Summary: GAO was requested to give a legal opinion on the authority of the President to condition eligibility for government contracts on compliance with wage and price standards issued pursuant to Executive Order 12092. The President cannot impose mandatory wage and price controls on the economy in the absence of authorizing legislation, and there is currrently no operative statute giving the President such power. The Administration's Anti-Inflation Program clearly aims toward achieving wage and price stability through voluntary compliance; failure to abide by the President's guidelines is not a violation of law. To the extent that private enterprise is virtually dependent upon government business, the requirement to comply with "voluntary" guidelines poses an obvious dilemma. The enterprise must comply, cease doing business, or obtain a waiver of the requirement from the government. Compliance under such circumstances can hardly be labeled voluntary. Insofar as Executive Order 12092 and implementing regulations thereunder apply a mandatory scheme of wage and price standards in the goverment procurement process, the order and regulations lack the force and effect of law.
