Contractors May Avoid a Shutdown, but Get More Scrutiny From New Congress

Federal contractors could face increased congressional scrutiny in 2027 as Democrats prepare to take control of Congress, potentially bringing new investigations into government contracts and procurement practices, according to Professional Services Council (PSC) President Stephanie Kostro.

Kostro pointed to the congressional investigations that followed the 2006 midterm elections, when Democrats regained control of both chambers and launched extensive oversight of the George W. Bush administration. She said contractors should prepare for similar scrutiny when the new Congress convenes in January.

“If you go back to 2007, in a very short time frame, you had more than 100 oversight hearings about contracts,” Kostro told GovCIO Media & Research in an interview. “I suspect we will see oversight hearings or investigations, document requests, requests for information, et cetera, early here in in 2027.”

Kostro said that while PSC doesn’t offer legal advice to its member companies, it has advised them to start assessing whether any contracts might have exposure to a potential congressional investigation and gather their documentation to be ready for Congress.

“When we look at areas of exposure, we’re looking at things like which companies might have donated to White House projects like the Ballroom, like America 250. We are asking them to look at their contracts and did they receive a sole source or a limited competition, no-bid contract from agencies in the last year and a half, those might come into question,” she said.

Other areas where Congress may take a longer look could be in the companies from which the federal government took an equity stake or those who did work on administration priorities, such as immigration enforcement.

Kostro said that scrutiny may not just fall on prime contractors, but also mid-size and small businesses and suppliers tied to administration work.

Those warnings already began rumbling on Sept. 28, when Rep. James Himes, D-Conn., ranking member on the House Permanent Select Committee on Intelligence, sent a letter to trade group National Defense Industrial Association, asking them to remind member companies to be responsive to congressional inquiries, citing the White House Ballroom as a project the committee might be interested in.

“Going forward, the Committee may seek information in the form of documents, communications, transcribed testimony, and otherwise to understand how corporate contributions to this project were solicited and made, who was involved in those discussions, and whether contributions were related in any way to the goal of obtaining or maintaining government contracts, access to the President or Administration officials, or other benefits,” the letter said.

No Likely Appetite for a Shutdown

The last time a Trump administration faced a Democratic surge in Congress, the federal government fell into a 35-day partial government shutdown before new legislators took office.

Kostro said because of that shutdown, as well as last year’s 43-day shutdown, memories are fresh for the pain of a lengthy budget impasse, making it less likely there will be one this time.

“Talking with folks on the Hill and elsewhere in the government, there’s not an appetite to have that gamesmanship again,” she said. “Now, I will never say the likelihood of shutdown is zero because you never know what might pop up. You could look at scenarios where there is aggression and intransigence and combativeness, etc., both within the chambers as well as at the White House. I don’t think it is likely that the president would veto a [continuing resolution] that crossed his desk. But again, I can’t say that the likelihood is zero.”

Perhaps equally unlikely is the prospect of a full budget, so Kostro said that PSC is advising members to advocate for a continuing resolution before the current one expires on Dec. 11 and to continue calling to funding measures over the next several months.

The other unknown is the fate of acquisition reform following the White House’s slate of executive orders calling for changes to the Federal Acquisition Regulation and other changes.

“They don’t have a statutory underpinning, but they do have impacts on regulations, and Congress may well decide that they want to get involved in this as well from a legislative side,” Kostro said. “I think all of that makes for an interesting impact on industry.”