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Thread: Awarding Govt Contracts

  1. #1
    Senior Member Gerry Clinchy's Avatar
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    Default Awarding Govt Contracts

    NY Times today
    http://www.nytimes.com/2010/02/26/bu...html?th&emc=th

    The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers,

    By altering how it awards $500 billion in contracts each year, the government would disqualify more companies with labor, environmental or other violations and give an edge to companies that offer better levels of pay, health coverage, pensions and other benefits, the officials said.


    Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy and lift more families into the middle class. It would affect contracts like those awarded to make Army uniforms, clean federal buildings and mow lawns at military bases.

    Although the details are still being worked out, the outline of the plan is drawing fierce opposition from business groups and Republican lawmakers. They see it as a gift to organized labor and say it would drive up costs for the government in the face of a $1.3 trillion budget deficit.

    Critics also said the policy would put small businesses, many of which do not provide rich benefits, at a disadvantage. Furthermore, government officials would find it difficult to evaluate bidders using the new criteria and to determine whether one company’s compensation package should give it an edge, said Alan L. Chvotkin, executive vice president of the Professional Services Council, a coalition of 340 government contractors.
    The reasoning is:

    Many low-wage employees of federal contractors receive Medicaid and food stamps, he said. Citing studies conducted by the Department of Housing and Urban Development and by academic researchers, he said that contractors that pay their employees well have greater productivity and reliability, while contractors with a record of labor law violations do shoddier construction work.

    “This policy is good for workers, it’s good for taxpayers and it’s good for high-road businesses,” Mr. Madland said.
    One federal official said the proposed policy would encourage procurement officers to favor companies with better compensation packages only if choosing them did not add substantially to contract costs. As an example, he said, if two companies each bid $10 million for a contract, and one had considerably better wages and pensions than the other, that company would be favored.
    Some supporters of the new procurement policy — and even some opponents — say Mr. Obama could impose it through executive order. They assert that the president has broad powers to issue procurement regulations, just as President John Kennedy did in requiring federal contractors to have companywide equal employment opportunity plans.

    But some opponents argue that legislation would be needed because an executive order may collide with laws that require federal contractors to pay the prevailing regional wage for the type of work being done. The executive order, they fear, would call for higher wages.
    I'm probably being dense, but it seems to me that a cafeteria worker, if not trained or capable of doing more than this work, might not be worth $20/hour. So, if one employer pays $10/hr and another pays $20/hr, the higher-wage contractor would be favored.

    Truthfully, I know secretarial staff (which today requires quite a high level of proficiency not required even a decade ago), would be very happy to get paid $40,000/year. And many of them don't get paid that much. I'd easily trade a secretarial job for being a cafeteria worker if the pay was $40,000/yr for the latter.

    I suspect that there will always be a need for cafeteria workers or people who mow lawns, but how much are those services worth in an economic sense? Can they be equated with other jobs that require more education/training?
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    Senior Member Uncle Bill's Avatar
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    Just keep those government union jobs coming. The government job market has no shortage of applicants... it's BHO's shining moment. It's the only way he can claim all those jobs he's saved or created. What a farce.

    UB
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    i guess i need some help reading what you have referenced.

    where in that article you referenced (or anywhere else, for that matter), was it that Obama or anyone else in his administration advocate $20 per hour for a cafeteria worker? did i miss something?

    all i saw was advocating paying above the poverty level. currently that is calculated at $22,000/year or $11.00/per hour.-Paul
    there's no good reason to fatten up a retriever.

  4. #4
    Senior Member Gerry Clinchy's Avatar
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    Quote Originally Posted by paul young View Post
    i guess i need some help reading what you have referenced.

    where in that article you referenced (or anywhere else, for that matter), was it that Obama or anyone else in his administration advocate $20 per hour for a cafeteria worker? did i miss something?

    all i saw was advocating paying above the poverty level. currently that is calculated at $22,000/year or $11.00/per hour.-Paul
    No, Paul, I was just using an "example" of over-paying for certain services. Essentially, it would appear that if $11/hr is the wage advocated for a govt contract, that is effectively raising the "minimum wage" for govt contracts?

    Would that "poverty level" gauge vary with the cost of living in the area where the govt work would be performed? Would the poverty level wage be different for Washington DC v. some place in Nebraska or Mississippi?

    In my area, an experienced secretary might get only about $15/hr in private industry. That might, or might not, include some "benefits". Would the company who must provide $11/hr for cafeteria workers pay more highly skilled employees less in order to crunch the #s? Would the company thus suffer by attracting less qualified workers in positions of larger responsibility and skill levels?

    The cost of the govt contracts might increase. But maybe it would be a "wash" since the cafeteria worker at $11/hr might not qualify for a tax credit. OTOH, if it resulted in lower pay for some other employees, that would decrease tax revenues from those employees. If companies had to increase wages to more highly skilled workers to maintain a sufficient wage gap between low skill & higher skills, then overall cost of the contract would increase more than the increase for the lower skilled workers. That is sort of what happens with minimum wage mandates. Milton Friedman wrote well on the concept of minimum wage.
    G.Clinchy@gmail.com
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    Senior Member badbullgator's Avatar
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    Just lok for the union label........

    There are many jobs out there that are worth 20+/hour but there are many that are not worth 7.....unless you work for a union
    Views and opinions expressed herein by Badbullgator do not necessarily represent the policies or position of RTF. RTF and all of it's subsidiaries can not be held liable for the off centered humor and politically incorrect comments of the author.
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