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Foes Fight U.S. Contractor 'Blacklist'

Tuesday, March 24, 2015

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An executive order requiring contractors to disclose their labor-law violations will be burdensome and expensive, say numerous opponents calling on President Obama to withdraw the plan.

The "Fair Pay and Safe Workplace Executive Order," signed July 31, 2014, would require companies competing for federal contracts to disclose any labor-law violations from the prior three years and for agencies to consider those violations when awarding contracts valued at over $500,000.

The measure also aims to encourage companies to settle existing disputes, like paying back wages. Self-reported violations will not preclude an employer from obtaining a contract.

Fair Pay Executive Order

Nicknamed the "blacklisting" executive order, Obama's "Fair Pay and Safe Workplace Executive Order" is criticized as being burdensome, unfair and complex.

Nevertheless, as the order inches closer to publication in the Federal Register, critics are voicing concerns that the order will blacklist contractors for alleged violations that are later found to lack merit or if they fail to disclose inadvertent and technical violations.

Additionally, critics say, the order:

  • Demands an unreasonable scope of reporting requirements;
  • Undermines employers' due process protections;
  • Disregards existing remedies to address labor law violations; and
  • Relies on a highly subjective review process by appointing a senior official from each agency to determine if a bidder should be disqualified.

Proposed Rule

Roughly 24,000 businesses, employing 28 million workers, currently have federal contracts.

Current federal contracts are not affected by the order, which will not take effect until 2016.

The Department of Labor submitted its proposed rule to the Office of Management and Budget for review on March 6. This review is the final step before publishing the guidance.

The proposed rule will soon be published in the Federal Register, triggering a 45-day public comment period.

"Cheaters shouldn't win," U.S. Secretary of Labor Thomas E. Perez said when the order was first announced. "This action ensures they won't."

Thomas E. Perez
Department of Labor

U.S. Secretary of Labor Thomas E. Perez said companies with a history or labor law violations continue to receive lucrative federal contracts.

According to Perez, companies with a history of labor-law violations continue to receive lucrative federal contracts. A study released in 2013 found that almost 30 percent of the top violators of federal wage and safety laws were also current federal contractors.

Reportable Violations

Affected bidders for federal projects would be required to report violations from the prior three years of a long list of labor laws, including the:

  • Fair Labor Standards Act;
  • Occupational Safety and Health Act;
  • Migrant and Seasonal Agricultural Worker Protection Act;
  • National Labor Relations Act;
  • Davis-Bacon Act;
  • Service Contract Act;
  • Americans with Disabilities Act; and
  • Equal Employment Opportunity Act.

Violations related to minimum wage, affirmative action, age discrimination and civil rights would also be reportable.

'Unworkable, Unfair, Unnecessary'

Numerous opponents submitted written testimony before a joint meeting on Feb. 26 of the House Subcommittee on Workforce Protections and House Subcommittee on Health, Employment, Labor and Pensions.

Stan Soloway, president of the Professional Services Council, called the order "unworkable" and said it treated willful lawbreakers and those who make honest mistakes the same way, reported.

"Companies with pervasive, willful, and repeated violations of law should not be awarded federal contracts," Soloway said. "However, as constructed this E.O. is fundamentally unfair, vague, complex and in-executable. It will be costly, burdensome and is simply unnecessary."

Feb. 26 joint committee

At a joint House committee meeting on Feb. 26, opponents said the order unfairly treated both willful and accidental violators the same. Proponents said the order would help fix the current "broken system."

Soloway suggested that Obama rescind the order and instead convene a panel of federal acquisition and labor officials, private-sector companies and contractors and labor unions to examine existing problems and potential solutions.

The Associated Builders & Contractors and 19 other business trade groups wrote to Obama in November asking him to withdraw the order. The group said the plan "dramatically changes the enforcement mechanisms carefully put in place by Congress and needlessly adds uncertainty, subjectivity and onerous and costly new data collection and reporting requirements for federal contractors."

'Fix the Broken System'

Not everyone is against the order. The Mechanical Contractors Association of America has expressed its support in a statement, signed onto by the Campaign for Quality Construction (CQC) coalition.

"CQC's acknowledges the added complexity of the pre-award eligibility screening procedures, but supports the judgment that the aims of the policy are worthy of exploring and implementing new and innovative approaches to improve Federal market performance," the coalition said.

At the February committee hearing, Karla Walter, associate director of the American Worker Project at the Center for American Progress Action Fund, submitted testimony that the "current system is broken."

The order "strives to help fix the broken system and ensure that law-breaking contractors come into compliance before they are able to receive new contracts," Walter wrote.


Tagged categories: Contractors; Contracts; Government; Government contracts; Health and safety; Labor; Laws and litigation; North America; President Obama; Program/Project Management; Violations; Workers

Comment from Chuck Pease, (3/24/2015, 11:41 AM)

With all of the graft and corruption and dishonest contractors winning federal contracts what the hell is wrong with being held accountable? The present system has no teeth. Time for a change boys and girls get right or get out!!! there are some that paly fair. No thief likes a light.

Comment from Jim Johnson, (3/24/2015, 1:30 PM)

The real problem as I see it is that it does not require a contractor to be found guilty by a judge or jury before any activity is considered reportable. Just being charged with an offense certainly does not mean a firm is guilty of that offense.

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