White House contracting proposal could have big impact on construction industry

The White House has acknowledged that it is considering a proposal that would significantly alter the way it awards federal contracts, but said the discussions are in early stages and that no immediate policy changes are forthcoming.

The proposal, dubbed the “High Road Contracting Policy,” was first reported by The Daily Caller in early February. According to multiple sources familiar with the discussions, the proposal would give preference to government contractors that pay their hourly workers a “living wage” and provide additional benefits such as health insurance, employer-funded retirement plans and paid sick leave.

An administration official declined to comment on the specifics of the proposal, claiming the High Road policy is simply one of a number of options the White House is considering with regards to procurement reform.

“The policies are part of a wide range of options under consideration. No final consensus has been reached and there’s been no recommendation to the president, much less one he has approved,” the official said.

Supporters of the proposal, including organized labor and progressive think tanks such as the Center for American Progress, have lobbied the administration to leverage the government’s buying power to raise wages and labor standards across the U.S. economy. They argue many workers on federal contracts have incomes below the poverty level and cost the government more through programs such as food stamps and Medicaid.

According to one draft of the proposal obtained by The Daily Caller, companies seeking to do business with the federal government would be evaluated by a central office that would assign a score based on contractor’s compensation of its entire labor force, not just the workers on the federal contracts.

Every agency would also have a labor standards advocate who would have the discretion to change a company’s score based on their intent to comply with the new standards. Industry groups including the U.S. Chamber of Commerce have argued this process will become a de facto screening for unionized companies.

Ben Brubeck of the trade group Associated Builders and Contractors said his organization represents 25,000 contractors, most of whom are non-union. Overall Brubeck said almost 85 percent of the construction workforce is non-union and would be adversely impacted by the regulations, especially since the industry is currently facing almost 25 percent unemployment.

“Almost all the work is federal government work,” Brubeck said, estimating that the new wage standards could result in cost increases between 20 and 30 percent. “It’s really scary.”

Almost a quarter of American workers are employed by a company with federal government contracts, so the proposal could potentially have a much wider impact than the $500 billion federal contracting market. The impact could affect companies in range of industries from cleaning services to cafeteria workers. The Service Employees International Union, which has been one of the leading advocates for the High Road policy, has repeatedly refused to comment on the proposal or its lobbying efforts.