to determine the market value of a ticket to an event when the ticket lacks a face value. This approach requires including in the calculation the “face value of the most expensive publicly available ticket” to the event. New Example 4 to this provision reads: A company offers an employee of the Federal Communication Commission (FCC) free attendance for two to a private skybox at a ballpark to watch a major league baseball game. The skybox is leased annually by the company, which has business pending before the FCC. The skybox tickets provided to the employee do not have a face value. To determine the market value of the [two] tickets, the employee must add the face value of two of the most expensive publicly available tickets to the game and the market value of any food, parking or other tangible benefits provided in connection with the gift of attendance that are not already included in the cost of the most expensive publicly available tickets. Written approval for widely attended events. Under the amended executive branch regulations, employees who wish to accept an offer of free attendance to an event under the “widely-attended gathering” exception must now—in all instances— obtain written authorization from their designated agency ethics official (DAEO) before attending the event. The amended provision on “widely-attended gatherings”— or “WAGs”—now also makes clear that continued on page 4 ©2017 Wiley Rein LLP Page 3

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