Jimmy Rodefer: Controversial disclosure rules for federal construction contractors to become law

Two years in the making, the final rules have been released for the Fair Pay and Safe Workplaces Presidential Executive Order. They're causing a stir in the construction industry.

The final rules of Executive Order No. 13,673, originally announced by the White House on July 31, 2014, were released Aug. 25. What contractors face is complying with the order — 3,416 words long — and the accompanying rules for which the table of contents alone is some 900 words. The executive order's first sentence under "policy" describes its purpose, which seems laudable:

"This order seeks to 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 rules compel firms with federal contracts of more than $500,000 to disclose past wage and safety violations for 14 federal labor laws up to the past three years; to do it as well for subcontractors; to perform these tasks at least twice a year; and that,

"contracting officers, in consultation with labor compliance advisers, consider the disclosures, including any mitigating circumstances, as part of their decision to award or extend a contract."

There are professional construction organizations more than concerned that the rules, reporting demands, responsibilities, and potential liability threaten to limit — or eliminate — the ability of small contractors to compete for federal projects and will make it too costly and cumbersome as well for many larger firms to compete.

A smaller pool of contractors can mean higher costs to taxpayers. Higher regulatory costs to construction firms for compliance can mean higher costs to taxpayers. There are also concerns that the labor compliance officers have too much discretion under the rules to award or deny contracts and that politics may play a role in their decisions. Opposition isn't universal. The International Brotherhood of Teamsters, for example, supports the order.

"It will not only protect the millions of workers that are employed by federal contractors, but it will ensure that taxpayer money is not being handed to companies that blatantly violate labor and workplace laws," Teamsters Union General President Jim Hoffa said in a statement.

The Associated General Contractors, meanwhile, minces no words in its dissent:

"AGC has fought against and informed members about this unfounded, unnecessary, unworkable and unlawful EO since the president signed it in 2014. The association has been and will continue to pursue all options — legislative and legal — to block this EO and its regulations."

The Associated Builders and Contractors Inc. calls it the "blacklisting final rule" and reported the results of a member survey:

"… more than 51 percent of respondents said the final rule's onerous requirements, including reporting alleged violations that firms are still contesting, will force them to abandon the pursuit of federal contracts. Ninety-one percent of contractors said the final rule will impose a significant or extreme burden for their firm through its new requirements to compile necessary information needed to comply with final rule. Finally, 93 percent said the final rule will make the contracting process less efficient and 98 percent said the final rule will make the contracting process more expensive."

Opposition and potential court action notwithstanding, at present the rules are to become effective Oct. 25. Some portions will be phased-in over a three-year period: contracts of more than $50 million are first on the list. Contractors doing federal work, planning to bid on federal work, or who would like to do federal work, have a lot of learning to do. In some cases, not a lot of time to do it.

You may view the original post here in the Knoxville News Sentinel.


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