Preemption By Procurement


The federal government’s enormous financial commitment to infrastructure development has drawn renewed attention to the transformative economic potential of public procurement. However, as this Article shows, that potential is limited by the little-known federal competition rule, which requires state and local governments using federal transportation funds to award contracts through a process of “competitive bidding.” Over the past forty years, this rule has been interpreted to require that federally funded contracts be awarded to bidders based on “cost-effectiveness” rather than a broad socioeconomic return on the investment of public funds. The consequences of this interpretation have been unappreciated and far-ranging. Under the competition rule, federal agencies can dictate the priorities of state and local governments in their contracting by preempting innovative local policy efforts to address labor precarity, racial inequality, and environmental degradation. The central contribution of this Article is to reveal how this preemption by procurement operates and to demonstrate why it is improper as a matter of law and policy. The Article does so by recovering the legal history of competition in federally funded transportation procurement, showing how it was transformed by the Reagan Justice Department from a mechanism for preventing collusive bid rigging into a tool for undercutting progressive state and local policy. Uncovering this history reveals that the competition rule was never intended to preempt state and local government authority to develop tailored contracting standards to meet pressing local needs; to the contrary, the evolution of the competition rule shows its consistent support for non-efficiency-based socioeconomic goals. By reclaiming the broader meaning of competition, the Article seeks to unlock the potential of state and local government transportation contracting to improve the economic security and health of American workers, while promoting climate resilience and racial justice. It advances this project through affirmative proposals for regulatory revisions to widen the scope of opportunity for what we call responsible procurement, which gives states and localities discretion to use federal funds to meaningfully address the crucial challenges of our times.