ABC is vehemently opposed to regulations which, in effect, create a “blacklist” of companies and other employers who are alleged to have “unsatisfactory” labor and employment policies and practices. “Persuasive evidence,” including alleged violations of a contractor's lack of compliance with tax laws, or substantial noncompliance with antitrust, labor employment, worker safety, environmental or consumer protection laws may cause a prospective contractor to be denied a federal contract.
On January 30, 2009 President Obama signed Executive Order 13496, “Notification of Employee Rights Under Federal Labor Laws”, which gives the Secretary of Labor sweeping new powers over federal government contracts. If a contractor fails to comply with provisions outlined in Executive Order 13496, the “contract may be cancelled, terminated, or suspended in whole or in part, and the contractor may be declared ineligible for further Government contracts.” In other words, federal contractors and their subcontractors could lose their contract and/or face debarment (blacklisting) for failing to post the Notice or comply with its provisions.
The Office of Federal Contract Compliance Jan. 29 issued a directive, effective immediately, offering information to federal contractors and subcontractors on complying with nondiscrimination provisions, particularly related to criminal record restrictions and discrimination based on race and national origin.
The Department of Labor on Dec. 21, 2012, released an updated agenda outlining the regulatory activities of its sub-agencies for the next year. The agenda includes items on reporting requirements for labor consultants, employers and associations, and affirmative action in federal construction, among other issues.
ABC, along with nine other groups, May 23 sent a letter to the Department of Labor (DOL) Secretary Hilda Solis raising concerns about a recent Office of Federal Contract Compliance Programs (OFCCP) proposed rulemaking that would set hiring quotas for federal contractors to employ workers with disabilities.
In the first phase of the LSU study "Online Reverse Bid Auctions for Construction Contractors and Subcontractors," authored by James H. Gill, Jr., JD., AIC, and Yilmaz H. Karasulu, PH.D., COSS, the researchers reviewed hundreds of published articles, papers and reports relating to the "auctioning" of commodities and services, with an eye to the use of cost-saving data that could justify the use of reverse auctions.
The review, which excluded advertising materials, revealed primary areas in which online reverse auctions are being used: airline tickets, computers, construction services, cost of utilities, legal services, office furniture, raw materials for manufacturing, removal of nuclear waste, specific machine parts, surgical operations, and U.S. government treasury transactions.
The LSU study's analysis of these published materials exposed a scarcity of information supporting cost-saving claims in all industries, including the construction industry.
The second phase of the LSU study now underway will gauge the impact of online reverse auctions in the construction industry, such as the impact on bidding processes, project relationships and work quality.
The U.S. Army Corps of Engineers (USACE) July 27, 2004, issued a report to Congress on its experience using reverse auctions in a year-long pilot program. In the report, the corps found that purchasing construction services through reverse auctions did not wield any measurable savings. The reverse auction pilot program, which began in October 2002 and ran through September 2003, was mandated by statute and used the services of a contractor, FreeMarkets, Inc. of Pittsburgh.
Reverse auctions are a form of procurement wherein the buyer posts the project online and contractors respond by "bidding" online. The sealed bidding process is replaced by transparent bidding. The objective of the bidding is to obtain a standard firm fixed-price contract.
USACE determined that the reverse auction process, while sometimes appropriate for commodity purchases, was not effective for construction services. The corps found that the reverse auctions encouraged “bid-gaming,” where a contractor does not have to offer the government its best bid but only the low bid. For construction, the corps "could find no factual, significant or marginal savings in the use of reverse auctioning methodology over the standard sealed bid process."
Additionally, the corps reported that "the reverse auction process is not a protest-free methodology for initiating or obtaining a standard firm fixed price contract; it, too, has systemic, internal flaws." The report noted that the reverse auctions were labor intensive and savings were unfounded.
ABC recognizes that owners and developers who procure construction services intend to obtain the highest level of quality at the most cost-effective price. Over the years owners have implemented a variety of procurement methods to achieve this objective. Most recently, some owners have begun using a “reverse auction” bidding method to procure construction services. ABC opposes the use of reverse auctions and believes that the practice does not best serve owners or contractors in obtaining construction services.
Corps of Engineers Finds Reverse Auctions Do Not Save Money
The U.S. Army Corps of Engineers found that purchasing construction services through reverse auctions did not wield any measurable savings. Instead, reverse auctions encourage "bid-gaming." The reverse auction pilot program, which began in October 2002 and ran through September 2003, was mandated by statute.