Strategies for the New Administration

Joe Young

Good afternoon and welcome to Season Two, Episode One of the GovCon HR Round-Up Podcast. Great to be back for Season Two, guys.

Declan Leonard

Man. Amazing. Unbelievable.

Joe Young

From a timing perspective, we always like to be timely and topical, and I think we are in one of the most disruptive weeks in the history of being an HR professional in the government contracting market. Overstatement in any way?

Declan Leonard

I don't think it is. No, no shortage. We'll be talking about it. We probably should expanded this one from 30 to 60 minutes. But you know, that will give us something maybe to talk about next month, too.

Joe Young

So, yes, a lot to talk about today. So excited to have people join us. Just to kick things off as we normally do. My name is Joe Young. I am the president of GovConPay. We're the only outsourced payroll and HR solutions provider that focuses exclusively on serving the government contracting marketplace.

As always, we are coming to you live from Tysons Corner, Virginia, here in the wonderful studios of BLC Digital Strategies, which is the media affiliate of Berenzweig Leonard LLP, and we’re under the direction and support, as always, of our producer, Todd Castleberry.

I would also like as we get started to recognize our sponsor. Thank you again to the folks at Berkshire Associates who support this show, promote it to their vast audience and clients. For those of you who aren't aware, Berkshire is an HR compliance expert with over 50 years of experience with folks in all areas of compliance, and frankly, with many of the topics we're here to talk about today.

We were with some of them last night, and I know they've had a heck of a week and a heck of a few days. A lot of things to discuss. But as always, welcome to all of the folks who are joining us through the Berkshire community.

And before we get kicked off with today's topic, always want to let my colleagues here, Declan and Seth, the managing partners from Berenzweig Leonard LLP, introduce themselves and the firm.

Seth Berenzweig

Hi, good afternoon. Seth Berenzweig, co-managing partner here at Berenzweig Leonard. I help lead our corporate and transactional practice.

Declan Leonard

And Declan Leonard, I'm also co-managing partner here Berenzweig Leonard and I head up our firm's employment law practice.

Joe Young

So, before we get started, I do want to remind our guests, I think we may get some of this more than usual today, but the opportunity: we welcome any questions that anybody has on any of the topics and the hot off the press issues that we're going to be discussing today. Put those in the chat. Our team there will follow those to us.

And if we can, we will certainly try to get and address some of those questions live on there on the show today.

Declan Leonard

And, Joe, for all we know in these 30 minutes that we're in here, we might get more executive orders that impact contractors.

 

Joe Young

Todd, can we get a breaking news ticker?

Declan Leonard

That's right. Rachel's going to come fly in and tell us anything new.

Seth Berenzweig

By the time we get off the air, we may have abolished the federal income tax.

Joe Young

If that happens, you must break in and let us know.

Declan Leonard

Please.

Joe Young

So the topic today is how Trump's executive orders are changing the landscape for GovCon HR leaders. As I said, really the only topic we could do today. There were no other topics we could do this week.

All these executive orders came down, more impacting probably HR practitioners than ever before. We’re going to run through some of them.

Declan, I'm going to start with you. I know you've got some hot off the presses government releases there. No more remote work for federal employees?

Declan Leonard

Yeah. No, no, no, no. That's the first thing. That's the first thing we're starting with. Listen, you know, it's been said that government contractors are sort of the guinea pigs when it comes to these regulations. And that is why it's so easy to use these executive orders. I mean, normally you talk about legislation, it takes forever to pass stuff.

Executive orders can be signed very quickly with the stroke of a pen. We're four days into this administration and there already has been so many executive orders. Let's start jumping into them.

No more remote work for federal employees. I'll stress that I said federal employees. So, it’s not federal contractors yet.

But let's face it: this is just the tip of the iceberg. I mean, federal contractors are probably next. I don't have any confirmation of that. But I have OPM's hot off the presses memorandum. Here's how they describe it: If you think that they are tiptoeing into remote work the way the Biden administration did, where they said, “have your people come back” and not one person really even listened to that…

Here's what they say now: “Most federal offices presently are virtually abandoned. The vast majority of federal office workers have not returned to in-person work, even though the COVID-19 pandemic ended years ago. Many federal office workers never show up to the agency worksite at all. Federal office buildings sit empty. Virtually unrestricted telework has led to poorer government services and made it more difficult to supervise and train government workers.”

This is not my statement. This is the current administration OPM. My wife is a federal worker. I think she works hard as hell, including from home. But this is their mindset. They say: “Seeking to cajole individual agencies to try to get employees back to the office has not succeeded.”

That's why they're doing this mandate. They said as soon as practicable – OPM says they want it done in 30 days. This could very well flow down to contractors. Let's talk about the practical effect. If it does flow down to contractors. Think about recruiting, Seth. Recruiting right now for federal contractors is really done on a nationwide basis because of the remote work. It's going to be so much tougher now if they have to be within a stone's throw from wherever they're working.

Seth Berenzweig

Yeah. And who knows what it really means exactly in the context of going back to the office for government contractors. Does it mean going back to the customer site? Does it mean going back to headquarters?

Declan Leonard

They don't have headquarters anymore. Most of our clients have gone fully remote.

Seth Berenzweig

That's right. Or they have a much smaller headquarters. They might have a car office, workplace facility…

Declan Leonard

Or SevaSpaces. They might be a sponsor, too, we’ll see.

Seth Berenzweig

Even better. But, you know, if that space has room for five and all of a sudden 50 people show up on Monday, you've got an issue. So, this is something that, I agree, it's going to be happening, and it will probably have another development within the next 30 days.

Declan Leonard

Yeah. The reason why we led with this topic is because, as employment lawyers, we get more questions about remote work and hybrid work, whether it interfaces with ADA accommodations, things of that nature. And so, this will be seismic, especially if it's extended to contractors. Let's keep jumping on.

Joe Young

I don’t even want to mention the impact that's going to have on traffic around here. I don’t even want to go there.

Declan Leonard

What traffic? Yeah, just kidding.

Joe Young

So topic number two, we're going to throw it to you, Seth. Is DEI dead?

Seth Berenzweig

It is dead. There's already a guy in the hallway with a trumpet blowing “Taps” for DEI. It's dead, at least for the next four years. No more DEI programs or training by contractors are allowed. That means that if you are in the sector for program or practice change management and as part of that HR training or office management, you employ DEI-related or affirmative action-oriented practices, you cannot deliver that.

The highlight of that within the federal workforce is that yesterday DEI-related employees were told that day, “You have until 5:00 to pick up your things and get out.” They have been removed. Furthermore, agencies have been told that they're required to report contractors who supply any DEI-related services and training to the government.

It's literally… I mean it's open season.

Declan Leonard

And once again, much like with remote work, they are not tiptoeing into this. They have set up a specific web email address called DEIAtruth@OPM.com, and they have encouraged federal employees to report any coworkers who are trying to circumvent DEI. So, if they're not calling a DEI but they're still engaging in it, they want to know about it.

They mean business on this. It's a little bit of shades of maybe McCarthyism when you talk about telling on your coworkers. But I think it just shows… And they actually are going to require contractors to certify that they're not engaged in any DEI policies that would otherwise amount to discrimination.

So, if they have set-asides for certain employees, they view that as discrimination. You have to certify that you're not. So, this is an additional certification by federal contractors in order to remain in compliance and get work.

Seth Berenzweig

And I think that these kinds of contractors that do HR and organizational change management training, when they get questions related to DEI, promotion, demotion, discrimination, these kinds of issues, they're going to have to walk a really tight tightrope right now because what do they do if it requires some kind of an answer that encompasses something that smells like DEI?

It's not that you have a new sheriff in town; you have a new army in town. This is the most major change on this aspect and topic in decades. This is really going to be a big change in many regards.

Joe Young

And that topic leads right into the next point of, “What's the impact on affirmative action?”

Declan Leonard

As contractors out there know, affirmative action plans, you're required to fill those out assuming you qualify. Under the parameters of doing so requires you to keep track of hiring of women, minorities, and those, as of yesterday morning or the night before, are now kaput.

You no longer as a contractor have to do affirmative action plans.

Just as a caveat to that, you still have to track your veterans hiring and you still have to track your hiring and your outreach to hire people with disabilities because those both emanated from Congress. The veterans comes under Vets 4212 and disabilities comes under the Rehabilitation Act. So, don't think you don't have to track anything. But when it comes to women and minorities, you do not have to track those. You no longer have to prepare plans. You no longer have to submit those plans.

Now, I want to say one thing. Discrimination laws have not gone away now. Okay? So, you still cannot discriminate on the federal level. And so while you might not have to do these plans, you still should be cognizant of your workforce and whether or not any patterns exist that somebody could make an argument that you are disproportionately excluding or firing or not hiring or not promoting persons where you can show you're doing so based on immutable characteristics, gender, race, all that.

Joe Young

You just don't have to show proof of it.

Declan Leonard

Yeah, you just don't have to. Exactly. Yep.

Seth Berenzweig

I think again, for companies and government contractors that don't understand this, if they don't adjust their AAP training and process, then they're going to end up having a complaint lodged against them for applying criteria that has now been restricted by the government. So not only is this something where we're just saying you have to make an adjustment, you have to make an adjustment so that you don't get reported, right?

Declan Leonard

Yeah. You might not agree with any of this stuff, but you do work for the federal government. Like I said before, you're kind of the guinea pigs. They hold the purse strings and they seem like they are hell bent in making sure that this takes place very, very quickly and very, very emphatically.

Seth Berenzweig

Right.

Joe Young

So obviously, we talked about the results of some of the folks with the DEI jobs and the immediate termination and paid leave. But now we have also mandated hiring freezes for the next 90 days and DOGE and how it ties into those.

Seth Berenzweig

And yeah, absolutely. I'll be happy to take that one. And we'll be talking about DOGE in a little bit more detail in a moment. But in this DOGE, Elon sandbox or moment, if you will, the days of just endless continuing resolutions to continue to throw more money into the furnace to pay more federal employees seems to be coming to a pretty dramatic end.

To that effect, there is now an immediate hiring freeze for federal workers for an initial period of 90 days. There’s an immediate hiring freeze in the federal workforce across the board. Agencies are not allowed to use contractors to get around this freeze.

Declan Leonard

That's what they did last time. There was a freeze last time. And what they did was they just used contractors to make up the slack.

Seth Berenzweig

That's true for the first 90 days, I think that they're going to be very rigid on that. I do predict that after we go into the second half of the year and there are budget considerations, I do think that there will be some functions that will gradually become privatized and will be brought out to the contractor community.

But that is up in the air, and it won't happen for 90 days. The 90-day freeze does not apply to national security, immigration or public safety-related work. So, any of those agencies are not impacted. In the reverse of that, this 90 days is now being treated as an indefinite freeze for our friends at the Internal Revenue Service.

Declan Leonard

They're the only agency that was singled out. Wow.

Seth Berenzweig

Which is a shame because we all love the Internal Revenue Service. And I just think that's a really unfair… No, I'm just kidding.

Joe Young

Just get our refund checks on time and then go.

Declan Leonard

Yes, exactly. Seth, you raise a good point, though, because, when this stuff happens, it's a flurry of stuff and it causes people to maybe panic and they have their own different views of this stuff. You also have to have a mindset of “Where's the opportunities there?”

And I believe that while there's tons of talk about cutting the government, I believe that it will ultimately result in the increase in federal contractors.

I know that they say that you can't use it to get around that 90-day freeze, but I agree with you said that it's going to happen. The size of the federal government workforce has pretty much stayed consistent since maybe 2010. I don't have the facts, the numbers right in front of me, but that's what I've read that has kind of stayed consistent, whereas federal contractors have increased and increased year over year.

And I think that's what's going to happen here. These functions don't go away. It's so hard for all these functions to go away. And I believe a lot of that's going to be pushed on the private contractor community.

Seth Berenzweig

It makes complete sense from a budget standpoint because if it is through the competitive procurement process and you get the best value tradeoff, pricing is going to be one of the most important considerations. And when you have a contractor that gets in there through a very competitive bidding process, they're not paying them retirement benefits, they're not paying them health benefits.

That's not on the federal taxpayers directly. That is really off the book. And that is really running through the contractor. So, I do think that we're looking at a gradual change that's going to inert to the benefit of the private government contracts community, which is another theme that I'll be picking up again in about 5 minutes.

Declan Leonard

Okay. We do have a question, and maybe somebody wanted clarification about this affirmative action plan. They literally were pulling data today as many others were.

“Am I correct that, effective today, government contractors are not required to have an affirmative action plan, an AAP, for 2025?”

That is correct. They are not required to. Now they do still have to comply when it comes to Vets 4212 as well as tracking and outreach for hiring of disabilities and the Rehabilitation Act.

But when it comes to women and minorities, which make up the affirmative action plan, that is no longer a requirement.

Joe Young

Yeah, one other question we had, too, is somebody was curious about the specific agencies that are being covered under that exclusion. I'm not sure if we have that kind of right in front of us.

Declan Leonard

It's going to be it's going to be Homeland Security, DHS…

Declan Leonard

DoD, Public safety… Just think of all the federal law enforcement, FEMA, all of those.

Joe Young

Next one: Pay equity. It’s a topic we've talked a lot about on this show. We did a whole show on pay equity and pay transparency.

Declan Leonard

It's unbelievable when you think back on the shows that we did last year in our first inaugural season, talking about the joint employer rule, talking about the federal ban on non-competes, talking so much about pay, transparency, and pay equity. And then with the stroke of a pen, that stuff's all gone. So, contractors do not need to comply with Biden's pay equity and transparency rules.

For instance, contractors can now ask about prior salary data and things like that when they're formulating their own compensation levels. The one major caveat is state laws because states made a lot of pay transparency laws. As we've always noted, government contractors and their workforces are spread out so much that you better be very well aware of each state that you operate in.

And Colorado, New York, just all these different places, California, of course, that's just kind of redundant.

Joe Young

But it was growing so much. I remember from those conversations, all we did was talk about states.

Declan Leonard

The growing list.

Joe Young

As it grows, it kind of nullifies some of the impact of this because they still have to deal with the state issue.

Declan Leonard

That's right. But if we have the return to onsite work, that might also reduce the number of states that these contractors are in.

Joe Young

More contractors in Northern Virginia and not in Colorado and California.

Yeah, yeah, exactly. Another rule that contractors don't have to, at least on the federal level, comply with.

Joe Young

Another topic I know we touched on during our shows last year, and we can't turn on the TV now with talk about AI. There's even been some executive orders with regards to AI and the impact.

Seth Berenzweig

Right. So, in the prior administration, AI was really kind of treated as the potentially dangerous boogeyman and the rules under the Biden administration dictated that AI, in use by the federal government and its contractors, has to be safe, secure, and trustworthy.

It was kind of like when we were growing up, the version of our parents telling us, you know, you can't go swimming for 30 minutes after you eat because somehow there's something dangerous in there, but you don't exactly know what's wrong.

Now, it's completely been flipped. And what this administration, the new administration has said is, “Look, we are going to do away with these worrisome limitations. We're going to burst open the doors. We're going to have a new czar that's going to be looking at, among other things, use of AI and maximization of AI. There was actually a big announcement for some kind of I believe it was a Stargate task force that was opened yesterday and announced with SoftBank and Oracle and Larry Ellison in the room.

Joe Young

Half a trillion dollars, was it?

Seth Berenzweig

Half a trillion dollars. And the reason why I think this is very significant is for a couple of reasons. Of course, it's a major change. It's going to continue to promote the use of AI and the promotion of AI and blockchain. But going back to a theme that Declan talked about a few minutes ago, I think it's going to open up the floodgates of opportunity for government contractors.

Be ready from a marketing position and perspective because this means that high-tech contractors are going to have new opportunities to go in. It is now a requirement and a dictate of the federal government to leverage aggressively into AI. And these are new opportunities. These are going to be new procurements. It's going to be hot on the street. And this is something that's going to really be a big play at the concert, if you will.

Joe Young

Yeah. Just that's just going to continue and just continue to evolve and grow.

Okay. Let's talk about with regard to changing contracts and incumbents and non-displacement requirements.

Declan Leonard

For those of you out there that have Service Contract Act, SCA contracts, you know that under the Biden administration there was what was called the non-displacement requirement, which basically said, “Look, when you're taking over in a contract, you really have to you have to give the incumbents a right of first refusal of employment.” From a practical standpoint, a lot of times that's what contractors do anyways.

But this was an absolute mandate by the Biden administration. That has been rescinded. SCA contracts, the non-displacement requirement is no longer in effect, so that is not a requirement for SCA contracts.

Seth Berenzweig

The whole massive practice of broad rebadging is something that will only be a continued practice, only to the extent that the new contractor wants that to happen. They're not going to be shoved into that like they used to. That's a pretty big change from a personnel standpoint.

Joe Young

Now, the hot topic we've alluded to a little bit before. Let's talk a little DOGE: modernizing federal IT and software.

Seth Berenzweig

DOGE has been in the news because it's very interesting. I'll make this short, but DOGE became controversial as a governmental body even before it ever officially came into existence. At 12:01 on Inauguration Day, there were three lawsuits filed in the DC Federal Court claiming that DOGE as it operated, violated the Federal Advisory Committee Act, which is something that Declan and I read every day, actually.

Quite fascinating.

Declan Leonard

I've got it in my back pocket here.

Seth Berenzweig

Exactly. With your Constitution. [The lawsuits were] saying that it didn't operate in a manner and turning square corners because it didn't have a charter that was filed with the Library of Congress and agencies. And didn't stand on all fours with regard to formal public hearings. There's only one problem with that: It didn't yet exist. The inauguration wasn't even done until 12:08.

And the lawsuit is filed against, among others, agency heads at OPM and others that haven't even been confirmed by the Senate. I don't think that this is going to change or get rid of DOGE. I think all it's going to do, ironically, it's just going to really strengthen DOGE because it's just going to assure that they're going to be predetermined to just turn these square corners.

So, DOGE with us. Most notably, its main task is to highlight, shed light upon, and recommend massive cuts in the federal budget and in the federal workforce. It also is charged with modernizing federal IT and software.

Declan Leonard

That's critical.

Seth Berenzweig

It's inheriting a prior advisory committee, which is very important but isn't talked about quite as much as the other stuff. But I agree with Declan. I think that's going to be something that, again, you can see a theme happening here. If you're a government contractor and you're in the IT space, AI, there's a lot of new red meat on the table.

Declan Leonard

Look at this not only for some of the changes that are pretty seismic, but also the opportunities that are out there.

Seth Berenzweig

Yeah, absolutely.

[Declan’s cellphone rings]

There's going to be a big change. That was Elon. Tell him we’ll call him back.

Declan Leonard

That’s my executive order alarm. They just did a new executive order.

Joe Young

Did the IRS just go away? Is that your alarm? The IRS just went away.

Declan Leonard

Did I leave the oven?

Joe Young

Breaking news notice. Okay. Last up we had here – and we're kind of getting to the end of our half hour here. But I think this is important because I know it's something for our day-to-day practitioners and things they may be seeing more of is, with a slew of immigration reforms, the impact on I-9s, I-9 audits. What are we expecting as a result of those?

Declan Leonard

I mean, immigration was, you could argue, the whole lynchpin of the Trump win. That's a huge part of it. And so, that's going to have a big impact on contractors. I-9s, which is when you're when you're onboarding an employee, you have to take the documentation that shows that the employee is authorized to work in the United States.

You always had to keep these files. Of course, you always had to do that. But I believe there will be an increase in audits. I believe there's going to be a decrease probably in IRS audits because we saw that hiring freeze. But remember, the hiring freeze doesn't apply to immigration. I believe we're going to see a lot more audits of I-9 compliance, immigration compliance and it remains to be seen how this is going to impact the immigration visa process like H-1B visas.

There is a bit of tension within the Trump administration as to whether or not we should continue to be relying on overseas talent under the H-1B visa process. I think it's not going away. I mean, I think it's been very successful, but these are things that we have to keep an eye on.

Seth Berenzweig

And I think that this kind of brings us full circle into the program, because think of all of these changes that come full circle for federal sector HR Directors. You're going to have being brought under the lens for I-9 compliance. You're going to be instructed that you can no longer have DEI programs inside the company. And then if you have that as part of your training and compliance practice, you can't deploy that outside of the company to the federal workforce.

You are going to be dealing with staff freezes at the customer level. There's just going to be so much going on and this is really a blizzard. The thing that's so funny about it is we've talked about so many things and there's so many elements. The guy has been in office for, what, 48 hours? I mean, there's all these things have happened and he just, you know, he's just hit these things out like hotcakes. It's a lot going on.

Declan Leonard

We have about 2 minutes. We've had some additional questions dealing with the issue of affirmative action plans and stuff. Feel free to reach out to us directly on those ones. I want to end with one important point, and it has to do with unions because it's not a topic that we've normally talked about. And it is a little bit ironic that we're talking about unions in the context of a Republican administration.

The Department of Labor nominee is a very pro-union person. This person has supported doing away with the right to work laws across the entire country. And the reason why I raise them is because I'm going back to the very first topic that we talked about: remote work being taken away and potentially from contractors if it is extended that way. I believe unions are going to be the impetus for trying to challenge those. Individuals can't challenge remote work deletions and taking that away.

Unions, on the other hand, because the unions at the federal level… Remember the remote work prohibition is only for federal employees and the federal employee unions have already challenged that. And I believe that that's going to extend to federal contractors. Seth and I have had experience where government contractors have already been subjected to union organizing and union elections.

Sometimes I scratch my head in the past because I'm like, why? I mean, a lot of their terms are dictated by the contract, but if they start changing stuff like remote work, I believe unions… If you have a CBA, I think that's going to be one of the exceptions to this requirement to do away with remote work.

Seth Berenzweig

And in support of your thesis among the plaintiffs that filed these three immediate lawsuits against DOGE on Monday morning included federal workers unions. They are part of the plaintiffs that came in immediately to attack DOGE. That's definitely going to be a major current that's going to be coming forward.

Declan Leonard

Again, we're trying to get this news out here as it comes in. We're obviously scratching the surface for some of this stuff. Executive orders are sometimes written fairly concisely, and then they sort of play out over time. So, you know, take that for what it's worth. I mean, this stuff is going to continue to develop.

Joe Young

And on that note, we're coming to the end of our time here. You know, we look forward to being back for episode two in February. Typically at this time, I announce what that topic's going to be. But because of this quickly moving landscape, we've decided to kind of keep our powder dry on what we're going to discuss on February the 20th.

So keep an eye out for our our promotions on LinkedIn. You know, as we get closer, we'll try and narrow down some things, but it just may be a slew of some new multiple topics and executive orders.

Declan Leonard

Elon Musk could be president of Mars by the time we get to February, who knows?

Seth Berenzweig

And they will have no DEI rules on Mars.

Joe Young

So, on behalf of Declan, on behalf of Seth, thank you, everybody, for joining us. Thank you for the questions that came in. We wish everybody obviously the best. It's a very challenging time. A lot of questions, more answers to come. We appreciate you making us a part of your day and we look forward to seeing you next month.