Uncertainty in Federal Acquisition: GSA and Army Policies Cause Confusion

The recent directives from the General Services Administration (GSA) and the U.S. Army regarding federal acquisitions have created significant confusion in the government contracting community. In a January 24 memo, GSA Acting Administrator Stephen Ehikian announced a temporary suspension of all new GSA-funded obligations, including awards, modifications, and task orders. The rationale behind this decision is to allow new leadership to assess ongoing and planned acquisition activities, ensuring alignment with strategic goals. However, nine exceptions to this freeze exist, including contracts related to FEMA support and certain Federal Supply Schedule actions not tied to diversity, equity, inclusion, and accessibility (DEIA) initiatives.

Simultaneously, a January 23 memo from Lt. Gen. Laura Potter, director of the Army staff, introduced ambiguity regarding the Army’s contracting policies. Her directive instructed the Assistant Secretary for Acquisition, Logistics, and Technology (ASA/ALT) to establish a review process for solicitations, requests for proposals, and grant applications. Notably, she emphasized the immediate suspension of contracts related to DEIA, critical race theory, climate policies, and transgender and abortion policies. However, the lack of clarity in her directive has led to speculation over whether the Army is halting all contracts or only those related to the specified policy areas.

Industry stakeholders expressed concerns when the Army Contracting Command-Detroit Arsenal (ACC-DTA) issued a separate notice stating an immediate freeze on new solicitations, contract awards, and funding-related modifications. Unlike Potter’s memo, this communication made no reference to DEIA or other policy-driven factors, further deepening the uncertainty. However, the ACC-DTA assured contractors that the freeze would not affect existing contract performance.

Amidst the confusion, the Department of Defense (DoD) released a statement clarifying that no broad contracting pause has been implemented. A senior Defense official emphasized that DoD continues awarding new contracts as needed, though some may be reviewed if they fall within the scope of the recent guidance. When pressed on whether this position applied across the entire department, including the Army, DoD officials deferred clarification to the Army itself. The Army later responded, denying the existence of a blanket freeze.

This evolving situation underscores how federal procurement policies are often used to advance broader political priorities. One industry expert noted that successive administrations routinely leverage the contracting system to implement their policy agendas. The Biden administration pursued DEIA and climate-focused procurement strategies aggressively, and the current administration appears to be moving swiftly to reverse these priorities. Early signs suggest that acquisition policy changes will be a key component of the administration’s broader efforts to reshape federal operations. In the past two weeks alone, several significant policy shifts have been observed, including the establishment of the Department of Government Efficiency (DOGE), calls for acquisition reform, and rollbacks of environmental and DEIA policies in federal procurement. These changes raise questions about whether small business contracting set-aside policies may also be reevaluated.

Unlike the Army’s vaguely worded directive, GSA’s memo provides a clearer framework for its acquisition pause. Ehikian, who assumed his role as acting administrator on January 20, detailed the specific exceptions to GSA’s freeze, which include service contracts necessary to maintain federal buildings and emergency-response-related acquisitions. Meanwhile, the administration attempted to impose a broader freeze on federal grants and financial assistance programs, but this initiative faced immediate legal challenges. On January 30, U.S. District Judge Loren L. AliKhan issued an injunction blocking the administration’s planned suspension of grants and loans just minutes before it was set to take effect. This legal intervention highlights the potential economic and operational consequences of abrupt funding interruptions.

The fallout from these policy shifts illustrates the challenges that contractors face in navigating shifting acquisition priorities. Uncertainty surrounding the scope and duration of these freezes has led to concerns about delayed procurements, disrupted operations, and potential economic ripple effects. Contractors and government officials alike are left to decipher how these policies will be implemented in practice and whether additional clarifications will be issued in the coming weeks.

This blog post is based on information from Jason Miller’s article on Federal News Network. The contents of this post are not guaranteed to be accurate and do not constitute legal or business advice.