How Biden Can De-Reaganify Contracting Standards
We should’ve gotten rid of these Reagan-era restrictions long ago, but doing so now is more important than ever, with massive new federal funds in the pipeline for infrastructure and climate projects.
Ronald Reagan left highly visible marks on our capital city. The president who believed trees cause pollution now has his name carved into an edifice housing Environmental Protection Aagency offices. The infamous buster of the air traffic controllers union has an eponymous airport.
Even more disturbing? Vestiges of the Reagan era that are nearly invisible but continue to undermine progress towards a more equitable and sustainable economy.
Case in point: an obscure Office of Management and Budget (OMB) policy dubbed the “Uniform Guidance” that sets out rules for state and local governments when they use federal funds to pay private contractors. Republican officials in the Reagan administration seized on this policy as a weapon for blocking sub-federal actions they didn’t like.
Despite zero empirical evidence that an “efficiency above all” approach would improve contracting outcomes, the Reaganites succeeded in making it difficult for states and cities to attach labor and equity standards to contracts, for fear they would lose federal funding.
What, in particular, had the Reaganites so rankled? This was the 1980s, the era of a growing global movement to divest from Apartheid South Africa. Some U.S. cities and states wanted to join universities, churches, and other investors in refusing to do business with corporations that were profiting off the racist regime.
A report by Jobs to Move America and the Center for Media and Democracy delves into this history in depth, documenting the Reagan administration’s crusade to elevate contracting “efficiency” and “fair and open competition” above other interests, from fighting Apartheid to creating family-supporting jobs for those who need them most.
Reagan-Era Rules Reinforced Historic Racial and Economic Inequities
That Reagan officials lumped these issues together should come as no surprise. The Apartheid system itself was both racist and anti-union, designed to protect the privileges of a white elite class. And while the Republicans couched their arguments in free market rhetoric, the impact of their changes to OMB regulations reinforced our own country’s deeply embedded racial and economic inequities.
Despite zero empirical evidence that an “efficiency above all” approach would improve contracting outcomes, the Reaganites succeeded in making it difficult for states and cities to attach labor and equity standards to contracts, for fear they would lose federal funding.
The revisions also explicitly banned local hire programs, despite significant research dispelling the myth that such programs are anti-competitive and demonstrating positive benefits for disadvantaged workers and local economies. The Reagan-imposed ban meant, for example, that a largely Black city with high unemployment rooted in historic racism would have little power to prevent a contractor from bringing in an all-white, non-local engineering crew for an infrastructure project in their municipality.
We should’ve gotten rid of these Reagan-era restrictions long ago, but doing so now is more important than ever, with massive new federal funds in the pipeline for infrastructure and climate projects. Public funds are precious, and we all have an interest in ensuring that the benefits of these investments are equitably shared.
Biden Administration Proposals for Undoing These 1980s Holdovers
Fortunately, Biden’s OMB is moving in this direction with recently issued proposals for updating the Uniform Guidance. In a detailed public comment letter, nearly 150 unions and other members of the Local Opportunities Coalition commend the administration for positive improvements in 11 areas. Top on their list: the welcome removal of the ban on local hire policies.
The coalition also highlights changes to allow the use of scoring mechanisms to give companies a leg up in bidding competitions if they commit to creating specific numbers and types of jobs, with minimum levels of compensation and benefits. They also note positive steps to explicitly allow hiring preferences for disadvantaged communities, the use of project labor agreements between employers and workers and other pre-hire collective bargaining agreements, bans on the use of contract funds for union-busting, and protections against employers misclassifying workers as “independent contractors” to skirt labor laws.
How the Administration Could Go Further to Ensure Public Investments Benefit Workers and Communities
The Local Opportunities Coalition also recommends a few key ways the Biden administration could strengthen their proposals. For instance, they could explicitly allow states and cities to require that contractors (and their subcontractors) pay living wages and clarify that local hire policies can apply to both infrastructure and service contracts.
In a separate comment letter, several pro-worker and Wall Street accountability groups also applauded the Biden administration’s progress while suggesting that OMB officials also make explicit that state and local officials have the flexibility to consider additional equity factors to ensure public funds actually help workers instead of lining the pockets of wealthy executives and shareholders.
Specifically, they urge support for procurement policies that give preference to companies that refrain from wasteful spending on stock buybacks, excessive CEO pay, and private equity-driven leveraged buyouts and drastic cost-cutting.
“Discouraging these practices will help ensure that corporate recipients of public funds provide high-quality services with broadly shared benefits,” notes the letter, signed by Americans for Financial Reform Education Fund, the Institute for Policy Studies, Communications Workers of America, Jobs to Move America, Take on Wall Street, and United for Respect.
The OMB is expected to finalized changes to the Uniform Guidance in early 2024.
Back in the 1980s, Reagan’s efforts to crush the anti-Apartheid divestment movement ultimately failed. With demands for sanctions mounting, Congress passed a law in 1986 that gave cover to this effective means of solidarity with the South African trade unionists and others who successfully brought down the racist regime.
By scrapping the remnants of Reagan’s ideologically driven contracting standards, the Biden administration can build on this proud history of using the public purse for the greater good.
