Federal Contractors Concerned about President Obama’s Newest Executive Order

President Barack Obama’s “Fair Pay and Safe Workplaces” Executive Order creates new self-reporting requirements for federal contractors, an apparent effort to shame these employers (and appeal to the Administration’s labor constituency) by having them disclose an array of labor- and employment-related violations, including adverse arbitration awards, regardless of their relationship to the actual performance of the federal contract.

Federal contractors and subcontractors will be required to disclose violations of federal and state labor and employment laws for the previous three years, including, but not limited to, violations of the National Labor Relations Act, Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, Americans with Disabilities Act, and Family and Medical Leave Act. These disclosures must be made pre-award, and contractors will be required to update their violation information every six months during the performance of a contract. This information then will be evaluated and considered for purposes of determining a contract award and for evaluating whether remedial measures may be necessary to punish contractors that are “serious, repeated, willful or pervasive violat[ors]” of the law. A new government apparatchik, called a “Labor Compliance Advisor,” will help agency contracting officers decide whether a prospective contractor “is a responsible source that has a satisfactory record of integrity and business ethics,” among other decisions under the Executive Order.

Contractors — still adjusting to President Obama’s other recent executive orders, including Executive Order 13658 (raising the minimum wage for contractors to $10.10 per hour, effective January 1, 2015) and recent amendments to Executive Order 11246 (barring discrimination on the basis of sexual orientation or gender identity) — are concerned the new Order goes too far. Rather than competing on traditional factors such as price, quality of work and reputation, contractors now also will be evaluated by labor compliance advisors within each agency for their past missteps, even if those missteps have been previously remedied.

Further, it is unclear how this Order will be implemented and when remedial measures, such as potential debarment, will be implemented. Contractors worry that these uncertainties may impact significantly their ability to compete for contracts. Although the White House has stated that further regulations and guidance will be forthcoming, this has not eased growing apprehensions that President Obama’s penchant for executive orders aimed at tightening regulation of federal contractors will hurt market competition and each contractor’s ability to be judged on its merits.