Trends in US Policy

“To improve is to change; to be perfect is to change often.” – Winston Churchill

Since 20 January 2025, the United States has been undergoing the kind of rapid legal changes that have become an expected event when control of the federal government shifts from one party to the other. The White House has issued a flurry of executive orders, many of which could potentially be reversed by a future president or overturned by a court. Meanwhile, Congressional committees are working to restructure various laws and regulations that affect the construction industry. Stated themes include promoting private business and cutting down on restrictive regulations. For example, Executive Order 14192 now calls on federal agencies to consider cutting ten regulations for every new one that they implement. There is also an active effort to cut the number of federal employees, the positive and negative effects of which cannot yet be fully evaluated.

Tariffs

One high-profile change is the threat of increased tariffs. President Biden’s administration also maintained tariffs, especially against perceived unfair trade practices by China. Under President Trump, however, new and increased tariffs have been added or publicised, in part to incentivise fair trade practices, re-balance trade inequities and to revive domestic manufacturing industries that have suffered from outsourcing in recent years. Tariffs can obviously have significant impacts on costs of critical construction materials, and as a result, an increasing number of contractors and suppliers are negotiating for price adjustment clauses in their contracts.

Several countries have retaliated with their own tariffs, which will likely impact a variety of US projects overseas. Some relief may be available under Federal Acquisition Regulation (FAR) 52.229-6.

The practical impact going forward is a need to negotiate contract provisions addressing who will bear the risk, and to what extent, for price increases due to tariffs. Proposed clauses allowing for adjustments due to tariffs or other unforeseen material or labour escalation due to other extreme events (eg, pandemics) are becoming much more common. If owners are unwilling to take on the risk for these types of impacts, then contractors will certainly – or at least should – build that into their pricing models.

Diversity equity and inclusion (DEI)

Another major area of change is embodied in the new administration’s Executive Order 14151 (“Ending Radical and Wasteful Government DEI Programs and Preferences”). At least in federal contracting, there is a general trend toward eliminating requirements for awarding contracts based in part on race, gender and ethnicity. At the state and local levels, however, many government agencies are likely to continue their policies for construction contractors to achieve targeted goals of hiring and subcontracting on the basis of “diversity equity inclusion” criteria.

Border security

Another major trend is to tighten America’s borders after four years during which record numbers of undocumented immigrants entered the country. This change in policy will lead to major new construction of wall sections along the US–Mexico border, and it may ultimately have impacts on available labour inside the US. Already in the early weeks of the new administration, illegal border crossings appear to have decreased dramatically. The Trump administration has already stated that certain environmental rules (including, for example, the National Environmental Policy Act) will be waived as necessary to allow wall construction activities to move forward as quickly as possible.

Minimum wage

On 27 April 2021, President Biden issued Executive Order 14026 which raised the minimum wage to USD15 per hour (with annual adjustments), which mostly affected non-union labour. On 5 November 2024, a divided panel of the Ninth Circuit Court of Appeals held that the president lacked authority to fix the minimum wage, so it now remains to be seen where the minimum wage will end up (See Nebraska v Su, 2024 WL 4675411). On 14 March 2025, President Trump issued Executive Order 14236, formally revoking Executive Order 14026.

Environmental and energy

Federal environmental regulations are coming under increasing fire. Early in 2025, wildfires caused extensive damage in Los Angeles and Ventura Counties, revealing conflicts between certain environmental restrictions and the need to maintain sufficient water reservoirs for firefighting and forest and land management practices. Regardless of the causes, the US construction market will doubtless face a major rebuilding effort in Southern California, and the insurance market will have to absorb and redistribute major costs of that reconstruction.

Under the new administration in Washington DC, there will likely be a reduced emphasis on financial support for renewable energy projects. Instead, the federal government is likely to favour new power generation methods from fossil fuels and nuclear plants. An executive order in early April seeks to lessen restraints on the commercial use of coal. Although new generation facilities continue to face time-consuming permitting processes, construction in the energy sector can be expected to experience growth in the months to come.

International policy

One unwelcome aspect of the last few years is the proliferation of wars and regional conflicts that disrupt global trade and raise tensions between nations. The most deadly of these conflicts has been the Russian invasion of Ukraine; but military actions have also beset Israel, Syria, Lebanon, Sudan, Ethiopia’s Tigray region, the Red Sea and elsewhere. Such actions disrupt supply chains and energy supplies, causing a variety of impacts on costs of construction throughout the world. Early in 2025, the US announced a policy of promoting peace, but the success or failure of those efforts will doubtless impact both costs of construction and the need for reconstruction in multiple countries. Meanwhile, private construction for companies in the military supply industries is also likely to increase.

Areas not likely subject to change

There are also a number of areas in which the new US administration is likely to follow similar policies to those of its predecessor.

Already under President Biden, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022 has fostered a significant increase in construction of new computer chip plants in the United States. This trend seems likely to continue.

Both major political parties in the US also continue to favour requiring use of domestic components and products on federally funded projects under the Buy American Act. This federal requirement was extended to state and local governments contracting with federal dollars under the Build America Buy America Act, whose regulations became effective on 25 October 2023.

Another area of continuity is in cybersecurity, where both political parties have contributed to enhanced control over both classified and unclassified information under federal contracts. The Biden administration issued a new Part 40 to the FAR on this subject, and the Department of Defense is implementing additional requirements to assure that contractors have adequate cybersecurity systems in place. The new FAR Part 40 also addresses the importance of supply chain security, which is defined as “the risk that any person may sabotage, maliciously introduce unwanted functionality, extract data, or otherwise manipulate the design, integrity, manufacturing, production, distribution, installation, operation, maintenance, disposition, or retirement of covered articles so as to surveil, deny, disrupt, or otherwise manipulate the function, use, or operation of the covered articles or information stored or transmitted on the covered articles”.

As changes in communication media and technology continue to accelerate, construction industry players will benefit from training to keep up with new legal requirements and risks affecting their ongoing business. This article has attempted to offer some of the highlights, but there is much more going on, and the regulatory landscape changes almost daily. Certainly, some of the recent moves have been designed to renegotiate what the new administration believes to be policies and practices detrimental to US political and economic interests. Other changes, however, will be based on stark differences in political ideologies.

Overhaul of Federal Acquisition Regulation

The President recently ordered a restructuring of the FAR as reflected on 15 April 2025, in Restoring Common Sense to Federal Procurement. The stated purpose of the order is to “alleviate unnecessary regulatory burdens” and reduce what the administration views as “an excessive and overcomplicated regulatory framework and... onerous bureaucracy”.

Consequently, one of the primary goals of the order is to have the FAR include only those provisions “required by statute or essential to sound procurement”, removing other FAR provisions to the extent they do not advance this objective. If this reform goes as planned, it could be a great benefit to contractors working with the federal government or on projects that adopt the FAR.

Trends in Contracting

Contract terms and risk allocation are always evolving. There are three recent trends, however, that are noteworthy: (i) efforts by project owners to limit the contractor’s ability to recover time in the event of delay, and particularly, concurrent delay; (ii) efforts by owners and their design professionals to shift certain design responsibilities, including co-ordination, through the use of delegated design; and (iii) the increasing use of complex, and often lengthy, dispute resolution processes.

Limitations on concurrent delay

This trend started largely with the Public Private Partnership (P3) construction market. With the increasingly onerous contract terms advanced by public entities and credit facilities for this type of work, it is not surprising that a once well-established principle is being upended. The principle is this: when critical path work is delayed by inexcusable delay (ie, contractor-caused delay) and excusable delay (eg, owner delay or other delay outside the control of the contractor, such as unusual adverse weather), the contractor is generally entitled to an extension to the contract’s performance period for the period of time that the delays on the critical path overlap (George Sollitt Const. Co., v United States, 64 Fed.Cl. 229, 238-239 (2005)). The theory behind this is simple: if both excusable and inexcusable delays impact critical activities during the same delay period being measured, then neither party is considered the sole cause of the delay and therefore, neither party should be able to recover delay-related damages.

Contracts are now being modified to reflect a significantly different approach to evaluating responsibility for concurrent delay. An example of this is seen in a recent proposed contract provision on a P3 project.

“If a concurrent delay to a Critical Path activity that is the Contractor’s responsibility has occurred and has contributed to the delay for which the Contractor is seeking relief, the Contractor’s right to claim [a time extension] will be reduced to the extent such concurrent delay contributed to the delay for which the Contractor is seeking relief.”

This type of provision has taken many forms and is often nuanced, but the effects are generally the same.

This creates potential problems for both the owner and the contractor. The problems for the contractor are clear, to wit, unreasonable risk absent a significant adjustment in the contract price; a risk by the way, that will likely be passed down to subcontractors. For the owner, this may lead to higher pricing for the works, or at a minimum, less trust and collaboration and more disputes among the project participants, schedule manipulation, and/or legal “work-arounds”.

Possible defences include: being against public policy (such as, anti-indemnity statutes), legal exceptions (such as no-damage-for-delay), LD’s as unenforceable penalty, no cause-and-effect analysis (“but-for” analysis), first breach theory.

Delegated design

Delegated design is simply the transferring of design or engineering to the general contractor certain elements or components of a project normally the responsibility of the architect or engineer of record. Although this is not a new concept, the use of delegated design is expanding beyond those scopes of work to which it has traditionally applied (eg, fire and life safety). This trend is being driven predominantly by the design professional community. The problem with this shift is not the fact that the design community is transferring discrete design responsibility to the contractor – which if well defined, can be priced and managed – but the lack of clarity in the design documents as to what precisely is being required of the contractor and where the demarcation line is between the contractor’s typically limited delegated design component and the design professional’s overall responsibility for design and design co-ordination.

Take, for example, the scenario where the design documents specify a unique and complex exterior window wall system where the contractor and its subcontractor are responsible for the design of that system. In order for the contractor to be able to take on that role, it will require detailed design criteria from the architect and engineer of record, including details on how that system will interface with overall structural, structural engineering calculations for the structure, including those elements to which the wall system ties in, and co-ordination of the various systems to which the wall system will tie in.

The design professionals of record should not be looking to the contractor to co-ordinate various elements of the building structure to assure that they are sufficient to meet the design criteria for the wall system, nor should the contractor be required to ascertain the overall structural loads or determine whether the wall system required will be compatible to the overall project design. Too often, when problems with the project design arise, the design professional community look at the delegate design provisions as a way to avoid their responsibility to co-ordinate the various design elements and furnish a constructable project.

Complex dispute resolution provisions

The contractual dispute resolution provisions are becoming more complex and convoluted, particularly on larger projects, such as P3 Infrastructure and EPC energy projects, with many provisions having strict deadlines or other conditions that expose contractors and their subcontractors to significant risk. The problem with this trend is it is drawing out the dispute resolution process, which at a minimum is expensive and typically frustrating. The increasing complexity in resolving disputes is also coming with hidden traps and time deadlines that can result in claims being either waived or significantly limited due to technical non-compliance.

An example is the use of multi-tiered forums for addressing disputes, each of which is a condition precedent to the next one. Consequently, dispute resolution may begin with an executive team negotiation, and then go to an initial decision maker, to mediation, to non-binding neutral evaluation or a dispute resolution board, and ultimately to arbitration, or worse, litigation. This can stretch the dispute resolution process to four or five years, or more. In the meantime, contractors and subcontractors are often contractually required to continue work and finance the cost overruns until the dispute resolution process plays out.