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Major Violators Win Federal Contracts

Thursday, December 19, 2013

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Billions of dollars in taxpayer-funded contracts are being “routinely paid to companies that are putting the livelihoods and the lives of workers at risk,” concludes a new study released by a U.S. Senate panel.

Companies that employ millions of American workers are reaping federal construction and other contracts despite major federal wage and safety law violations—including some companies with fines still unpaid, says the report by the Senate Health, Education, Labor and Pensions (HELP) Committee.

Almost 30 percent of the top violators of federal wage and safety laws are also current federal contractors, according to “Acting Responsibly? Federal Contractors Frequently Put Workers Lives and Livelihoods at Risk,” released Dec. 11.

The report, which draws on data from 2007 to 2012, follows a year-long investigation by the HELP committee staff.

OSHA Fall Protection

Multiple construction companies with major OSHA violations continue to receive federal contracts, the Senate HELP Committee reported.

Those violators/contractors include a variety of construction firms and other companies that serve the building industry. Among them:

  • Two construction companies fined a total of $2 million for federal wage violations;
  • A construction and maintenance company fined more than $6.6 million by the Occupational Safety and Health Administration;
  • A painting contractor fined $5 million for lead exposures; and
  • Another painting contractor once called "callous" by the Secretary of Labor for not protecting its workers.

Connecting the Dots

Investigators call the study 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 OSHA 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 the establishment of a database 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.


The report cites "a troubling overlap between companies that receive large federal contracts and companies that fail to properly compensate their employees."

Among the companies reportedly cited for hundreds of thousands of dollars in wage violations, then awarded contracts, were Massachusetts-based CAL Construction Co. Inc., assessed $1.3 million in back pay on a federally funded housing project; and Sablan Construction Co. Inc., assessed $760,000 in back pay and once sued by Internal Revenue Service.

Safety Violators and Contracts

Multiple construction companies among OSHA's top 100 offenders from 2007 to 2012 also are identified in the report. They include:

  • Keystone Construction and Maintenance, still facing $6,636,000 in fines;
  • Lanzo Construction Co., still facing $657,500 in fines after several employee deaths, injuries and other accidents, according to OSHA records;
  • C.A. Franc, currently fined $539,000 for willful violations after a new employee, a college student, fell to his death (the owner also pleaded guilty to a criminal charge);
  • HI Crouse Construction Co., currently fined $510,750 for willful violations; and
  • Benchmark Construction Co. Inc., currently fined fined $318,000.

Coating Contractors

Companies related to coatings work also 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.

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."

U.S. Senate HELP Committee

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

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.

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.


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: Commercial contractors; Construction; Engineers; Fatalities; Good Technical Practice; Government; Government contracts; Health and safety; Lead; OSHA; Workers

Comment from Gail Alario, (12/19/2013, 7:49 AM)

It truly amazes me that right under the government's nose these same contractors continue to get contracts while putting workers at risk with their lives. Seems that the left hand never knows what the right hand is doing. very sad that workers continue to lose their lives because of greed. There should be a monthly publication listing companies and their violations...make them public to every government agencies in charge of awarding contracts. Expose them!

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