Government Procurement as Economic Transformation
Government spending on contracts is massive. The federal government alone spends $600 billion or more annually. State and local governments add hundreds of billions more. Currently this money flows to extractive corporations. Redirecting it to worker cooperatives transforms the economy without additional spending.
Preferential Bidding Structure
Tier 1: Worker Cooperatives
Worker cooperatives get first opportunity to bid on all contracts. If a cooperative can deliver at competitive price and quality, the contract is awarded automatically. “Competitive” is defined as within 10% of the lowest bid to account for building cooperative capacity. Cooperative certification process is streamlined and free.
Tier 2: Small Local Business
If no qualified cooperative bids, preference goes to small business under 100 employees. The business must be locally owned, not a franchise or subsidiary.
Tier 3: Union Shops
If no cooperative or small business qualifies, preference goes to unionized companies verified through union certification.
Tier 4: Standard Competitive Bidding
Only if no qualified bids from Tiers 1 through 3 do we use standard competitive bidding.
Implementation Details
Contract carve-outs reserve a percentage of large contracts for cooperative subcontractors. Prime contractors must demonstrate a cooperative participation plan. This prevents large contracts from excluding cooperatives entirely.
Payment terms favor cooperatives with 30% upfront payment (standard is 0%) to address working capital challenges new cooperatives face. Net-30 payment terms replace standard net-60 or net-90.
Technical assistance provides free bid preparation support from government. This helps cooperatives navigate procurement bureaucracy and levels the playing field against corporations with bid departments.
Performance bonds are government-backed for cooperatives, eliminating the barrier of expensive commercial bonding. These are conditional on cooperative certification and insurance.
Multi-year contracts with preference for 3 to 5 year terms provide stability for cooperative business planning and reduce administrative overhead of annual rebidding.
What This Changes
IT Services
Currently, Accenture, Deloitte, and Booz Allen Hamilton extract billions while delivering poorly. In the future, developer cooperatives build systems faster, cheaper, and better. The Alaska Business Network was built in less than one week versus 18 months and $5 million from consultants.
Building Construction
Currently, large contractors hire subcontractors, extract margins, and often deliver late and over budget. In the future, worker-owned construction cooperatives build directly with workers benefiting from public investment.
Maintenance and Repair
Currently, service contracts go to extractive companies providing poor service at high prices. In the future, HVAC, electrical, and plumbing cooperatives provide better service with profits going to workers.
Professional Services
Currently, consulting firms charge $300 per hour, pay workers $80 per hour, and extract $220 per hour. In the future, professional cooperatives charge $150 per hour, workers receive $120 per hour, with $30 per hour for overhead.
Landscaping and Facilities
Currently, contracts go to companies paying minimum wage with high turnover and poor quality. In the future, worker-owned landscaping cooperatives offer living wages and pride in work.
Food Services
Currently, Aramark and Sodexo extract profits while providing terrible food to schools, hospitals, and prisons. In the future, worker-owned food cooperatives provide better food and better wages.
The Economic Impact
If even 30% of government contracts flow to cooperatives instead of extractive corporations, we redirect $200 billion or more annually to building worker ownership. Hundreds of thousands of workers become owners. Profits stay in communities instead of extracting to distant shareholders. This creates a demonstration effect showing worker ownership is viable at scale. It provides a training ground for democratic workplace governance.
Preventing Gaming
Real cooperative requirements verify one worker, one vote governance. Profit sharing is verified through tax returns. Front organizations for traditional corporations are prohibited. Annual certification is required.
Quality standards ensure cooperatives must meet the same quality and delivery standards. Poor performance results in decertification, maintaining accountability.
Transition support gives existing contract workers support to form cooperatives and bid. They receive right of first refusal when contracts come up for rebid. Technical assistance helps in cooperative conversion.
Why This Works
Government is already spending this money. No new taxation is required. We just redirect existing spending from extractive corporations to worker ownership. Government acts as market participant with values-based procurement, using purchasing power to build the economy we want.
Political Viability
This is hard to argue against. “We’re giving preference to businesses where workers are owners” is straightforward. Opponents have to argue that worker ownership is bad or that government should prefer extractive corporations over worker-owned businesses. Neither is a politically viable position.
This is how we build worker ownership at scale, starting now, using existing government spending.