The Department of Defense (DOD) cut another batch of government contracts and grants on March 20th. The DOD is just one of many executive agencies advancing the policies of President Trump and the Department of Government Efficiency (DOGE) focusing on mass cuts to contracts and grants in the name of improving government efficiency. The latest DOD cuts come a day after the deadline for DOD heads to conduct a comprehensive review and validation of existing General Services Administration (GSA) contract vehicles for consulting services. The February 18th Memo, Review and Validation of Contracts for Consulting Services Memorandum, instructed a similar review of non-GSA-related contracts by April 19, 2025. In this blog, PilieroMazza addresses possible arguments contractors can use to keep their government contracts with DOD and other agencies. Register here for our webinar to get an overview of the DOD’s Mentor-Protégé Program.
What You Can Do Now
Across the government, agencies are terminating contracts they consider non-essential to achieving their statutory purpose. In particular, the DOD hopes to “reallocate [savings] to mission-critical priorities.” Following its most recent round of cuts, the DOD warns there is “more to follow in the weeks ahead.” To prepare, contractors should contact their respective agency to explain why their specific contract is mission critical, aligns with the agency’s statutory purpose, and increases overall governmental efficiency.
By way of example, each branch of the military has an overarching policy of readiness to protect the nation at any time and do so effectively. This statutory purpose encompasses a broad range of requirements; for instance, there are over 420 military installations in the U.S. alone. Each installation requires electricity, water, food, and services vital to the success of everyday operations. With each of these requirements comes contracts directly related to the statutory purpose of each branch. Contractors know well that while service members perform the majority of the DOD’s core operational functions, the tangential tasks in support of each branch are generally filled by government contractors.
Important Tips
It appears an increasing amount of agencies are utilizing AI text-based programs to, in some cases entirely, perform reviews of targeted contracts. As such, it is vital for contractors to not only speak with their agency, but to also bolster their websites, proposals, and other materials. Contractors should accentuate how their work supports the mission of the DOD and other agencies they work with, how all the work they perform is statutorily required, and how it maximizes the efficiency of federal workers and the federal government while maximizing the services provided to the American people and the U.S. government.
Moreover, contractors should pay specific attention to the growing list of Prohibited Language. Although the Administration emphasized it did not issue such a prohibition and that agencies are permitted to decide how to follow the President’s Executive Orders, a theme exists among the cancelled contracts. Accordingly, and particularly with the use of AI, contractors should scrub their websites, contracts, proposals, and any other materials for references to the prohibited language on the list. This will protect contractors and their contracts from appearing in AI reviews and being targeted by “crawlers” combing the internet and other resources for “low hanging fruit” to cut.
Takeaways
- Arguing Your Case: While the DOD and DOGE claim to have cut over $660 Million worth of DOD contracts and grants, contractors continue to serve vital support functions for the DOD’s statutory purpose. As such, it is crucial to ensure your contract aligns with the DOD’s or other agencies’ broad statutory purposes, particularly as the DOD tightens oversight and prioritizes spending in areas directly tied to national defense and military readiness.
- Prohibited Language: Removing Prohibited Language is critical to mitigate risks facing government contractors and their businesses. Agencies are demanding removal of terms from contracts and terminating contracts containing language on the Prohibited List. Even more, companies with such language on their website may be opening the door to labor related investigations or other inquiries from government officials. Small businesses in particular can ill afford the distraction such inquiries or justifications will bring—it is best to get out in front of this now.
- Focus on DEI: PilieroMazza is seeing a noticeable pattern where cuts within the DOD are directly affecting contracts linked to Diversity, Equity, and Inclusion (DEI) programs. The rationale behind these cuts is tied to the notion that some DEI programs are not directly related to military readiness or defense operations. Contractors should review their contracts, identify any links to a DEI program, and prepare accordingly.
- “More to Come:” It is likely there are still more cuts to come. However, that should not prevent contractors from being proactive and reaching out to their contracting officers. Contractors can also contact others within the agencies they work for to discuss how their work supports federal employees and how those employees rely upon the contractors’ work. These conversations are necessary as the justifications provided could determine whether the contracts are removed or remain in place.
PilieroMazza continues to monitor shifts in the procurement marketplace. If you have questions about the recent contract cuts, please contact Cy Alba, Krissy Crallé, or another member of PilieroMazza’s Government Contracts Group and visit our Government Contract Executive Orders resource center for additional coverage. Interested in working with the DOD, but you’re not sure where to start? Register here for our webinar on April 18th for an overview of the DOD’s Mentor-Protégé Program.
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If you’re seeking practical insights to gain a competitive edge by understanding the government’s compliance requirements, tune into PilieroMazza’s podcasts: GovCon Live!, Clocking in with PilieroMazza, and Ex Rel. Radio.
