Stymied by a gridlocked and bitterly divided Congress, President Barack Obama’s use of executive authority to promote his party’s political agenda in advance of the mid-term congressional elections has many stakeholders worried about a flow of heavy-handed regulations streaming out of federal agencies that could reshape the federal contracting landscape.

The executive actions buttress stalled Democrat-led legislative efforts at the congressional level on minimum wage and gender pay equity issues that animate the progressive base while ostensibly appealing to middle class swing voters. Senate Majority Leader Harry Reid has effectively shut down the upper chamber for the year, only advancing bills perceived as political winners for his imperiled caucus, which will lose its majority if the GOP picks up six Senate seats after the Nov. 4 election.

By asserting the power of the pen, President Obama has flexed his political muscles within his executive authority governing federal contracting to assist his party allies and highlight what he sees as an intractable GOP Congress.

OFCCP
In September 2013, the Office of Federal Contract Compliance Programs (OFCCP)  issued two final rules that drastically alter federal contractors’ existing affirmative action and nondiscrimination obligations with respect to veterans and individuals with disabilities. The final rules require federal contractors to collect written documentation and track workforce statistics to determine whether the percentage of protected employees meets affirmative action requirements.

In 2014, the OFCCP is likely to expand construction industry affirmative action plans for women and racial minorities employed on federal contracts through a forthcoming proposed rule. Concerns remain regarding the even-handedness of the agency’s regulatory approach, as there has been little evidence contractors are failing to meet existing requirements. Well-established processes are in place to prequalify responsible firms and screen out poorly performing or unscrupulous contractors.

Federal Minimum Wage
On Feb. 12, President Obama signed Executive Order 13658, initially touted by the White House as a way to lift the wages of workers performing construction and custodial services under federal contracts. However, most construction industry federal contractors will not be affected by this order because the Davis-Bacon Act already applies to all federal contracts in excess of $2,000.

The Davis-Bacon Act requires contractors to pay craft employees prevailing wage and benefit rates determined by the U.S. Department of Labor, but these rates typically exceed President Obama’s new minimum wage of $10.10 per hour, and the free market ensures workers receive a higher wage. However, the federal contracting community will monitor the impact on pay for construction industry apprentices when regulations implementing this executive order are released in the fall.

Pay Equality
On April 8, President Obama issued Executive Order 13665, Non-Retaliation for Disclosure of Compensation Information, and a presidential memo to the Secretary of Labor, Advancing Pay Equality Through Compensation Data Collection.

Both executive actions cater to working women—a  key constituency courted by Democrats this election cycle—and are expected to add new levels of costly and time-consuming red tape to the federal contracting process. The full impact of these  measures on employees and employers can be determined after regulations implementing them are released later this year.

Political Calculations or Real Change?
These executive actions have the potential to needlessly restrain competition, increase taxpayer costs, stifle job creation, and delay the delivery of goods and services to the government and its customers. The federal contracting community must actively participate in the regulatory process to limit the unintended negative consequences on stakeholders and resist politically motivated over-regulation.

Only after the regulatory process and its implementation during the procurement of future federal contracts will the public know if these executive actions are a legitimate attempt to improve the federal contracting industry through policy changes, or if they are empty political calculations pandering to Democrats’ key constituencies during this election cycle.


Ben Brubeck is director of federal procurement and labor affairs for Associated Builders and Contractors. For more information, email brubeck@abc.org.