How Biden Can De-Reaganify Contracting Standards

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.