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The Obama administration has attempted to impose increased burdens on federal government contractors via policies that needlessly injure competition, increase taxpayer costs, stifle job creation, and delay the delivery of goods and services to the government and its customers. The most abusive federal contracting policies affecting the construction industry are the administration’s continued efforts to expand the use of project labor agreements and the expanded application and enforcement of “prevailing wage” requirements under the Davis-Bacon Act.

See below for the latest news, legislative action, regulatory developments and compliance tools for hot button issues in federal, state and local procurement.

Associated Builders and Contractors Files Suit Against ‘Blacklisting’ Rule

Associated Builders and Contractors (ABC) and its ABC Southeast Texas Chapter announced that they have filed a lawsuit challenging the Fair Pay and Safe Workplaces final rule, commonly referred to as the “blacklisting” rule, which was released Aug. 25, 2016. The legal challenge was filed in the U.S. District Court for the Eastern District of Texas, Beaumont Division, by the Texas office of Littler Mendelson, P.C., ABC National’s general counsel. The firm will represent ABC, the ABC Southeast Texas Chapter and the National Association of Security Companies (NASCO) in the lawsuit.

“The Obama Administration has exceeded its authority by forcing government contractors and prospective government contractors to publicly disclose mere accusations that they have violated labor and employment laws,” said ABC Vice President of Regulatory, Labor & State Affairs Ben Brubeck. “ABC supports policies that provide value to taxpayers by ensuring that federal contractors compete on a level playing field, but this rule will require contractors to report alleged violations that have not been fully adjudicated and are being contested, which violates their first amendment and due process rights and is likely to harm fair and open competition in the federal marketplace.” 

“The rule creates additional costs and regulatory burdens that will discourage qualified firms, particularly small businesses, from pursuing federal contracts, and will drive up costs to taxpayers,” said Brubeck. “In addition, it will cause litigation and delays that will disrupt the federal procurement process for critical goods and services purchased by the government.”  

Nationally, ABC members performed more than 60 percent of all federal government construction contracts exceeding $25 million from FY2009 to FY2015.  

The blacklisting rule is among more than a dozen significant regulations targeting federal contractors recently issued by the Obama administration. In addition to the final rule violating the first amendment and due process rights of current and prospective federal contractors, the complaint raises a number of other critical legal issues the courts will resolve. 

A national survey of ABC members conducted in September found that:

  • 51 percent of respondents said the rule’s onerous requirements, including reporting alleged violations that firms are still contesting, will force them to abandon the pursuit of federal contracts
  • 91 percent of contractors said the rule will impose a significant or extreme burden for their firm through new requirements to compile information needed to comply with final rule
  • 93 percent said the final rule will make the contracting process less efficient
  • 98 percent said the final rule will make the contracting process more expensive.
ABC has consistently opposed the blacklisting proposal since the White House issued the Fair Pay and Workplaces Executive Order 13673 in July of 2014 and has:
  • Supported legislative efforts to protect contractors from the policy
  • Submitted comments in August 2015 urging the withdrawal of the FAR and DOL proposals along with more than 300 member companies
  • Voiced concerns about the proposed rule’s violation of the first amendment rights of contractors at a June 15, 2016 meeting with the Office of Management Budget’s (OMB) Office of Information and Regulatory Affairs and in supplemental comments
  • Joined 19 other business trade groups in sending a Nov. 6, 2014, letter to DOL Secretary 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 Thomas Perez, Director Muñoz and Deputy Director at OMB Beth Cobert.
For more information, visit abc.org/blacklisting

New Member Resources on Final ‘Blacklisting’ Rule

In the wake of the Aug. 24 issuance of the final rule on “blacklisting,” ABC is quickly deploying resources to help members comply with new requirements while pursuing legislative efforts and, potentially, litigation to protect contractors and taxpayers from the policy.

Officially known as the Fair Pay and Safe Workplaces final rule, the measure 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 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. Prime contractors pursuing federal contracts over $50 million issued after Oct. 25, 2016, will be the first group that must comply with this rule. 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. 20 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, 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.

"Blacklisting" Fair Pay and Safe Workplaces

OVERVIEW

President Obama’s Executive Order (EO) 13673, known as the “Blacklisting” EO because it could prevent some federal contractors from winning future federal contracts, will discourage qualified large and small businesses from pursuing federal contracts, threaten the livelihood of millions of Americans and increase costs to taxpayers.


ABC SUPPORTS

• Congress, the administration, federal procurement officers and stakeholders working together to develop a balanced approach to creating and implementing any reforms to the federal contracting procurement process.
• Safeguards for fair and transparent competition and protections against subjectivity and corruption in federal contracting.
• Federal agencies awarding contracts based on merit to firms that can deliver the highest quality product at the best price.
• Appropriations-based funding limitations on the DOL and FAR's blacklisting proposals.

ABC OPPOSES

• Federal contractors who repeatedly and intentionally break federal labor and contracting laws and regulations.
• Executive Order 13673 and any executive order, legislation or regulation that would deny federal contractors due process and permit or encourage discrimination in federal contracting based on arbitrary criteria, pre-adjudicated and/or false accusations, or a contractor’s labor affiliation.
• Any executive order, legislation or regulation that could discourage competition and delay federal construction projects by adding new levels of costly and time-consuming bureaucratic red tape to the federal contracting process.

BACKGROUND

On July 31, 2014, President Obama issued The Fair Pay and Safe Workplaces EO 13673, which places a sweeping new regulatory scheme on federal contractors that will disrupt the federal procurement process, significantly increase red tape and costs for both government and industry, and serve as a barrier to federal contracting for many businesses.

The EO instructs federal agencies to determine whether businesses seeking federal contracts are “responsible” enough to be awarded a contract based on a subjective review of its three-year compliance history with 14 federal and equivalent state labor, employment and safety laws. The EO could result in some of the best federal contractors being arbitrarily blacklisted from winning future federal contracts for committing even minor violations of a rapidly growing and constantly changing labyrinth of workplace laws and regulations. Even the federal government has a difficult time complying with the laws consistently.

Flouting Congressional authority, the EO disregards existing statutory enforcement powers found in the Federal Acquisition Regulation (FAR) and various labor laws. In addition, the EO imposes new and redundant data collection, review, inter-agency consultation and enforcement procedures. The EO also unfairly restricts the ability of employers to use arbitration to resolve employee disputes in certain circumstances (Federal law and subsequent Supreme Court decisions have made clear these arbitration agreements are acceptable).
 
UPDATE

On August 24, the Federal Acquisition Regulatory (FAR) Council issued a final rule that was 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 contracts of $500,000 or more when it is fully put into action. Prime contractors pursuing federal contracts over $50 million issued after Oct. 25, 2016, will be the first group that must comply with this rule. 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 and additional information can be found in Newsline. 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.”  


Court Issues Preliminary Injunction Against Blacklisting Final Rule

On Oct. 24, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction that prevents the Federal Acquisition Regulatory (FAR) Council from implementing the final blacklisting rule, officially titled Fair Pay and Safe Workplaces, which was scheduled to go into effect on Oct. 25. 

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Associated Builders and Contractors Files Suit Against ‘Blacklisting’ Rule

WASHINGTON, D.C., Oct. 7– Associated Builders and Contractors (ABC) and its ABC Southeast Texas Chapter announced that they have filed a lawsuit challenging the Fair Pay and Safe Workplaces final rule, commonly referred to as the “blacklisting” rule, which was released Aug. 25, 2016. The legal challenge was filed in the U.S. District Court for the Eastern District of Texas, Beaumont Division, by the Texas office of Littler Mendelson, P.C., ABC National’s general counsel. The firm will represent ABC, the ABC Southeast Texas Chapter and the National Association of Security Companies (NASCO) in the lawsuit.

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ABC Survey Finds Blacklisting Rule Will Force Many Contractors to Abandon Federal Marketplace

In the wake of the Aug. 24 issuance of the “blacklisting” final rule by the Obama administration, 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. 

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Court Issues Preliminary Injunction Against Blacklisting Final Rule

On Oct. 24, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction that prevents the Federal Acquisition Regulatory (FAR) Council from implementing the final blacklisting rule, officially titled Fair Pay and Safe Workplaces, which was scheduled to go into effect on Oct. 25. 

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DOL Issues Paid Sick Leave Final Rule for Federal Contractors

On Sept. 30, the DOL’s Wage and Hour Division issued a final rule requiring certain federal contractors to offer employees up to seven days (56 hours) of paid sick leave annually, including paid leave for family care.  The paid sick leave required by the final rule is in addition to a contractor’s obligations under the Service Contract Act (SCA) and Davis-Bacon Act (DBA). 

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Minimum Wage Increasing for Workers on Covered Federal Contracts in January

Beginning Jan. 1, 2017, the minimum wage for workers on covered federal contracts and service contracts will increase to $10.20 per hour from $10.15 per hour in 2016. The increase is dictated by the Oct. 7, 2014, U.S. Department of Labor’s Wage and Hour Division final rule that implemented Executive Order 13658.

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Associated Builders and Contractors Files Suit Against ‘Blacklisting’ Rule

Associated Builders and Contractors (ABC) and its ABC Southeast Texas Chapter announced that they have filed a lawsuit challenging the Fair Pay and Safe Workplaces final rule, commonly referred to as the “blacklisting” rule, which was released Aug. 25, 2016. The legal challenge was filed in the U.S. District Court for the Eastern District of Texas, Beaumont Division, by the Texas office of Littler Mendelson, P.C., ABC National’s general counsel. The firm will represent ABC, the ABC Southeast Texas Chapter and the National Association of Security Companies (NASCO) in the lawsuit.

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DOL Issues Paid Sick Leave Final Rule for Federal Contractors

On Sept. 30, the DOL’s Wage and Hour Division issued a final rule requiring certain federal contractors to offer employees up to seven days (56 hours) of paid sick leave annually, including paid leave for family care.  The paid sick leave required by the final rule is in addition to a contractor’s obligations under the Service Contract Act (SCA) and Davis-Bacon Act (DBA).  Therefore, a contractor may not receive credit toward its prevailing wage or fringe benefit obligation under the SCA and DBA for paid sick leave provided in satisfaction of the requirements of the final rule. 

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ABC Files Comments on New Paid Sick Leave Requirement for Fed Contractors

On April 12, ABC submitted comments in response to the U.S. Department (DOL) of Labor Wage and Hour Division’s proposed rule on establishing paid sick leave for federal contractors. The proposed rule requires certain federal contractors to offer employees up to seven days of paid sick leave annually, including paid leave for family care. The paid sick leave required by the proposal is in addition to a contractor’s obligations under the Service Contract Act (SCA) and Davis-Bacon Act (DBA). Therefore, a contractor may not receive credit toward its prevailing wage or fringe benefit obligation under the SCA and DBA for paid sick leave provided in satisfaction of the requirements of the proposed rule.

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Federal Contracting

The Obama administration has attempted to impose increased burdens on federal government contractors via executive actions that needlessly restrain competition, increase taxpayer costs, stifle job creation, and delay the delivery of goods and services to the government and its customers.

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Building America: The Merit Shop Scorecard

WASHINGTON, D.C., Nov. 21– Associated Builders and Contractors (ABC) today released its annual update to “Building America: The Merit Shop Scorecard,” which reviews and grades state-specific policies and information significant to the success of the commercial and industrial construction industry. The scorecard highlights states that have created a free enterprise-based environment where merit shop contractors are well positioned to succeed and calls attention to states where strategic improvements need to be made.

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