Labor Law Violators Still Get Contracts

A study released by the Government Accountability Office (GAO) shows that 60% of  the top 50 violators of labor laws from 2005 to 2009 still received federal contracts in 2009. These companies receive billions in contracts despite numerous Safety, occupational and wage violations as well as facing discrimination charges. It was also discovered that nearly 40% of the 50 largest fines leveled by the Occupational Safety and Health Administration (OSHA) between 2005 and 2009 were against companies that still gained contracts in 2009. This group of violators has also been found to be cited by both the Wage and Hour Division (WHD) and the National Labor Relations Board (NLRB).

The specific code being violated by handing out huge contracts to such gross offenders would be Federal Acquisition Regulation (FAR) Subpart 9.104-1 which states that “a satisfactory record of integrity and business ethics” is part of the general standards of responsibility. The Project ON Government Oversight (POGO) possesses a database that catalogues 200 cases of labor misconduct resulting in $1.4 billion in penalties, settlements, judgments and fines.

15 companies cited for labor law violations by either OSHA, NLRB or WHD were reviewed by the GAO. The GAO only looked at instances of substantial fines- assessments of at least $100,000 by WHD and OSHA fines of at least $25,000. These 15 companies were awarded over $6 billion in contracts during the previous fiscal year. Some of the major labor law violators include: Corrections Corporation of America, Tyson Foods, Akal Security, Inc. and Teco-Westinghouse Motor Company. Compounding the problem is the fact that 7 of the 15 companies reviewed committed other violations. These actions included defrauding Medicare and Medicaid, hiring undocumented workers and violating environmental laws.

The GAO report indicates that poor intra-government information sharing is putting workers at risk. Data about violations is scattered about some areas while relevant data about awarded contracts exists in other locations. Connecting the two was even difficult for the GAO and they could only find data on the top 50 violators leaving a question as to how far reaching the problem may be.

The White House is aware of the problem and appears to be taking strides to address the issues. Vice President Joe Biden is developing a “High Road” contracting policy. This proposal centers on wages and benefits but critics note it does not currently address other problems such as tax cheats, polluters or safety and health violators.

Sources:

http://www.ombwatch.org/node/11317

http://pogoblog.typepad.com/pogo/2010/10/are-federal-contractors-a-bunch-of-scrooges.html

http://www.federaltimes.com/article/20101005/ACQUISITION03/10050303/

http://www.allgov.com/Where_is_the_Money_Going/ViewNews/Contractors_with_Labor_Law_Violations_Won_6_Billion_Dollars_in_Contracts_Last_Year_101006