Federal contractors tell Obama: Stop picking on us

Federal contractors say they are being unfairly targeted as President Obama pushes an agenda that’s focused on raising wages and creating safer workplaces.

Since 2009, the President has issued 13 executive orders that have led to 16 regulations applying to companies that do business with the government.

{mosads}The directives range from Obama’s announcement of a higher minimum wage for employees of contracting firms, to new rules requiring companies to report labor violations as part of the bidding process.

The latest order, signed by the president this week, would require contractors to offer paid sick leave.

“He’s using the federal contracting community as a messaging board because those are the types of policies he’d like Congress and State and local legislators to adopt,” said Alan Chvotkin, executive vice president and counsel at the Professional Services Council (PSC), a trade group that represents the government technology and professional service industries.

Though the PSC backs some of the policies behind the executive orders, including the latest on paid leave, Chvotkin said contractors take issue with record keeping that’s required to prove compliance with the orders.

“It’s very much a throwback to the industrial age of the ’60s than the progressive human resources environment of the 21st century,” he said, explaining that the majority of employers now allow their workers to take time as they see fit.

Citing burdensome reporting requirements, business groups have called on the administration to withdraw the rules recently released as a result of the President’s July 2014 executive order requiring federal contractors to disclose any violations of 14 federal labor laws and equivalent state laws they’ve had in the last three years.

In August, the PSC joined the National Defense Industrial Association, Aerospace Industries Association and the Information Technology Industry Council in writing a letter to White House officials asking the administration to back off.

“At a time when government budgets are under siege, cost efficiency is essential, and there is a broad agreement about the need for the government to open its aperture to enable access to the full marketplace of capabilities, this rapid growth in compliance requirements is becoming untenable,” their letter said.

Chvotkin said the PSC has yet to get a response.

In a statement to The Hill, Jamal Brown, the White House Office of Management and Budget press secretary, said the federal government only does business with companies that comply with laws that protect workers’ safety, wages and civil rights.

“At the same time, this Administration has worked to remove and streamline burdensome requirements imposed by previous administrations on federal contractors,” he said. “As part of this effort, last year the Office of Management and Budget, after extensive engagement and feedback from federal contractors, issued guidance to agencies to further improve performance, simplify the federal procurement policies, and drive innovation.” 

Associated Builders & Contractors (ABC) said the President has long treated the federal contracting marketplace as a testing ground to implement sweeping changes he can’t get through Congress.

“By circumventing congressional authority, the Obama administration has increased regulatory burdens that drive up costs on taxpayer-funded projects and discourage small businesses from pursuing federal contracts,” Geoff Burr, ABC’s vice president of government affairs, said in a statement to The Hill.

“The president’s latest proposal is of particular concern to the construction industry because it contradicts the U.S. Department of Labor’s (DOL) long-established policy of crediting sick leave as a fringe benefit for employees performing work on contracts subject to the Davis-Bacon Act,” he said.

The law, which passed in 1931, requires contractors and subcontractors to pay their laborers and mechanics employed under a federal contract no less than the locally prevailing wage and fringe benefits.

Under the order, the DOL is expected to issue regulations by Sept. 30, 2016. Legal experts expect them to draw legal challenges.

Because the federal mandate only ensures paid leave for employees working on public jobs, Lawrence Prosen, a partner at the D.C. office of Thompson Hine, said it could create a discrimination issue, since contractors typically take on both public and private projects.

“Let’s say you build Humvees and you have a line of production that’s building Humvees for the government and the next line over are employees building the commercial version and they wouldn’t be subject to this,” he said. “Hypothetically speaking, I can see where a class of people could get together and say this is not fair.”

Despite industry outcry, proponents say the executive orders are needed to push for broader changes in society.

David Madland, managing director for economic policy at the Center for American Progress, pointed to the equal employment opportunity executive order that President Lyndon B. Johnson signed in 1965 prohibiting federal contractors from discriminating against workers based on their gender or race.

What started as a mandate for federal contractors, he said, later became law.

“For a long time, presidents have made significant changes in the way we do government contracting because they have the authority to do so and see this as a way to make change,” he said.

As for the industry’s argument that the orders are overly burdensome, Madland said that’s a way to avoid actually opposing the policy change.

“For most employers, paying a higher minimum wage is not a paperwork burden,” he said. “They’re trying to hide behind process arguments.”

–This story was updated at 9:53 a.m.