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Obama Cracks Down on “Low Road” Contracting

President Barack Obama signed an executive order Thursday that strikes a major blow against federal contractors who repeatedly violate wage, safety, and discrimination laws. These so-called “low road” contractors, as you might have read on the Project On Government Oversight’s blog in the past, take unfair advantage of their employees and shortchange taxpayers.

President Obama’s Fair Pay and Safe Workplaces Executive Order will go into effect in 2016 and will apply to new federal contracts valued at more than $500,000. It will require prospective contractors to disclose labor law violations and will give agencies more power to take these violations into account when awarding contracts. According to a White House fact sheet on the executive order, there are roughly 24,000 businesses with federal contracts, employing about 28 million workers.

Although federal contracting officers already assess a contractor’s record of integrity and business ethics, they are often in the dark about the company’s history of workplace violations.  As a result, companies with troubling labor practices receive billions of dollars in federal contracts every year. Contractors will now be required to disclose violations in the previous three years of laws addressing wages, health and safety, collective bargaining, family and medical leave, and civil rights. They must also collect this information from subcontractors. It will be up to contracting officials, assisted by a Labor Compliance Advisor at each agency, to determine whether violations indicate a lack of integrity and business ethics.

All of this information will be entered into the Federal Awardee Performance and Integrity Information System (FAPIIS), the federal government’s contractor responsibility database. Of course, the public already has a great source of contractor labor violation data in POGO’s Federal Contractor Misconduct Database.

The executive order will also help millions of workers get their day in court. It will prohibit companies with $1 million or more in federal contracts from requiring employees to submit to arbitration in disputes involving Title VII of the Civil Rights Act (prohibiting discrimination based on race, religion, sex, and national origin) or cases of sexual assault or harassment. The executive order will also require contractors to give their employees the necessary information each pay period to verify the accuracy of paychecks.

“Taxpayer dollars shouldn’t be used by unscrupulous employers to drive down living standards for our families, neighbors, and communities,” the White House announced. “By creating incentives for better compliance and a process for helping contractors come into compliance with basic workplace protection laws, the Executive Order is basic good government that will increase efficiency in federal contracting and will help strengthen our workforce and our economy.”

On two other occasions this year, President Obama acted to improve workplace conditions for employees of federal contractors. In February, he established a $10.10 minimum wage for federal contractors. In July, he banned contractors from discriminating against lesbian, gay, bisexual, and transgender (LGBT) employees. All three executive orders will benefit millions of workers while potentially saving taxpayers billions of dollars every year.

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: Contractor Accountability

Authors: Neil Gordon

Submitted by Dfens at: August 6, 2014
We have responsible contractors alright. They are responsible for turning our military into a welfare system for the rich! Look at what happened to Lockheed when the C-5 they modified crashed in Dover or that F-22 crashed in Alaska. In each case the military sponsored a public fact finding board that white washed the contractor of all responsibility and put all of the blame on the pilots. Funny thing was, both airplanes were later modified at great expense to you and I to fix non-existent problems not involved in either crash officially. So what great punishment was levied on Lockheed? Basically they killed one pilot, maimed another and made money on both crashes all while having the US government publicly put the blame on the victims of their incompetence. Now you tell me, what in Obama's great and wonderful executive order did anything to fix that problem? I, for one, am tired of hoping for change at this point in this failed administration.
Submitted by Scott at: August 4, 2014
Working with responsible contractors is essential. Although I'm unsure how much buy-in the EO will have at OFPP, it sounds like the Labor Department is on-board and the U.S. Chemical Safety and Hazard Investigation Board pushed for safety to be included in source selection decisions, which POGO supported. http://www.pogo.org/blog/2013/01/20130118-company-behind-fireworks-disaster-still-fed-contractor.html
Submitted by Dfens at: August 3, 2014
What a useless gesture. The executive branch of government, which works for the president, pays contractors $1.10 for every $1.00 they spend designing and building weapons. Why doesn't he sign an executive order and put a stop to that?

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