Cries of 'blacklisting' as administration cracks down on contractors

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The Department of Labor has issued new guidance on how contracting agencies should evaluate labor violations when hiring federal contractors.

The guidance is a byproduct of President Obama’s July 2014 Fair Pay and Safe Workplaces Executive Order, which forces federal contractors to disclose any labor law violations it has had in the last three years when procuring contracts over $500,000. 

Industry has coined the order the “blacklisting rule.”

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Prior to making an award, the guidance says contracting officers are required to give contractors an opportunity to disclose any steps they have taken to correct any reported violations or improve compliance with the labor laws, including any agreements entered into with an enforcement agency.

With a labor compliance adviser, the contracting officer then has to consider the information and decide if a contractor has a satisfactory record of integrity and business ethics.

"The opportunity to contract with the federal government is a privilege, not an entitlement,” Labor Secretary Thomas PerezThomas E. PerezClinton’s top five vice presidential picks Government social programs: Triumph of hope over evidence Labor’s 'wasteful spending and mismanagement” at Workers’ Comp MORE said in a statement. “Taxpayer dollars should not reward corporations that break the law and contractors who meet their responsibilities should not have to compete against those who do not."

In addition to the guidance from the Labor Department, the Federal Acquisition Regulatory Council has proposed regulations that integrate the order's requirements and the provisions of the Labor Department's guidance into the existing procurement rules. 

The proposed rules would create an online database for agencies to track contractors’ labor law violations; force contractors to disclose whether they have had criminal, civil or administrative violations within the past five years for certain contracts; and direct agencies to take suspension and debarment actions when necessary to protect the government from harm.

According to a September 2010 Government Accountability Office report, almost two-thirds of the 50 largest wage-and-hour violations and almost 40 percent of the 50 largest workplace health-and-safety penalties issued between 2005 and 2009 were made against companies that went on to receive new government contracts.

Perez said the guidance issued by the Labor Department will promote better-informed procurement decisions by providing contracting officers with necessary information to ensure accurate, efficient and consistent compliance with labor laws.

Industry groups such as the Chamber of Commerce say Obama’s executive order is unnecessary because contracting officers already have the authority to prevent businesses with questionable records from receiving federal contracts.

“This initiative has long been on organized labor’s wish list because it facilitates corporate campaigns to pressure companies to recognize unions,” Randy Johnson, the group’s senior vice president of labor, immigration and employee benefits, said in a statement. “This effort has nothing to do with improving the contracting process.”

The executive order not only requires federal contractors to report labor violations within the last three years, it forces contractors who have been awarded a government contract to update that information every six months.

“These reporting requirements will increase the cost of doing business with the government, slow the contracting process, and will create yet another barrier for small businesses looking to be involved in government contracting,” Johnson said.

The public has 60 days to comment on the Labor Department guidance and the Federal Acquisition Regulatory Council’s proposed procurement rules.