Safe Chain Link

03

Oct

The Fair Pay and Safe Workplaces Executive Order: Lessons Learned from the Private Sector

Author: Jared Smith, Co-Founder

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As the October 25 implementation date draws near, the Fair Pay and Safe Workplaces Executive Order has been under significant attack by those who believe the new regulations that require prospective federal contractors to disclose labor law violations aren’t necessary and will result in unfair blacklisting of contractors who are following the law.

But private sector contractor qualifying experience indicates otherwise.

In fact, responsible bidder policies have a proven track record of protecting workers and improving the quality of contractors in the private sector, up-leveling contractor safety standards and reducing the pressure to cut corners to lower costs, in order to effectively compete without unfairly blacklisting contractors who follow the rules.

Here are three important reasons we believe the Fair Pay and Safe Workplaces Executive Order is necessary:

1. Serious Safety Concerns — Major safety incidents in the government sector are on the rise. A recent Senate report drew attention to the need for increased contractor regulation, describing how 49 federal contractors amassed upwards of 1,776 separate enforcement actions in six years, received $81 billion in federal contracts in fiscal year 2012 alone and were fined $196 million in penalties for failing to uphold safe working conditions or neglecting to pay earned wages. According to the report, some of the most extreme examples of corporate misconduct were not even included in those numbers, as the data was not yet available at reporting time.

These jaw-dropping statistics indicate too many repeat offenders are winning repeat business. The Fair Pay and Safe Workplaces Executive Order would mimic responsible bidder programs already used by some states and many private sector businesses, which have improved contractor quality by eliminating the contract candidacy of companies with long track records of committing fraud, wasting taxpayer funds and violating workplace laws.

2. Shortchanged Taxpayers — The federal government spends hundreds of billions of dollars every year contracting out to government services ranging from maintenance and janitorial work to the design and manufacture of sophisticated aircraft. Yet the review process to ensure that only responsible companies receive federal contracts is weak. Essentially, if the basic standards are met, the government is required to choose the lower bidder. This often results in the federal government awarding contracts to companies with long track records of violating workplace laws, as businesses that do spend the extra dollars to do the right thing are easily underbid.

In the event the safety issues aren’t compelling enough, The Center for American Progress (CAP Action) finds that contracting with companies with deplorable records of workplace safety violations also frequently results in poor performance of government contracts. Failing to adhere to safety standards not only creates additional risk that could result in additional tax dollars, but the contracting job might not even be completed on time.

3. Limited LegislationOfficials have noted that the Fair Pay and Safe Workplaces Executive Order three-year labor law violation reporting requirements do not actually apply to every potential safety violation, but rather only the most “egregious” safety violations will count against contractors submitting a federal bid. For instance, the bill only requires contractors to disclose OSHA violations that are ranked as “serious” or “willful” rather than the run-of-the-mill violations that often pop up during routine audits and inspections. Officials estimate less than 10 percent of contractors will meet the egregious safety violation threshold that would disqualify them from submitting a federal bid under the new regulations.

A large portion of the private sector has abided by similar requirements and found that “blacklisting” of contractors was self-imposed by contractors who were not actually following the law, essentially blacklisting themselves by failing to avoid “serious” or “willful” safety violations that could have been corrected had they taken contractor safety as seriously as profits.

The Fair Pay and Safe Workplaces Executive Order promises to hold government entities to at least as high of standards as the private sector, protecting taxpayers, law-abiding businesses and the more than one in five Americans who are employed by companies that do business with the federal government by giving law-abiding contractors who don’t cut corners the leg up they deserve.

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