Government Contracting: A Practical Way Forward on Climate Change & Corporate Responsibility

A responsible company holds itself accountable to shareholders, customers, employees, and society.  Even in the face of the bruising it took on health care and the fight still ahead on financial reform and climate change, it increasingly looks like President Obama may have found a "third way" forward on his related agendas of climate change and corporate responsibility.  Following a long tradition of using the government's purchasing power to advance a social agenda, the Administration may raise accountability and sustainability standards for government contractors, making them more responsible corporate citizens, writ large.

 

 

Last year the President signed Executive Order 13514 which, in part, intends to "leverage Federal purchasing power to promote environmentally-responsible products and technologies."  Congress is considering legislation that would require additional disclosures and greater transparency from companies seeking to sell to the government.  And now the Office of Management and Budget is rumored to be considering a “High Road Contracting” initiative that would raise the standards for good corporate citizenship among these companies. 

Not only does this approach have historical precedent, it has merit – and risks.  About 2/3rds of America's largest companies on the Russell 1000 Index sell something to the government.  For many of them, if the government isn't their biggest customer, it's among the biggest.  There's an old saying, "If you want to change the world change California and change Wal-Mart."  Both institutions represent massive buying power and a deep reach into the entire American supply chain.  But both are dwarfed by the reach of the US federal government.  If the world’s biggest customer says jump, a good number of companies will jump.

 

So as a tool, it’s one that could have real impact.  At the same time, the process of arriving at how to use this tool has potential pitfalls.  The biggest danger?  It turns into a free-for-all with everyone piling on their pet hobby horse: preferences for small businesses, companies in specific Congressional districts, “buy America”, low carbon footprint, the list could stretch on forever.  Any of these may have merit on their own, but buying and selling stuff to the US government is not an easy business.  I should know:  I’ve seen it from both sides.  I spent the better part of my formative professional life managing and selling services to the Department of Defense and serving as an advisor to the Assistant Secretary of the Navy for Research, Development, & Acquisition.  The average government contractor survives on slim margins and the average government procurement official already has a library full of acquisition regulations to adhere to.  No new regulations are better than ill conceived ones.

 

Done well, though, the Administration could use its purchasing power – or even just the hint of it – as a proving ground for its overall agenda, demonstrating the viability of new corporate accountability and climate change policies before going mainstream.  That means the approach needs to be deliberative with an eye on the long term.  Any policy fielded should be something considered viable nationwide.  It needs to be developed in the open and with input from multiple constituencies. 

That’s why the CROA is proud to announce the formation of the Corporate Excellence for Government Roundtable, a cross-sector community drawing together leaders from government, industry, academia, non-profits, and other communities to openly discuss how to improve corporate accountability and sustainability.  The Roundtable will hold its inaugural event on June 30th at the George Washington University.  At the event CR Magazine will announce its list of the Best Corporate Citizens in Government Contracting.  Click here for more details and to here register to attend.   

This Roundtable will anchor a deliberative discussion and produce results that advance the accountability and sustainability of government contractors and make real progress toward a nationwide energy and corporate responsibility policy.  We welcome all constituencies to join the discussion.

  A responsible company holds itself accountable to shareholders, customers, employees, and society.  Even in the face of the bruising it took on health care and the fight still ahead on financial reform and climate change, it increasingly looks like President Obama may have found a "third way" forward on his related agendas of climate change and corporate responsibility.  Following a long tradition of using the government's purchasing power to advance a social agenda, the Administration may raise accountability and sustainability standards for government contractors, making them more responsible corporate citizens, writ large.

 

 

Last year the President signed Executive Order 13514 which, in part, intends to "leverage Federal purchasing power to promote environmentally-responsible products and technologies."  Congress is considering legislation that would require additional disclosures and greater transparency from companies seeking to sell to the government.  And now the Office of Management and Budget is rumored to be considering a “High Road Contracting” initiative that would raise the standards for good corporate citizenship among these companies. 

Not only does this approach have historical precedent, it has merit – and risks.  About 2/3rds of America's largest companies on the Russell 1000 Index sell something to the government.  For many of them, if the government isn't their biggest customer, it's among the biggest.  There's an old saying, "If you want to change the world change California and change Wal-Mart."  Both institutions represent massive buying power and a deep reach into the entire American supply chain.  But both are dwarfed by the reach of the US federal government.  If the world’s biggest customer says jump, a good number of companies will jump.

 

So as a tool, it’s one that could have real impact.  At the same time, the process of arriving at how to use this tool has potential pitfalls.  The biggest danger?  It turns into a free-for-all with everyone piling on their pet hobby horse: preferences for small businesses, companies in specific Congressional districts, “buy America”, low carbon footprint, the list could stretch on forever.  Any of these may have merit on their own, but buying and selling stuff to the US government is not an easy business.  I should know:  I’ve seen it from both sides.  I spent the better part of my formative professional life managing and selling services to the Department of Defense and serving as an advisor to the Assistant Secretary of the Navy for Research, Development, & Acquisition.  The average government contractor survives on slim margins and the average government procurement official already has a library full of acquisition regulations to adhere to.  No new regulations are better than ill conceived ones.

 

Done well, though, the Administration could use its purchasing power – or even just the hint of it – as a proving ground for its overall agenda, demonstrating the viability of new corporate accountability and climate change policies before going mainstream.  That means the approach needs to be deliberative with an eye on the long term.  Any policy fielded should be something considered viable nationwide.  It needs to be developed in the open and with input from multiple constituencies. 

That’s why the CROA is proud to announce the formation of the Corporate Excellence for Government Roundtable, a cross-sector community drawing together leaders from government, industry, academia, non-profits, and other communities to openly discuss how to improve corporate accountability and sustainability.  The Roundtable will hold its inaugural event on June 30th at the George Washington University.  At the event CR Magazine will announce its list of the Best Corporate Citizens in Government Contracting.  Click here for more details and to here register to attend.   

This Roundtable will anchor a deliberative discussion and produce results that advance the accountability and sustainability of government contractors and make real progress toward a nationwide energy and corporate responsibility policy.  We welcome all constituencies to join the discussion.
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