J. Scott Applewhite/AP

Obama Pushes Contractors to Be Greener, More Worker-Friendly

Administration estimates "Fair Pay" rule will cost contractors $458 million in the first year.

The Obama administration has finalized plans to bring more scrutiny to potential federal contractors' histories of violating labor laws, releasing twin final regulations that will publish Thursday to implement a 2014 executive order.

A final rule from the Defense Department, General Services Administration and NASA, and final guidance from the Labor Department, will implement President Obama’s Fair Pay and Safe Workplaces order to boost transparency of contractors’ compliance with labor laws. It will require agencies’ contracting officers to give greater consideration to such violations.

The rule will go into effect Oct. 25 with its provisions phased in over the next two years. Labor estimated in 2014 the order would affect 24,000 businesses employing 28 million workers. In its final rule, the administration estimated contractors would spend $458 million complying with the new regulations in its first year, while the government would spend an additional $16 million.

The final rule and guidance spell out the labor laws to which vendors must disclose violations, and define how the government will evaluate contractors’ records. While agencies are already tasked with issuing contracts to “responsible” businesses, Defense, GSA and NASA said new layers of transparency will ensure government entities are actually able to carry out that task. 

“Many labor violations that are serious, repeated, willful and/or pervasive are not being considered in procurement decisions, in large part because contracting officers are not aware of them,” the agencies wrote in the rule.

The order sets up a new process to encourage companies to settle existing disputes, such as paying back wages, and requires them to give workers access to information to regularly verify the accuracy of their paychecks. Workers subject to sexual assault or civil rights violations will no longer face mandatory arbitration agreements, instead being able to take their cases to court.

Groups representing federal contractors have criticized the order since it was issued, saying it adds unnecessary complexity and risks punishing companies that have done little or nothing wrong.

Geoff Burr, then the vice president of federal affairs for the Associated Builders and Contractors, said in a 2014 Government Executive op-ed the order could lead to “some of the best firms being arbitrarily blacklisted from winning future federal contracts for committing even minor violations of a rapidly growing and constantly changing labyrinth of complex workplace laws and regulations.”

In a statement Wednesday, ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck called the final rule “duplicative and cumbersome.”

The Federal Acquisition Regulation’s "flawed blacklisting final rule will create a murky and needlessly subjective procurement process that will result in fewer qualified and responsible contractors bidding on federal contracts,” Brubeck said. He added ABC supports holding accountable “unethical firms,” but argued the rule empowers “bureaucrats to subjectively pick winners and losers in the federal contracting marketplace.”

The Professional Services Council has expressed similar concerns, saying the executive order would do “too little to promote labor law compliance and efficient federal contracting” and add “delays in agencies obtaining the goods and services they require.”

Scott McCaleb, an attorney at Wiley Rein concentrating on government procurement, called the rule a “solution in search of a problem,” noting the administration’s own assessment that the new policy would lead to only a “limited number” of compliance agreements between contractors and enforcement agencies.

Progressive groups, however, praised the final rule, saying it would both boost accountability and produce better value for taxpayer dollars.

“Until now, contractors have continued to receive federal contracts worth billions of dollars despite long track records of committing rampant wage theft, creating unsafe working conditions, or discriminating against workers on the job,” said David Madland, a senior fellow at the Center for American Progress. “The Obama administration’s Fair Pay and Safe Workplaces executive order will help ensure that companies with long track records of violating workplace laws clean up their acts before receiving new contracts.”

In a separate proposal issued Wednesday, GSA announced it is planning to require all medium and large companies doing business with agencies through Alliant 2 -- a contract vehicle for information technology upgrades -- to report on their carbon footprint to qualify for the job.

In a request for comments, GSA said it will require medium and large Alliant 2 contractors to “inventory and publicly disclose” their greenhouse gas emissions. Additionally, the vendors will have to set targets for reducing their footprints and release annual reports on their progress in meeting them.

GSA asked for public comments on whether the disclosures are necessary, how large of a lift they will be, whether they will serve a public utility and how the burden on contractors could be minimized. 

GSA estimated about 40 percent of Alliant 2 contractors already publicly report their emissions “in response to requests from their non-government customers, investors, insurers and corporate sustainability policies.”