Authors are Paul Bailey, Brittany Gallo, Brian Stine, Alyssa Bacchus
Bottom Line Up Front (BLUF):
Executive Order 14192, effective from January 31, 2025, introduces a stringent 10-for-1 regulation elimination policy, meaning for every new regulation an agency proposes, they must repeal 10 existing rules. While this policy aims to alleviate "unnecessary regulatory burdens" and promote prudent financial management, it could delay new regulatory actions, reshape procurement policies, and introduce unpredictability. Contractors are advised to prepare for transitions and engage in strategic advocacy to navigate this new regulatory terrain.
Regulation Process Refresher:
Background: The 2-for-1 Rule of EO 13771
Previously, under President Trump, EO 13771 mandated a 2-for-1 rule where two regulations had to be eliminated for each new regulation introduced, significantly slowing regulatory progress. Agencies pushing new regulations had to demonstrate that the cost of the new regulation was no greater than zero. EO 14192 now escalates this approach with a 10-for-1 mandate.
Key Components of EO 14192:
- Regulatory Reduction Amplified - Agencies must now prioritize the elimination of outdated, redundant, or overly burdensome regulations before enacting new ones. The reductions could involve reassessing regulatory frameworks like environmental compliance, labor standards, and safety protocols.
- Regulatory Budgeting - A new, stringent budgeting process requires a net cost that is "significantly less than zero" for all new regulations proposed during FY 2025.
- Enhanced OMB Oversight - The Office of Management and Budget will take a more central role, providing guidance on the new regulatory restrictions and setting cost thresholds of allowable regulation costs by agency each fiscal year.
- Exemptions and Waivers - Regulations critical to national or homeland security, or those deemed emergencies, might be exempt from this rule. However, these exceptions are at the discretion of the OMB, suggesting some areas of government operation might remain largely unaffected.
- Unified Regulatory Agenda - Unless a regulation was included in the most recent version or update of the Unified Regulatory Agenda, new regulations may not be issued unless required by law or approved by the Director of OMB.
Implications for Government Contractors:
Looking Ahead:
- Compliance Costs - While deregulation could reduce compliance costs, the initial transition might require investments in understanding and adapting to the new regulatory framework.
- Regulatory Cost Submission to OMB - For agencies proposing new regulation, identify and provide an approximation of the total costs or savings associated with each new or repealed regulation.
- Further Guidance - The Director of OMB has been tasked with providing the heads of agencies with guidance on implementing this EO. Stay informed on forthcoming instructions and cost thresholds from OMB.
- Exceptions - Stay informed if your agency may be subject to exemptions with respect to military, national security, or homeland security-related regulation.
- Global Competitiveness - How the U.S. adjusts its regulatory environment might influence its global market position, affecting international contracts and partnerships.
Need Help?
Staying informed and adaptable will be key as we navigate this new regulatory landscape. Our team at Capital Edge Consulting is committed to guiding you through these changes. Please contact us for further insights or assistance with compliance under EO 14192.