Contractor Regulation Growth Spurt—Don’t Bet On It

When the Obama administration took over, there was already a set of new, and a backlog of in-process, regulations washing over the industry.  They focused on, among several thrusts, increasing transparency and nurturing competition.  As  political momentum and a pipeline for regulations are now fixtures, we haven’t seen the end of regulatory increases.

And it is a one-way phenomenon for the most part.  When was the last time that you saw the withdrawal or the softening of regulation of contractors?

But we were wrong nearly a year ago when we prognosticated that regulation of contracting would rise as a secondary effect of the understandable loud calls to re-regulate with some stringency Wall Street and other financial services industries.  While still necessary–in terms of public opinion polls and the sincere or postured mutterings from Congress, and even some business leaders–it seems clear we will not see that. Somewhat reminiscent of health care reform, we are seeing a dilution in sentiment and political feasibility for making significant financial regulation a reality.

Not only officials of the last administration, such as Treasury secretary Hank Paulson, but also current officials have softened their stance on financial industry regulation.  As a result, financial regulation will turn out to be wimpier and partial. 

Accordingly, we do not see a marked increase of business regulation generally, including on federal contractors.  Again, we are talking about an acceleration in the pace and boost in stringency of regulation, not the pre-existing baseline trend to progressively more regulation of the industry.