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Anti-Low Road Contracting Rule Coming Soon

The Office of Management and Budget (OMB) will soon issue a proposed rule for implementing President Obama’s Fair Pay and Safe Workplaces Executive Order. Obama signed the order last July, and it will take effect in 2016.

The order will require employers bidding on federal contracts exceeding $500,000 to disclose violations of federal or state laws pertaining to wages, workplace health and safety, collective bargaining, family and medical leave, and civil rights. Contracting officers will evaluate this information as part of the mandatory pre-award screening called a responsibility determination. In addition, contractors will be prohibited from forcing employees to submit to arbitration in discrimination and sexual assault and harassment cases, and will be required to give employees the information needed to verify the accuracy of their paychecks.

In advance of the proposed rule’s publication, OMB recently issued a memorandum to the federal departments and agencies further explaining the executive order. The memo largely focuses on the appointment, responsibilities, and desired skills of labor compliance advisors (LCA), senior officials in each agency charged with implementing the order. Agencies have 90 days to designate LCAs. Among their tasks is helping contracting officers determine whether prospective contractors with labor violations have the necessary record of integrity and business ethics to do business with the government. LCAs will publicly issue annual reports summarizing agency efforts to promote greater labor compliance, including responses to serious, repeated, willful, or pervasive violations of labor laws.

The contractor community is not happy. There is the usual grumbling about more regulation and another bureaucrat (the LCA) meddling in the contract award process. Contractors are calling it the “blacklisting executive order” because they fear they will lose contracts over labor violation allegations that are later found to be meritless.

This anxiety is misplaced. The order implores the government to “help” and “work with” contractors to resolve labor violation issues and prescribes a range of remedies as an alternative to contract termination, suspension, and debarment. The White House fact sheet accompanying the order emphasizes that the goal is “to help more contractors come into compliance with workplace protections, not to deny contracts to contractors.” Nonetheless, a congressional subcommittee hearing about the order last month saw much teeth-gnashing and garment-rending by pro-contractor groups.

The public will have an opportunity to submit comments before the rule is finalized. We expect a flood of comments from contractors and business groups. We hope the government watchdog community and concerned citizens will also come out in force to support the executive order. After all, so-called “low road” contractors—contractors with poor labor compliance records—are not only shortchanging the federal government and taxpayers, they are putting their employees’ lives at risk.

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, Federal Contractor Misconduct, Suspension and Debarment

Authors: Neil Gordon

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