Agencies must take an labor law violations into account when selecting federal contractors according to a new executive order. (SAUL LOEB / AFP/Getty Images)
President Obama’s executive order cracking down on federal contractors who have violated labor laws have divided lawmakers, federal employee groups and contractors over how effective it will be in deterring abuses.
President Obama signed an executive order July 31 requiring federal contractors to disclose any labor law violations and for agencies to take that into account when awarding contracts.
The Fair Pay and Safe Workplaces executive order affects contracts valued at more than $500,000 and will be implemented in stages during 2016, according to the administration.
The executive order also provides a range of rules and guidance for agencies and contractors. It:
■Requires contractors to disclose labor law violations from the past three years before they can get a contract, including violations of laws regarding collective bargaining, family and medical leave and wages;
■Mandates each agency to appoint a senior official as a labor compliance officer overseeing contracting officers, to make sure agencies are complying with the new rules, and;
■Forbids contractors with $1 million or more in government business from requiring employees to enter into arbitration agreements for issues related to sexual assault or harassment.
The executive order will push contractors to settle existing labor issues such as back pay and helps provide information to contracting officers they need to make good decisions when awarding contracts, according to an administration statement.
While most contractors do not violate labor laws the administration does not want to reward those that do by giving them federal contracts.
“By cracking down on federal contractors who break the law, the president is helping ensure that all hardworking Americans get the fair pay and safe workplaces they deserve,” the statement said.
Colleen Kelley, president of the National Treasury Employees Union, said the executive order will provide agencies more guidance on how to consider labor violations when issuing contracts.
“NTEU strongly agrees that the government should not do business with contractors that disregard employee rights or put their safety at risk,” she said in a statement.
Rep. Chris Van Hollen, D-Md., said the executive order will ensure that taxpayer dollars are not spent on companies that violate the safety and dignity of their workers.
“The federal government must lead by example and reserve its business for those who provide safe workplaces and fair pay for their employees,” he said.
Sen. Tom Harkin, the chairman of the Senate Health, Education, Labor and Pensions Committee, said the executive order follows on a report he released last year finding that taxpayers awarded $80 billion in contractos to companies with significant labor violations.
“The president’s action will be an important step forward to give the government more tools to effectively confront and deter workplace wage and safety violations,” he said in a statement.
But for contractors the latest executive order is just another example of the administration’s micromanagement of federal contractors, according to the Professional Services Council.
The executive order is one of four this year that have singled out federal contractors while imposing specific and unique requirements for those who want to do business with the federal government, according to the PSC.
PSC Executive Vice President Alan Chvotkin said most violations of labor among contractors law are small and unintentional due to widespread confusion on some workplace policies, but even so the federal contracting community has a higher rate of compliance than the private sector does.
“This order actually adds more complexity and confusion to the federal contracting process, risks adding further delays in agencies obtaining the goods and services they require, and does too little to promote labor law compliance and efficient federal contracting,” Chvotkin said.
He said PSC has asked the administration to engage them prior to issuing rules in order to develop better processes for dealing with non-compliance by contractors, instead of having to deal with an already issued rule.
While the executive order is meant to address a few bad apples, it pulls in all federal contractors, according to Brian Turmail, spokesman for the Associated General Contractors of America.
He said the increasing burden on contractors specifically might drive some away from federal business.
“In a more competitive environment for construction — with the private market making a slow but steady comeback — the federal market is not the only game in town,” Turmail said. “These mandates and the confusion and liability connected with them will only make non-federal work more appealing to the construction contracting community.”
Joseph McCaffrey, a director of government contractor advisory services at contracting consultant BDO, said there is potential for confusion as agencies work to draft regulations and rules regarding the executive order.
For example, agencies are told to put contractor labor law violation information online, but it does not say whether the data is public or private or what kind of details the data will contain, McCaffrey said.
The executive order also does not make clear how much authority contracting officers have to determine whether a contractor has committed a violation and should be reported to be suspended or debarred.
“The devil is always in the details,” he said.■