Risk Management for Federal Contractors During Regulatory Changes

According to an article by Merle M. DeLancey Jr. of the Blank Rome firm, federal contractors are operating in an environment of rapid regulatory change driven by a surge in executive orders affecting government contracts. While it is common for executive orders to provide high-level directives with regulatory guidance following later, DeLancey says the sheer volume and scope of these orders present unprecedented challenges. 

In response, federal contractors must carefully assess their obligations, determine appropriate actions, and maintain compliance while awaiting formal contract modifications with clear communication, strict adherence to contract terms, and proactive engagement with both government representatives and subcontractors.

In times of uncertainty, DeLancey says maintaining open and respectful communication with contracting officers is essential. Only a contracting officer can formally modify a contract, and direction from other government representatives should be verified. Given the evolving regulatory landscape, contracting officers may lack clarity, making patience and diligence crucial. Additionally, contractors must remember that executive orders alone do not alter contract terms; compliance should only change upon receipt of a formal modification. Acting prematurely based on anticipated changes could lead to unnecessary or incorrect adjustments.

Contractors should continue performing strictly according to existing contract terms unless directed otherwise by proper channels. Failure to do so could be considered a breach, increasing the risk of contract termination. Equally important is ensuring subcontractors receive clear guidance and remain aligned with contractual obligations. Finally, contractors should proactively demonstrate their contracts’ value by preparing narratives highlighting their contributions and efficiency.

Federal contractors can mitigate risks and safeguard their government contracts in this uncertain regulatory climate by prioritizing communication, compliance, and strategic positioning.