Federal employees aren’t alone in wondering about President-elect Donald Trump’s so-called Department of Government Efficiency. So are federal contractors. They wonder what the DOGE will think the government should be doing. Stephanie Kostro, executive vice president for policy at the Professional Services Council, joined the Federal Drive with Tom Temin to discuss.

Interview transcript:

Tom Temin: And notwithstanding that other efficiency drives have come to the government over the years, what is the council thinking about this?

Stephanie Kostro: Thanks, Tom, for having me on this really important topic. You’re exactly right. This is nothing new in terms of having a commission stood up to really take a look at government efficiency. People often talk about this great commission, which was back in 1982, technically called the Private Sector Survey on Cost Control. But even before that, we had Teddy Roosevelt had a similar commission called the Keep Commission way back when. And Vice President Al Gore had his National Partnership for Reinventing Government. What I think is different about this group is that how they define efficiency is not necessarily cost effectiveness, right. It’s about thinking through with rigor what the government missions should be and starting from letting function drive form rather than the other way around. So when they’re thinking through efficiency, from what I’ve read in the media and then from what I’ve gleaned from conversations, is that they’re really taking a hard look at what it is that government should be doing. And then after that, what the government should be paying to do that. And so that’s a mix of civilian workforce. It’s contractor workforce. It’s the kinds of things that come out of that. But hopefully it is going to be mission-driven and the for-profit private sector that we represent at the Professional Services Council has a lot of thoughts on that.

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Tom Temin: Yes, you’re right. I think that what they’re looking at is when they talk, always comes down to the Education Department, seems to be the hockey puck in these types of discussions. And they want to close it down entirely, which is they don’t think the federal government has that mission in education. And so for contractors, then it’s not simply being more efficient by like an A-76 Competition. Remember, those do in the private sector more efficiently, non-inherently governmental type of functions. They’re looking about taking away things. So what does the council think about that? I mean, it gets into philosophy more than practicality.

Stephanie Kostro: It does on one level, Tom, you’re exactly right. But some of the steps we’ve heard that the DOGE considering are very practical from a contractor perspective, right? It’s about rescinding regulations. It’s about reducing administrative burden. It’s about cost savings. And those topics all resonate very, very deeply with the contractor community. When you think about efficiency, we often talk about can the government do business like a business? And I think that’s something that our community has a lot to say about. And so, for example, when it comes to rescinding regulations, we can look back on earlier this year when the Supreme Court issued a ruling in Loper Bright versus Raimondo, where we talked about what is the role of the executive branch interpreting statute and therefore creating some of these regulations and rules? We’re really going to see hopefully the DOGE and its staff want to engage with the private sector with the contractor community to talk about. All right, so what are some of these regulations that could be rescinded? What are some administrative burdens that is a compliance drill but doesn’t actually result in improved mission achievement?

Tom Temin: Right. And I think the flip side they might not be thinking about is, well, if you give this executive administration that kind of expanded power over the administrative state, then you give it to the next person who may be the other party. And then we get even wilder swings than we’ve been getting in the past 20 years with changes in administration.

Stephanie Kostro: I think that’s right. One of the issues that you have to wrestle with is legacy creation. And if you change the system now and I know I’ve seen articles where folks from DOGE, whether it’s Mr. Musk or Mr. Ramaswamy talking about with the Supreme Court currently made up the way it is, could a lot of legal decisions be decided in favor of incoming President Trump? By the same token, his term will last four years. Something will come after President Trump. And what does his legacy set up for that individual? And I think that’s a great question.

Tom Temin: We’re speaking with Stephanie Kostro, executive vice president for policy at the Professional Services Council. And on a more practical note, we are coming close to the deadline of the continuing resolution because nothing is going to happen during the current administration.

Stephanie Kostro: Yeah, it always seems like Groundhog Day when we talk about continuing resolutions, right. And when you look at the last decade or so, almost invariably we start out the fiscal year with a continuing resolution. And oftentimes that will expire in the November or December time frame. This one’s no different. It’s expiring on December 20th. This is during the lame duck session where I wouldn’t be surprised to see talk about omnibuses or broken down into minibuses. What can we pass? What can we not pass? Would we see a laddered CR like we have in the more recent past? What I think is interesting, though, is a comment made by the current DoD comptroller Mike McCord at one of PSE’s conferences last week, and he said if the appropriators have a good sense of what the numbers should be by Thanksgiving, which is coming up this week, they could be done and through the floor by December 20th. But that’s a numbers draw. My question then is what’s the political will behind getting something passed for a full year appropriation by December 20th? And that’s where we’re up on the Hill talking to folks. Is there the political will to get something done by Dec. 20 that is lasting throughout the fiscal year? My sense is that we are facing another CR into the spring based on what I’m hearing currently, right.

Tom Temin: Right. So that’s basically what we had this past fiscal year, which didn’t really take effect in terms of appropriations until, I think the end of March, right? Halfway through.

Stephanie Kostro: That’s true. And if you look back and I’ll refer to it as President-elect Trump’s first administration, he took the oath of office in 2017. And then what we saw from him was a skinny budget for the next fiscal year. The skinny budget, top-line dollars, not a lot of information and then really releasing a full budget request in May. We’re looking probably at something similar. I don’t want to pre-decide anything or opine too early on any of this, but I think we are looking at a situation where we will have a CR through at least the early spring and then who knows when we’ll get the full year appropriation. And those are the kinds of questions government relations teams are blanketing the Hill to find out.

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Tom Temin: Right. And if the discussions of the four-year appropriation happened in the early Trump administration, then it kind of coincides with the establishment of, I keep saying DOGE. I don’t know whether it’s DOGGY, DOOG, DOGE or what ROUGE, but backwards, it’s E-GOD. But anyway, that would happen at that same time and then that could affect the budget talks, I would think. Will they try to have it affect them anyway?

Stephanie Kostro: I would think. I mean, for those of us who have been in the executive branch and working in control workshops know now is the time when OMB, the Office of Management and Budget, is giving pass backs to the departments about what their request will be for the following year, but they don’t yet know what their current fiscal year spending will be. It’s an interesting time to be in Washington in terms of following the dollars. But again, I don’t want to opine too early on where we might be. It just the smart money would be on having another continuing resolution. But if they can get appropriations passed for the full year this December, that would be fantastic. We always like in the contractor community to have budget certainty. And I know contracting officers love budget certainty, right. So if we could get full year appropriations passed in December, that would be the best of all possible worlds. History just doesn’t support that as a realistic expectation. But I’d happy to be wrong. Happy to be wrong.

Tom Temin: Be wrong. In the meantime, between the DOGE and the budget uncertainty and the transition, contractors are really uncertain right now.

Stephanie Kostro: We’ve seen a lot in the recent press about the DOGE folks take on contractors. I think there are some efficiencies that can be found. I think engagement with the contractor community will be essential for the DOGE to find out where those efficiencies are, but also those back to basic principles and you called it a philosophy, right. What should the government be doing? What are the missions that are essential for government to perform and which of those should be performed by the civilian and military workforce and what should be formed by the contractor workforce? And I think those conversations have to happen with the contractors in question.

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