On July 31, President Obama issued a sweeping Executive Order (EO) that instructs bureaucrats at federal agencies to determine whether a business is “responsible” enough to receive a federal contract based on a subjective review of each company’s recent compliance history with labor and safety laws.  

The subjective nature of the order opens the door to favoritism and abuse of government contractors by administration officials. In addition, it is expected to increase red tape and serve as a barrier for businesses of all sizes to be awarded new federal contracts.

For a comprehensive overview of what this EO does, ABC General Counsel Maury Baskin’s firm, Littler Mendelson, offers a detailed explanation.

Here are some of the key changes resulting from the EO:

• Contractors will be required to disclose any violations federal and state workplace laws  committed within the past three years when competing for and completing federal contracts worth more than $500,000. This includes everything from wage and hour laws to laws covering things like collective bargaining and medical leave.
• New obligations and increased risks will be placed on contractors when performing services for the government.
• Contractors will now be required to certify that each subcontractor (with compensation above $500,000) meets the newly imposed responsibility standards.
• Each agency will designate a senior official as a Labor Compliance Advisor who will have sweeping authority to monitor and enforce labor law responsibility requirements and other workplace requirements.

This controversial executive action changes (perhaps illegally) a number of complex federal procurement and labor laws and attempts to impose a standard that a number of federal agencies can’t even comply with for their own employees. 

According to a White House “Fact Sheet” on the order, it will be implemented on new contracts in stages on a prioritized basis during 2016.

ABC is strongly opposed to this EO and intends to fully participate during the rulemaking process (timing TBD). 

We are currently analyzing how this EO will impact members in order to create educational/compliance materials and a legal, regulatory and political response strategy. Check back with Newsline for updates. 

In the meantime, you can find more information about how this might impact your ability to bid on federal construction projects and review industry concerns in ABC’s statement on the EO and stories in the Los Angeles Times, The Washington Business Journal and The Hill  among others. In addition, questions can be directed to ABC's Director of Federal Procurement and Labor Affairs, Ben Brubeck.

An ABC Member-Only webinar on EO titled "New Challenges for Federal Contractors" will be held Sept. 11 at 2 p.m. ET by ABC General Counsel Maury Baskin. To learn how federal contractors can prepare for the changes to come, register for the webinar here.