Government Contracting Gets Harder

This is a challenging time for small businesses selling to the federal government.

Good Morning!

Here are today’s highlights:

• Gene Marks says that to scale his business he needs to do less and think more.

• Steel and aluminum tariffs are expected to start today, with more on the way.

• Monster reports that pretty much everyone is looking for a new job.

• Uber and Lyft drivers say a new minimum wage is hurting them.

GOVERNMENT CONTRACTING

The rules have changed: “With a barrage of executive orders, the Trump administration has given corporate America an ultimatum: Companies must now eradicate any semblance of Diversity, Equity and Inclusion from their hiring and business practices, or otherwise face an uncertain and potentially ruinous future. Small businesses that regularly contract with government agencies are especially anxious about losing out on vital revenue streams. White House orders have cast a wide and notably vague net on various targets, such as ‘gender ideology extremism’ and ‘radical and wasteful DEI programs.’ One particular order, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, forbids ‘contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.’”

• “​​For Felix Gilbert, founder and president of the Baltimore-based digital agency XCell, a longtime partner of the U.S. Air Force, the DEI crackdown has given way to ‘pure chaos’ at the firm, he says. Sweeping directives from the White House have come rapidly. In particular, the offer of a buyout for all federal workers—which was later temporarily blocked by a federal judge—has left contractors like XCell uncertain if they’ll be able to maintain relationships that have helped them build the business. A reported 65,000 federal workers have agreed to accept the voluntary resignation package already.”

• “Gilbert is among those knuckling down in favor of a long-standing commitment to DEI. Other major government contractors have done the opposite: Booz Allen Hamilton, a major publicly-traded defense contractor, is ridding the company of its DEI department and any commitments to diversity on its website, Bloomberg reported Friday. Dominoes are also collapsing in the private sector: Accenture, the global professional services firm, also announced it was scrapping DEI hiring targets on Friday. Both firms cited President Trump’s executive orders as motivation for the policy changes.”

• “For some leaders, funding is already contingent on complying with the government’s orders. ‘To get funded we needed to be in compliance with executive orders and remove mention of DEI in our position descriptions, and we were told that our websites would be monitored,” says the CEO of an educational nonprofit, who asked to remain anonymous for fear of repercussions. ‘We also had to remove mention of DEI in our grant requests.’”

• “The Trump administration is arguing that DEI is a form of systemic discrimination. But some of the White House’s proposed policies—like using the Department of Justice to press criminal investigations against private companies that fail to erase DEI practices—stand on dubious legal footing. Nonetheless, the implications are chilling for organizations that depend on government funding. ‘I have several employees of color who are struggling with feelings of erasure, and that phrase has been used multiple times by my Black staff members,’ the nonprofit CEO says.” READ MORE