Companies who repeatedly violate safety regulations should have a tougher time getting federal government contracts, under new guidance published by the U.S. Department of Labor.

New guidance issued by the federal government is aimed at preventing government contracts from going to companies that routinely violate labor laws – including safety regulations.

The exception, not the rule

Although there’s already an Executive Order in place (EO 13673, Fair Pay and Safe Workplaces) that requires federal agencies to do business only with “responsible” sources, multiple studies conducted over the last two decades indicate that consideration of contractor labor law violations during the federal procurement process has been the exception rather than the rule.

In the mid-1990s, the congressional General Accounting Office (GAO), now known as the Government Accountability Office, issued two reports finding that federal contracts worth billions of dollars had been awarded to companies that had violated the OSH Act and the National Labor Relations Act. The reason? Contracting agencies lacked adequate information about contractors’ noncompliance.

Lots of violators get contracts

Over a decade later, with contracting expenditures escalating, the GAO again found a similar pattern. Looking at the companies that had the largest wage violations and workplace health- and-safety penalties from fiscal years 2005 to 2009, the GAO found that a surprisingly high percentage of those companies subsequently received federal contracts.

The new guidance provides explicit new instructions for federal contracting officers to consider a contractor’s compliance with certain federal and state labor laws as a part of the determination of contractor “responsibility” that contracting officers presently must undertake before awarding a Federal contract.  

In addition, “the Order directs the FAR Council to propose the rules and regulations necessary to carry out the Order and the Department to develop guidance to help implement the new requirements. In this final Guidance, the Department provides detailed definitions for various terms used in the Order and the FAR rule to categorize and classify labor law violations, and the Department provides a summary of the processes through which contracting agencies will assess a contractor’s overall record of labor law compliance and carryout their other duties under the Order.”

A "smart step"

The National Council for Occupational Safety and Health (National COSH) is calling the guidance “a smart step forward for workers, businesses and taxpayers.”

“As a homeowner, you wouldn’t want to hire a painting company that uses rickety ladders and puts workers at risk on your property,” said National COSH Acting Executive Director Jessica Martinez. “Taxpayers also want fair value for money spent on government contracts, instead of hiring scofflaws who cut corners and put workers at risk.”

“From now on, companies applying for federal contacts worth more than $500,000 will have to report their history of workplace violations,” said Martinez. “This leads to better quality services and reduces the hidden costs that result from injured workers and those not receiving a living wage. There’s no blacklist of these companies. Once there is a spotlight on these problems, however, there will be an incentive to settle and remediate these violations, so taxpayers can be sure their money is being spent efficiently and workers are treated fairly.”

The organization cites a study by the Center for American Progress Action Fund, which shows that federal contractors with a history of repeat workplace violations “were also often guilty of shortchanging taxpayers through poor performance on government contracts.”

Responsible contracting policies, Martinez added, “also ensure that the worst actors in the market place do not have the opportunity to profit from public contracts.”

The "usual complaints"

National COSH senior organizer Peter Dooley predicted that business associations will issue “the usual complaints” about burdensome government regulations.

“The real burden of bad business practices falls on workers, who are exposed every day to preventable illnesses and injuries on the job – and who are often subject to illegal retaliation when they exercise their right to a safe workplace,” said Dooley, adding: “Businesses that comply with workplace laws shouldn’t have to compete with those who don’t.”