US Senate Committee on Health, Education, Labor, & Pensions

Harkin Unveils HELP Committee Investigation Revealing Widespread Labor Law Violations Among Major Government Contractors

Wednesday, December 11, 2013

Investigation Represents the First Comprehensive Report to Connect Dots Between Federal Contracts and Labor Law Violations

Forty-Nine Contractors Engaging in Significant Labor Law Violations Received $81 Billion in Taxpayer-Funded Contracts in 2012 Alone 

WASHINGTON, D.C.—An investigation into the federal contracting process unveiled today by U.S. Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, revealed widespread labor law violations among major government contractors. The investigation found that almost 30 percent of companies receiving the highest penalties for violations of federal labor law are also federal contractors. Specifically, the 49 federal contractors accountable for large-scale labor law violations were responsible for almost 1,800 separate enforcement actions taken by the Department of Labor and paid $196 million in back wages and initial penalties over a recent six-year period.

The report shows that these 49 contractors received more than $81 billion in taxpayer dollars in 2012 alone, and demonstrates that the current federal contracting process fails to hold contractors accountable for major or repeated labor law violations. Harkin unveiled the report today during an address at the Center for American Progress Action Fund titled “How the Federal Contracting System Harms Workers and Taxpayers.”  

The report, titled “Acting Responsibly? Federal Contractors Frequently Put Workers Lives and Livelihoods at Risk” is the result of a year-long investigation by HELP Committee majority staff. It identifies the shortcomings of the current federal contracting process and offers a list of solutions to remedy these problems to ensure that taxpayer dollars are spent in a way that promotes compliance with federal law and improves the quality of life for working Americans. These recommendations include administrative actions by the Department of Labor (DOL) and the Government Services Administration (GSA), coupled with a White House Executive Order.

“These findings are deeply troubling: almost thirty percent of companies with a significant violation of basic labor laws are federal contractors , and tens of thousands of American workers are paying the price—through shortchanged paychecks, with their safety, or, sadly, with their lives,” Harkin said. “Not only are these contractors violating labor laws time and time again, but our federal contracting system has virtually no reliable tools in place to ensure that these violations of the law are ever considered before a contract is awarded.

“By law, the government is only supposed to contract with companies that it first determines to have a ‘satisfactory record of integrity and business ethics.’ But, as the findings of this report reveal, the federal government is awarding billions of taxpayer dollars to companies with significant violations of federal labor laws,” Harkin added. “We need an effective system in place to respond when federal contractors violate wage or safety laws, and to make compliance with labor laws a meaningful part of federal contracting decisions. Our government owes it to hardworking Americans to lead by example when it comes to following to our labor laws.”

The HELP Committee’s investigation represents the first comprehensive report of its kind to connect federal labor law violations and contracts awarded to private companies. Findings of the investigation include:

  • Eighteen federal contractors were recipients of one of the largest 100 penalties issued by the Occupational Safety and Health Administration (OSHA) of the Department of Labor between 2007 and 2012.  Almost half of the total initial penalty dollars assessed for OSHA violations were against companies holding federal contracts in 2012. 
  • Forty-two American workers died during this period as a result of OSHA violations by companies holding federal contracts in 2012. For instance, in 2010, seven workers were killed at a Tesoro-owned refinery in Anacortes, Washington when a heat exchanger ruptured and spewed vapor and liquid that exploded.  The workers who died were standing near the area of the rupture specifically to attempt to stop leaks of the volatile, flammable gases in the facility, which had not been inspected for 12 years prior to the rupture.  Nevertheless, Tesoro received $463 million in federal contracts in fiscal year 2012.
  • Thirty-two federal contractors received back wage assessments among the largest 100 issued by the Wage and Hour Division of the Department of Labor between 2007 and 2012. 
  • Thirty-five of these companies violated both wage and safety laws.
  • Overall, the 49 federal contractors responsible for large violations of federal labor laws were cited for 1,776 separate violations of these laws and paid $196 million in penalties and assessments.  In fiscal year 2012, these same companies were awarded $81 billion in taxpayer dollars. 

The report identifies key areas for improvement and solutions to remedy these problems, on both the agency and executive levels:

  • Improving the quality and transparency of Department of Labor information regarding violations of federal law.
  • Publication of an annual list of federal contractors that were assessed penalties or other sanctions, and as well as additional information concerning contractor compliance with labor law, by the Department of Labor.
  • Improvement of contracting databases administered by the General Services Administration, including increasing public transparency and expanding the amount of misconduct information included in those databases.
  • An Executive Order requiring contracting officers to consult with, and obtain recommendations from, a designated official at the Department of Labor about violations of federal labor law when making responsibility determinations.
  • An Executive Order to establish additional tools – beyond the existing responsibility determination and suspension and debarment process – that contracting officers, in consultation with the Department of Labor, can use to ensure that contractors comply with federal labor law.

The full report, with executive summary, can be seen here.

The appendix to the report can be seen here.

 

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