Amendment to Executive Order 13673

Background

The Original Executive Order

Before the amendment brought by President Obama, Executive Order 13673, dubbed "Fair Pay and Safe Workplaces," was primarily aimed at ensuring that companies awarded federal contracts were in compliance with labor laws. Signed on July 31, 2014, it called for federal contractors to disclose labor law violations and imposed requirements to ensure fair pay and safe working conditions. The Department of Labor, with the cooperation of the Federal Acquisition Regulatory (FAR) Council, was tasked with implementing these requirements. This broader regulatory approach targeted enhancing compliance, detecting labor violations, and fostering safer workplaces by leveraging the federal government's purchasing power.

Effects of the Amendment

The amendment to this order, Executive Order 13738, refined specific aspects related to the information flows around subcontractor disclosures and contracting parties responsible for determining a contractor’s responsibility. It aimed to streamline processes and clarify roles, thereby reinforcing the existing framework without imposing additional substantive requirements. Notably, it emphasized accountability and transparency by specifying which entities within the federal procurement infrastructure were responsible for evaluating compliance data provided by contractors and subcontractors.

Operational Adjustments and Agency Actions

The amendment included operational adjustments such as designating entities that would evaluate a contractor's compliance, which indirectly promoted accountability across various levels of procurement. Agencies like the Department of Labor and the FAR Council spent significant resources crafting guidelines and aligned directives to aid departments in effective implementation. While there was no direct rulemaking involved, these efforts were aimed at strengthening the synchronization of labor law compliance with federally contracted work.

Reason for Revocation

Context of Revocation

Upon taking office, President Donald Trump embarked on a broader deregulation agenda aimed at reducing what his administration considered burdensome regulations that hindered business growth. On March 28, 2017, the amendment, along with its parent executive order, was revoked. This revocation was consistent with a series of executive actions under Trump’s "one-in, two-out" policy, which required that any new regulation be offset by the removal of two existing ones. This mandate was posited on the belief that reducing bureaucratic red tape would improve economic performance and job creation.

Ideological Shifts

The fundamental ideological shift underscoring this revocation reflected a broader legal and economic philosophy that viewed strict regulatory oversight as a constraint on business innovation and efficiency. Trump's administration emphasized a market-driven approach, wherein businesses were expected to self-regulate without overt governmental intervention, especially in sectors seen as critical to U.S. economic competitiveness, such as defense contracting.

Political Considerations

The revocation was also heavily influenced by political considerations, notably the administration’s position to strengthen relationships with business leaders and defense contractors, key constituencies that were vocal about regulatory burdens. Reports from industry groups, like the U.S. Chamber of Commerce, claimed that the 2014 executive order unduly complicated contracting processes and increased compliance costs, which, in their view, could potentially deter businesses from participating in federal contracting.

Winners

Corporate Beneficiaries

Major U.S. federal contractors, particularly those in the defense and construction sectors, likely benefited from the revocation of these regulations. Companies such as Lockheed Martin and Boeing, which frequently engage in large-scale government contracts, stood to gain due to reduced compliance costs and streamlined administrative processes. These corporations often lobby for minimal regulatory oversight, arguing that such flexibility is essential for competitiveness and innovation.

Business Interest Groups and Associations

Pro-business interest groups and associations, such as the Business Roundtable and the National Defense Industrial Association, emerged as clear winners following the repeal. These organizations had long advocated for less restrictive contracting rules, suggesting that deregulation would improve opportunity access across the industry while reducing unnecessary compliance expenses, thus facilitating more efficient resource allocation.

Economic Implications for Small to Medium Enterprises (SMEs)

Though less pronounced, some small to medium enterprises (SMEs), which comprise a significant portion of the supply chains to larger defense contractors, potentially benefited from increased contract opportunities. Often possessing fewer resources than their larger counterparts, SMEs faced disproportionate compliance burdens. The revocation likely made it easier for these firms to compete for subcontracting opportunities without facing the added pressure of meeting detailed federal labor compliance requirements.

Losers

Labor Rights Advocates

Labor rights groups, including the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), viewed the revocation as a significant setback. These organizations had previously supported the Obama-era policies, arguing that they were crucial to safeguarding worker’s rights across the federal contracting sphere. Without these regulations, there were fears of diminished enforcement capabilities to ensure fair pay and safe work conditions.

Government Accountability Advocates

Advocates concerned with government accountability and transparency perceived the rescission as a loss, arguing that the clarity and structure brought by the order helped to hold major federal contractors accountable for fair labor practices. The original provisions ensured compliance was centrally managed and scrutinized, reflecting a governance model directed towards responsible taxpayer revenue usage.

Workers and Employees in Federal Contracting

The employees of federally contracted companies, particularly those with lower wage positions vulnerable to labor laws violations, stood to lose out with the order’s revocation. The potential weakening of oversight mechanisms raised concerns about increased risks of wage theft, inadequate safety measures, and reduced reporting structures to highlight contractor malpractices. While larger corporations might self-police, these oversight mechanisms often served as external checks ensuring rigorous compliance with labor standards.