Labor Department pursues Obama era agenda with opaque methods
February 24, 2020
This article was originally published in the Economic Standard on February 18, 2020.
The federal government is hardly a paragon of efficiency or low costs for taxpayers. As President Trump’s recently released budget shows, the federal government will still be spending more than $50 trillion through 2030 even if the administration gets its “skinny” budget approved by Congress. One bright spot of federal operations has been the rise of private contracting which can fulfill essential government services at a fraction of the cost of the public sector. But these contractors are being undermined by overzealous federal offices accusing them of “discrimination” without any real evidence. The government can make a dent in the deficit by welcoming cost-effective contractors with open arms.
When done right, allowing outside talent to tackle federal fumbles (h/t Sen. James Lankford, R-Okla.) can save taxpayers billions of dollars while bringing in a diverse array of talents to solve long-neglected issues. According to prominent marketing consultant Brandon Gaille, “When governments calculate the cost of outsourcing compared to what it would take to do the work internally, then they must calculate the overall benefits that are possible from higher productivity levels and expertise…it is possible to save up to 30% on the cost of the work being performed without experiencing a reduction in quality.” Companies are willing to undercut each other on price in order to secure a lucrative federal contract, but they must have assurances that the federal government will act in good faith and uphold their end of the bargain.
Unfortunately, this does not always happen because of one particular contracting policy embedded into contemporary practice by the Obama administration. President Trump’s predecessor filed a number of frivolous last-minute lawsuits against companies contracting with the federal government that for some reason were not withdrawn by Trump’s former Department of Labor (DOL) Secretary Alex Acosta. Their negative impacts continue today, as companies reconsider relationships with the federal government.
DOL’s Office of Federal Contract Compliance Programs (OFCCP) is tasked with combating discrimination and promoting affirmative action within the federal contracting community. Instead, thanks to Obama-era policies, they routinely accuse companies of discrimination based solely on statistical analyses of hiring and promotion data. In these cases, there’s no compelling evidence normally required to indict companies such as a “smoking gun” email or audio catching management in the act of discrimination. The government sued Google and Oracle based solely on hiring and compensation data without any specific allegations of bigoted motives. The federal government noted that “Federal contractors are scheduled for routine audits through a neutral selection process” and lawsuits requiring companies to comply with compliance reviews are necessary to “meet the requirements of all laws enforced by the agency.”
This may sound like simple due diligence from a regulatory office, but the OFCCP has a disturbing track-record in scaring contractors and driving up compliance costs. The U.S. Chamber of Commerce has identified this particular office as an impediment to good governance, and repeatedly emphasized the need for reform. They issued a report in 2017, making the case for the OFCCP to “abandon its transformation to an opaque, plaintiff-style enforcement agency, purposefully hostile to the contracting community and singularly focused on issuing findings of discrimination, often where none exist.” Despite these reasonable calls for reform, the office continues its reckless rampage against companies based on statistical innuendo.
These misguided holdover policies from President Obama threaten to derail the progress that President Trump has made in lowering contracting costs for taxpayers. Last year, for instance, the Trump administration reversed an Obama-era policy mandating that a contractor company taking over government work from another company had to give preferential hiring treatment to nonmanagerial employees from the previous company. This did little but encourage bloat in contracting and President Trump wisely did away with the misguided mandate.
President Trump must continue the push for contracting reform and hold the OFCCP accountable for prosecutorial excess. Taxpayers across the country can benefit from a smarter, leaner federal government, but only with policies that protect contractors from witch-hunts.