FAR Council’s and Dept. of Labor’s Contractor “Blacklisting” Rule – Finalized and Promptly Stayed

By Eric J. Conn, Chair of Conn Maciel Carey’s national OSHA Practice

Texas District Court Enjoins the Administration from Enforcing the Federal Government Contractor “Blacklisting” Provisions of the Federal Acquisition Regulatory Council’s New Final “Fair Pay and Safe Workplaces” Rule.

On August 25, 2016, the Obama Administration, through the Federal Acquisition Regulatory (FAR) Council and in conjunction with the U.S. Department of Labor, promulgated the final Fair Pay and Safe Workplaces regulation and parallel guidance from the Labor Department, which collectively federal contractors have unaffectionately dubbed the “Blacklisting Rule.”  far-article-1The cornerstone provisions of the final rule establish expansive new reporting obligations for contractors bidding on executive branch contracts with an estimated value exceeding $500,000. These contractors, along with subcontractors whose portions of the overall contract meet the $500,000 threshold contract value, must disclose all confirmed and alleged violations issued under 14 labor laws, including alleged OSHA citations, within the three years prior to a prospective contractor’s bid submission, regardless of the status of the citation or whether the citation has yet been upheld in a judicial or administrative review process afforded employers.  To be clear, under the final rule, all OSHA citations must be reported, even minor paperwork citations characterized as “OTS” (“other-than-serious”).

The final rule change the manner in which the rule applies to subcontractors.  Unlike the proposed rule, the final rule requires covered subcontractors to disclose violations directly to the Department of Labor, which will conduct a “responsibility determination” and return it to the subcontractor, who in turn will then be required to deliver it to the prime contractor.  The final rule also pushed back the mandatory disclosure date for subcontractors to October 25, 2017, a year after the disclosure requirements were set to begin for prime contractors.

The disclosure requirements for all contractors apply equally to related state labor laws, which sweeps in all citations issued under the 27 federal OSHA-approved state OSH programs administered by state occupational safety and health agencies such as CAL/OSHA.  Whichever contractor is awarded a covered contract must also disclose any old and new OSHA or other alleged labor law violation (referred to in the regulation as “administrative merits determinations”) during regular, bi-annual reports throughout the life of the contract.

Rule Challenged and Preliminary Injunction Granted

Barely before contractors had time to read the regulation and attendant DOL guidance, however, and prior to its first effective date of October 25th, a group of industry trade associations filed a legal challenge in a Texas federal district court to the rule and requested the court grant emergency relief by Continue reading

OSHA Rule in FAR Clothing: The Government Contractor “Blacklisting” Rule

By Eric J. Conn

Following President Obama’s 2014 “Fair Pay and Safe Workplaces” Executive Order (EO 13673) — commonly referred to as the “Blacklisting” Executive Order by government contractors — this Spring, the Federal Acquisition Regulatory (FAR) Council in conjunction with the Department of Labor (DOL) issued proposed regulations and guidance implementing EO 13673. The companion proposals establish expansive new reporting obligations requiring disclosure of any OSHA citation issued — still just allegations — FAR 1within the three years prior to bid submission, as well disclosures of all other “administrative merits determinations” issued under 13 other labor laws. The proposals then require regular bi-annual reporting of the same data throughout the life of the contract.

Although the proposals are purportedly designed to identify and prevent “irresponsible” companies from obtaining federal contracts, because they cast such a broad net, based on mere allegations of violations, the rule’s likely effect will be to significantly intensify the scrutiny to which contractors will likely be subjected (and the costs they will need to bear to comply with the rule) without accomplishing the President’s objectives of ferreting out irresponsible contractors.

Specifically, the proposed regulations would require contractors bidding on executive branch contracts with an estimated value exceeding $500,000 to disclose any OSHA citation, regardless of the status of the citation or whether the citation has yet been upheld in the administrative review process afforded employers. All OSHA citations must be reported under the proposals, even citations characterized as “OTS,” or “other-than-serious,” the characterization OSHA applies to minor paperwork violations. The disclosure requirements apply equally to citations issued under the 27 state plan programs administered by state occupational safety and health agencies such as CAL/OSHA.

In addition to the disclosures contractors must make, prime contractors also must collect the same information from every subcontractor who has a contract or bid exceeding the $500,000 threshold (with the exception of subcontractors whose contract is for commercial-off-the-shelf (COTS) goods or services).

The DOL guidance indicates that contracting agencies’ “responsibility” determinations will consider most heavily only those OSHA citations (or other labor law violations) determined to be “serious, willful, repeated, or pervasive.” While this limitation may sound good, applied in the OSHA context, it provides cold comfort to responsible contractors. A review of 2009 – 2013 OSHA enforcement data shows that the vast majority of citations issued — upwards of 85 percent — are initially characterized as serious, repeat, or willful. This means that Continue reading