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U.S. Violators Reap U.S. Contracts

Monday, December 16, 2013

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Major wage and safety law violations involving millions of U.S. workers are not preventing their employers from reaping billions of dollars in federal contracts, according to a new study released by a Senate panel.

Almost 30 percent of the top violators of federal wage and safety laws are also current federal contractors, with taxpayer dollars "routinely paid to companies that are putting the livelihoods and the lives of workers at risk," according to the report released Wednesday (Dec. 11) by the Senate Health, Education, Labor and Pensions (HELP) Committee.

VT Halter Marine
VT Halter Marine

Two workers on a painting project at VT Halter Marine perished in an explosion in 2009. But the 28 OSHA citations issued were not available in the federal Clean Contracting Act database.

Those violators/contractors include:

  • A ship repair company employing two men who died during surface-preparation work for a painting project;
  • An industrial painting contractor fined $5 million for lead exposures; and
  • Another industrial painting contractor once called "callous" by the Secretary of Labor for not protecting its bridge painters.

Connecting the Dots

Acting Responsibly? Federal Contractors Frequently Put Workers Lives and Livelihoods at Risk” looks at data from 2007 to 2012; the report follows a year-long investigation by the HELP committee staff.

Investigators call it the "first comprehensive report to connect [the] dots between federal contracts and labor law violations."

Forty-two American workers died during the study period as a result of Occupational Safety and Health Administration violations by companies that held federal contracts in 2012, the report said.

Furthermore, it said, "the 49 federal contractors accountable for large-scale labor law violations were responsible for almost 1,800 separate enforcement actions taken by the Department of Labor and paid $196 million in back wages and initial penalties" over the study period.

Holding Contractors Accountable

Those 49 contractors "received more than $81 billion in taxpayer dollars in 2012 alone," demonstrating "that the current federal contracting process fails to hold contractors accountable for major or repeated labor law violations," the committee said in releasing the report.

URS Corp.
URS Corp.

Engineering/construction multinational URS Corp. is among the companies that continue to receive federal contracts despite a record of wage violations.

The pattern persists despite the Clean Contracting Act of 2008, which required that a database be established to help agencies evaluate violations of federal law in making a responsibility determination, said the report.

Even employers deemed Severe Violators by OSHA have received hundreds of millions of dollars in contracts, it said.

Wage Violators

Health and safety violations were not the only wrongdoing noted. The report cites "a troubling overlap between companies that receive large federal contracts and companies that fail to properly compensate their employees."

Of the 100 largest back-pay awards ordered by the Department of Labor during the study period, 35 were assessed against companies that held federal contracts, the report said.

Moreover, more than 40 percent of the total amount of unpaid back wages were attributed to 32 companies receiving federal contracts. Some of the contractors had even paid civil fines in addition to the back wages, and some contractors were cited twice during the six-year study period.

Tarentum Bridge
Wikimedia Commons / Mr. Vitale

OSHA issued more than $5 million in fines in 1994 to E. Smalis Painting for lead exposure during work on the Tarentum Bridge in Pittsburgh. OSHA records showed the case still open as of Friday.

Among the companies cited for hundreds of thousands of dollars in wage violations, then awarded millions in contracts, were:

  • URS Corp., a global provider of engineering, construction and technical services for the infrastructure, oil and gas and other industries;
  • Southwest Research Institute, of San Antonio, TX; and
  • Energy giant Kinder Morgan.

Deaths and Contracts

Several companies related to coatings work figure in the report.

For example, it says, among the "many incidents of misconduct" not available in the Clean Contracting Act database are 17 willful and 11 serious violations cited by OSHA that led to the 2009 deaths of two employees of VT Halter, a Mississippi shipbuilding and repair company owned by Singapore-based ST Engineering Limited.

The men perished in an explosion and fire ignited by highly flammable materials being used to prepare a tugboat for painting.

VT Halter was fined $1.3 million for what then-Labor Secretary Hilda Solis called "a horrific and preventible situation." Yet, the report said, ST Engineering received $1.9 million in federal contracts in fiscal year 2012.

230 Willful Violations

The list also includes E. Smalis Painting Co., which ranked seventh among companies receiving the Top 100 OSHA violations during the study period.

On Dec. 9, 1993, OSHA opened a case against the Pittsburgh, PA-based painting contractor, eventually issuing 230 willful and four serious violations and more than $5 million in fines for lead exposures on the Tarentum Bridge in Pennsylvania.

As of Friday (Dec. 13)—20 years later—OSHA records show that the case remains open, with fines tentatively reduced to $1,092,750. The report lists E. Smalis as a federal contractor during the study period, although not in 2012.

Painting Contractor: 3 Cases

Three similar cases, with similar violations from the same era, landed Manganas Painting Co., of Canonsburg, PA, on the Senate report list three times.

That contractor was the subject of two cases issued by OSHA in 1994 and adjudicated in 1996. More than $2.6 million in fines were assessed in the two cases, later reduced to just under $1.5 million. Then-Labor Secretary Robert Reich called the company "callous."

The Senate report also cites a third OSHA case against Manganas, with $1.134 million in fines issued against the company, later reduced to $938,100. Details of that case were not available Friday, and the report says that all three fines against the company are pending.

Report
U.S. Senate HELP Committee

The Senate panel report cites numerous lapses in the contracting system and offers recommendations.

Like E. Smalis, the report lists Manganas (which was cited again by OSHA in 2010) as a federal contractor during the study period, but not in 2012.

Chasing Data

"Given the scale of the findings," the report  says, "it is clear that violations of labor laws are not being adequately considered or analyzed in the contractor responsibility determination."

Why? The report cites several reasons:

  • Even though most of the data are public, they are contained in multiple agency databases and not available to contracting officers in a unified, usable form;
  • Corporations have multiple identities, subsidiaries and parent companies, making it difficult to review the conduct of a corporate entity as a whole;
  • "Resource constraints and human error" at the Department of Labor "result in substantial errors in the databases" that track health, safety and wage violations;
  • Errors and multiple identities may list a company many different ways in databases (one company reportedly appears in OSHA's database under at least eight different names); and
  • The suspension and debarment process for federal contractors is ineffective and inconsistently applied.

Recommendations

The report recommends that:

  • The Labor Department "take steps to improve" the quality and transparency of its information on workplace safety violations;
  • The department annually publish a list of contractors that violate federal labor law, the details of the violations, and the penalties assessed; and
  • The Government Services Administration expand and improve its contracting databases.

It also calls for Executive Orders to allow more information to be added to federal databases; establish clear guidelines for contracting officers; and develop an alternative sanctioning mechanism to the debarment process.

The report calls it "imperative" that contracting officers "adequately consider prospective contractors’ compliance with federal labor law prior to awarding a contract."

"The American taxpayers, many of whom work as contractors or at firms that contract with the government, deserve nothing less."

   

Tagged categories: Bridges; Engineers; Fatalities; Government; Government contracts; Health and safety; Industrial Contractors; Lead; OSHA; Shipyards

Comment from Tony Rangus, (12/16/2013, 10:09 AM)

I guess it is OK to kill, maim, cause long term health issues & shortchange your employees, but spill oil into the ocean & BANG, no more federal contracts. Killing wildlife trumps killing or maiming a poor employee. The American way is alive & well for Federal Contractors. Millions in fines is just part of doing business. Who cares about the widows or children who have lost a parent, due to callous US employers. BAN them for five years from any new taxpayer monies.


Comment from Chuck Pease, (12/16/2013, 9:25 PM)

Just when you think you have heard it all!!! Truth be known I have always looked at agencies that are suppossed to enforce,regulate, and protect to be sort of a smoke and mirrors thing. Enough to make it appear that they give a ####. Money can buy anything. Always has always will.


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