In the wake of the Obama administration’s Aug. 24 issuance of the “blacklisting” final rule, officially known as the Fair Pay and Safe Workplaces Executive Order 13673, ABC recently surveyed membership to determine the impact of the rule on the contracting community interested in pursuing federal contracts.
ABC’s survey of its members reveals that more than 51 percent of respondents said the final rule’s onerous requirements, including reporting alleged violations that firms are still contesting, will force them to abandon the pursuit of federal contracts. Ninety-one percent of contractors said the final rule will impose a significant or extreme burden for their firm through its new requirements to compile necessary information needed to comply with
final rule. Finally, 93 percent said the final rule will make the contracting process less efficient and 98 percent said the final rule will make the contracting process more expensive.
To put this into perspective, from FY2009-FY2015, ABC member prime contractors won 56 percent of large-scale federal contracts exceeding $25 million. That’s 626 contracts valued at roughly $40 billion (63.65 percent of total value) won by ABC members. With the loss of quality and experienced ABC member prime contractors with no record of reportable violations, the federal government would experience increased costs, reduced competition and perhaps less quality construction projects because of this burdensome blacklisting rule.
About the Rule
The final rule will require federal contractors and subcontractors to disclose any “violations” of 14 federal labor laws and OSHA-approved state plans to the federal government before being awarded federal contracts covered by this rule.
The rule was issued by the Federal Acquisition Regulatory (FAR) Council and accompanied by a
guidance document from the U.S. Department of Labor (DOL) and a White House
amendment to
Executive Order 13673.
ABC issued a press release slamming the final blacklisting rule immediately afterward.
The final rule is effective on Oct. 25, 2016, and will be implemented in
phases that will impact prime contractors and subcontractors pursuing federal contractors of $500,000 or more when it is fully put into action Oct. 25, 2017. Prime contractors pursuing federal contracts over $50 million issued after Oct. 25, 2016, will be the first group that must comply with this rule. This threshold decreases to prime contracts of $500,000 or more issued after April 25, 2016, and extends to subcontracts of $500,000 or more issued after Oct. 25, 2017. In addition, on Jan. 1, 2017, the rule’s paycheck transparency provisions take effect, requiring contractors to provide wage statements and notice of any independent contractor relationship to their covered workers.
ABC’s general counsel, Littler Mendelson P.C., has
prepared an analysis of the blacklisting final rule. In addition, ABC will offer a
free webinar for ABC members on Sept. 22 at 2 p.m. ET, titled, Federal Contractors: Learn About the Obama Administration’s Final Rule on “Blacklisting.”
The final rule is expected to increase costs for taxpayers, threaten the livelihood of employees who work for responsible federal contractors and cripple the federal procurement process with needless uncertainty,
delays and litigation. It places a new and costly regulatory burden on the federal contracting community and creates a process that will allow trial lawyers to extort larger settlements from firms, enable bureaucratic agencies to extract costly compliance agreements for conduct that may have been legal, and give labor unions leverage to persuade businesses to capitulate to their demands.
“ABC supports a level and transparent playing field for federal contractors and believes unethical firms should be held accountable,” said Ben Brubeck, ABC’s vice president of Legal,
Regulatory and State Affairs. “However, there are many troubling aspects of this rule. For example, the final rule strips federal contractors of their due process rights by forcing them to disclose pre-adjudicated ‘labor law decisions’ and alleged violations of the covered laws to government officials that can be used as the basis for contracting officers to deny a contract to an otherwise qualified firm.”
“For this, and many other practical reasons raised in our comments to government officials during the past two years and highlighted in this recent survey, ABC will continue to explore every available avenue, including the judicial system, to protect taxpayers, contractors and their employees, whose livelihoods rely on a fair procurement system, from this overreaching policy,” said Brubeck.
ABC has consistently opposed the blacklisting proposal since the White House first issued the Fair Pay and Safe Workplaces Executive Order 13673 on July 31, 2014. Specifically, ABC has:
- Participated in a June 2016 meeting with the Office of Information and Regulatory Affairs to express concerns with the proposals
- Supported legislative efforts to protect taxpayers and contractors from the policy. ABC has sent letters in support of amendments to roll back the blacklisting proposal in the FY2017 House Financial Services, General Government Appropriations bill, the Labor-HHS Appropriations bills in the U.S. House and Senate and the National Defense Authorization Act (NDAA). The House and Senate plan to take up these appropriations bills when they return from recess in September and the NDAA is currently in conference
- Submitted comments in August 2015 urging the withdrawal of the FAR and DOL proposals along with more than 300 member companies
- Joined 19 other business trade groups in sending a Nov. 6, 2014, letter to DOL Secretary Thomas Perez and Director of the White House Domestic Policy Council Cecilia Muñoz requesting the president withdraw the executive order
- Spoken out against the executive order in an Oct. 13, 2014, White House listening session hosted by Secretary Perez, Director Muñoz and Deputy Director at the Office of Management and Budget Beth Cobert.
For more information, visit
abc.org/blacklisting.
DOL Resources on the final rule:
Please contact
Ben Brubeck if you have questions or concerns.