Analysis Shows Cost of Hiring Quotas for Federal Construction Contractors Underestimated

Administration officials significantly underestimated the cost to construction employers of proposed new hiring quotas for federal contractors according to a new analysis released by the Associated General Contractors of America. According to the analysis, a proposed new hiring quota for the disabled would cost employers 30 times more than officials predict, while a new hiring quota for veterans would cost employers 20 times more than originally estimated.

“The administration has grossly underestimated the financial and administrative burdens that these new rules would impose, particularly on small businesses,” said Brian Turmail, the association's spokesperson. “If the proposed rules take effect, many small construction firms may no longer be able to afford to work on federal projects.”

Turmail noted that the administration's proposal to force federal contractors to make sure that 7 percent of their workers in each job category are disabled would cost construction firms $14,056 per year for each of their office locations, 30 times higher than the $473 compliance cost the administration suggested in its proposed rules. In addition, employers would have to spend at least 1,444 hours per office location complying with the new rule, 185 times longer than the 7.8 hours federal officials estimated.

The spokesperson added that the administration's proposed veterans hiring quota would cost construction firms a minimum of $11,333 per year per office location, 25 times more than the $560 estimated by the Department of Labor. That rule would also force construction employers to spend at least 1,267 hours per year per office site to comply, 140 times longer than the nine hours Labor officials originally suggested. Turmail noted that the added burden the new rules would impose on firms, when combined with the cost of complying with other regulations would likely be too much to bear for many small firms considering working on federal projects.

The analysis was based on detailed evaluations of the hiring quotas conducted by construction firms that would be covered by the rule. Association officials added that the new rules aren"t even needed, considering federal data indicates contractors are already doing everything within their power to hire people with disabilities and veterans. And the current unemployment rates for people with disabilities and veterans — which the Department cites to justify its new quotas — are lower than for construction workers.

The proposed new rules require firms to meet sweeping new reporting requirements, establish formal partnership agreements with community outreach programs to help with recruiting, and put in place new training programs, among other costly new measures. If firms fail to meet the “goals” set out in the two proposed rules, they face federal audits and potential debarment from working on future federal contracts.