With Change Comes Opportunity: What Recent Intelligence Community Changes Mean for Contractors

As with other facets of government, the first 60 days of the Trump Administration have brought significant changes and reprioritization to the Intelligence Community (IC). With this change comes opportunity. This Holland & Knight alert recaps three of the most notable recent developments within the IC and highlights opportunities and related considerations for contractors.

Increased Focus on China and Emerging Technologies.

Ahead of his Senate confirmation, Director of the CIA John Ratcliffe vowed to increase the CIA's focus on China and emerging technologies to further its mission worldwide. This increased focus is a doubling-down on priorities identified by his predecessor, former CIA Director William Burns, who in 2021 established new CIA Mission Centers devoted to China and emerging technologies, respectively. Director Ratcliffe's enhanced focus on these areas comes during the rapid development and deployment of technologies such as generative artificial intelligence (AI), quantum computing and machine learning. It also comes at a time when the new administration is prioritizing securing a lasting peace in Eastern Europe, in part to refocus on the Indo-Pacific region.

The CIA's enhanced focus on China and emerging technologies will no doubt be mirrored by the other 17 constituent members of the IC. With this increased focus will come new and additional opportunities for contractors to provide the IC with cutting-edge technologies, China-related operational capabilities and other intelligence services. Many of these opportunities will present themselves through traditional solicitations for goods and services to which contractors will need to be prepared to quickly respond.

Additionally, contractor opportunities related to the renewed focus on China and emerging technologies under the new administration are also likely to materialize from unsolicited proposals submitted pursuant to the infrequently invoked procedures detailed in Federal Acquisition Regulation (FAR) Part 15.6, "Unsolicited Proposals," and its related provisions in IC members' various FAR supplements. The new administration has signaled a willingness and desire to rethink traditional approaches to government, especially with respect to acquisitions. Contractors with cutting-edge solutions that can further the administration's China and emerging technologies priorities should consider proactively offering their solutions to the IC. In so doing, contractors will need to ensure their submissions comply with the requirements for unsolicited proposals specified in the FAR and any operative agency-level supplements. Contractors should also leverage existing relationships, or forge new ones, to ensure their proposals are appropriately considered.

Office of Management and Budget Scrutiny of IC Budgets

At the same time it redoubles its efforts related to China and emerging technologies, the Trump Administration has also committed to scrutinizing the IC's finances. Specifically, the Office of Management and Budget has created a new position, the associate director for intelligence and international affairs – held by former CIA officer Amaryllis Fox Kennedy – to assess spending on classified initiatives, covert operations and the like. These are commonly referred to as "black budgets."

With this increased scrutiny, coupled with the new administration's stated goal of reducing federal spending, contractors should anticipate at least some decrease in opportunities related to black budget expenditures. This will result in increased competition among contractors supporting the IC for potentially fewer opportunities. As awards become more contentious, contractors will need to ensure they have counsel able to help shape requirements pre-award and pursue their cases post-award. As discussed below, this means engaging counsel with the requisite security clearances, ample resources and experience pursuing classified protests. Contractors who fail to plan ahead for stiffer competition for fewer opportunities risk both missing out on opportunities to provide their solutions to the IC and may be unable to seek redress in the event of an erroneous competition or award.

Renewed Focus on Latin America

The new administration has also stated that it will place a greater emphasis on intelligence collection in the Western Hemisphere. Although Latin America was a front line for intelligence during the Cold War struggle between the United States and the Soviet Union, it has been a comparative intelligence backwater during the decades since the fall of the Soviet Union and 9/11. Much of the renewed focus on Latin America stems from the new administration's designation of drug cartels as terrorist groups. Specifically, Director Ratcliffe emphasized enhanced intelligence collection and covert action in Latin America during his confirmation hearing.

This renewed focus on the Western Hemisphere presents opportunities for IC contractors in the region. Specifically, new opportunities will likely be available to contractors with well-developed Spanish and Portuguese language capabilities and personnel connections to the region. Other opportunities will likely materialize related to providing logistical support for IC element footprints in the region. Still further opportunities may arise for contractors with experiences specifically in jungle or other tropical operational environments. To maximize these opportunities, contractors should assess their capabilities in these areas and explore potential areas of expansion.

Contractors should also evaluate the implications of pursuing such opportunities. For example, contractors should do their due diligence in researching current status of forces agreements (SOFAs) or other operative directives in host nations. Such authorities frequently contain provisions addressing contractor personnel status, specifically. Contractor personnel may be subject to certain rules or exposure to local legal systems that may impact their operations and inform how to compete for IC requirements in Latin America.

Takeaways

To best position themselves, contractors must stay vigilant in monitoring opportunities and leverage both new and existing relationships with their IC customers. Contractors should assess their current relationships with the IC, especially in light of recent personnel shifts, to ensure they are optimally informed about current needs and forthcoming opportunities. They should also explore leveraging existing contacts to forge new relationships with key IC stakeholders.

Notably, hundreds of intelligence and national security officials are among those who have recently left government as a result of downsizing pursued by the Department of Government Efficiency (DOGE). This presents a distinct opportunity for contractors to obtain highly qualified personnel with recent experience working for contractors' target IC client base.

Contractors in the intelligence and national security spaces should also ensure they have qualified and appropriately cleared counsel available in the event litigation is necessary. At the proposal stage (i.e., pre-award), contractors may wish to challenge the terms of a solicitation. If an evaluation is unfavorable, a contractor may wish to challenge the award in a bid protest. This requires counsel with the appropriate security clearances, experience, and adequate resources to pursue contractors' cases.

Both the Court of Federal Claims and Government Accountability Office (GAO) have bid protest procedures specific to classified requirements (See Holland & Knight's previous alert, "GAO Issues New Guidance for Protests Involving Classified Material," Feb. 3, 2023.) Contractors should ensure they have counsel who are familiar with these procedures in order to pursue protests immediately. Additionally, counsel without a clearance will not be able to obtain the requisite clearance – even on a provisional basis – within the time frames required for a timely protest.

Conclusion

In sum, the recent changes and reprioritization within the IC presents myriad opportunities for contractors, but also prospective challenges. Contractors supporting the IC need to stay vigilant in pursuing these opportunities and be creative in offering their solutions to a new administration focused on innovation and efficiency. At the same time, IC contractors must assess the implications of these opportunities, be prepared to leverage existing relationships and forge new ones, and ready themselves to pursue their rights through counsel as needed.

Please contact the authors with any questions or concerns related to your contracting opportunities with the IC.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.