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.
“You shouldn’t have to show your entire business and run it the way you want me to run it to get a federal contract,” said Brian Worth, spokesman for Independent Electrical Contractors, a trade group for electricians. “If I have to pay all my employees High Road standards, unless I exclusively do federal work, it creates a massive headache. It almost makes me want to set up a federal contracting company. Otherwise, if I do one federal job I have to comply with these policies for all my employees.”
Republican lawmakers have also expressed concern that the proposed regulations would favor unionized companies bidding on federal contracts and may adversely impact small businesses, particularly in the construction industry. Sen. Susan Collins of Maine sent a letter to Office of Management and Budget chief Peter Orszag in early February requesting a briefing on the proposed changes; her office has yet to receive a response.
“I am very concerned that the High Road proposal would negatively impact small businesses. If, for example, small, non-union businesses ‘score poorly,’ then they could be ineligible to compete effectively in the acquisition process. This change could ‘shut the door’ for small businesses that are seeking to enter the federal marketplace,” Collins said in an e-mailed statement.
Sen. Bob Bennett of Utah, who also signed the request for a briefing, echoed Collins’s concerns.
“This would make it very difficult for a small business to take part in the federal market,” Bennett said last week. “In order to enforce that kind of thing you’ve got to have a hefty bureaucracy, a whole bunch of new regulations and a lot of new rules.”
The administration official countered that many of the recent reports are erroneous since no policy decision has been made, making the impact impossible to predict. They said one of the priorities for any contracting reform would be to keep costs as low as possible. The official also said the administration will try to accomplish as much of its procurement reform through administrative action as possible, adding weight to lawmakers’ fears that the White House may attempt to bypass them while implementing the new policies.
“It’s all couched in very attractive motherhood and apple pie kind of language,” said Bennett. “You get down below that language, ask what’s really going to happen in the marketplace and it appears, unless they can give me other information, that we want to unionize places that are not unionized and we want to punish shops that are not union contract shops.”