Business Community Preparing Coordinated Pushback on Safe Contracting Guidelines

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By Stephen Lee

June 3 — The business community is digging in to fight the Obama administration's recently published guidelines for safe government contracting.

“We are going to file comprehensive and extensive comments,” Marc Freedman, executive director of labor law policy at the Chamber of Commerce, told Bloomberg BNA May 29. “And we anticipate, if there are final regulations that retain the same problems that we see in these proposals, that we will be looking seriously at our options, which could include litigation.”

The business lobby may also call on members of Congress to get involved, said Roger Jordan, vice president of government relations at the Professional Services Council, which represents federal contractors.

The message could play particularly well with members whose districts include large federal contractors, or who sit on the House Armed Services Committee, which is heavily involved with military contractors, Jordan said.

As a first step, however, Jordan said his group will ask for an extension to the 60-day comment period.

“It's a lot to go through, a lot to digest, and putting that into comprehensive comments is going to take some time,” he told Bloomberg BNA May 29.

Freedman said the pushback will take the form of an organized effort spanning a broad swath of the business community.

“There is definitely coordination,” he said. “We’re talking with other groups and interested parties.”

Violations, Mitigating Factors Defined 

The proposed guidance (80 Fed. Reg. 30,574) comes under Executive Order No. 13,673, “Fair Pay and Safe Workplaces,” issued in July 2014. The order instructs contracting officers throughout the federal government to consider labor law violations committed within the previous three years when making contracting decisions on projects worth more than $500,000.

The Labor Department's May 28 guidance proposal defines the types of violations that must be reported and lays out mitigating factors that can be considered in determining whether a contractor's bid should go forward, including the implementation of an injury and illness prevention program.

Due Process Concerns 

One of the business community's chief complaints with the proposed guidance is that it allows contracting officers to consider mere citations for alleged violations, which Freedman said tramples on employers' due process rights.

“We all know what happens to citations,” Baruch Fellner, an attorney with Gibson, Dunn & Crutcher LLP, told Bloomberg BNA May 28. “The vast majority of them are either withdrawn, reclassified or otherwise taken care of. The simple fact that a citation might affect the winning of a contract is clearly a source of tremendous concern.”

Business groups are also concerned about the proposed guidance's rules that require contractors to identify labor law violations committed by their subcontractors. Some contractors use tens of thousands of companies in their supply chains, creating a massive administrative problem, Jordan said.

Notice and Comment Triggered?

The business groups are further troubled by the fact that the new contracting rules were issued as an executive order and guidance, rather than a regulation, meaning they aren't subject to the rigorous notice and comment rules of the Administrative Procedure Act.

Jordan said his group's comments will likely address that issue.

Fellner suggested that the Labor Department may have already triggered the Administrative Procedure Act's notice and comment requirements by forcing employers to choose between two disagreeable options—either implementing an Injury and Illness Prevention Program or missing out on contracting opportunities.

The basis for that reasoning stems from a 1999 federal court decision that found that the Occupational Safety and Health Administration couldn't tell employers that they must either implement an I2P2 program or risk a wall-to-wall inspection (Chamber of Commerce v. Dep't of Labor, D.C. Cir., No. 98-1036, 4/9/1999).

“If you're going to tell employers that they have to do this or else they suffer consequences, you have to go through notice and comment,” added Freedman.

State Plan Equivalency Problems 

Freedman, though scornful of what he deemed a transparent effort by the administration to pretend that it is heeding stakeholder comments, said ultimately he didn't think it would matter.

“I don’t think [the Labor Department's response to the Chamber's comments] is going to be substantively different from the way our comments on full-blown regulations have been received,” Freedman said. “They respond, but they just say, ‘The Chamber of Commerce has said the following things, and we’re going the other way,' or, ‘So and so also made the opposite point and we agree with the opposite group.' That’s all they have to say. I would be fairly stunned if they looked at our comments and said, ‘Oh yeah, we didn’t think about that.' ”

Yet another sore spot with the guidance proposal is its language stating that OSHA-approved state plans are considered equivalent to federal laws.

That raises problems, Freedman said, because some states have tougher laws than federal OSHA. California, for example, has an I2P2 rule on the books. Under the proposed guidance, a contractor's bid could be jeopardized because of violations under OSHA-approved state plans that don't exist at the federal level, Freedman said.

Economic Impacts 

At an even more fundamental level, both the executive order and the guidance are unnecessary because the federal government already has information about labor law violations, according to both the Chamber and the Professional Services Council.

“It's going to cost the government a significant amount of money to implement this,” Jordan said. “Why not invest those funds into making the necessary fixes to your databases and systems where this information is already housed?”

He further said that ending contracts is bad policy because it could cut off an agency's access to an important source, which may only be available from a handful of companies. Workers may also lose their jobs if their employers' contracts are cut off, Jordan said.

More than 28 million workers, or 21 percent of the U.S. workforce, were employed by government contractors in 2013, Michael Trupo, a Labor Department spokesman, told Bloomberg BNA May 27.

Offering to the AFL-CIO?

According to Freedman, both the executive order and the guidance are an unambiguous offering by the Obama administration to organized labor.

As evidence, he pointed to a document the AFL-CIO submitted to President Barack Obama's transition team in 2009, which specifically asks the then-new administration to strengthen its existing responsible contractor requirements.

Specifically, the union recommended the creation of a governmentwide database that would include labor law violations that contracting officers could use when evaluating a bidder's record.

“This is a long-standing goal of the AFL-CIO,” Freedman said. “It's not even a matter of subtlety as to who’s behind this.”

‘Good Public Policy.'

“The executive order and the proposed guidance that has been published to implement the executive order, in our view, represent good public policy,” Lynn Rhinehart, general counsel for the AFL-CIO, told Bloomberg BNA June 3.

“The government should only give contracts to employers that respect workers’ rights. That’s a policy we’ve advocated to various administrations for many years,” Rhinehart said.

Additionally, said Keith Wrightson, worker safety and health advocate at Public Citizen, lobbying on behalf of its members is one of the AFL-CIO's key roles.

“It's often confusing to me as to why business groups like the Chamber of Commerce think it's all about them,” Wrightson told Bloomberg BNA June 1. “Is it not a cornerstone of our values to have equal protection under the law? The EO is a benefit to both workers and businesses. Under the EO, cream shall rise to the top and the taxpayers will get the best value for their tax dollars.”

Bad Corporate Actors

Both unions and their allies in Congress have long argued that too many bad corporate actors are winning government contracts.

“Companies cannot just try to see these costs and fees as a cost of doing business,” Rep. Jared Polis (D-Colo.) said in a March hearing. “They need to know that when they violate our labor laws, which we take very seriously as a country, that there are ramifications to their business and to their future potential to be a contractor for the federal government”.

During the same hearing, Karla Walter, associate director of the Center for American Progress American Worker Project, said the current system for identifying scofflaws during the bidding process is woefully inadequate.

In 2013, Sen. Tom Harkin (D-Iowa), then-chairman of the Senate Health, Education, Labor and Pensions Committee, issued a report documenting widespread violations of safety and wage laws among federal contractors.

According to the report, 18 federal contractors were slapped with OSHA penalties between 2007 and 2012 that ranked among the agency's 100 heaviest fines during that period.

Comments on the Labor Department's guidance can be filed at or by mail to Tiffany Jones, U.S. Department of Labor, Room S-2312, 200 Constitution Ave. N.W., Washington, D.C., 20210. All comments should be labeled ZRIN 1290-ZA02.

To contact the reporter on this story: Stephen Lee in Washington at

To contact the editor responsible for this story: Larry Pearl at

The proposed guidance for Executive Order 13673 is available at

Executive Order 13673 is available at

The AFL-CIO submission to the Obama-Biden Transition Project is available at