By Mark Gruenberg

PAI Staff Writer

The Obama administration has issued its final rule, and 369 pages of guidance, telling federal contracting officers about how to evaluate labor law compliance – or lack of it – by bidders for federal work.

The rule, which implements a two-year-old presidential executive order, will have wide impact, if business groups don’t find a friendly judge to stop it. The Labor Department, in its guidance, said the government awarded $518.4 billion worth of contracts last year.

Obama’s order and the DOL rule do not provide an outright ban on labor law-breaking firms from getting federal contracts. But they do tell federal contract officers to give great weight to labor law-breaking when evaluating whether a company should win federal business or not. Labor groups are either silent or in favor of the new rule. The contractor community hates it.

“While there are many flaws with this new measure," said Associated General Contractors CEO Stephen Sandherr, "one of its biggest is that it gives federal officials enormous discretion to decide which firms should be singled out for punishment.  For example, it allows a federal contracting official to give greater weight to the same safety violations depending on which firm was accused of committing them. Such subjective criteria opens the door to punishing federal contractors based on which political, social or labor causes they support, instead of their safety performance or treatment of workers."

The rule will be phased in over three years, starting in October, and will initially apply only to prime contractors and will only have contract officers review labor law-breaking by firms for the year before. But by October 2018, it will apply to all contractors and will cover three years of labor law-breaking. Right from the start, it covers contracts worth $500,000-plus. And federal labor law agencies will provide contracting officers with lists of law-breakers.

Years of studies, the rule adds, show that labor law-breakers – including wage and hour law-breakers, National Labor Relations Act violators, and job safety and health law-breakers – gained billions of dollars in federal business. So did firms that broke prevailing wage laws.

But the studies, on the state and federal levels, also show that despite corporate claims, firms that were later found to violate the law did not save government and taxpayer dollars.

The AFL-CIO had no immediate comment on the rule, which many unions supported. The Teamsters and the National Partnership for Women and Families lauded it, as did gay-lesbian-bisexual-transgender groups. DOL said of 8,000 comments on the rule, only 30 opposed it.

“The executive order will hold companies that contract with the government accountable for violating workplace laws and prevent bad actors from receiving federal contracts,” the Teamsters said in their statement praising DOL’s rule.

The executive order and the rules and guidance “will not only protect the millions of workers that are employed by federal contractors, but it will ensure that taxpayer money is not being handed to companies that blatantly violate labor and workplace laws,” added union President Jim Hoffa.

And it addresses frequent labor law-breaking by contractors, including “wage theft, safety violations and discrimination,” the Teamsters noted. The AGC vowed to "explore all possible legislative and legal measures for undoing this deeply troubling and unnecessary new federal mandate.”

DOL also emphasized it wants to help contractors avoid labor law-breaking, by letting them fix prior problems, rather than trying to dump them after contracts have been awarded. It was silent on what federal contract officers should do when confronted by cases of repeat offenders and frequent labor law-breakers.

DOL also warned the new rules do not mean that the government would stop throwing labor law-breaking contractors off of federal work. “However, the expectation is that its new requirements and processes will help contractors avoid the consequences of that process” of debarment and bans, DOL said.