Proposal to keep repeat labor-law violators off contracts draws opposition

The Obama administration’s attempt to streamline the federal procurement process and bolster labor protections for government and contract employees is coming under strong opposition from federal contractor groups.

The Federal Acquisition Regulatory (FAR) Council issued a proposed rule and the Labor Department released a guidance memo today aimed at improving contractor compliance with labor laws.

The rule and guidance seek to implement Fair Pay and Safe Workplaces, an executive order President Barack Obama signed on July 31, 2014.

“Under the terms of the Executive Order, agencies will require prospective contractors to disclose labor law violations from the past three years before they can get a contract,” said a factsheet that accompanied the executive order. “The 14 covered Federal statutes and equivalent state laws include those addressing wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights protections. Agencies will also require contractors to collect similar information from many of their subcontractors.”

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Among other things, the executive order seeks to crack down on repeat offenders — contractors who routinely violate federal labor laws.

“The Executive Order will ensure that the worst actors, who repeatedly violate the rights of their workers and put them in danger, don’t get contracts and thus can’t delay important projects and waste taxpayer money,” the factsheet said.

‘Blacklist’ proposal called flawed and unfair

Stan Soloway, CEO and president of the Professional Services Council, agreed that “repeated violations of law should not be awarded federal contracts.” However, he said, in a release, the rule, guidance and underlying executive order are “un-executable” and deny due process for contractors.

“The rule and guidance treat mere allegations of wrongdoing — which have not been fully adjudicated — similar to adjudicated cases where the established legal procedures have been allowed to play out as intended,” Soloway said. “The same is true for the proposals’ treatment of arbitral settlements and settlements without any finding of guilt. Adding additional penalties to the ones already prescribed in law is tantamount to double jeopardy. And adding them only for contractors is a double standard.”

He added that the policy was fundamentally unnecessary and unfair.

“It is all the more troubling that the government already has a wide range of authorities under which to deny contracts to companies it deems to be irresponsible or unethical,” Soloway said.

He added the proposals establish a sweeping and flawed reporting system.

“By the administration’s own admission, the largest part of the problem they are seeking to address is the poor quality of internal information systems to track relevant data,” he said. “It would be a much wiser use of taxpayer funds to fix those information systems rather than foist such a legally questionable and massive new compliance regime off on to law-abiding, high-performing companies who already expend inordinate resources complying with scores of other government-unique requirements.”

As part of the executive order, each agency would appoint a senior official as a Labor Compliance Advisor, to assess whether contractors exhibit business ethics and integrity.

Associated Builders and Contractors (ABC), a trade organization representing the national construction industry, came out against the proposed rule and guidance, calling them a “blacklisting” proposal.

“This rule creates a murky federal acquisition system that is absurdly cumbersome and allows contracts to be awarded in a subjective nature by unelected bureaucrats,” said Geoff Burr, ABC’s vice president of government affairs, in a release. “The ‘blacklisting’ proposal released today will unnecessarily complicate the federal acquisition process by adding undue subjectivity and may result in some of the best federal contractors being blacklisted from winning future contracts. Additionally, the administration’s latest assault on federal contractors will result in more bid protests and more frequent and costly labor and employment disputes.”

Individuals have 60 days to make comment on the proposed rule to Regulations.gov.

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