Obama Administration Seeks to Change Way Government Contracts Are Awarded

The Obama Administration appears to be planning to hike wages and benefits for workers nationwide by changing how the government awards contracts. The plan reportedly would favor private companies that offer employees better pay, health coverage, pensions and other benefits for contract opportunities. The government also will emphasize disqualifying from government contracting companies with labor, environmental and other violations.

This move follows the February 26 release of the first Annual Report of the White House Task Force on the Middle Class, headed by Vice President Joe Biden.  Discussing “Responsible Federal Contracting,” the report states:

The Federal Government spends over half a trillion dollars a year on contracts for goods and services, generating employment for tens of millions of workers.  However, there are inadequate controls on the records of firms who get these contracts and on the quality of the jobs these contracts create.  Ignoring these factors has negative implications, not only for the workers on these contracts, but for the quality and efficiency of services rendered.  For these reasons, the Task Force has participated in a review process to identify ways to reform the procurement process to increase the quality of both the services procured and the jobs created under Federal contracts.

The Task Force recognizes that contracts should not be awarded to irresponsible sources with unsatisfac­tory records of business ethics, including noncompliance with labor and employment, tax, fraud, and consumer protection laws.  We also recognize that substandard wages and benefits can have negative impacts on employees’ productivity and stability, which in turn can reduce the quality of performance on Federal contracts.

We expect to produce shortly some new recommendations to bring these ideas into practice.

Critics accuse the Administration of using federal contracting to further its agenda of   rewarding contractors employing union workers (a.k.a., “big labor”) with federal contracts — even characterizing this latest development as a gift to organized labor.  They warn this would drive up costs for a government facing a $1.3 trillion budget deficit.  In addition, they predict it would be difficult for government officials to evaluate and determine which companies offer the best compensation package.
 
While we await the details regarding how the Administration hopes to implement these changes, it has become clear that federal government contracting officers will place greater emphasis on a bidder’s treatment of employees and compliance history when determining who may receive lucrative contracting opportunities.  We will provide updates as events unfold.