Victory for federal contracting authority

The U.S. Court of Appeals for the 10th Circuit last month upheld President Biden's executive order mandating wage increases for federal contract workers. This decision affirmed the president's broad authority to establish rules governing the federal procurement process. The administration should use this authority to establish new standards for government contracts, including finalizing proposals to require greenhouse gas emissions inventories and climate risk assessments for companies that contract with the government.

Several recent court losses have raised concerns within and outside the administration about the extent of the government's authority to impose conditions on federal contractors, which directly employ about 20% of the U.S. workforce. In response to the COVID-19 pandemic, multiple circuit court panels have struck down executive procurement orders imposing vaccine and testing requirements on contract workers. Efforts to raise the minimum wage for federal contractor employees have also been controversial, with the U.S. District Court for the Southern District of Texas issuing an injunction against it, while other federal courts have upheld the increase.

But efforts to reduce executive authority over federal contractors stalled in April when the 10th Circuit upheld the Biden administration's contractor minimum wage increase that applied to seasonal recreational workers. In a 2-1 decision, the Court of Appeals rejected the plaintiffs' two main claims. The Court held that the Federal Property and Administrative Services Act (FPASA) gives the President fairly broad authority to enact regulations regarding government procurement that the President deems “necessary” from the standpoint of “economics” and “efficiency.” It was confirmed that there was. It also rejected the application of the U.S. Supreme Court's main issue doctrine, which subjects certain consequential rules to intense judicial scrutiny. The court noted that FPASA has been repeatedly used by the administration to issue countless regulations, and that this order was not an exercise of new or transformative legal authority, but outside the scope of FPASA. It was determined that it was not.

The 10th Circuit's decision bodes well for other FPASA initiatives, including a pending rule requiring large federal contractors to disclose limited information about their carbon emissions and exposure to climate risks. . As the 10th Circuit panel noted, in line with what we have noted in the past:

“'Economy' and 'efficiency' are not narrow meanings. They include factors such as price, quality, suitability and availability of goods and services that are relevant to all acquisition decisions. , and courts have respected presidential judgments about how a particular executive order may advance the purpose of the statute.

We can draw a straight line from emissions and climate risk transparency to stable and reliable procurement processes that are better insulated from the climate emergency. Without information disclosed under the proposed rule, agencies are acting blind regarding the climate-related externalities and risks of acquisitions and therefore lack the ability to assess the risks of acquisitions.

According to the Tenth Circuit's logic, the principal interrogation doctrine should also not be at issue. If the minimum wage mandate's price tag of $1.7 billion per year was not justified by the scrutiny of the key issues, it is unlikely that the cost of the proposed disclosure rules, estimated at less than $500 million per year, would be either. Governments can therefore have greater confidence in the legal defensibility of disclosure regulations.

Perhaps it is time to question what has become the accepted wisdom in the admittedly volatile procurement industry, with government FPASA authorities facing widespread skepticism. Apart from the COVID-19 orders, there have been new attempts to impose contractor requirements, as previously discussed. Worker The FPASA rules, not contractors and employers, actually fared quite well in court. Recognizing this, the government should promptly finalize pending regulations regarding contractor emissions.

And in a potential second term, the Biden administration should consider pursuing broader procurement priorities. For example, we have advocated alongside other advocates to ban traditional procurement rules. de facto Non-Compete Clause. This could be useful if a court limits the Federal Trade Commission's recently announced regulations on the subject, or for categories of contractors whose employees fall outside the Commission's jurisdiction.

In a dissent from the Tenth Circuit's decision, Judge Alison H. Eade argued that FPASA violates the nondelegation doctrine and is therefore unconstitutional. It is difficult to overstate the extremism of that position. The federal government has issued a long list of FPASA orders since the law was enacted in 1949, all of which would be invalidated if Judge Eid's interpretation prevails. So, for now, let's assume that even the loudest critics are aware of how strange it is to rule that a statute that has been consistently in place for decades is consistently unconstitutional. In this case, we are left with what Judge Eid relatively candidly acknowledged about the plain text of the statute in a footnote: “Economy” and “efficiency” as justifications for administrative actions. ”