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Administration Considers Controversial High Road Contracting Policy

Published by on March 23, 2010

The Obama Administration is considering implementing new rules on how government contracts are awarded that would take the contractor’s labor practices into consideration when evaluating proposals.  More after the break. Currently, federal contracts are worth $500 billion a year.  Under the current policy, contracts are normally awarded to the lowest bidder.  Under the new policy, […]

The Obama Administration is considering implementing new rules on how government contracts are awarded that would take the contractor’s labor practices into consideration when evaluating proposals.  More after the break.

Currently, federal contracts are worth $500 billion a year.  Under the current policy, contracts are normally awarded to the lowest bidder.  Under the new policy, termed the “High Road Contracting Policy,” the Department of Labor would be charged with evaluating and factoring in contractors’ labor policies as one of the criteria for an award.  Those contractors that pay their workers a “living wage” – complete with health and retirement benefits and paid sick leave – would be given preference in the awarding of federal contracts.  Contractors who are found to be in violation of labor laws would be either restricted or barred from receiving federal contracts. 

The purpose behind the new policy is outlined in a recent publication by the White House Middle Class Task Force, which states 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.”  Supporters of the policy say that it will have the effect of growing the middle class by increasing wages and benefits for millions of workers. 

Currently, there are already two federal laws regulating federal contractor wages, the Davis-Bacon Act, and the Services Contract Act.  The Davis-Bacon Act applies to the construction industry, while the Services Contract Act governs service companies.  Both of these laws establish a prevailing wage for federal contract workers.

Critics of the new policy cite repercussions in the form of increases in costs to taxpayers for public projects, loss of jobs for low-skill workers, and the reduction of competition from small businesses and non-union contractors for government contracts.

Some stories about the new policy can be found here, here and here.

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