Impact of Executive Order Revocation on Federal Contractors

On March 14, 2025, President Donald J. Trump issued the executive order titled "Additional Rescissions of Harmful Executive Orders and Actions," which, among other actions, revoked Executive Order 14026 of April 27, 2021. EO 14026 aimed to "promote economy and efficiency in Federal procurement by increasing the hourly minimum wage paid by the parties that contract with the Federal Government to $15.00 for those workers working on or in connection with a Federal Government contract." This increase took effect on January 30, 2022, with provisions for annual adjustments based on inflation.

The revocation of EO 14026 means that federal contractors are no longer obligated to adhere to its stipulated wage rates. Consequently, many contractors may revert to the wage determinations specified under the Service Contract Act (SCA) and the Davis-Bacon Act (DBA), or if applicable, the rated established by Executive Order 13658, which remains in full effect as of the date of this writing. 

Considerations for Contractors

1. Contract Review: Contractors should thoroughly examine their current agreements to determine which wage requirements apply. While EO 14026 has been rescinded, EO 13658, issued during the Obama administration, remains in effect, setting a lower minimum wage currently at $13.30 per hour.
2. Pricing Strategies: With the removal of the higher wage mandate, contractors might need to adjust their pricing models. This could involve recalibrating bids for upcoming contracts or renegotiating existing ones to reflect the updated labor costs.
3. Employee Relations: Any changes to wage structures should be communicated transparently to employees to maintain morale and trust. Contractors should also consider the potential impact on employee retention and recruitment when adjusting wages.
4. Pending Price Adjustments: For contractors who had submitted price adjustment requests to account for the increased wages under EO 14026, it's essential to consult with contracting officers to understand the status of these requests and any necessary modifications in light of the recent changes.

The rescission of EO 14026 signifies a substantial policy shift affecting wage standards for federal contractors. Contractors must proactively assess their contractual obligations, adjust pricing strategies accordingly, and ensure clear communication with their workforce to navigate this transition effectively. This will place pressure on personnel at all levels, especially HR, payroll, and other internal departments.

Onsi Group is committed to helping you achieve Peace of Mind and operational efficiency. Contact us today to learn more about how our tailored solutions can meet your business needs and help you thrive in the ever-changing landscape of federal contracting.

- Author: Hailey Soupiset

- Editor: Joshua Hinckley