Washington has never been an easy place to keep a secret. Off-the-record discussions find their way onto the record, rumors fly and proposals get leaked — sometimes on purpose.
The latest development on this front is the White House's not-so-closely-guarded plan to establish a new labor standards preference that would favor contractors willing to pay more than prevailing wage laws already require. The plan even has a nifty name — "High Road" — implying that contractors who literally buy in to this practice are extra-special corporate citizens.
This high road, however, could well lead the government down the wrong road. Contract costs will increase as companies pass their own increased costs to the government. The administration has reportedly acknowledged this likelihood at least tacitly, but has said that the expense of higher-wage contracts could be partially offset through improved outcomes. It is unclear how or whether metrics would be developed to measure that. There is concern, too, that increased costs in these areas would hinder the government's ability to properly fund and pursue all of its missions.
Small-business participation in the federal market could also suffer. Small businesses rely on cash flow. Many don't have the overhead or ready cash necessary to pass an across-the-board pay increase to workers without an upfront cash infusion and some assurance that their increased costs will be met over time. On top of other recent proposals, this rumored change in contract preference would add still more to the cost of doing business with the government, putting small businesses ever more behind the eight ball and making it more unlikely that the government will meet its 23 percent small-business contracting goal.
Overall contract competition could also be harmed, as companies concerned about having to pay higher wages to all workers, not just those working on federal contracts, decide to exit the federal market.
It is not just contract costs that could rise. Draft proposals now under consideration would create a new layer of government, mostly inside the Labor Department, to manage the program and score all government contractors on their participation. A new advocate office is also under discussion. The costs associated with establishing and maintaining these new programs would be borne today and for many years.
To be clear, this is not the first time an administration has advocated using the acquisition process to obtain a perceived positive outcome. There are always temptations, from all ideological walks of life, to drive behavior via government contracting.
Contracting officers and other officials are left to sort through conflicting mandates and still try to support the operation of critical government programs. Is it any wonder that they sometimes quote Greta Garbo's "I want to be alone" line? As tough as it may be, resisting the urge to promote social gains via the acquisition process would not only be appreciated by the overburdened acquisition workforce, it would also allow the government to operate with greater efficiency.
That's one reason why a group of five Republican senators recently sent a letter to Office of Management and Budget Director Peter Orszag asking for more information about the program and expressing concern at some of the rumors surrounding the plan.
Specifically, the letter cited concern over the cost of the High Road proposal and its impact on small businesses. The senators, including moderates like Olympia Snowe and Susan Collins, both of Maine, asked OMB to conduct briefings and discussions with Congress before any definitive action is taken. Despite initial proclamations to be transparent, however, it is unclear whether that will happen.
While some of the details may yet change, one thing seems clear: The High Road could come with a high price. At a time of soaring federal deficits, that may not be the best news taxpayers have heard all week.
The administration should work with Congress, industry and other acquisition stakeholders before implementing a plan that would have such a profound impact on government procurement. å
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Larry Allen is president of the Coalition for Government Procurement, a trade association representing vendors in the General Services Administration's Federal Supply Schedules program.







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