WASHINGTON DC – A new White House Executive Order (EO) to strengthen the federal contracting system by promoting compliance with federal labor law echoes many recommendations from a 2013 report issued by Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, that revealed widespread labor law violations by major government contractors that went unnoticed in the contracting process.
Harkin said “As my report revealed, the growing use of federal service contracts has meant that millions of Americans are now employed by major government contractors under deals worth billions of dollars. Thanks to the President’s executive action, we will allow the federal government to lead by example when it comes to compliance with important labor laws—by ensuring that job sites are safe and hazard-free, and by ensuring workers are receiving the wages they are entitled to under the law,”.
The HELP Committee’s investigation represented the first comprehensive report of its kind. It found that the amount of federal service contracts had increased by more than $200 billion since 2000, with an increasing number of private-sector employees paid with taxpayer dollars. It found that almost 30 percent of companies receiving the highest penalties for violations of federal labor law are also federal contractors. Specifically, the report identified that between 2007 and 2012, 49 federal contractors were accountable for almost 1,800 separate enforcement actions taken by the Department of Labor and paid $196 million in back wages and initial penalties over that period.
These violations had a real impact on the lives of thousands of Americans. For instance, an explosion at a grain elevator owned by the Bartlett Grain Company in October 2011 resulted in the death of six workers and left two others hospitalized. Bartlett was cited for five willful and eight serious violations of workplace safety laws and was assessed $406,000 in initial penalties by OSHA in April 2012. Bartlett Grain also received $16.3 million in federal contracts in 2012.
Key Findings of the Harkin Investigative Report: A Need For Reform in Federal Contracting
Eighteen federal contractors were recipients of one of the largest 100 penalties issued by the Occupational Safety and Health Administration (OSHA) of the Department of Labor between 2007 and 2012. Almost half of the total initial penalty dollars assessed for OSHA violations were against companies holding federal contracts in 2012.
Forty-two American workers died during this period as a result of OSHA violations by companies holding federal contracts in 2012. For instance, in 2010, seven workers were killed at a Tesoro-owned refinery in Anacortes, Washington when a heat exchanger ruptured and spewed vapor and liquid that exploded. The workers who died were standing near the area of the rupture specifically to attempt to stop leaks of the volatile, flammable gases in the facility, which had not been inspected for 12 years prior to the rupture. Nevertheless, Tesoro received $463 million in federal contracts in fiscal year 2012.
Among the largest 100 back wage assessments issued by the Wage and Hour Division of the Department of Labor between 2007 and 2012, 32 were federal contractors.
Overall, the 49 federal contractors responsible for large violations of federal labor laws were cited for 1,776 separate violations of these laws and paid $196 million in penalties and assessments. In fiscal year 2012, these same companies were awarded $81 billion in taxpayer dollars.
Thirty-five of these 49 federal contractors responsible for large violations of federal labor laws violated both wage and safety laws.
Recommendations from the Harkin Investigative Report Included in White House EO
According to a fact sheet published by the White House, the President’s EO contains eight key provisions to ensure that Americans employed under major federal contracts receive the pay they have earned and are protected from health and safety hazards. Many of these provisions reflect recommendations from Chairman Harkin’s investigative report.
Hold Corporations Accountable: the Executive Order will “require prospective contractors to disclose labor law violations from the past three years before they can get a contract.” Similarly, Harkin’s investigative report asked the U.S. Department of Labor (DOL) to annually publish a list of contractors that violate federal labor law and for DOL to input more information about labor violations in databases that contracting officers consult.
Crack Down on Repeat Violators: The Executive Order will ensure “that the worst actors, who repeatedly violate the rights of their workers and put them in danger, don’t get contracts and thus can’t delay important projects and waste taxpayer money,” echoing a similar recommendation from the HELP investigation.
Improve Efficiencies in Contracting: The White House cited Chairman Harkin’s report and its exposé of labor law violations among major government contractors in its fact sheet, as well as a report from the Center for American Progress that suggested a strong relationship between contractors with a history of labor law violations and subpar performance carrying out contracts. The White House stated that the EO will “improve the efficiency of federal contracting and result in greater returns on federal tax dollars.”
Help Companies Improve: An important part of strengthening federal contractors’ compliance will be to help more contractors come into compliance with workplace protections, not to deny contracts to contractors,” according to the White House. Chairman Harkin’s report called for measures to ensure contractors comply with federal labor law in order to continue doing business with the government.