Donald Trump has mastered the art of the deal — in the private sector. But as president he may find that dealmaking in the federal government is somewhat less artistic.
Consider Carrier: its plant in Indiana became a flashpoint on the campaign trail after Carrier said it would move more than 2,000 jobs to low-cost Mexico. After his election, Trump began a highly public negotiation with the company designed to keep as many of those jobs in the United States as possible.
On Thursday, Trump is set to visit Indiana to lay out a deal he made with the company to keep as many as 1,000 jobs in the state. The specifics of the agreement have not yet been made public.
But one appealing point of leverage for a dealmaker like Trump would be Carrier's parent, United Technologies, a $56 billion company that generates about 10 percent of its revenue from federal government contracts — and particularly from Pentagon defense contracts.
But President Trump will not have as much leverage over those contracts as CEO Trump would have had in the private sector.
Federal contracting regulations are notoriously restrictive. And experts tell CNBC that any effort to quash UTC contracts could run afoul of the rules and expose the federal government to a costly lawsuit from the company.
"You cannot award or fail to award a contract to United Technologies on the basis of any factor that's not mentioned specifically in writing in the original solicitation or the contract itself," said Steven Kelman, a professor at Harvard's Kennedy School of Government and a former administrator of the Office of Federal Procurement Policy in the Office of Management and Budget under Bill Clinton. "Those are the only considerations you are allowed to use."
Kelman said Trump could have considerable leeway in rhetorical bluster, but any effort to punish the company could prove problematic. "I do not think it is legal to use the contracts in this way," he said. "He can say anything he wants, but it would be illegal to do it. And UTC must know that."
All of the rules are spelled out in detail in Part 15 of the Federal Acquisition Regulation, the bible of government contracting doctrine.
Still, there is soft power for Trump in that UTC has an incentive to preserve a good tone in its relationship with the new administration.
And Kelman said Trump has the ability to make sweeping changes to federal procurement more broadly — if preserving jobs in the United States is mentioned as a factor in all federal contracts signed under Trump going forward, then the administration would be free to use outsourcing as a condition for federal contracting.
The downside of that, of course, is that the taxpayers would ultimately pay more for products built with more expensive labor. That effect can already be seen in the premium that the government pays for personal computers, which under so-called Buy America rules, must be made in the United States.
Kelman, in the end, thinks it would be a dangerous path for the government to travel. "It is very irregular for the president of the United States to be involved in a contract decision — those decisions are usually handled by a career civil servant," he said. "This is not good for the federal contracting system because the system is based on impartiality and not having decisions made on the grounds of politics."
The Trump transition team did not immediately respond to a CNBC request for comment.