President Obama has signed an executive order that will require federal contractors, including those in the construction industry, to disclose previous labor-law violations and give agencies more guidance on how to weigh that information when awarding contracts.
At the White House signing ceremony on July 31, Obama said, “Our tax dollars shouldn’t be going to companies that violate workplace laws, violate workers’ rights." He added, "If a company is going to receive taxpayer money, it should have safe workplaces … and should not discriminate against workers.”
The executive order will apply to new federal procurement contracts valued at more than $500,000 and go into effect in 2016, after the Federal Acquisition Regulatory (FAR) Council drafts implementing rules and guidance.
The directive will mandate that prospective contractors, before they can win a contract, disclose labor law violations from the past three years. The 14 federal and state laws that will be reviewed include those addressing hourly wage, safety-and-health, collective-bargaining, family, medical-leave and civil-rights protections.
Agencies also will require contractors to collect similar information from many of their subcontractors.
Organized labor and worker advocates praised the action, saying it will show employers that want to do business with the federal government that they must comply with federal and state labor and safety laws.
Neera Tanden, president of the Center for American Progress, a non-partisan, Washington, D.C.-based research institute, said in a statement, “Today, far too many companies with long track records of violating workplace laws are continuing to receive federal contracts with no strings attached.”
A 2013 report issued by Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin (D-Iowa) found that nearly 30% of the companies that had the highest number of federal labor-law violations were also federal contractors.
A 2010 Government Accountability Office report found that almost two-thirds of the largest workplace health-and-safety violations and almost half of the 50 largest workplace health-and-safety penalties issued between fiscal 2005 and 2009 were assessed to companies that received new government contracts.
But construction officials say the president’s action could have unintended consequences. Geoff Burr, Associated Builders and Contractors vice president of government affairs, said in a statement, “We are concerned these sweeping changes threaten the due-process rights of federal contractors and conflict with existing federal procurement and labor law.”
Burr said that although contractors should comply with federal and state labor laws, “the subjective nature of the order opens the door to favoritism and abuse of government contractors by administration officials.”
Burr added that ABC and federal contractor organizations could take legal and legislative action to prevent the order from going into effect.
There will be a public comment period after the FAR Council drafts proposed regulations.