Executive Order Will Require Contractors to Disclose Safety and Labor Violations Before Getting Government Work

President Obama has issued an executive order that will require prospective federal contractors to disclose any safety or labor violations from the past three years before securing contracts.

“Contractors [that] invest in their workers’ safety and maintain a fair and equitable workplace shouldn’t have to compete with contractors who offer low-ball bids – based on savings from skirting the law – and then ultimately deliver poorer performance to taxpayers,” the White House explains in a fact sheet on the executive order, which Obama issued on July 31.

Set to take effect in 2016, the executive order will cover new federal contracts valued at more than $500,000. Prospective contractors will have to disclose violations of 14 federal statutes and equivalent state laws that address wage and hour, safety and health, collective bargaining, family and medical leave and civil rights protections.

Agencies also will have to require contractors to collect similar information from many of their subcontractors.

The executive order directs the General Services Administration to develop a single website for contractors to meet their reporting requirements. Contractors only will need to provide information to one location, even if they hold multiple contracts across different agencies, according to the White House. 

“The desire to ‘report once in one place’ is a key theme in the feedback received from current and potential contractors,” the Obama administration explains. “This step is one in a series of actions to make the federal marketplace more attractive to the best contractors, more accessible to small businesses and other new entrants, and more affordable to taxpayers.”

The White House insists that the goal of the executive order is to help more contractors comply with workplace protections, “not to deny contracts to contractors.” 

“Companies with labor-law violations will be offered the opportunity to receive early guidance on whether those violations are potentially problematic and remedy any problems,” the White House website says. “Contracting officers will take these steps into account before awarding a contract and ensure the contractor is living up to the terms of its agreement.”

Government Work Is Big Business

The Department of Labor estimates that there are roughly 24,000 businesses with federal contracts, employing about 28 million workers. 

In 2010, the Government Accountability Office issued a report finding that almost two-third of the 50 largest wage-and-hour violations and almost 40 percent of the 50 largest workplace health and safety penalties issued between FY 2005 and FY 2009 occurred at companies that went on to receive new government contracts. 

Last year, Senate Health, Education, Labor and Pensions Committee Chairman Sen. Tom Harkin, D-Iowa, issued a report revealing that dozens of contractors with significant health, safety and wage and hour violations were continuing to receive federal contacts. 

“Because the companies with workplace violations are more likely to encounter performance problems, [the executive order] will also improve the efficiency of federal contracting and result in greater returns on federal tax dollars,” the Obama administration asserts.