Federal procurement is a powerful weapon by which American presidents attempt to expand their power and shape public policy in areas in which Congress has not acted or will not act. In the same way that presidents exercise political control over the bureaucracy and agency regulatory rulemaking, they exert direct control and influence over procurement rulemaking and thereby attempt to shape the behavior of private sector companies. For more than half a century, presidents have exercised this political control over federal procurement and influence on public policy without violating the separation of powers, affirming the unilateral presidential power of the purchaser-in-chief to set terms and conditions beyond a traditional proprietary contractual relationship.
Historically, procurement- and acquisition-related executive orders have been based upon the president's broad powers under article II of the Constitution or the powers delegated to the president under the little-known 1949 Federal Property and Administrative Services Act (FPASA). In the latter, Congress delegated statutory authority to the American president to act as the "principal and uniform" purchaser in contracting with any private sector entity that does business with the federal government. The FPASA authorizes the president to adopt policies and directives that provide for an "economic and efficient" procurement system. Presidents thereby gain a range of strategic advantages over Congress, largely as a result of the legislature's collective-action problems, the relative ease with which the president can block attempts to reverse procurement and acquisition orders, and a range of federal judicial decisions affirming congressional delegation of this statutory authority.
Through this power of the purchaser over time, presidents attempt to influence public policy and private sector behavior in contested areas such as antidiscrimination and equal employment opportunity; unemployment and inflation; labor-management relations; environmental protection; gun control; international child labor standards; immigration enforcement; economic opportunities for minority- and women-owned businesses, service-disabled veterans, and accountability and transparency in political contributions from federal contractors.
To make policy in many of these areas, presidents need not always secure the consent of Congress. Instead, presidents simply amend federal purchasing rules and dare others to oppose the change. In this, the market and political power of the purchaser can be more important--for presidential power, for the administrative presidency, for policy making--than political scientists have recognized.
The Administrative Presidency and Political Control of the Bureaucracy
The administrative presidency remains the nexus of policy making in the modern era. Any discussion of the administrative presidency focuses on the emergence of national administrative agencies and the formulation of public policy through them. Presidents have sought to exert political control and influence over the administrative state through a variety of means such as expanding the White House staff and centralizing political control over federal regulatory policy. Modern presidents have exerted political control and influence over all federal rulemaking at the start of their administrations by imposing moratoriums on new regulations and postponing the effective dates of existing rules (Copeland 2008).
The theme of political control--how politicians control bureaucrats and how bureaucrats control subordinates--permeates the administrative presidency literature. While disagreement remains about who controls the bureaucracy, a scholarly consensus holds that agencies translate the broad mandates of political actors into concrete policy. Scholars focus on how presidents get political control of the institutions that create and implement policy as a means of exercising "residual decision rights." Since statutes inevitably leave discretion to the executive, often by design, the president has many opportunities to exercise this residual authority (Mayer 2001, 24). Indeed, presidents have attempted to centralize (and to augment) their political control over the bureaucracy by drawing on every power, formal and informal, at their disposal (Lewis and Moe 2009; Moe 1989).
Presidents and their staffs consider executive orders an indispensable policy and political tool (Mayer 2001). Executive orders and presidential policy directives to the bureaucracy are instruments of political control and influence. Formally, an executive order is a directive that draws on the president's unique legal authority to require or authorize some action within the administrative state (Mayer 1999). The ability to issue and to enforce an executive order is based on statutory authority, an act of Congress, or the Constitution. (1) Executive orders are not defined in the Constitution, and there are no specific provisions in the Constitution authorizing the president to issue them. (2) These orders are used to direct agencies and officials in their execution of congressionally established policies. In many instances, they have been used to guide federal administrative agencies in directions contrary to congressional intent.
Political scientists recognize executive orders as an important policy tool, however constrained by legal and political considerations its use may be (Deering and Maltzman 1999; Krause and D. Cohen 1997; Mayer 1999, 2001; Moe and Howell 1999a). Presidents have used executive orders to reorganize executive branch agencies, to alter administrative and regulatory processes, to shape legislative interpretation and implementation, and to make public policy. (3) In a study of the history of executive branch practice, Calabresi and Yoo (2008) conclude that since the days of George Washington, presidents have consistently asserted their power to execute law. (4)
To have the full force of law, executive orders must be "derived from the statutory or constitutional authority cited by the president in issuing the decree" (Cooper 2002, 21). However, courts have allowed the president to claim implied statutory authority when Congress has not opposed the president on the public record. In staying out of separation-of-powers issues, the courts have left it up to Congress to protect its own interests against the expansion of executive power. More broadly, executive orders have continued to grow in importance, and overly deferential court decisions have laid the foundation for further expansion. Congress has had a difficult time enacting laws that amend or overturn orders issued by presidents, though efforts to either codify in law or fund an executive order enjoy higher success rates. While judges and justices have appeared willing to strike down executive orders, the majority of such orders are never challenged, and for those that are, presidents win more than 80% of the cases that go to trial (Howell 2005).
Presidents thus have a unique position in which they seek to gain political control and influence over policy making (Moe and Wilson 1994). In the same way that presidents exercise political control over the bureaucracy and influence agency regulatory rulemaking, they also exert direct control and influence over federal procurement and acquisition rulemaking and attempt to shape private sector behavior. Presidents can use their power of the purchaser to extract behavioral adjustments from private sector actors and/or to supply benefits to key political constituencies. Republicans and Democrats, for example, have used labor-management procurement-related orders to advance key electoral supporters'--organized labor and business--political (and economic) interests.
The Market Power of the Purchaser
Federal contracting (and subcontracting) with the private sector is a political as well as an economic exchange. The federal government can provide public goods and services by either making them or buying them. Procurement is the purchasing of goods and services by contract, purchase card, grant, intragovernmental transaction, or other means of sourcing. The federal government has used procurement to draw on a range of private sector expertise and thereby perform functions more effectively and efficiently. Governments contract for products and services that its employees use (such as office supplies, computers, and fighter aircraft) and for services it provides to others (such as collecting on delinquent student loans, running customer-service hotlines, and delivering job training) (Kelman n.d.).
Early in the twentieth century, the federal government was a relatively small and unimportant purchaser of good and services. However, by fiscal year (FY) 1982, federal procurement spending reached $158.9 billion and a high of 4.89% of gross domestic product (GDP). Total federal procurement spending has continued to grow, reaching $168.1 billion in FY 1983, $218.8 billion in FY 2000, $523.8 billion by FY 2009 (3.71% of GDP) (see Figure 1). The U.S. federal government has thus become the world's largest purchaser of goods and services (Lew 2011; Manuel et al. 2012). Approximately 22% of U.S. workers are employed by entities subject to requirements placed on certain federal and federally funded contractors and subcontractors pursuant to executive orders (Burrows and Manuel 2011). Thus, some analysts have argued that if presidential power to impose requirements on federal contractors (and subcontractors) is construed broadly, the president could effectively regulate significant sectors of the U.S. economy. As a result, the American presidency has substantial market and political power as a purchaser.
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The private sector companies that contract with the government are not small players. For example, the ten companies that received the most federal procurement dollars in FY 2010 included defense contractors such as Lockheed Martin,...