Friday, September 4, 2015

Fair Pay and Safe Workplaces - Public Comments - Part 5

This week, we have been recapping several of the 918 public comments submitted in response to draft regulations implementing the President's Executive Order (EO) called Fair Pay and Safe Workplaces. The EO is intended to punish Government contractors (or some would say is intended to incentivize Government contractors to do better) who engage in repeated offenses of fourteen different labor laws currently on the books. Under the proposed regulations, offending contractors (and subcontractors) will be at a disadvantage compared to their competitors, when responding to solicitations for Government work.

If you have not been following this series, you may want to go back and read Parts 1 through 4:
So far, we've looked at comments submitted by a public service organization (POGO), one that represents a certain segments of contractors (AGC), one that represents attorneys specializing in contract law (ABA) and one that represents workers in general (Leadership Conference on Civil and Human Rights). Today we will recap a response from an existing Government contractor; Lithko Contracting. Many of the 918 public comments came from Government contractors. There was no particular reason for choosing Lithko's submission other than it seemed to have been written by someone that had given some thought to the practicalities of trying to implement the regulations.

Lithko is a nationwide specialty concrete contractor employing 1800 people. It has been in business for 33 years and, according to its narrative, has an excellent safety record and a great relationship with OSHA and other Governmental agencies. Lithko opposes the proposed rules.

Lithko's first objection concerns the requirement to report non-final agency and court actions. Lithko pointed out that companies commonly undergo agency investigations and receive violation notices or court complaints, but a subsequent hearing or legal proceeding reveals the alleged violation is unfounded or is much less serious than the original claim. If non-final agency or court actions are considered by contracting officers as part of the responsibility determination process, quality companies could lose a contract as a result of cases or investigations that are not yet fully adjudicated or are eventually dismissed.

Secondly, adding reporting requirements and certifying compliance of subcontractors will force companies to hire more staff  (and attorneys) at great cost which will eventually be passed on to the federal government and taxpayers.

Third, there will likely be an increase in the number of bid protests, litigation against frivolous complaints and investigations, and lawsuits disputing the subjective responsibility determination or assertions made by federal contracting officers and prime contractors. These will create delays.

Finally, added cost, red tape, increased risk, delays and needless uncertainty will have a severe impact on small businesses and will prevent many small businesses from competing for federal contracts because they do not have the resources to comply with this substantial regulatory burden.

Lithko is certainly correct about added cost. The Government acknowledges that. It probably has not thought through the relative impact of the added cost on small businesses.

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