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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.
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