Fact Check

Home Depot and the Federal Government

Is the Home Depot chain of stores declining to do business with the federal government?

Published June 28, 2002

 (Rob Wilson / Shutterstock.com)
Image courtesy of Rob Wilson / Shutterstock.com
The Home Depot chain of stores is declining to do business with the federal government.

In June 2002, the Atlanta-based Home Depot chain of hardware and home-improvement stores instructed their retail outlets, as a matter of corporate policy, to decline any purchase of materials made by or for the federal government. This policy applies regardless of the method of payment, whether it be cash, a government purchase order, or a government-issued credit card:

Example:   [Collected on the Internet, 2002]


When I went to the Depot I spoke with the store manager on duty at the time. I asked if it was true that they would not sell to the US government. He said that their corporate office sent a letter that day stating that they could not sell to any Federal Government agency or contractors that were doing business with the US Gov. I asked if I could see the letter that Home Depot corporate sent. He showed it to me but would not give me a copy. I asked him to call HD's corporate office for permission. He declined. I told him I would not leave without a copy of the letter. He called. After he talked he gave me the phone I spoke to their public affairs office. She confirmed that they would not sell to us, would not give a reason, but said it had nothing to do with Iraq. I asked if she realized what an impact this decision would have on their business and she stated that any loss of business they would suffer as a result of this policy was worth it. I then asked her to tell the manager to give me a copy of the letter and she did. He made a copy for me and asked for my name. As I left I told him he should be ashamed to work at that store and that they should quit selling the US flag or any item that had the flag on it.

The reasons for this policy were explicated by a Home Depot spokesman who said that "Engaging in business practices with the federal government is not a strategic focus of the Home Depot," and that "The Home Depot is not and does not plan to become a federal contractor or subcontractor." (The same spokesman also said that it was a restatement of an old policy, although memoranda outlining procedures regarding the acceptance of government purchases were only sent to Home Depot stores within the last few weeks.)

The issue, according to The Washington Post, was that Home Depot was taking steps to ensure they do not become classified as a government contractor, and thereby subject to reams of paperwork and cumbersome government regulations regarding equal-opportunity hiring practices:

The Atlanta-based retailer recently circulated a memo to employees instructing them not to accept government credit cards, purchase orders or cash from any customer buying on behalf of the federal government. The reason: Home Depot is not a federal contractor and doesn't want to become one."When you do business with the federal government, you have an obligation to adopt a lot of accounting and reporting obligations," said John Simley, a Home Depot spokesman. "You have to put in place a whole lot of clerical machinery to make that happen. We are not equipped to do that."

Simley, the Home Depot spokesman, said a firm that does $50,000 worth of business in a year with the federal government automatically becomes a federal contractor and must file reams of paperwork.

That's why a Home Depot subsidiary called Maintenance Warehouse, which Home Depot acquired in late 2000, pulled out of its contract with the federal government earlier this year.

On 17 June 2002, Home Depot posted a somewhat murky press release on their web site, one which did little to clarify the reasons behind their policy:

The Home Depot takes compliance very seriously," said Frank Fernandez, executive vice president and general counsel for the company. "Since we have never been a federally approved contractor, our intent was to re-state our existing policy for our stores and associates and remind them of their responsibilities in complying with related rules.""The Home Depot has an unwavering commitment to support its communities, federal and local government, and all disaster agencies in times of emergency and natural disasters through generous donations of supplies and materials," said Fernandez.

A few weeks later, however, Home Depot suddenly announced it had reversed its "no government" policy:

The Atlanta-based home improvement retailer said it intends to pursue federal government business, a change from its previous policy that precluded it from selling to any federal governmental agency or entity.Home Depot said the decision to change its position was based on feedback from its associates, customers and a further evaluation of the systems and administrative requirements necessary to become a federal contractor.


ElBoghdady, Dina.   “Home Depot Shies from Federal Deals.”     The Washington Post.   18 June 2002   (p. E6).

Schneider, Andrew.   “Home Depot Stops Doing Business with Federal Government.”     St. Louis Post-Dispatch.   16 June 2002.

Atlanta Business Chronicle.   “Home Depot Changes Tune on Government Business.”     28 June 2002.

David Mikkelson founded the site now known as snopes.com back in 1994.

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