Google Pay Data Dispute Unlikely to Cost Company Federal Contracts

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By Jay-Anne B. Casuga and Jasmine Han

Google Inc. faces the possibility of losing its government contracts if it doesn’t submit pay data requested by the Labor Department. But the likelihood that the tech giant will actually be banned from federal contracting is low.

Google is currently the prime contractor on five contracts with the federal government, with a total value of $758,600, according to Bloomberg Government’s database of publicly reported government contracts. Google also is the subcontractor on at least five additional federal contracts worth an additional $2.8 million, according to the database.

The loss of federal contracts because of noncompliance, known as debarment, is “the ultimate penalty” for companies that do business with the government, Jaime Ramón, a former director of the DOL’s Office of Federal Contract Compliance Programs under President George H. W. Bush’s administration, told Bloomberg BNA.

But OFCCP administrative actions against allegedly noncompliant contractors “hardly ever” reach the debarment stage, said Ramón, now an attorney with Dykema Cox Smith in Dallas.

The rarity of contractor debarments based on OFCCP action is backed up by government data. Only six companies currently are excluded by the agency, according to a Bloomberg BNA analysis of publicly available data from the government’s System for Award Management.

Last week, the OFCCP filed an administrative lawsuit against Google, alleging that the company violated the law when it refused to provide certain compensation data as part of a routine audit. The agency regularly audits government contractors for compliance with workplace affirmative action and nondiscrimination requirements under Executive Order 11,246 and other laws.

Google Calls Agency’s Requests ‘Overbroad.’

Google said it didn’t hand over the data because some of the OFCCP’s requests were “overbroad in scope” or revealed confidential data, such as employees’ private contact information.

Denial of access cases in which a contractor doesn’t provide requested data arise infrequently. But in recent years, when such cases have occurred, the OFCCP has prevailed more often than not, or reached settlement (see related story).

Although that might not bode well for Google, it doesn’t necessarily mean the company will lose its federal contracts.

Denying the OFCCP access to data stalls the compliance process, but it doesn’t lead to debarment unless the contractor “is defiant,” Ramón said.

Few Debarments Originate With OFCCP

The OFCCP since fiscal year 2013 has audited at least 10,458 government contractors operating about 12, 494 facilities nationwide, according to a Bloomberg BNA analysis of DOL enforcement data.

The agency filed 26 administrative lawsuits against allegedly noncompliant contractors during that time. Administrative action is required for the OFCCP to obtain a debarment order.

Of the 26 administrative lawsuits, only four led to contractors being debarred. That’s about 15.4 percent of administrative cases, most of which reached settlement, but only about 0.04 percent of total contractors audited.

Contract exclusions against two other companies also are active, according to a Labor Department spokesman, but it’s unclear when those debarments occurred.

Debarments can originate with other agencies as well. For the Labor Department as a whole, 468 entities, including individuals as well as companies, currently are listed on the contract exclusion list. Governmentwide, the exclusion list includes 141,198 entities.

Historically, the number of OFCCP-related debarments has been low.

There have been 11 OFCCP-related debarments since 2000, including the six currently active debarments, a DOL spokesman told Bloomberg BNA.

Since 1965, when EO 11,246 was signed and the OFCCP’s predecessor agency, the Office of Federal Contract Compliance, was established, there have been approximately 72 OFCCP-related debarments, John Fox, an attorney with Fox, Wang & Morgan in San Jose, Calif., and a former OFCCP policy official, told Bloomberg BNA. “Program” was added to the name in 1978.

“And they are slowing down tremendously in frequency,” Fox said.

Most Current Debarments Voluntary

The majority of the OFCCP’s current debarments are voluntary, Christopher Wilkinson, a former DOL associate solicitor for labor-management, told Bloomberg BNA.

“That’s really the big takeaway,” said Wilkinson, now a partner with Orrick, Herrington & Sutcliffe in Washington. “In recent history, there have been no debarments through enforcement by the agency.”

At least four of the six companies currently on the contract exclusion list agreed to voluntary debarment in consent decrees settling the OFCCP’s claims. At least three of those stemmed from the companies’ refusal to submit data or records during an audit.

One company’s debarment was through default judgment.

Voluntary debarments can occur when companies decide that complying with government requirements tied to federal contracts becomes too expensive or burdensome, Ramón said.

Debarment Process Can Be Lengthy

The OFCCP by itself can’t outright debar government contractors, Fox said.

In a nutshell, the agency and the contractor must first try to settle compliance issues that crop up during an audit. If that’s unsuccessful, the agency next files an administrative complaint with the DOL’s Office of Administrative Law Judges seeking a debarment order.

If an ALJ rules against the contractor, the company can appeal to the DOL’s Administrative Review Board.

If the contractor loses before the ARB, it can seek review at the federal district court level and obtain an injunction to stop the debarment while the case proceeds. Theoretically, further appeals could go to a federal circuit court and even the U.S. Supreme Court.

The entire process can be lengthy. For example, one OFCCP lawsuit has been going on for more than 20 years. That case, against a Bank of America predecessor, began in 1993 and initially included denial of access issues based on alleged Fourth Amendment violations.

Attorney: ‘Only Google Can Debar Itself.’

When all is said and done though, it’s the ARB that orders the contractor’s debarment.

But debarment orders don’t take effect immediately. They’re held in abeyance for a period of time, usually 60 to 120 days, to allow the contractor to come into compliance, Fox said.

The debarment goes forward only if the contractor doesn’t comply within that time frame, he said. It’s an incentive for contractor compliance.

Wilkinson shared a similar viewpoint, observing that the regulations governing OFCCP-based debarment state that debarments are “not for purposes of punishment,” but to protect the government’s interest in having compliant contractors.

This makes OFCCP-based debarments different from contract bans imposed by other agencies, which are punitive.

Fox posed a hypothetical in which a subpoenaed witness refuses to testify at a civil trial and is imprisoned for civil contempt. The witness has the “keys to the jail” because he or she will be released upon complying with the court’s order, he said.

A similar situation occurs with federal contractors facing an OFCCP debarment action.

“OFCCP cannot cause a contractor to be debarred which does not wish to be debarred,” he said.

In the context of Google, Fox added: “Only Google can debar itself by refusing to comply.”

To contact the reporter on this story: Jay-Anne B. Casuga in Washington at jcasuga@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

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