Bringing ‘America First’ to Government Contracts

Trump can use federal spending as leverage to protect and support American jobs

by Fred Lucas | Updated 28 Dec 2016 at 7:49 AM

President-Elect Donald Trump hasn’t waited until Jan. 20 to get to work on policy.

Trump first preserved about 800 Carrier jobs in Indiana — keeping a specific campaign promise and reflecting his broader campaign theme about American jobs. He at least seems to have applied his “Art of the Deal” negotiating skills in pushing Boeing to agree on a cheaper Air Force One, while Lockheed Martin is being pushed on the price of delivering F-35 fighters.

“The Trump method would be the simplest way to go about it, which says: If you move jobs out of the U.S., we’ll nail you.”

It seems a natural next step would be making American jobs a priority in any future government contracts. There is already a convoluted set of rules, 51 parts and more than 1,900 pages long, in place for government contracting. A president could change at least half of these regulations without Congress to make retaining U.S. jobs a priority, said Dan Gouré, former director of the Office of Strategic Competitiveness for the Defense Department during the Bush administration.

Under the acquisition regulations, there is already leeway for the executive branch to ditch contracts in place. The broadest is “termination for convenience,” allowing the government to terminate a contract when it’s no longer in the government’s interest — for example, when a war or military conflict ends. Another front is “termination for default,” meaning when the company contracted fails to deliver on time or on budget.

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What wasn’t part of the Indiana deal was Carrier’s parent company United Technologies, a firm that has got about $6 billion in federal contracts, making it the seventh largest recipient of federal contract funds, according to former presidential candidate Sen. Bernie Sanders (I-Vt.).

Sanders thinks he has a better solution with the Outsourcing Prevention Act. The bill would, among other things, ban all companies that outsource jobs from getting a federal contract.

This Sanders formula would create a bureaucratic nightmare, said Gouré, now the vice president of the Lexington Institute, a public policy research group.

"The Trump method would be the simplest way to go about it, which says: If you move jobs out of the U.S., we'll nail you," Gouré told LifeZette. "The Sanders bill would require massive tracking and auditing of transaction[s] contractors make."

Trump could act on multiple levels without an act of Congress, Gouré said, to prioritize American jobs as part of each future federal contract. This could be handled in part by specifying an America First policy in the request for proposals for procuring contracts.

One method of using the contracting system to promote jobs would be restricting bids to only U.S. firms, Gouré said. This wouldn't guarantee some of the work is not done abroad, but it would greatly minimize the likelihood.

Secondly, the federal contracts could require assembly in the United States. This is already frequently done with key elements of national security materials, including some computers, and black boxes, which the federal government doesn't want other countries to know about.

A third avenue would be fairly easy, but a big priority of the incoming administration: infrastructure. American construction companies would naturally be contracted for road, bridges, and airport improvements. However, the administration could also require that domestic steel and other materials also be in the United States.

The biggest area of government contracting comes from the Defense Department with contracting airplanes, tanks, and various other vehicles. Trump is already driving a hard bargain on this front.

The smallest area would be furniture and laptops. Most computers and related technology companies have big overseas operations. The same is true for desks and chairs. A stronger shift to U.S.-made products in this area would necessarily raise prices for taxpayers.

If Trump moves heavily on contracts, his critics will at some point call this unprecedented — but they would be wrong. President Obama was constantly using the federal contracting process to push the LGBT agenda and raise the minimum wage.

Nitpicking away at private companies, even those with government contracts, might make free market conservatives a little uncomfortable, but as former House Speaker Newt Gingrich noted on "Fox News Sunday" on Christmas Day, it's par for the course at the state level for Republican and Democratic administrations.

"The president of the United States should do everything he can to keep companies in the U.S. and the president of the United States should be very tough on companies who have been rigging the entire process of acquisitions to their advantage and the disadvantage of the American people," Gingrich said. "Trump is going to be more like our governor than our traditional sense of a president. Governors intervene. They're aggressive. They're in your face."

Nearly all U.S. military equipment is manufactured in the United States, Gouré said. However, U.S. firms do secure contracts in other countries, and in some cases, build equipment there. In one recent example, India agreed to buy planes from Lockheed Martin, but on the condition that the defense contractor build the planes there.

Gouré said things could get complicated. Would outsourcing include only jobs that were traceably moved outside the United States — such as in closing a factory? Or would this also include an American firm opening operations abroad that were never in the U.S. to start with?

At least for now, it seems the Trump approach would likely focus on protecting jobs already in the United States, and pushing policy that encourages more jobs in the United States — while not exactly banning international expansion by American companies. This makes sense. Trump expands overseas. Who can forget his press conference at his Scotland resort on the night of the Brexit vote? But he didn't close a Trump resort in the United States to build it.

Protectionism has always had an uneasy place in conservatism. But, there is clearly good reason to believe Trump is not pushing a Bernie Sanders-style knee-jerk isolationism. Trump understands business and now his business is U.S. employment, which he will likely make part of almost any future deal.

  1. boeing
  2. Carrier
  3. Donald Trump
  4. economy
  5. Government Contracts
  6. jobs
  7. lockheed martin
  8. UTC
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