By Gautham Nagesh – The Daily Caller 02/11/10

Republicans are up in arms over a pro-union contracting policy currently under consideration by the White House, arguing the measures will significantly increase the cost of government contracts and are part of the Obama administration’s efforts to implement policies that favor organized labor while circumventing Congress.

The Daily Caller reported last week that senior administration officials are considering a series of proposals known as “High Road Contracting Policy” that would give preference to companies bidding on federal contracts that pay hourly workers a “living wage” (typically a mandated, above-market wage) and provide additional benefits above and beyond existing labor laws.

Critics say the proposals would heavily favor unionized companies and significantly increase the cost and amount of time needed to award contracts. Estimates have the potential cost increase at 20 percent, adding about $100 billion a year to the federal budget.

“Making contracting decisions based on political or ideological litmus tests will waste taxpayer dollars and limit economic growth at a time when we can least afford to do so. The administration’s new rules amount to a backdoor attempt at card check. The last thing our small businesses need is to be saddled with new rules that effectively say ‘unionize or die,’” said John Hart, communications director for Senator Tom Coburn, Oklahoma Republican. Coburn and four other Senate Republicans sent a letter to Office of Management and Budget Director Peter Orszag last week asking for a briefing on the proposals; they have yet to receive a response.

The proposals are among the measures the administration is considering in order to give a boost to unions following a series of setbacks. Many liberals have conceded the Employee Free Choice Act, also known as card check, is dead for the time being and organized labor was dealt another blow yesterday when the Senate blocked the nomination of labor lawyer Craig Becker to the National Labor Relations Board.

Now the administration is facing increasing pressure to go around Congress and implement pro-labor policies via executive order. The Service Employees International Union, one of the groups lobbying the White House to adopt the new labor policies, did not respond to multiple requests for comment.

“There’s a tremendous amount of fervor in this area related to the Obama administration taking some action to boost organized labor and I think one of the things this illustrates is that there are numerous avenues that could potentially be explored,” said Michael Fox, a labor and employment lawyer with Ogletree Deakins in Austin, Texas. Fox added that Obama could also consider a recess appointment for Becker, “if the administration has decided to burn their bridges and go all out.”

But sources told The Daily Caller that Vice President Biden’s office has already floated the idea of implementing the new labor policies by executive order and was rebuffed by OMB’s general counsel, who claimed such drastic changes to contracting laws would require legislative action. When asked for comment on the talks, an OMB official provided the following: “We are aware of the proposals and are currently in the process of reviewing them.”

David Madland, director at the Center for American Progress testified in front of the House Armed Services Committee in August on labor standards in federal contracting and said his organization supports the changes and has discussed them with the administration and lawmakers. He disagreed that the changes would increase costs, pointing to studies at the state and local levels showing similar policies have increased competition for contracts.

“If we’re talking basically a wash on the overall direct bid costs and then you factor in the savings from reduced spending on Medicaid and food stamps, it’s increasingly likely [this policy] wouldn’t cost the government anything,” Madland said. “It would be great if Congress took action, and great if the administration took action. Everything does not necessarily need legislative action.”

One of the most contentious proposals is to centralize the evaluation and scoring of companies’ labor records, likely in the Department of Labor. Republicans are concerned that the process could undermine the autonomy of contracting officers, who are currently supposed to award contracts based solely on cost to the taxpayer, technical merit and a company’s past performance.

Madland said adding one additional criteria should not excessively complicate the bidding process, pointing out that the Labor Department already evaluates contractors based on their labor policies.

A Senate staff member who asked not to be identified argued otherwise, saying the new labor evaluations would become a de facto screening process that favors unionized companies.

“You will see protests right and left,” the staff member said. “This will grind federal contracting to a halt.”

Listen to reporter Gautham Nagesh discuss High Road Contracting on Federal News Radio 15000AM here.

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