Does anyone want to defend this new Executive Order?

Great Debates
1

On Friday afternoon, Obama released an executive order that, as I understand it, requires that if a company signs a contract to do some work for the US government that some other company was previously doing, they are required to use the same employees as the previous contractor.

In other words: if company A’s contract to clean the floors at Massive Government Agency is expiring, and company B wants to make an offer to take over the job, they are required to hire on Company A’s workers to do it.

Text of order (PDF).

There are some caveats. If the new contractor is using fewer employees, he is not required to keep of the first company’s people; just that he must offer jobs to everyone from the old company for as many openings as he does have before he can hire anyone new. And there is also a provision that the new contractor doesn’t have to keep anyone who has done a poor job. The problem is, though (AFAICT) that the new company making the offer isn’t going to know how good the workers there are.
This is what I’m visualizing:

Floor Cleaning Company A has that contract, and they employ 200 people and charge the taxpayers $10 million a year to keep that Agency’s floors clean.

I own Company B, and I can get it done with 120 people, charging the taxpayers only $7 million.

But the reason I can get it done for less is because I know the kind of people I hire, I know how I train, motivate and supervise them. Now the administration’s telling me that if I get the contract, I have to fill all 120 slots with the old company’s workers. I don’t know these people. I didn’t pick them. I have no idea if they’re any good, and I have no idea how they’ll respond to my different management style. I can let the ones who don’t do a good job go … but how the hell am I gonna know which ones they are, since they aren’t my people? (And as every employer knows, there are a LOT of employees that fall under the heading of “not a good hire, but not enough grounds to terminate.”) If company A is competing to keep the contract, they don’t exactly have much incentive to provide me with an honest assessment of the people in place (and the order does not require them to.)

All that makes me unsure I can really do it for that $7 million. Maybe it’s not worth going for the contract at all.

The executive order itself acknowledges that it is already common practice to hire on many of the previous contractor’s people – so this order *only *helps the employees that a new contractor would have decided they *didn’t *want.

If I’ve misunderstood this (very possible), I welcome the correction. But if I am accurate, ISTM this is contrary to the president’s claim that he doesn’t care about care about government being big or small, so long as it “works.” The order, as I see it, puts priority on keeping union jobs safe, even if that means the taxpayers spend more money.

Does anyone want to defend this?

2

Doesn’t say anything about wages so first right of refusal doesn’t mean a thing.

3

At this point, you go to the head of the contracting department, lay out all the reasons you need an all-new workforce, and the head can grant an exemption for this contract.

I don’t have a major problem with the new rule. The vast majority of the time, the worker bees are more or less interchangeable, and this rule will not adversely impact the new subcontractor. The remainder of the time, exemptions are allowed. The benefit I see is that current workers get at least a reasonable measure of job security that they did not have before. It doesn’t benefit anyone to have revolving door employment based on contractors winning and losing bids.

4

This sounds very much like our TUPE regulations.

5

I don’t see it as being particularly useful to anyone, no. It’s a silly and counterproductive rule. I predict a huge upswing in positions offered to these new workers… except the job will be mvoed to Miserable Frozen Hole Somwhere in Alaska, at minimum wage and no moving expenses.

6

I’m not sure of the substance of the issue, but it seems to me that this executive order reverses a Bush ban on a 1994 Clinton executive order on the same subject. Not knowing much of the substance, and nobody so far being able to illuminate the issue in any way in other than a hypothetical, I’m throwing my lot in with the “Bush did it so it must be wrong” camp.

7

Yea…I have to offer you a job…so minimum wage with no benefits sound good? No? Goodbye.

Now…the one I want to hire? $14 an hour with bennies sound good?

Unless the existing employee gets the ability to agree to the pay/bennies that the person actually taking the job will get…it means nothing.

8

Don’t government contracts include certain minimum conditions for jobs offered under those contracts?

9

I’m guessing the announcement that President Obama plans to make the White House more environmentally friendly was directed the political environment. I expect he will install low E-glass mirrors to go along with the smoke machine.

10

I think the term “in good faith” covers these sorts of shenanigans.

11

Could you explain this?

No, you miss the point – they must be offered a job for the same contract they were working on before. If my company has the contract for cleaning building X, I must be offered by whoever takes over the building X contract.

Moreover, these are union jobs. Presumably wages will be set per union scale. (As I read the order, non-union workers do not need to be offered)

12

I’ve worked on federal government contracts where my wages and job title were set by the U.S. Department of Labor, not the company’s bean counters, who would never miss an opportunity to screw an employee if it improved the company’s profits. No unions were involved.

13

I don’t know anything about the issue. But I’ll take a stab at defending the order on its own terms.

If the contractor already has employees that he has “trained, monitored, and supervised,” and about whom he knows “how they will respond to my new management style,” then he can still use them. The order states that “the contractor and any subcontractors may employ under this contract any employee who has worked for the contractor or subcontractor for at least 3 months immediately preceding the commencement of this contract.”

So we’re just comparing hiring unknown people to hiring other unknown people. Both sets are subject to the same training, monitoring, and supervision. And obviously can be replaced for poor work. Thus, the only comparative advantage between the Bush state of affairs and the new one is that you might select a new set of 120 people who are better than the existing set. Right?

How likely is there to be a significant difference in the ability to spot a good service worker during a hiring process? It seems at least reasonable to make the judgment that the benefits of reduced disruption and a work force that is stable enough to become familiar with the Federal Government’s personnel, facilities, and requirements might outweigh the cost of displacing the comparative advantage some contractors might have in spotting good new employees.

14

It looks like this is an expansion on an EO issued by Clinton back in 1994 (EO 12933), which was revoked by Bush in 2001 (EO 13204).

Obama’s EO explicitly revokes Bush’s revocation (in addition to doing other things).

15

TUPE details.
For excruciating detail, see here (links to PDFs).

16

yes; you are correct. I think I was a little confusing there.

It does seem very reasonable, and I’d guess this is why many contractors already do it. But I guess my problem is that I think that judgement should be made by the contractor.

17

I would agree if the government were imposing this on someone else. But in this case the government is the client and clients get to determine the elements of the bargain. The whole point is that the two costs in question–a loss of service before the contractor gets started and a constant changeover of workforce–are not costs that contractors consider or get included in the cost of a bid. So it is up to the client to require those things. If a contractor doesn’t like it, she can find a different client.

The only reason for us as citizens to get upset would be if this is costing taxpayers more money than it’s worth. But if the cost-benefit analysis says this is at least within some range of reasonableness, then I don’t think there’s anything to be upset about.

18

In my experience, the whole contracting thing is a scam – the majority of these functions should be performed by government employees in the first place.

19

The last couple decades have seen massive competition for labor, and very little for management. Manufacturing and service jobs have been outsourced and offshored, and their wages have stayed flat or been driven down. At the same time, executives have seen ever more lofty “compensation” for their services, and receive bonuses even for poor results. Have we come to accept that that’s the way it should be?

With all the kerfuffle in the auto industry recently, I thought it was an interesting comparison. A foreign company, run from overseas, can build cars in an American factory, and sell them to American consumers at a profit. The Big Three, run from Detroit, can’t. So why does the analysis of their troubles focus on the workers when the difference between profit and loss is management?

Same thing with this Executive Order. In essence, it sets up a competition between two companies, working the same job with the same pool of workers, to see who can do it better and cheaper. Company A against Company B, may the better managers win. Don’t free-marketers sing the praises of competition? Well, here it is.

(That’s a bit devil’s advocate-ish of me, but I’m trying to introduce an idea that seems to be missing from capitalism recently, so please forgive me. Obviously one key tool to a manager/executive is selecting employees, this would seem to take that somewhat out of their playbook. But I think that they can find other areas to distinguish themselves. And are there any long-term provisions for employees? After six months (or however long), if you’re such a management stud that you know you can identify the weakest employees and find better replacements, can you?)

20

Killed this thread. Sorry about that.