May 26, 2016

Congress Moves To Gut OSHA Plan To Weigh Violations In Procurement

Despite a threatened veto from the White House, the Senate appears slated to join the House in adopting legislation that would gut OSHA’s plan for implementing President Obama’s directive that the agency consider government contractors’ records of workplace violations in granting contracts.

The Senate has begun debate on a defense authorization bill, S. 2943, that includes language restricting OSHA-led implementation of President Obama’s Executive Order (EO) 13673 requiring federal agencies to weigh contractors’ labor law violations in awards to companies that have been suspended or debarred for their labor law violations.

Like the House version of the bill, the Senate bill includes language that would exempt most or all Defense Department contractors — who make up roughly two thirds of all federal contractors — from the executive order’s requirements, according to press reports.

Obama’s order on Fair Pay and Safe Workplaces calls for contractors and their subcontractors to report recent violations in the past three years, and requires federal officials to review those compliance records and determine “whether a contractor has a satisfactory record of integrity and business ethics.”

The order tasks OSHA with issuing guidance for implementing the order and defining the various types of violations that contractors must report, which include “any administrative merits determination, civil judgment, or arbitral award or decision rendered against them.”

The administration is moving ahead to implement the order with the White House Office of Management and Budget beginning formal review May 4 of the Department of Labor’s final guide for assisting federal agencies in reviewing contractors’ violations, as well as a related Federal Acquisition Rule to enforce the requirements.

Labor groups that have backed the EO and supported OSHA’s guide, have called for the agency to include provisions aimed at preventing future violations, such as employer retaliation against workers who report violations, in the settlement deals that the EO calls for federal officials to consider in procurement decisions.

But the EO and a proposed version of the guidance have drawn significant concerns from industry groups, who fear it will significantly increase OSHA’s leverage to force contractors to comply with requirements even if they are only subject to alleged violations, in violation of their due process rights.

An industry observer has also said the guide also appears to allow OSHA to impose future requirements outside of the rulemaking process.

Given the concerns, lawmakers are seeking to curtail the order’s reach. But there are differences between the two bills. While the Senate bill language seeks to ensure the EO’s provisions apply only to companies that have been suspended or debarred, the House language would shield all defense contractors from the order’s implementing rules.

The Senate language directs the Defense Department to ensure that companies, except for those that have been suspended or debarred for labor violations, “are not compelled or required to comply with the conditions for contracting eligibility as stated in any acquisition regulations promulgated to implement Executive Order 13673.”

The House language says, “The provisions of Executive Order 13673 and any implementing rules or regulations shall not apply to the acquisition, contracting, contract administration, source selection, or any other activities of the Department of Defense or the National Nuclear Security Administration.”

But the White House has threatened to veto the House bill in part over the prohibition, which the administration said would roll back important safeguards for ensuring companies that shirk labor laws do not underbid contractors that invest in worker safety, according to a May 16 Statement of Administration Policy (SAP) on the House language.

“The Administration strongly objects to section 1095, which would roll back important safeguards established by the President to ensure that taxpayer dollars do not reward corporations that break labor laws and thereby jeopardize the performance and cost of Federal contracting,” the SAP says. — Dave Reynolds ()

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