Federal Contractors With Bad Safety Records Will Be Scrutinized Under Executive Order

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By Stephen Lee  

July 31 — Federal contractors will face tougher scrutiny of their safety and health records under an executive order President Barack Obama signed July 31.

Under Executive Order 13,673, companies must disclose labor law violations from the previous three years before they can win a federal contract, according to a White House fact sheet.

Labor Department officials will determine whether a bidder's actions “rise to the level of a lack of integrity or business ethics,” but will weigh only the most egregious violations, the White House said.

The order applies to contracts valued at more than $500,000.

The order also is an attempt to reward contractors that have clean records, allowing them to check a single box on a bid form indicating they have no history of violations and thus bypassing further scrutiny.

Contractors to Get Early Guidance

“Contractors who invest in their workers' safety and maintain a fair and equitable workplace shouldn't have to compete with contractors who offer low-ball bids—based on savings from skirting the law—and then ultimately deliver poorer performance to taxpayers,” the fact sheet read.

Federal officials will also offer early guidance to companies with labor law violations on whether their violations could raise problems in bidding, along with the chance to fix the problems. Contracting officers will take those steps into account before awarding contracts, according to the White House.

The order is consistent with Obama's recent vows to use his executive authority to push forward a middle-class agenda, over the objections of a divided Congress.

Lawmakers See Payoff

It also comes at least partly in response to recent lobbying efforts by congressional Democrats. In 2012, six senators and Rep. George Miller (D-Calif.) sent a letter to Obama insisting that he order the federal government not to award contracts or licensing agreements with any companies—either in the U.S. or abroad—that don't guarantee basic rights for their workers.

One year later, Sen. Tom Harkin (D-Iowa), chairman of the Senate Health, Education, Labor and Pensions Committee, released a report documenting widespread violations of both safety and wage laws among federal contractors.

The report found that between 2007 and 2012, 18 federal contractors were slapped with Occupational Safety and Health Administration penalties that ranked among the agency's 100 heaviest fines during that time span.

Long Trail of Worker Deaths

Forty-two U.S. workers died as a direct result of OSHA violations committed by companies holding federal contracts as of 2012, the report alleged.

One such company was Tesoro Corp., whose Anacortes, Wash., refinery was the site of an explosion in 2010 that killed seven workers. According to the HELP Committee report, Tesoro won $463 million in federal contracts that fiscal year.

Nearly 30 percent of companies with significant labor law violations were federal contractors, Harkin said at the time.

Many of the reforms contained in the executive order were suggested in the HELP Committee report.

“Thanks to the President's executive action, we will allow the federal government to lead by example when it comes to compliance with important labor laws—by ensuring that job sites are safe and hazard-free, and by ensuring workers are receiving the wages they are entitled to under the law,” Harkin said in a July 31 statement.

Companies that receive federal contracts employ 22 percent of the U.S. workforce, meaning Obama's planned action “will raise working conditions for millions of Americans,” Harkin said the day before the executive order was signed.

Lawmakers Hail Order

Miller also praised the order in a statement.

“When a business continually puts workers in danger or repeatedly cheats them out of pay, the federal government should not support that company with taxpayer dollars,” said Miller, ranking Democrat on the House Education and the Workforce Committee.

“These are the kinds of protections we must strengthen on behalf of workers,” Miller continued. “Companies that play by the rules, treat workers with respect and dignity and operate a safe, discrimination-free workplace will now have a more level playing field when it comes to competing for federal contracts. Unscrupulous companies with the worst labor violations will have to clean up their act, or they'll lose the opportunity to compete for future business.”

Unions and public interest groups, including the Teamsters and National Partnership for Women and Families, also applauded the executive order.

Currently, neither the federal government nor any state has a so-called responsible contracting law, although the Maryland Legislature passed a bill in April that begins the process for establishing safety and health requirements for contractors that bid on public works projects.

State lawmakers are expected to bring forward a bill in the next legislative session that establishes a prequalification system.

To contact the reporter on this story: Stephen Lee in Washington at stephenlee@bna.com

To contact the editor responsible for this story: Jim Stimson at jstimson@bna.com

Executive Order 13,673 is available at http://www.whitehouse.gov/the-press-office/2014/07/31/executive-order-fair-pay-and-safe-workplaces.

A fact sheet on the order on fair pay and safe workplaces is available at http://www.whitehouse.gov/the-press-office/2014/07/31/fact-sheet-fair-pay-and-safe-workplaces-executive-order.

The Senate Health, Education, Labor and Pensions Committee's 2013 report “Acting Responsibly? Federal Contractors Frequently Put Workers' Lives and Livelihoods at Risk” is available at http://www.harkin.senate.gov/documents/pdf/52a876b0e4d63.pdf.


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