An Executive Order Against Offshoring


    Pennsylvania governor Edward G. Rendell today issued an executive order titled, "Contractor Social Responsibility and Offshore Services," in which he strongly encourages state agencies to reduce the amount of work they do with companies that send work offshore.

    These are double-edged swords, of course. On one hand, it makes for great press, because it looks like the governor is preserving jobs within his own state. On the other hand, taxpayers will probably take a hit for it since domestic firms may be in a position to have to charge more when the work is retained domestically. On the other hand, unemployed or underemployed people also cost taxpayers, in the form of state aid. On the other hand, when you’re governor, you have to act like you care about what happens to the residents of your state.

    I don’t know what the answer is to this kind of proclamation. I only know the issues are complex.

    Here’s the full text of the order:

    Whereas, the Commonwealth spends more than 100 million dollars in public funds each year for the procurement of various necessary services that could potentially be outsourced offshore and bears a responsibility to the taxpayers to ensure that these funds are spent reasonably and appropriately; and

    Whereas, increasingly many of the companies with whom the Commonwealth contracts with for services provide key elements of these services outside of the geographical boundaries of the United States; and

    Whereas, in many cases sending these services off-shore raises significant concerns about contract compliance, the treatment of sensitive and confidential information and other security concerns; and

    Whereas, off-shore outsourcing can result in the partial or full eliminate domestic jobs and has the potential to weaken the economy of the Commonwealth and the United States; and

    Whereas, the U.S. Department of Labor has certified that since January, 2000 to the present, there have been 1,391 Pennsylvania businesses, with a total of 268,672 workers in Pennsylvania negatively impacted by trade/foreign imports typically resulting in the elimination of jobs; and .

    Whereas, according to The Economist Magazine (February, 2005) data from Forrester Research estimates that 3.3 million service industry jobs will have moved overseas by 2015 to take advantage of cheaper labor markets; and

    Whereas, the Commonwealth recognizes that it operates in a global economy and that prohibitions against contracting for services performed abroad may implicate agreements negotiated by the United States government and may increase the costs paid by taxpayers for goods and services; and

    Whereas, the Commonwealth must balance the interest in ensuring efficient and effective use of taxpayer funds in serving the public interest with the need to ensure the security of sensitive information and to monitor contract compliance, and therefore has an interest in understanding the extent to which contractors and potential bidders provide contracted services outside of the geographical boundaries of the United States; and

    Whereas, therefore, it can be appropriate under certain circumstances to use the competitive bidding process to create incentives for companies to utilize domestic labor when performing services under a contract with the Commonwealth by giving additional consideration in the contractor selection process to those companies that certify that they will perform contracted services within the geographical boundaries of the United States.

    Now therefore, to the extent permitted by the laws and agreements of the United States and the Commonwealth of Pennsylvania, it shall be the policy of the Commonwealth that when Commonwealth executive agencies procure services using the competitive sealed proposals method or the multiple award best value selection method to give additional consideration to those companies that certify that they will perform contracted services within the geographical boundaries of the United States.

    1. Additional Solicitation Requirement.

    Every entity submitting a bid or proposal to provide services to a Commonwealth executive agency shall clearly identify which, if any, elements of the service it proposes to perform outside of the United States in the bid or proposal documents as required under section 2 below, either directly or through other contracts.  In developing the criteria for evaluating proposals and selecting contractors, the Commonwealth executive agency shall consider the extent to which each potential contractor proposes to perform elements of the service being procured outside of the United States to the extent permitted by the laws and treaties of the United States and shall clearly state the criteria being used to make such an evaluation in all requests for proposals or other bidding documents, . This requirement shall apply to contracts issued pursuant to Sections 513 (relating to competitive sealed proposals) and 517 (relating to multiple awards) of the Commonwealth Procurement Code, 62 Pa.C.S.

    2. Certification.

    All potential contractors who propose to perform contracted services must provide a signed, written certification with their bid or proposal as to those elements or services which will be provided physically or by contract outside of the geographical boundaries of the United States.

    3. Evaluation.

    In the selection process, the Commonwealth executive agency shall award points commensurate with the amount of contracted services performed in the United States relative to amount of contracted services performed in the United States by other offerors or contractors.  Those offerors or contractors who do not provide the certification required under section 2 above shall not receive any of the points allotted for this criterion/evaluation factor.

    4. Remedies.

    Any contractor or subcontractor who is found to have falsely certified that services covered under a proposed contract will be performed within the United States or who fails to otherwise conform to the certification by providing services outside of the United States which had been certified as being provided within the United States shall be subject to any or all of the following:

    (i)    The contract at issue may be cancelled;

    (ii)   The contractor may be debarred from doing business with the Commonwealth;

    (iii)  Criminal action may be taken for filing a false certification with a public official;

    (iv)   Payment may be withheld by the Commonwealth purchasing agency;

    (v)    The Commonwealth purchasing agency may take action to recover any and all payments made.

    5. Audit.

    The Commonwealth purchasing agency shall reserve the contractual right to audit the books and records of a contractor or any subcontractor under any contract or subcontract to ensure compliance with the certification submitted by the contractor or subcontractor under Paragraph 2