Federal procurement officials may soon be able to prevent
companies from receiving federal contracts simply because of
whispers that a company has broken labor, occupational-safety or
other federal laws. The three big federal procurement agencies (the
Department of Defense, the General Services Administration and
NASA)--who together control the Federal Acquisition Regulation
(FAR)--proposed that change in July.
Currently, FAR says a federal procurement officer can keep a
company from receiving a contract only if the company has an
unsatisfactory record of compliance with laws and regulations.
In theory, that means a state or federal court or a federal
agency has to have found the company guilty of violating a federal
law in order to deny it a federal contract. In practice, however,
contracting officers also take into account alleged violations when
deciding whether to award a contract, according to Lynn Rhinehart,
associate general counsel for the AFL-CIO. In some circumstances,
she says, it may be appropriate for procurement officers to base
their decisions on alleged violations, or "persuasive evidence
of substantial [and repeated] noncompliance with a law or
regulation."
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Enter the procurement agencies' proposal, which formally
puts the alleged violations standard into FAR. It also enumerates
the broad range of federal violations that are of concern, a
listing that's not included in the present FAR. If the proposal
becomes final, a company could be barred from receiving a contract
as a result of mere allegations that it has repeatedly violated
federal law and established a pattern of such violations.
Rhinehart calls the proposal a clarification and affirmation of
current practice. "It's not breaking any radical new
ground," she insists. Proponents add that the proposal will
help ensure the federal government does business only with those
companies that work to maintain a clean record of compliance with
federal laws and regulations.
Others, however, see a potential danger in passing such a
proposal. Felix Martinez, director of procurement and federal
markets for the American Consulting Engineers Council, notes that a
union trying to organize a company could flood a federal regulatory
agency--be it the EPA, the Equal Employment Opportunity Commission,
the National Labor Relations Board or OSHA--with unsubstantiated
complaints about the company. That might be enough to meet the new
"persuasive evidence of substantial noncompliance"
standard. Says Martinez, "Any lawyer worth his salt could
slide something in there."
Trade associations that are members of the National Alliance
Against Blacklisting, such as Food Distributors International
(FDI), have also criticized the proposal. "The creation of
such a sweeping blacklist of penalized or even debarred federal
contractors and subcontractors is a blatant reward to the
AFL-CIO," says John Block, president of FDI. "The
president has given the unions the power to blackmail companies
into accepting union-organizing and collective-bargaining demands.
[These companies] face the possibility of losing all federal
contracts."
Stephen Barlas is a business reporter who covers the
Washington beat for 15 magazines.
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