President Carter's biggest club in enforcing his anti-inflation program probably is this power to prevent government contracts from going to companies that do not adhere to his "voluntary" guidelines for wages and price increases.
But even that power has severe limitations though the government buys $85 billion worth of goods and services a year.
For starters, the government will ask only firms that sign federal contracts over $5 million to certify that they are in compliance with the program. Compliance means companies are holding wage and benefit increases to 7 percent and keeping price increases 1/2 percent below the average level of their price increases in 1976 and 1977.
Far few than 1,000 of the 250,000 firms that do business with the government sign contracts over $5 million, perhaps as few as 250.
Furthermore, one official noted, about two-thirds of those firms probably are defense contractors, many of whom are the only possible supplier of the good or service.
And, since most companies signing $5 million contracts are usually large, the threat of losing government business is probably not enough, by itself at least, to comply with the wage-price standards.
"We deal with two types of companies," one official said, somewhat ruefully, "Those that we cannot do without and those that can do without us."
But administration officials emphasized that since the program is voluntary, all of the sanctions it has in the closet - from debarment to the removal of import restrictions for industries where prices climb too fast as well as bringing public pressure to bear - are designed to encourage companies to comply rather than punish them for not complying.
"Presumably the symbolic effect of being denied a government contract would be much stronger than the financial impact," said one official.
The Office of Federal Procurement Policy is working on regulations that will be simple, according to director Lester A. Fettig. He said the compliance certification will be limited to $5 million contracts at first so that "we don't bite off more than we can chew."
But he said the threshhold would get smaller as the government got more experience using procurement to induce companies to comply with the guidelines.
Only contracts signed after Jan. 1 will have to contain the certifications.
Fettig said that they will also watch carefully firms or industries that are identified by the Council on Wage and Price Stability as being out of compliance. COWPS will monitor the nation's 400 largest companies as well as other major industries and wage settlements.
The new regulations will contain sanctions for companies that certify they are in compliance but then default. But officials said the regulations - like the watch list that the Council on Wage and Price Stability will maintain - will be reasonable.
"If you face a 90-day strike then settle on a wage and benefit package that is higher than the standard, we're not going to finger you. Nor is COWPS. We're not out to put people out of business," an official said.
The list of sanctions could range from forcing a knowing violator to take no profit on his contract to no action at all in the case of a company that is forced into technical non-compliance.
One other major incentive the government can influence directly are tariffs or other import restrictions. If an industry such as steel were to boost its prices at rates the government disapproves, the administration could threaten to dismantle trigger price protection.
The government has also negotiated voluntary import restrictions from countries supplying televisions, and shoes. But one trade official cautioned that the nation must be careful of unilateral liberalizations of imports at a time when the nation is negotiating a far-ranging multi-lateral trade agreement in Geneva.