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Ebenezer Scrooge Should Not Be a Federal Contractor

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One in four federal contractors with histories of serious workplace violations provided bad value for taxpayers. That’s the conclusion of the Center for American Progress Action Fund (CAP Action) in its latest report,At Our Expense: Federal Contractors that Harm Workers Also Shortchange Taxpayers.

A 2010 Government Accountability Office (GAO) report found federal contractors were assessed some of the largest fines for violating federal wage and workplace safety laws. CAP Action, reviewing the same universe of companies analyzed by the GAO, found that 25 percent of the federal contractors responsible for committing the worst labor violations (7 out of 28 companies) also had significant contract performance problems such as fraud and cost overruns. CAP Action profiled the labor violations and poor contract performance of KBR, BP, Corrections Corporation of America, Akal Security, Wackenhut, Lockheed Martin, and Group Health Cooperative.

Organizations like CAP Action have long warned that contracting with persistent violators of wage and workplace safety laws—so called low-road companies—can result in bad deals for the government. Yet the federal government continues to award billions of dollars in contracts to companies with long histories of abusing workers and shortchanging taxpayers.

Fortunately, the push for reform is gaining traction in Congress. Last week, the majority staff of the Senate Committee on Health, Education, Labor, and Pensions (HELP) released its own study of federal contractors’ labor practices. The HELP Committee report, Acting Responsibly? Federal Contractors Frequently Put Workers’ Lives and Livelihoods at Risk, found that almost 30 percent of companies receiving the harshest penalties for violating federal labor laws are also federal contractors. The report found that 49 contractors, receiving a total of $81 billion in contracts in fiscal year 2012, were responsible for 1,776 Department of Labor enforcement actions and paid $196 million in restitution and penalties over a 6-year period. Of these 49 contractors, 35 were cited for failure to comply with both federal wage laws and federal health and safety laws.

The HELP Committee report includes some of the companies profiled by CAP Action—BP, Lockheed Martin, and Wackenhut—although it does not address the contract performance side of the equation. Nonetheless, the report contains many astonishing statistics that will hopefully spur the White House and Congress to reform federal contracting practices. One of the most disturbing statistics is that 42 American workers died as a result of the workplace health and safety violations of 8 federal contractors, including BP.

Both the HELP Committee and CAP Action point out that the federal government lacks effective mechanisms to encourage contractor compliance with wage and workplace safety laws and to prevent agencies from contracting with companies that routinely violate these laws. The process by which the government determines whether a prospective contractor has a satisfactory record of integrity and ethics—the responsibility determination—largely fails to consider labor law violation histories. The database the federal government uses to track contractor responsibility—the Federal Awardee Performance and Integrity Information System, or FAPIIS—only includes misconduct that occurs during the performance of a contract or grant. Lockheed Martin is the only one of the 49 contractors highlighted in the HELP Committee report that currently shows up in FAPIIS.

Another important mechanism, the suspension and debarment system, is too inconsistent and underutilized to promote greater compliance with wage and safety laws. Only 1 of the 49 contractors in the HELP Committee report has been excluded from federal contracting: BP was suspended in November 2012, more than two years after the Deepwater Horizon oil rig disaster that killed 11 workers and discharged millions of barrels of oil into the Gulf of Mexico. But BP’s suspension was based on federal environmental violations. According to the HELP Committee report, no contractor has ever been suspended or debarred for a workplace safety or wage violation.

It was almost a year ago when the Project On Government Oversight brought these issues to the public’s attention at a public meeting of the U.S. Chemical Safety and Hazard Investigation Board (CSB). The CSB issued a report finding that a fireworks explosion in Hawaii in 2011 that killed five Treasury Department subcontractor employees could have been averted with stronger workplace safety requirements for federal contractors. The CSB recommended adding a contractor responsibility requirement focusing on safety performance. POGO thinks this is a good start, but enabling contracting officers to check prospective contractors’ safety compliance histories requires more comprehensive data tools. For this reason, the FAPIIS database should be expanded to include environmental and workplace safety violations not occurring during the performance of a contract or grant.

By: Neil Gordon
Investigator, POGO

Neil Gordon, Investigator Neil Gordon is an investigator for the Project On Government Oversight. Neil investigates and maintains POGO's Federal Contractor Misconduct Database.

Topics: Contract Oversight

Related Content: Congressional Oversight, Contractor Accountability, Federal Acquisition, Federal Contractor Misconduct

Authors: Neil Gordon

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