Responsible contracting policies help governments reduce the risk of contract failure and ensure that contractors have a track record of providing employees with living wages and benefits. Responsible contracting usually leads to better quality services and reduces the hidden costs that result when workers don't receive living wages and benefits. Responsible contracting can be achieved through ordinances or laws, regulations, or administrative policies.
Responsible contracting includes several broad principles:
Prudent and fair contracting processes
Governments should perform accurate cost comparisons to ensure that outsourcing is actually cost-effective. Cost comparisons should include direct costs, indirect costs, and transitional costs. Often contracting appears to be cheaper than keeping the function in-house because governments fail to consider a host of variables, including the community ramifications of reduced wages and benefits, the additional training that new employees may require, personnel time for monitoring the contractors, or the enormous costs that the government will incur in the event of contract cancellation. Projections of cost savings often rely on rosy assumptions. An honest assessment is required to make prudent contracting decisions.
Governments should set standards regarding contractors' wages, benefits, and records of complying with workplace, tax and other laws. Using bid price as the main selection variable can make responsible companies look uncompetitive. Governments should not reward companies for providing a low bid at the expense of workplace responsibility. Contractor responsibility reduces staff turnover and provides higher quality and more reliable services for the community. The City of Los Angeles, for example, has a "responsible contractor policy" requiring city agencies to review potential bidders' history of labor, employment, environmental and workplace safety violations. It uses a detailed questionnaire, in which bidders must disclose and explain past and pending litigation, past contract suspensions, and outstanding judgments.
Public transparency and accountability
Information related to the contracting process should be as open as possible, to allow for public input and to help hold contractors accountable. Public hearings and comment periods are important ways for the public to have a voice in the contracting process. Public access to contracting information allows taxpayers to understand how their money is being spent and reduces the risk of corruption in the contracting process. Public release of bidders' stated track records, for instance, allows the public to provide any relevant information that the applicants may not have included.
Responsible Contracting Resources
Visit our Advocacy Toolbox page to see examples of city and state-level responsible contracting policies.
The Road to Responsible Contracting: Lessons from States and Cities for Ensuring That Federal Contracting Delivers Good Jobs and Quality Services
National Employment Law Project, 2009
Making Contracting Work: Promoting Good Workplace Practices in the Federal Procurement Process
Center for American Progress Action Fund & National Employment Law Project, 2009
Stop Bad Contracts and Protect Public Jobs
This report gives examples of responsible contracting legislative language from around the country.