IS THE GREENHOUSE GAS RULE WORTH THE EFFORT?
The Federal Acquisition Regulation (FAR) Council is seeking comments from industry on its proposed rule requiring contractors with over $7.5 million in annual government business to take various steps, depending on total sales, to track, report, and mitigate their greenhouse gas (GHG) emissions. Before the Council implements the rule, however, they should analyze the costs associated with it against any perceived benefits. The current generic term for this asks “is the juice worth the squeeze?”. It is an established best practice that all regulatory actions, including those that are procurement-related, go through a cost benefit analysis to ensure that the new requirements are justified based on quantifiable evidence. The costs of new GHG tracking and mitigation requirements are real, yet the universe of companies doing business in this market is small compared to the much, much larger commercial market. It is unlikely that merely imposing the requirements called for in the proposed rule would have any meaningful impact on worldwide GHG emissions. The FAR Council should quantify the expected benefits and weigh them against the cost of implementation before imposing new costs on industry. It should not be too much for industry to ask the government to do a little of its own research before it imposes new research requirements on others. If the Council does elect to move ahead, though, it should absolutely do so in tandem with the Securities and Exchange Commission that is also developing GHG requirements for publicly traded companies. The SEC rules could have a wider impact, but if the two actions are not coordinated, publicly traded companies that also sell to the government could be covered by two similar, but not identical, rules, each with its own data collection, reporting, and mitigation requirements. That adds to both cost and confusion for contractors and will ironically have the potential impact of requiring more paper generation, driving up GHG emissions. Contractors should absolutely comment on the proposed rule and understand the potential impact on their business. In the meantime, the FAR Council should take care to not impose new costs that will bring little, if any benefit, and coordinate its actions with other agencies promulgating similar rules.