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Documents confirm White House pushing pro-union contracting policies

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Gautham Nagesh
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      Gautham Nagesh

      Gautham Nagesh covers politics and the federal government for The Daily Caller. Prior to joining the DC he covered technology, oversight and procurement in the executive branch for Government Executive magazine and Nextgov.com. His writing has also been featured by The Atlantic, National Journal and the official web site of the Detroit Pistons. He attended Cornell University and hails from Jackson, Michigan.

      <em><a href="mailto:gn@dailycaller.com">E-mail Gautham</a> and <a href="http://twitter.com/gnagesh">follow him on Twitter</a></em>

Documents obtained by The Daily Caller confirm the White House is seriously considering adopting a series of proposals that would favor unionized companies bidding on federal contracts. The documents acknowledge the proposals are likely to increase the cost of government contracting and the size of the bureaucracy.

The proposals, collectively known as “High Road Contracting Policy,” were first reported earlier this month. The basic elements of the policy would give preference to companies bidding on federal contracts that pay their hourly workers a “living wage” and provide health insurance, employer-funded pension plans and paid sick days.

Following the report Republicans slammed the proposal, with Sen. Tom Coburn of Oklahoma referring to it as “backdoor card check.” Other critics, led by Sen. Susan Collins of Maine, worry the new rules would increase the cost of government contracting by as much as 20 percent, or more than $100 billion annually, while further slowing the procurement process.

Proponents of the proposals, including the Center for American Progress and the Economic Policy Institute, argue government contracting should be used as a vehicle for expanding the middle class and many of the workers that would be impacted by the changes end up costing the government more through public assistance programs such as Medicaid and food stamps. David Madland of CAP also pointed to studies on the state and local level that show no cost increase following the implementation of similar policies.

However, in a draft of the policy obtained by The Daily Caller the administration acknowledges the proposals would increase contracting costs as well as the size of the bureaucracy. By the administration’s calculations the proposals would impact as many as 26 million people:

“Some part of the resulting increase in labor costs is likely to be passed on to the government in the form of higher bid prices … In addition, modest staff increases may be necessary to administer the policy.”

The document says those increases would be offset by savings on public assistance, productivity gains and increased price competition. Glenn Spencer at the U.S. Chamber of Commerce disagreed.

“One worry would be that some companies decide it’s just not worth it to engage in government contracting,” Spencer said. “What’s a little bit disturbing about [the proposal] is that it doesn’t require you to pay the higher wages and additional benefits just to workers on a specific contract, but to every employee in country. The impact on employers is likely to be far greater than actual cost of contracting. On that, it’s pretty clear costs will go up.”

EPI vice president Ross Eisenbrey pointed out that may federal contractors earn hourly wages below the poverty threshold and argued that preference should be given to companies that pay higher wages and provide other benefits.

“By favoring [high road companies] we would lift the entire workforce, which as we know has been suffering wage declines and stagnation for decades,” Eisenbrey said.

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  • ignatiusreilly

    “The basic elements of the policy would give preference to companies bidding on federal contracts that pay their hourly workers a “living wage” and provide health insurance, employer-funded pension plans and paid sick days.”

    And this is somehow bad?

    If workers get a living wage, they don’t need food stamps.
    If workers have health insurance they don’t need Medicaid.
    If workers have pension plans, they live out their retirements with dignity.
    If workers have sick days, they don’t spread their germs to everyone else.

    The money they earn goes to buying products and services and circulates throughout the economy creating more jobs.

    What’s the problem?

    • thephranc

      The problem is that there are more non-union companies then there are union companies and they have effectively been told they can not openly bid in a fair market. Despite what the unions say non-union shops pay good money per hour. It’s a fair wage unlike the expensive overpaying for union work. Union work is more often then not going to come in over time and over budget. Non-unions have 401k plans with matching while not as lavish and expensive as the unions pensions it falls in to what the work is actually worth. Non-union workers have sick days and breaks and aren’t forced to work overtime without pay. This bill isn’t about any of those things. It is about giving political favour to unions for putting democrats and the president in office. This bill will raise costs and raise taxes and put people out of work. Union rolls in non-governmental jobs is on the decline.

      • ignatiusreilly

        “The problem is that there are more non-union companies then there are union companies and they have effectively been told they can not openly bid in a fair market.”

        It seems to me that this is just an extension of Davis-Bacon.

        Nobody’s demanding union workshops or precluding non-union employers.
        The only stipulation is that prevailing wage and benefit packages be included for all bidders. That means that the playing field is leveled as far as the labor end of a contract goes so you don’t have a guy coming in and underbidding good contractors by exploiting cheap labor, which in construction usually translates into undocumented workers.

        • thephranc

          No they are actively pushing out non-union shops in favour for union shops. Its been happening for over a year. This will only make it easier.

          The unions hire illegals all the time. As long they pay the dues so that argument in moot.

  • barryfromtexas

    Well, it is “change.” That’s the closest I can say in a positive fashion about this.

  • emem

    So the tradition of low cost provider through competive bid, administered by GSA is dead? Well, maybe the upside is that we can eliminate an agency.