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The head scratcher guidance from the White House last week purported to help agencies plan for people to return to federal offices. That included both federal employees and contractors. For how contractors are reacting, Federal Drive with Tom Temin turned to the executive vice president for policy at the Professional Services Council, Stephanie Kostro.

Interview transcript:

Tom Temin: It’s definitely good to have you back.

Stephanie Kostro: Thanks so much for having me back.

Tom Temin: You really have to read that guidance over and over again, to understand what it’s saying. And it’s basically saying anything goes, if you submit enough plans to us that’s talking to federal agencies, how to contractors interpret what they’re supposed to do.

Stephanie Kostro: We’re talking about a memo on integrating planning for a safe, increased return of federal employees and contractors. It’s a 20 page memo that came out of OMB, OPM and GSA and the alphabet soup that is the US government. And basically, it lays out requirements for agencies to submit plans for re entry both for federal workers and for contractors. But it really focuses on federal workers, this civil servants, vise contractors, the only place that raises contractors in any meaningful way is to say that, that you can’t require them necessarily to have vaccinations to be on site. And it does lift the 25% occupancy limit on most federal buildings. But that said, it really focuses on the civil servants and less on contractors. And that’s an area that we as the professional services council would like to see additional detail.

Tom Temin: Yeah, I guess the question becomes who is it that says contractor personnel can return because situations vary so much? In some cases, the contractor employees outnumber federal employees in some locations.

Stephanie Kostro: 100%. There are about 2.1 million civil servants out there, and you have about 4 million federal contractors. Now, not all of them work on site at federal buildings and facilities. But that said, the fact that this memo raises them in terms of vaccination and occupancy, but not in terms of flexible telework, agility, flexibility, and agility come up several times in this 20 page memo, but not as it relates to contractors. And as we’ve seen in the past, in many cases, the US government has policies for civil servants writ large, but then goes contract by contract. So it’s really difficult for businesses to plan for that. When it comes down to what is required of their workers. Do you recommend then that contractors talk with a contracting officer or with the highest executive that happens to be at that particular location or home? What we’re recommending would be that contractors talk to the contracting officer regarding how this will this memo will apply to their contract, this memo does go into timelines, and that is where the federal agencies need to submit their re entry plans. As soon as late this week, with a schedule that’s due in July 9, and a final plan with a schedule that’s due July 19. That said, it does give some flexibility to meet collective bargaining. So that obviously brings up labor unions, but it doesn’t talk about adjusting contracts. And so if contractors want to see how this memo will be applied to them, they should talk to their contracting officers.

Tom Temin: Alright. Well, that’s good advice, I guess at least if you know who to ask, maybe you get a chance and getting the answer. And hopefully you look at the bottom of your contract to see who it is that you need to talk to. Right. And that’s not all that’s going on there is the spring regulatory plan, released to the Biden Harris administration’s unified agenda for rulemaking. And this is a sharp departure from the rulemaking Procedures and Standards of the Trump administration, which again, had reversed what the Obama administration had done, and on and on, ad nauseum into the distant past. Maybe James Monroe had something to say about it. But what do contractor’s see ahead there and what should you do?

Stephanie Kostro: You’re right, it is a bit of a seesaw. The Biden-Harris administration really is taking their unified, regulatory agenda very seriously. For your listeners. It’s a it’s an agenda that comes out twice annually. This is the spring version. And it contains more than 2500 items that the Biden Harris administration wants to pursue. And it really aligns with the the administration’s stated priorities for Bill back better, its equity, its economic recovery, its climate, it’s a lot of health issues, and equity, equitable access to health. And so as our contractors are looking at this, they’re sort of wondering what does it mean in terms of contract requirements? Where are they going to be going in terms of opportunities, it really becomes clear, with such a closely balanced and misaligned Congress, a lot of things won’t get pushed through in legislation. And it really becomes clear that the administration is going to use regulatory tools to achieve much of their agenda. And for contractors, that means they need to monitor these things very carefully, comments on them within the comment period and use associations like the professional services council to be a voice for them as this process moves forward.

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Tom Temin: Yes, because the agencies themselves if things go according to how the by administration would like them to go will have a lot more people and a lot more clout and probably a lot more discretion in the range of rulemaking. They feel they can embark on.

Stephanie Kostro: Yeah, agencies have a greater voice in the rulemaking process, certainly than they do in legislation. And so when they’re using this particular tool through the rulemaking, whether it’s an interim rule or proposed rule or a final rule of they do have a greater voice, I will say that, for for small businesses out there, one of the set of regulations that would be integral to them is the Small Business Administration is is developing plans to advance regulations that can ease requirements to refinance debt and expand other loan programs. So for the small businesses out there, there’s definitely a need to delve deeper into this agenda and find out what might benefit them as they move forward.

Tom Temin: Yeah, it’s always good to get rid of debt when interest rates are on the on the rise and inflation is on the rise. We’re speaking with Stephanie Kostro, executive vice president for policy at the Professional Services Council. And I wanted to ask you also about the supply chain disruptions task force that is coming up, this seems to be focused a lot on manufacturing. And your members are, are generally not manufacturers, but they use manufactured goods, sometimes in the fulfillment of their services contract.

Stephanie Kostro: They do. And so the supply chain issue became the subject of an executive order early on in the Biden Harris administration. And in that executive order, they asked for 100 day reviews. So for date reviews that took 100 days, not 100 day reviews of edit, and it focused on areas of manufacturing semiconductors, rare earth elements, that kind of thing. That 100 day review period is over. And so this disruptors taskforce is one of the results of that it is to look at supply chain, issues going forward and how they can address vulnerabilities that impact service contractors. Because if you’re talking cyber or if you’re talking financial services, or something along those lines, it really is making sure that every link in your supply chain is as invulnerable as it can be. And so I believe watching this task force scores very closely, and in fact we have a supply chain issue coming up in terms of a topic at our annual Federal Acquisition Conference, which will be happening next week. And so hopefully, that will be an issue that we talk there.

Tom Temin: Yes, because some of the larger services firms are in an effective sense, if not in the way their businesses are legally chartered. But they are resellers for certain manufacturers, they use them over and over again, to host the systems that they design. And so they’re going to have your members, those services, companies are gonna have to be mindful of what’s in the chips and what’s in the boards and what’s in the black boxes that they have delivered for agencies.

Stephanie Kostro: That’s exactly right. And also, we have several members who do aircraft maintenance, and they’re gonna have to wonder where the parts are coming from. So it’s not just sort of what’s internal to their company systems, but also the supplies that they’re acquiring, and then using for maintenance and sustainment of aircraft, for example, or, or tanks or that kind of thing, it is going to be a critical issue for them. So it’s really not just about manufacturing, it’s about the services side, too. And we’d like the administration to keep their eye on that ball as well.

Tom Temin: And interestingly, there was a gambit on just Friday, big tech regulation, they’re talking about possibly breaking up Apple breaking up Facebook, separating supply chains and marketplaces, from owners and so forth. A lot of different proposals out there. Does any of that mean anything in our world.

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Stephanie Kostro: From the services contractors world, this means a lot. As you were alluding to, there was a big push on Capitol Hill this past Friday, June 11, where many bills were introduced several bills in order to break up what they termed to be monopolies of companies, large tech companies that are sort of household names. Now, a lot of that is about the consumer world, but it does impact the services the government can acquire through services contracts. And so you’ve got folks out there in big tech saying this kind of legislation could quote unquote, kneecap them vis-à-vis competitors on the international marketplace. But from a government perspective and services contracts, we really have to look carefully at the implications of this legislation. Because there are so many bills, I imagine we will see something pass either the House or the Senate. And so we will be parsing out the specific language to make sure that it doesn’t adversely impact not only our services, contractors, but the services they can provide to the government customer.

Tom Temin: Sure, there’s a cloud of cicadas going on out there, and you don’t know which one’s going to bang off your forehead in all of this.

Stephanie Kostro: There is that and but of course, the cicadas will go dormant for 17 years, and I don’t believe Congress will. So this is an issue that we’re going to be facing, not a six week period, but a six month period or so.

Tom Temin: Although a 17 year hiatus for Congress is something worth considering maybe.

Stephanie Kostro: I will definitely not comment. on that.

Tom Temin: Stephanie Kostro is executive vice president for policy at the Professional Services Council. We’ll hope you’ll come back within 17 years. Thanks so much for joining me.

Stephanie Kostro: Thanks for having me.

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