Amid the chaos of transition, confirmation hearings and confirmations on The Hill, there’s some good news for defense contractors. On Thursday, the House of Representatives voted 236-187 to kill a Federal Acquisition Regulation (FAR) rule that sprang from President Obama’s Fair Play and Safe Workplaces Executive Order 13673.
THE SELF-REPORT RULE
The purpose of EO 13673 was to help “increase efficiency and cost savings in the work performed by parties who contract with the Federal Government by ensuring that they understand and comply with labor laws.” The rule that the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) proposed in the Federal Register back in May 2015 took a slightly different approach. The proposed rule was “designed to improve contractor compliance with labor laws and increase efficiency and cost savings in Federal contracting.” That purpose is substantially different. It’s no longer about helping contractors understand and comply labor laws; the proposed rule is about forcing compliance beyond already established regulations, processes, and procedures in the immensely complicated Federal contracting system.
According to the rules authors, “many labor violations . . . are not being considered in procurement decisions, in large part because contracting officers are not aware of them.” In other words, the rule wasn’t about helping contractors at all; it was about helping contracting officers. The essential purpose of the rule springing from the EO is to require contractors bidding for procurement and service contractors of $500,000 to self-report any violations of some 23 Federal labor laws, or equivalent state labor laws.
THE POTENTIAL IMPACT
In theory, the rule could very well start a mud-slinging war among contractors. It could encourage contractors competing for Federal business to sling accusations of labor law violations at one another, in effect imposing a debilitating sort of parasitic drag on opponents’ reputations. While labor advocates obviously defended the proposed rule, most contractors’ advocates, like the Associated Builders and Contractors, opposed it. In their view, “the rule ‘would have treated frivolous accusations of wrongdoing as grounds to prohibit qualified contractors from performing federal work’ . . . .”
PROGNOSIS
Before the rule ever wielded its effect, it was stymied with an injunction. Government Executive’s Charles S. Clark reports, “In October, a Texas district judge issued a preliminary injunction blocking parts of the rule in response to a suit brought by a chapter of the Associated Builders and Contractors. The judge decided that the rule’s reporting requirements reach beyond executive authority and are otherwise preempted by federal labor laws.”
By the end of this week, contractors can expect the rule will die a quiet death on The Hill.
