Unable to get much of its agenda for reshaping the U.S. economy past even a Congress dominated by Democrats, the Obama Administration is now seeking the same ends by manipulating the government contracting process. The federal government spends some $500 billion a year on contracted services and equipment, everything from nuclear aircraft carriers and jet fighters to scientific assistance and janitorial services. Private contractors already have to jump through incredible hoops in doing business with the federal government including providing detailed information on their costs, profit margins, expenditures, staffs and their management. They must also conform to all kinds of federal regulations — some of which reward contractors according to criteria such as size, minority ownership or gender status and others of which limit their performance or even penalize them based on equally limited factors.
As if this were not enough of a burden on the private sector, along with rising tax rates and new health care mandates, the Obama Administration is trying to further constrain and reshape private business under the guise of something called “high road contracting.” Under this concept, the federal government would set criteria for what constitutes minimally acceptable contractor practices and factor these criteria into their assessment of bids for government projects. The criteria would include whether the bidder pays a livable wage, provides “quality, affordable health insurance,” an employer-funded retirement plan and paid sick leave. Other factors would include the company’s record in complying with tax and labor laws. Never mind that there are laws already on the books regarding many of these factors, such as minimum wage laws and health care. This concept would radically and unjustifiably alter the entire landscape of American private enterprise. Moreover, this approach would essentially usurp Congress’s role in establishing the laws by which commerce operates.
Advocates of this strong-arming of private business have a hidden agenda. Well, maybe several. But one is the expectation that if they can enforce proposed standards on federal contractors this will force a shift across the entire span of U.S. business. Many of the largest providers of goods and services to the federal government, including Exxon Mobil, Hewlett-Packard, Dell Computers and Boeing, actually do more business in non-government sales. But if required to change their compensation practices for the federal government work, they will be tempted, even forced, to transform their entire companies. In addition, if the government can demand these kinds of standards for companies seeking federal contracts, how soon will it be before this filters down to the state and local levels?
High road contracting will be disastrous for small business. The vast majority of current federal contractors either are still or were started as small businesses. Many small businesses could not meet the criteria proposed with respect to wage levels, retirement policies, affordable health care, etc. Moreover, it would have the perverse effect of reducing the scope of competition for and raising the costs of federal contracts. The barriers to new entrants into the federal contracting space would be built higher. Companies, particularly small businesses, that could not make the required changes or would lose money by implementing them, would not be able to bid on government contracts. There would be fewer start up small businesses and some existing companies would be destroyed. It would in fact only benefit the small number of large companies. This proposal is a guaranteed job killer.
The proposed high road contracting approach is in reality a low road attempt to implement by stealth a radical agenda for reshaping the American economy. Because proponents of this approach know it would be laughed out of the halls of Congress they don’t want to bother involving our elected representatives. Let’s just do this through the bureaucracy as a matter of regulatory changes. How very EU of the radicals.
So, in the midst of the most severe recession and lackluster recovery since the Great Depression with unemployment rising and the deficits exploding it makes a lot of sense to implement changes in federal contracting requirements that kill jobs, reduce competition and increase costs to the government. Sounds like a good idea, doesn’t it.
Find Archived Articles: