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.
When contacted with regards to the documents, some of which are dated August 2009, a spokesperson for Vice President Biden sent the following:
“We are not certain of the origins of this memo, but it appears to be a broad examination of the landscape surrounding these issues; it is out of date and not reflective of the current policy review ongoing in the administration. The president made it clear that he is committed to reforming government contracts to save taxpayers money while protecting workers and the environment. The administration is currently gathering data and examining the best ways to do this.”
Several observers have pointed out that the measures appear to be aimed at boosting organized labor, which has been dealt a series of setbacks in recent months. Union membership is at its lowest point in decades, making the $500 billion federal contracting market attractive grounds for expansion.
“Would it be advantageous for unions? That depends,” Eisenbrey said. “Yeah, I think it’s possible that union firms could benefit. I would hope that they would, that they’re winning contracts that provide paid sick leave and health benefits and so forth.”
The Service Employees International Union is one of the groups most actively lobbying on behalf on the proposals but has declined multiple requests for comment in recent weeks. Spencer said organized labor is pressing for the administration to take action on this and other labor issues without involving Congress.
“Unions have had a hard time advancing some of their issues through Congress,” Spencer said. “They’ve found some of their ideas they’d like to implement are not all that popular on the Hill. Right now they’re not that popular on the Hill. They’re trying to work every angle they can to get some of this stuff done.”
The documents also confirm that a central office would be responsible for collecting and evaluation the labor practices of all companies bidding on federal contractors. The office would then assign a score that contracting officers would have to take into account during the award process.
Every agency would also have a labor standards advocate that would “have the authority to vary this score to a reasonable extent, taking into account bidders’ credible commitments to implement good labor standards on the contract in question.” Critics contend the process would become a de facto screening for unionized companies.
“The implications are not just for federal contractors across entire work force, but also state and local governments,” Spencer said. “It does appear to be an effort to impose some fairly ambitious social policies across wide swaths of the economy without having to resort to legislation.”