NEW LIFE FOR COMMERCIAL ITEMS?

In the world of government contracting, commercial items are non-defense goods sold to the government that also are sold to the private sector. Think coffee makers and office supplies rather than weapons and radar systems.

The primary law governing the sale of commercial items to the government is the Federal Acquisition Streamlining Act of 1994, which was originally intended to make the procurement process easier both for contractors and the government. Over the years, though, many clauses have been added to FASA, making the procurement of commercial items more burdensome for both parties—and more expensive for the government.

“FASA is a natural candidate for regulatory rollbacks,” says Crowell & Moring’s Gail Zirkelbach. “Contractors and the government would both be very pleased to have less red tape to deal with, and the government could conceivably save billions as contractors cut prices to reflect their savings from reduced compliance requirements.”

INFRASTRUCTURE: GOOD NEWS AND BAD NEWS

In President Trump’s initial address to Congress in February, he called for $1 trillion in new infrastructure spending. The goal would be to repair and upgrade the nation’s aging highways, bridges, airports, dams, railways, mass transit systems, and more.

If the president’s intentions become reality, government contractors could see a bonanza of new projects and revenue streams. But the picture might not be entirely rosy, says Crowell & Moring’s David Ginsberg.

“If infrastructure projects materialize on the grand scale that’s expected,” Ginsberg says, “they’ll be administered and at least partially funded not just by the federal government but by states and local governments too. Having more parties to deal with would likely compel contractors to hire additional counsel with deep experience in local laws and policies.”

Two other issues raise potential red flags that could persuade contractors to enlarge their legal teams even further. The first of these is labor. Up to 1.1 million U.S. construction workers reportedly are undocumented immigrants—meaning not only that the supply of skilled workers could be materially reduced by the administration’s tough stance on immigration, but also that contractors would need to be extra vigilant about compliance with immigration laws.

The second issue relates to financing. The administration says that its plan should be funded through a combination of public and private capital, rather than direct appropriations. Contract provisions accordingly could become more complicated.