Promised Presidential Executive Orders in State of the Union

Raising Minimum Wage on Federal Contracts & Streamlining Permitting Process During Tuesday’s State of the Union, President Obama announced a host of planned executive orders. Most pertinent to the construction industry was: (1) a mandate to increase the minimum wage on federal contractors; and (2) another to streamline permitting processes for construction projects. According to the president, he will sign an executive order requiring federal contractors to pay their employees a minimum $10.10 per hour. However, the White House did not release a draft executive order and has not provided significant insight on how the president would structure such a mandate. Reports indicate that this mandate would only apply to new, direct-federal contracts awarded in 2015. It would not apply to existing direct-federal contracts, which could include task orders issued in 2015 on pre-existing multiple award contracts. While not certain, it is considered unlikely that such a mandate would apply to federally-assisted contracts, i.e., contracts issued by state departments of transportation for federal highway construction. More questions include whether such a mandate would flow down to subcontractors—and likely putting prime contractors on the hook for ensuring subcontractor compliance—and how such a mandate would work under standing prevailing wage laws—both state and federal. The president also declared his intent to streamline the permitting process for key construction projects. Again, however, he did not provide any significant thought on how he would do so. The president previously signed Executive Order 13604 in 2012 on improving performance of federal permitting and review of infrastructure projects. In 2013, he also put forth a presidential memorandum to further implement that executive order. Such endeavors are a step in the right direction, but while these documents instruct federal agencies on how to better coordinate their permitting efforts, they do not substantively address the host of environmental laws that enable federal agencies to drag out project permitting and study processes for years and even decades. President Obama can only address such significant problems through working with Congress and passing legislation. For more information, please contact Jimmy Christianson at 703-837-5325 or christiansonj@agc.org.