A new policy promises increased oversight of the federal contracting process – but more headaches for the contracting officers and additional red tape and compliance issues for contractors themselves.
The proposed rule from the Federal Acquisition Regulation (FAR) and the Department of Labor (DOL) regarding President Obama’s Fair Pay and Safe Workplaces Order requires companies submitting proposals for federal contracts exceeding $500,000 report any past or pending labor violations that occurred within the past three years. Contracting officers, along with labor advisors, will review the violations to determine if the contractor has a pattern of willful and pervasive abuse of the labor statutes. The alleged goal is to ensure taxpayer money isn’t going towards supporting companies that have a track record of violating labor laws.
New government regulation – never as simple as it seems
If only it were that simple. The intent is good, but the reality of how the proposed rule plays out may not be so good. Taxpayers will pay more to support this rule – both in increased overhead costs for contractors and to support additional steps in the government’s proposal review process. But the real question is: does it solve the issue? Does this rule ensure consistent rule breakers are prohibited from winning contracts or does it keep good contractors out unfairly due to open, but unfair accusations and a subjective review process?
Reporting allegations and accusations
The Office of Management and Budget (OMB) and DOL claimed to listen to the feedback; however, listening didn’t lead to implementation. Everyone is in agreement that pervasive lawbreakers should not be awarded contracts. Not everyone agrees on how we can work to make sure that doesn’t happen. Additionally, the ruling forces contractors to report on allegations that have not gone through the established legal procedures to ensure the allegations are accurate, as well as allegations that have been settled through arbitration without any findings of guilt. Both open allegations and previously settled cases (even cases with no findings of guilt) are available for scrutiny by the contracting officer and labor advisor(s).
The ruling could also hurt small businesses. The rules impact all contractors – not just the prime. Subcontractors will need to submit this information to their prime, and the prime contractors will determine if the subcontractor is too big of a risk to add on to their proposal submission. Sharing confidential information with partners and competition, which are often the one in the same, is uncomfortable and unnecessary.
The bottom line
That’s what this comes down to – is this really necessary? Do we not have systems already in place that would meet the need? The answer is yes. The data is there but the systems are not interoperable. Stan Soloway, CEO and president of the 400-member-company Professional Services Council “called the reporting regime ‘costly and sweeping,’ saying the administration should focus on improving existing internal information systems.” This seems like the perfect opportunity to make systems talk to one another instead of creating a new process with the potential to oust good, law-abiding contractors. No one wants to be unfairly blacklisted, and a subjective review process seems to point to this possibility becoming a reality.
