Executive Order Requires Federal Contractors to Report Labor Violations

President Obama recently signed an executive order that requires prospective federal contractors, including federal construction contractors, for covered procurements (i.e., ones where the estimated value exceeds $500,000) to disclose in their proposals certain labor violations. The Executive Order, which is effective as of July 31, 2014, states, in relevant part:

For [covered] procurement contracts for goods and services, including construction, [] each agency shall ensure that provisions in solicitations require that the offeror represent, to the best of the offeror’s knowledge and belief, whether there has been any administrative merits determination, arbitral award or decision, or civil judgment, as defined in guidance issued by the Department of Labor, rendered against the offeror within the preceding 3-year period for violations of any of the [listed] labor laws and Executive Orders[.]

Among the labor laws listed in the Executive Order, violations which must be reported are: (1) the Davis-Bacon Act; (2) the Service Contract Act; (3) the Fair Labor Standards Act; (4) the Occupational Safety and Health Act of 1970; (5) the Migrant and Seasonal Agricultural Worker Protection Act; and (6) the National Labor Relations Act.

The Executive Order goes on to state that contracting officers will consider labor violations disclosed by offerors “in determining whether an offeror is a responsible source that has a satisfactory record of integrity and business ethics[.]” Additionally, the Executive Order provides that offerors will be given an opportunity to furnish information about any steps they have taken to correct violations of, or improve compliance with, the labor laws set forth in the Executive Order. Of note, the Executive Order also requires that contractors include in any subcontracts that contain an estimated value in excess of $500,000 a requirement that the subcontractor disclose to the contractor violations of enumerated labor laws that occurred within the preceding three-year period.

Although the Executive Order states that it is “effective immediately,” it requires the Federal Acquisition Regulation (FAR) Council, in consultation with the Department of Labor, the Office of Management and Budget and “relevant enforcement agencies,” to amend the FAR to implement many of the provisions contained in the Executive Order. Presumably, these FAR amendments will include the development of the solicitation and contract provisions necessary to make the rules applicable to contractors. In the meantime, however, there does not appear to be anything that would prohibit agencies from developing interim solicitation and contract provisions that implement the Executive Order.

In light of the reality that this Executive Order has immediate and potentially wide-ranging implications, federal contractors should promptly familiarize themselves with its content.

Read or download the Construction and Procurement Q3 2014 Newsletter >>