The Buck Stops Here: Using Public Funds for Public Good

By Amol Mehra, Esq. and Mike Lally

The United States spent around $3.6 trillion last year, on products, services, and employment, including contractors. Which companies benefited from these lucrative deals with our government? And what were our conditions on their performance? Shouldn't we, as the taxpayers that are funding these purchases, be able to expect the beneficiaries of these contracts to act in a way that reflects our values? As the largest procurer of goods and services in the world, we could have a tremendous impact in promoting human rights protections, both here and abroad, if we leveraged the use of our procurement dollars.

We've all heard the old adage that the customer is always right. As a customer with a few trillion dollars to spend, the U.S. government has a tremendous amount of leverage, and is no stranger to using this leverage to achieve policy goals or generate social benefits domestically and internationally. For instance, the U.S. already grants preferences in contracting to minority-owned businesses. In 1999, the Clinton administration issued Executive Order 13126, "Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor." More recently, in 2012, President Obama passed Executive Order 13627 "Strengthening Protections Against Trafficking in Persons in Federal Contracts." Even at the state and local level, many governments have joined the SweatFree Purchasing Consortium in an effort to improve working conditions in factories they purchase their uniforms and other textiles from. In 2012, Maryland passed the Maryland State Procurement and Congo Conflict Minerals Bill, in an effort to make sure its procurement process was conflict mineral free, following in the footsteps of California.

These efforts have all been a step in the right direction, but barely scratch the surface of the potential for a comprehensive solution for incentivizing human and labor rights protections through government procurement. By requiring government contractors to perform broad human rights due diligence in their supply chains and through their business relationships, the government could do wonders in promoting human rights and development aims. And in so doing, it wouldn't be creating unreasonable burdens on business actors. Due diligence is a concept almost every business is familiar with or already performs, including in the context of mergers and acquisitions, to deal with workplace health and safety issues, environmental harms and anti-corruption efforts. A comprehensive human rights due diligence requirement as a precondition for government contracts could bring these various requirements together, helping companies address individual regulatory demands in a holistic approach.

The U.S. government wouldn't be the only one moving in this direction. Australia recently announced a new initiative to prevent human trafficking in government procurement. In Norway, the national pension fund requires ethical screening of its investments, its export credit agency imposes human rights requirements on borrowers, and the government has recently released "A Guide to Human Rights Due Diligence in Global Supply Chains," as part of efforts to develop a government-wide approach to socially responsible procurement. Similar efforts to factor environmental and social considerations into procurement are underway in the EU.

Reforming the way our government examines human rights, including labor rights, through procurement would benefit workers within the U.S. as well. Non-union federally contracted workers have staged several strikes in the last few months, over low-wages and alleged wage-theft. A study by the progressive think tank Demos estimated that 1,992,000 workers who jobs are funded by tax payer dollars receive $12 per hour or less.

Reforming our procurement schemes to require human rights performance could also benefit our image abroad. For instance, if private military contractors who are hired by the United States were required to evidence human rights respect in their operations, with credible independent monitoring, it might help restore trust both domestically and internationally in U.S. contractors. Efforts in this regard are already underway through a multi-stakeholder initiative known as the International Code of Conduct for Private Security Providers. The U.S. government should make security contracts conditional on membership and certification to this Code, ensuring that minimum standards are set for human rights protections and that abusers don't benefit from government dollars.

Our tax dollars should not be lining the pockets of any business that makes profits through complicity in human rights violations, be they the atrocities in the Congo, trafficking in humans, child labor or sweatshops. By calling on our government to reward human rights performance in government contracts, we are putting our money where our mouth is and using our power to promote human rights the world over.