Navigating Government Procurement Challenges in Trump’s New Administration
Summary
Looking at Trump’s first four years in office, there are signs of what his second administration will prioritize in government contracting. Specifically, his administration will target or rescind many Biden administration requirements to use clean energy and consider affirmative action when awarding contracts. However, there will most likely be continued requirements to use American-made manufacturing through the “Buy America Act.” Trump may continue this policy and push for more standards and fewer waivers.
In terms of spending priorities, if we look at President-Elect Trump’s policy goals and rhetoric, there is the anticipation of reductions in procurements and contracts in certain agencies such as Education, Internal Revenue Service (IRS), Environmental Protection Agency (EPA), and U.S. Department of Housing and Urban Development (HUD). A more significant focus will be on cyber-security, defense spending, and infrastructure.
Overall, the Trump administration's federal contracting priorities will likely emphasize domestic manufacturing and cost-cutting, with a reduced emphasis on clean energy, affirmative action, and small business preference programs.
What Could Change
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The classic method for changes in government contracting is made through executive orders. This happens during each presidency. On his first days in office, there is anticipation that Trump will issue E.O’s focused on:
Environment and Clean Energy requirements;
Diversity and Inclusion policies and training;
Minimum Wage Policies.
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The Trump administration will reshape the contracting environment around the priorities outlined in the campaign, Project 2025, and his first term. There will be continued emphasis on “Buy” America requirements and further prohibition of outsourcing jobs for businesses that want to work with the federal government.
The Biden administration awarded billions in contracts to small and diverse businesses. This level of spending will likely not remain the same in the Trump administration, a trend seen throughout the government procurement process. However, changes to federal contracts and bureaucracy take time. It is also worth noting that the Small Businesses Administration (SBA) can still set parameters for contracts with small businesses.
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The leaders, Elon Musk and Vivek Ramaswamy of "DOGE," have promised to reduce the federal bureaucracy significantly. Still, it is unclear how they will work with Congress and other federal agencies. Since the commission has no legal authority and its report isn’t due until 2026, its influence and ability to drive significant changes remain uncertain.
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The incoming administration may target federal contracting preference programs, viewing them as akin to affirmative action. This could affect initiatives like the SBA’s 8(a) program for disadvantaged businesses and the HUBZone program. Project 2025 mentions restructuring and changing the focus of the Minority Business Development Agency. Under the plan, the agency would analyze how regulations and taxes impact minority-owned businesses and remove support for specific programs within the agency.
However, during the campaign and subsequent interviews, the Trump administration discussed utilizing small business technology in the government supply chain.
Providing Context
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The unpredictability of policy direction during the first Trump presidency highlighted the challenges of anticipating administrative priorities. This uncertainty can make it difficult for small businesses to prepare proactively for potential changes.
It is important to understand that Executive Orders affecting the government procurement process typically require a regulatory implementation phase, which can take months or even years to materialize fully.
The Pennsylvania government must maintain substantial investments at the state and local levels to address potential funding gaps for small and diverse businesses. Such commitments will help sustain economic opportunities and support business growth despite changing federal priorities.
Opportunities for Pennsylvania
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The Trump administration has made A.I a priority and will likely work with state and local government to implement laws and regulations in this area. Companies in Pennsylvania that work on A.I. regulations and technology will benefit from this increased funding.
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PA has a robust manufacturing sector. Businesses that make their products in PA may benefit from increased focus on “Buy in” American products.
Conclusion
A second Trump administration will likely rescind many clean energy and affirmative action requirements established by Biden, while maintaining or even expanding “Buy America” policies. Spending cuts are expected in agencies like Education, the IRS, EPA, and HUD, with increased funding for cybersecurity, defense, and infrastructure. Small and diverse businesses that benefitted under Biden may see fewer contract opportunities, but federal procurement changes take time to implement. Executive orders will be the main tool for altering environmental, diversity, and minimum wage policies, with uncertainty around how quickly these will translate into regulatory changes. States like Pennsylvania can mitigate potential funding gaps by investing at the local level and leveraging opportunities in AI and American-made manufacturing.
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