[oregon-l] Plan to Seek Use of U.S. Contracts as a Wage Lever

[John A. Fleming]

Plan to Seek Use of U.S.  Contracts as a Wage Lever

By STEVEN GREENHOUSE
The Obama administration is planning to use the government's 
enormous buying power to prod private companies to improve wages 
and benefits for millions of workers, according to White House 
officials and several interest groups briefed on the plan.

By altering how it awards $500 billion in contracts each year, 
the government would disqualify more companies with labor, 
environmental or other violations and give an edge to companies 
that offer better levels of pay, health coverage, pensions and 
other benefits, the officials said.

Because nearly one in four workers is employed by companies that 
have contracts with the federal government, administration 
officials see the plan as a way to shape social policy and lift 
more families into the middle class.  It would affect contracts 
like those awarded to make Army uniforms, clean federal buildings 
and mow lawns at military bases.

Although the details are still being worked out, the outline of 
the plan is drawing fierce opposition from business groups and 
Republican lawmakers.  They see it as a gift to organized labor 
and say it would drive up costs for the government in the face of 
a $1.3 trillion budget deficit.

"I'm suspicious of what the end goals are," said Ben Brubeck, 
director of labor and federal procurement for Associated Builders 
and Contractors, which represents 25,000 construction-related 
companies.  "It's pretty clear the agenda is to give big labor an 
advantage in federal contracts."

Critics also said the policy would put small businesses, many of 
which do not provide rich benefits, at a disadvantage.  
Furthermore, government officials would find it difficult to 
evaluate bidders using the new criteria and to determine whether 
one company's compensation package should give it an edge, said 
Alan L.  Chvotkin, executive vice president of the Professional 
Services Council, a coalition of 340 government contractors.

>From his earliest days in office, President Obama has called for 
an overhaul of government procurement policy, citing the 
contracting scandals of the previous decade involving cost 
overruns and no-bid contracts.

"The president made it clear that he is committed to reforming 
government contracts to save taxpayers money while protecting 
workers and the environment," a White House spokesman, Bill 
Burton, said.  "The administration is currently gathering data 
and examining the best ways to do this."

Two of Mr.  Obama's allies - John Podesta, the Clinton 
administration chief of staff who headed the president's 
transition team, and Andy Stern, president of the Service 
Employees International Union - have repeatedly pressed the 
president to use procurement policy to push up wages and 
benefits.

In testimony last year to the Office of Management and Budget, 
Mr.  Podesta said that 400,000 workers employed under federal 
contracts - like cafeteria workers, security guards and 
landscaping workers at federal buildings - earn less than $22,000 
a year, the federal poverty line for a family of four, assuming 
just one paycheck in a household.

"We have a president who is talking about bringing more people 
into the middle class," Mr.  Stern said.  "The government should 
expect contractors to obey the law, and at the same time 
contractors should not be building a poverty economy, but should 
be trying to build a high-road economy."

The officials briefed on the plan said it was being developed by 
officials in the Office of Management and Budget, the White House 
Office of Legal Counsel, the Treasury, Justice and Labor 
Departments and the vice president's Middle Class Task Force.

Even as business groups press the administration for more 
details, they are denouncing the plan, tentatively named the High 
Road Procurement Policy.

The Daily Caller, a conservative Web site, reported Feb.  4 that 
the plan would "heavily favor government contractors that 
implement policies designed by organized labor."

Randel K.  Johnson, senior vice president for labor at the United 
States Chamber of Commerce, called the plan a "warmed-over 
version" of President Bill Clinton's regulations that sought to 
bar federal agencies from awarding contracts to companies with a 
record of breaking labor, environmental or consumer laws.  
President George W.  Bush vacated those regulations soon after 
taking office.

"We strongly opposed the Clinton blacklist regulations," Mr.  
Johnson said, "and this appears worse than that."

On Feb.  2, Senator Susan Collins of Maine and four other 
Republican senators sent a letter to Peter R.  Orszag, director 
of the White House budget office, saying, "We are concerned that 
the imposition of these requirements, during a time of 
significant economic turmoil in the private sector and tight 
federal budgets, could have serious, negative consequences, 
especially for our nation's small businesses."

One signer was Tom Coburn, Republican of Oklahoma, who was one of 
the two main sponsors - the other was Senator Barack Obama - of a 
bill that sought to increase the transparency and accountability 
of federal contracting by requiring the government to create a 
data base of all federal contracts.  President Bush signed it 
into law in 2007.

David Madland, director of the American Workers Project at the 
Center for American Progress, a liberal research group founded by 
Mr.  Podesta, argues the new policy could lower government costs, 
instead of raising them.

Many low-wage employees of federal contractors receive Medicaid 
and food stamps, he said.  Citing studies conducted by the 
Department of Housing and Urban Development and by academic 
researchers, he said that contractors that pay their employees 
well have greater productivity and reliability, while contractors 
with a record of labor law violations do shoddier construction 
work.

"This policy is good for workers, it's good for taxpayers and 
it's good for high-road businesses," Mr.  Madland said.

He said that one study done by the state of Maryland found that 
after the state began requiring bidders to pay a living wage, the 
number of bidders per contract rose by a third on average.  Some 
higher-wage companies said they began seeking government bids 
because the new policy leveled the playing field.

One federal official said the proposed policy would encourage 
procurement officers to favor companies with better compensation 
packages only if choosing them did not add substantially to 
contract costs.  As an example, he said, if two companies each 
bid $10 million for a contract, and one had considerably better 
wages and pensions than the other, that company would be favored.

Some supporters of the new procurement policy - and even some 
opponents - say Mr.  Obama could impose it through executive 
order.  They assert that the president has broad powers to issue 
procurement regulations, just as President John Kennedy did in 
requiring federal contractors to have companywide equal 
employment opportunity plans.

But some opponents argue that legislation would be needed because 
an executive order may collide with laws that require federal 
contractors to pay the prevailing regional wage for the type of 
work being done.  The executive order, they fear, would call for 
higher wages.


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