Colorado Real Estate Journal - July 15, 2015
Bidders on government contracts will face substantial disclosure requirements if two government proposals for implementing the Fair Pay and Safe Workplaces Executive Order become final. Executive Order 13673 requires bidders on government contracts to disclose violations of federal and state labor laws within the past three years to contracting agencies so that the agencies can consider that information in making contract awards. The executive order is based on the premise that a prospective contractor must have a satisfactory record of integrity and business ethics to be determined responsible, and the federal procurement process is more efficient and economical when contractors comply with labor laws. The order applies to new contracts and subcontracts over $500,000, other than contracts for commercially available off-the-shelf items starting in 2016. At the end of May, the Federal Acquisition Regulatory Council (Department of Defense, General Services Administration and NASA) proposed rules and the U.S. Department of Labor proposed guidance for implementing the order. The proposals explain some of the burdens and responsibilities on the parties involved, but many questions are yet to be answered. Offerors must disclose whether any award, decision or civil judgment has been entered against them for violating any of 14 federal labor laws and executive orders or equivalent state laws. The apparent awardee must disclose detailed information about any violations. The awardee must agree to require each covered subcontractor to disclose its own violations and the awardee must consider that information before awarding a subcontract to determine if the subcontractor is a responsible source. An awardee must update information about its own violations and obtain updates from each of its subcontractors semiannually. The DOL’s p r o p o s e d g u i d a n c e describes at length what labor violations must be reported and what information must be disclosed about v i o l a t i o n s , explains how to analyze the severity of violations and describes the roles of DOL and the labor compliance advisers that each agency must designate. The FAR Council’s proposal would amend the Federal Acquisition Regulation consistent with the guidance by delineating solicitation provisions and contract clauses; identifying how, when and to whom disclosures are to be made; and describing the responsibilities of contracting officers and contractors. The proposals would make agency complaints and notices or findings of violations that have not been fully adjudicated, and are subject to further review, reportable. If an apparent awardee reports violations, the agency’s labor compliance adviser is to collect and analyze the information and make recommendations to the contracting officer based on whether it finds the offeror’s record is satisfactory, the record would be satisfactory if a labor compliance agreement were initiated, or the record is unsatisfactory and the suspending and debarring official should be notified. Contracting officers must consider mitigating factors such as corrective action and steps taken by the contractor to prevent its recurrence; however, a pattern of serious, willful, numerous or continuing violations with no effort to remediate warrants referral to the suspending and debarring official for the agency. Prime contractors are to judge the responsibility of prospective subcontractors in the same way. If new violations or changes are reported or obtained from other sources after a contract has been awarded, the contracting officer may continue the contract; refer the matter to DOL to obtain a new or enhanced labor compliance agreement; terminate the contract; or, if the violations are serious, notify the agency’s suspending and debarring official. The proposals also address provisions of the executive order regarding employee pay, independent contractor status and arbitration agreements. Contractors must provide pay stubs containing certain information to employees and can satisfy this requirement by complying with similar state laws. Contractors must notify independent contractors in writing of their status before they perform any work under the contract. Limits are placed on contractors’ ability to enter agreements with employees to arbitrate Title VII and certain tort claims where the contract exceeds $1 million. The guidance states that DOL will issue separate guidance on what state laws are considered equivalent to the 14 federal labor laws but also declares that OSHA-approved state occupational safety and health plans are equivalent. The proposals do not indicate whether the three-year violation period is retroactive. Other matters not resolved in these proposals include which state wage statement requirements are similar to the order’s pay statement requirement, the scope of public disclosure of violation information, how contractors should or must track violations subject to disclosure, whether to phase in the subcontractor requirements, whether subcontractors should disclose violations to DOL rather than to the prime contractor and procedures related to failures to enter into DOL compliance plans. The DOL’s guidance invites comment on these matters. Comments on either proposal must be submitted by July 27.