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THE BLACKLISTING EXECUTIVE ORDER: 

REWRITING FEDERAL LABOR POLICIES 

THROUGH EXECUTIVE FIAT 

JOINT HEARING 

BEFORE THE

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

AND THE

SUBCOMMITTEE ON HEALTH, EMPLOYMENT, 

LABOR, AND PENSIONS 

OF THE

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, FEBRUARY 26, 2015 

Serial No. 114–3 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=education 

or 

Committee address: http://edworkforce.house.gov 

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(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Todd Rokita, Indiana 

Lou Barletta, Pennsylvania 

Joseph J. Heck, Nevada 

Luke Messer, Indiana 

Bradley Byrne, Alabama 

David Brat, Virginia 

Buddy Carter, Georgia 

Michael D. Bishop, Michigan 

Glenn Grothman, Wisconsin 

Steve Russell, Oklahoma 

Carlos Curbelo, Florida 

Elise Stefanik, New York 

Rick Allen, Georgia 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Ranking Member 

Rube ́n Hinojosa, Texas 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Jared Polis, Colorado 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Mark Pocan, Wisconsin 

Mark Takano, California 

Hakeem S. Jeffries, New York 

Katherine M. Clark, Massachusetts 

Alma S. Adams, North Carolina 

Mark DeSaulnier, California 

Juliane Sullivan, Staff Director 

Denise Forte, Minority Staff Director 

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

TIM WALBERG, Michigan, Chairman 

Duncan Hunter, California 

Glenn Thompson, Pennsylvania 

Todd Rokita, Indiana 

Dave Bratt, Virginia 

Michael D. Bishop, Michigan 

Steve Russell, Oklahoma 

Elise Stefanik, New York 

Frederica S. Wilson, Florida, 

Ranking Member 

Mark Pocan, Wisconsin 

Katherine M. Clark, Massachusetts 

Alma S. Adams, North Carolina 

Mark DeSaulnier, California 

Marcia L. Fudge, Ohio 

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SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS 

DAVID P. ROE, Tennessee, Chairman 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Tim Walberg, Michigan 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Lou Barletta, Pennsylvania 

Joseph J. Heck, Nevada 

Luke Messer, Indiana 

Bradley Byrne, Alabama 

Buddy Carter, Georgia 

Glenn Grothman, Wisconsin 

Rick Allen, Georgia 

Jared Polis, Colorado, 

Ranking Member 

Joe Courtney, Connecticut 

Mark Pocan, Wisconsin 

Rube ́n Hinojosa, Texas 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Mark Takano, California 

Hakeem S. Jefferies, New York 

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C O N T E N T S 

Page 

Hearing held on February 26, 2015 ....................................................................... 1 

Statement of Members: 

Byrne, Hon. Bradley, a Representative in Congress from the State of 

Alabama ......................................................................................................... 7 

Prepared statement of ............................................................................... 8 

Polis, Hon. Jared, Ranking Member, Subcommittee on Health, Employment, Labor, and Pensions ........................................................................... 9 

Prepared statement of ............................................................................... 15 

Walberg, Hon. Tim, Chairman, Subcommittee on Workforce Protections ... 1 

Prepared statement of ............................................................................... 3 

Wilson, Hon. Frederica, S., Ranking Member, Subcommittee on Workforce 

Protections ..................................................................................................... 3 

Prepared statement of ............................................................................... 5 

Statement of Witnesses: 

Goldsmith, Mr. Willis, Partner, Jones Day, U.S. Chamber of Commerce, 

New York, NY, Inc. ....................................................................................... 23 

Prepared statement of ............................................................................... 26 

Styles, Ms. Angela, Partner, Crowell and Moring, LLP, Washington, DC .. 45 

Prepared statement of ............................................................................... 47 

Walter, Ms. Karla, Associate Director, American Worker Project, Center 

for American Progress, U.S. Department of Education, Arlington, VA ... 61 

Prepared statement of ............................................................................... 64 

Soloway, Mr. Stan, President and CEO, Professional Services Council, 

Washington, DC ............................................................................................ 73 

Prepared statement of ............................................................................... 75 

Additional Submissions: 

Foxx, Hon. Virginia, a Representative in Congress from the State of 

North Carolina: 

Report by the Interagency Suspension and Debarment Committee ..... 96 

Mr. Polis: 

Letter dated February 23, 2015, Fair Pay and Safe Workplaces Executive Order ............................................................................................. 11 

Chairman Walberg: 

Letter dated November 6, 2014, Concerns with the Fair Pay and 

Safe Workplaces Executive Order (E.O. 13673) .................................. 18 

Letter dated February 25, 2015, 2014, from Associated Builders and 

Contractors, Inc. .................................................................................... 21 

Letter dated March 6, 2015 from, The Associated General Contractors of America ....................................................................................... 266 

Mr. Goldsmith response to questions submitted for the record ............ 264 

Ms. Walter: 

Letter from Integrity National Corporation ............................................ 270 

Letter dated July 18, 2014, from Allen G. Sander, Chief, Operating 

Officer, Olympus Building Services, Inc. ............................................. 271 

Letter dated May 5, 2014, from Victor Moran, President, CEO, Total 

Quality .................................................................................................... 272 

Response to questions submitted for record ............................................ 277 

Ms. Wilson: 

Fair Pay and Safe Workplaces ................................................................. 136 

Letter dated February 25, 2015, from The Leadership Conference 

on Civil and Human Rights .................................................................. 143 

Campaign for Quality Construction ......................................................... 145 

Center for American Progress Action Fund ............................................ 153 

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VI 

Additional Submissions—Continued 

Ms. Wilson—Continued 

Report dated September 2010, Government Accountability Office, 

Federal Contracting ............................................................................... 174 

Report dated December 11, 2013, United States Senate, Acting Responsibly ................................................................................................. 196 

For Florida companies that play by rules, success is tough as nails .... 255 

Questions submitted for the record ......................................................... 274 

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THE BLACKLISTING EXECUTIVE ORDER: 

REWRITING FEDERAL LABOR POLICIES 

THROUGH EXECUTIVE FIAT 

Thursday, February 26, 2015 

House of Representatives 

Subcommittee on Workforce Protections 

joint with 

Subcommittee on Health, Employment, Labor, and Pensions 

Committee on Education and the Workforce 

Washington, D.C. 

The subcommittees met, pursuant to call, at 10:07 a.m., in room 

2175, Rayburn House Office Building, Hon. Tim Walberg [Chairman of the Workforce Protections subcommittee] presiding. 

Present from the Subcommittee on Workforce Protections: Representatives Walberg, Thompson, Brat, Bishop, Russell, Wilson, 

Pocan, and Clark. 

Present from the Subcommittee on Health, Employment, Labor, 

and Pensions: Foxx, Walberg, Byrne, Allen, Polis, Courtney, Pocan, 

Wilson, Bonamici, Takano, and Scott. 

Also present: Representatives Kline, Grijalva, and Ellison. 

Staff present: Janelle Belland, Coalitions and Members Services 

Coordinator; Ed Gilroy, Director of Workforce Policy; Christie Herman, Professional Staff Member; Marvin Kaplan, Workforce Policy 

Counsel; Nancy Locke, Chief Clerk; Zachary McHenry, Legislative 

Assistant; Daniel Murner, Deputy Press Secretary; Brian Newell, 

Communications Director; Krisann Pearce, General Counsel; Molly 

McLaughlin Salmi, Deputy Director of Workforce Policy; Alissa 

Strawcutter, Deputy Clerk; Loren Sweatt, Senior Policy Advisor; 

Alexa Turner, Legislative Assistant; Joseph Wheeler, Professional 

Staff Member; Tylease Alli, Minority Clerk/Intern and Fellow Coordinator; Barbera Austin, Minority Staff Assistant; Amy Cocuzza, 

Minority Labor Detailee; Denise Forte, Minority Staff Director; Melissa Greenberg, Minority Labor Policy Associate; Carolyn Hughes, 

Minority Senior Labor Policy Advisor; Eunice Ikene, Minority 

Labor Policy Associate; Brian Kennedy, Minority General Counsel; 

Brian Levin, Minority Press Secretary; Richard Miller, Minority 

Senior Labor Policy Advisor; Amy Peake, Minority Labor Policy Advisor; Veronique Pluviose, Minority Civil Rights Counsel; and 

Rayna Reid, Minority Labor Policy Counsel. 

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Chairman WALBERG. The subcommittee will come to order. 

Today, we will have opening statements from the chairmen and the 

ranking members of the two subcommittees. 

With that, I recognize myself for my opening statement. 

Good morning, and I would like to welcome our guests and thank 

our witnesses for joining us. 

I would also like to welcome our colleagues from the Health, Employment, Labor, and Pensions Subcommittee. Given the breadth of 

the issues we will discuss this morning, we felt it was appropriate 

to hold a joint hearing. 

Federal contractors are essential to government operations. Most 

employers provide quality, cost-effective services while complying 

with labor and employment law. 

Unfortunately, there are a few bad actors. We can all agree bad 

actors who deny workers basic protections, including wage and 

overtime protections, should not be awarded federal contracts funded with taxpayer dollars. 

For that reason, the federal government has had a system in 

place for decades which, if used effectively, would deny federal contracts to bad actors. In the event that a contractor fails to maintain 

a satisfactory record of integrity and business ethics, the contracting agency can suspend or debar the contractor, disqualifying 

the employer from contracts government-wide. 

Rather than dealing with these contractors directly under an existing system, on July 31, 2014 President Obama signed an executive order adding a burdensome, redundant, and unnecessarily punitive layer onto the federal procurement system. 

The executive order will require employers to report instances in 

which they or their subcontractors have violated or allegedly violated various federal labor laws and equivalent state laws for a 

preceding three year period. Prior to awarding a contract, these 

agencies’ contracting officer and a newly created labor compliance 

advisor will review this information and decide whether the employer’s actions demonstrate a lack of integrity or business ethics. 

While the new reporting requirements are significantly burdensome, particularly for some small employers, the subjectivity of the 

decision-making process and deprivation of due process are deeply 

troubling. 

The labor compliance advisor will advise the contracting officer 

as to whether an employer’s record amounts to a lack of business 

integrity. However, this subjective determination will include alleged violations, creating a new, dangerous precedent that employers are guilty until proven innocent. 

Ultimately, the employer could be blacklisted based on alleged 

violations that are later found to have no merit, putting some good 

employers on the brink of going out of business and impacting their 

workforce. 

We all share the same goal however, rather than implement another layer of bureaucracy, the administration should work with 

Congress and stakeholders to use the existing system to crack 

down on bad actors and ensure the rights of America’s workers are 

protected. 

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With that, I now yield to my distinguished colleague from Florida, Congresswoman Wilson, the ranking member on Workforce 

Protections Subcommittee, for opening remarks. 

And welcome. 

[The statement of Chairman Walberg follows:] 

Prepared Statement of Hon. Tim Walberg, Chairman, Subcommittee on 

Workforce Protections 

Federal contractors are essential to government operations. Most employers provide quality, cost effective services while complying with labor and employment law. 

Unfortunately, there are a few bad actors. We can all agree bad actors who deny 

workers basic protections, including wage and overtime protections, should not be 

awarded federal contracts funded with taxpayer dollars. 

For that very reason, the federal government has had a system in place for decades which, if used effectively, would deny federal contracts to bad actors. In the 

event that a contractor fails to maintain a satisfactory record of integrity and business ethics, the contracting agency can suspend or debar the contractor, disqualifying the employer from contracts government wide. 

Rather than dealing with these contractors directly under the existing system, on 

July 31, 2014, President Obama signed an executive order adding a burdensome, 

redundant, and unnecessarily punitive layer onto the federal procurement system. 

The executive order will require employers to report instances in which they, or 

their subcontractors, have violated or allegedly violated various federal labor laws 

and equivalent state laws during a proceeding three year period. Prior to awarding 

a contract, each agency’s contracting officer and a newly created Labor Compliance 

Advisor will review this information and decide whether the employer’s actions demonstrate a lack of integrity or business ethics. 

While the new reporting requirements are significantly burdensome, particularly 

for small employers, the subjectivity of the decision making process and deprivation 

of due process are deeply troubling. The Labor Compliance Advisor will advise the 

contracting officer as to whether an employer’s record amounts to a lack of business 

integrity. 

However, this subjective determination will include alleged violations, creating a 

new, dangerous precedent that employers are guilty until proven innocent. Ultimately, the employer could be blacklisted based on alleged violations that are later 

found to have no merit, putting some good employers on the brink of going out of 

business. 

We all share the same goal, however, rather than implement another layer of bureaucracy, the administration should work with Congress and stakeholders to use 

the existing system to crack down on bad actors and ensure the rights of America’s 

workers are protected. 

With that, I will now the ranking member of the subcommittee, Representative 

Wilson, for her opening remarks. 

Ms. WILSON of Florida. Thank you, Mr. Chair. 

Mr. Chairman, today is our first Workforce Protection Subcommittee hearing of the 114th Congress, and I can barely talk. I 

look forward to working with you and our colleagues to address the 

needs of America’s working class, which is the backbone of our 

country. 

Today we are discussing the President’s executive order on fair 

pay and safe workplaces, aimed at improving the federal contracting process by ensuring that government agencies have access 

to data and can evaluate each bidder’s compliance history with 14 

basic workplace laws. Simply put, this executive order builds on 

the expectation that companies who are seeking federal contracts 

must obey federal laws. 

Annually, the U.S. government issues approximately $500 billion 

in contracts—that is with a ‘‘b.’’ According to two recent reports, 

one-third of those companies who received the largest sanctions for 

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violations of federal wage and health and safety laws went on to 

receive a government contract. 

I am certain that we can all agree that taxpayer dollars should 

not be used to award contracts to unscrupulous companies that 

have a pervasive practice of engaging in wage theft, cheating workers out of overtime, or putting workers’ safety in jeopardy. 

In the audience today we have Ms. Karla Quezada, a food court 

worker at the Reagan Building, which is owned by the U.S. General Services Administration and home to several federal agencies. 

Despite regularly working more than 40 hours a week, Karla never 

received a dime in overtime pay. 

And she reported to the Department of Labor that her employer 

used a fraudulent scheme to cover up the wage theft. Although she 

is still working there, her hours have been more than halved. 

Karla was named a ‘‘champion of change’’ by the President for 

her advocacy to raise the minimum wage for government contract 

workers to $10.10 per hour. 

Karla, thank you so much for being here today and for your courage. 

[Applause.] 

Ms. WILSON of Florida. Finally, Mr. Chairman, we have received 

written testimony supporting this executive order from the Campaign for Quality Construction, comprised of the FCA International; the International Council of Employers of Bricklayers and 

Allied Craftworkers; the Mechanical Contractors Association of 

America; the National Electrical Contractors Association; the Sheet 

Metal and Air Conditioning Contractors’ National Association; and 

the Association of Union Constructors. 

It is their view that this executive order will help ensure that responsible contractors are not put at an unfair disadvantage by 

those who cut corners and treat violations of labor law as the cost 

of doing business. 

I thank the witnesses for being here today and I look forward to 

their testimony. 

I now yield to the ranking member on the Health Subcommittee, 

the gentleman from Colorado— 

[The statement of Ms. Wilson follows:] 

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Chairman WALBERG. I thank the gentlelady. 

Ms. WILSON of Florida. Okay. 

Chairman WALBERG. At this time I will now yield to my distinguished colleague from Alabama, Congressman Byrne, for his opening remarks. 

Mr. BYRNE. Thank you, Mr. Chairman. 

As a journeyman labor and employment attorney, I have grave 

concerns over the executive order we are examining today. It unfairly shifts the regulatory burden to employers while removing the 

burden of proof from labor violation claims. It reverses the historic 

Anglo-Saxon notion that you are innocent until you are proven 

guilty—which results, by the way, in a much less efficient system 

of government acquisition for the taxpayers of the United States. 

Furthermore, the executive order’s ban on pre-dispute arbitration 

is a direct violation of the Federal Arbitration Act, which ensures 

the validity and enforcement of arbitration agreements, a practice 

that the United States Supreme Court has repeatedly reaffirmed. 

The President has exceeded his authority to make such a change 

and is in direct violation of that law. 

What is worse, through its new reporting requirements the executive order shifts an incredible regulatory burden to contractors 

themselves by requiring prime contractors, some of whom have 

thousands of subcontractors, to collect information on their subcontractors related to 14 different federal labor and employment 

laws and over 500 different state laws. 

This will have a major effect on these subcontractors, many of 

them small businesses with limited resources to handle such an 

undertaking. Many will be forced to divert resources to handle this 

new administrative task that will not have to be completed just 

once, but every six months. 

These aggressive new regulations are going to unreasonably 

block responsible parties from participating in federal government 

contracts while seriously affecting the willingness of new employers 

to even seek federal contracts in the first place. The result of this 

new process will be a significantly delayed contracting process that 

limits both healthy competition and the efficient delivery of goods 

to the U.S. government at a reasonable price to the taxpayers. 

Instead of helping employers comply with complicated regulatory 

requirements, the administration has added yet more red tape to 

the federal procurement system that has the potential of blacklisting responsible employers when there is already a system in 

place for weeding out truly bad actors. 

To make matters worse, contracts will be put in jeopardy by alleged violations—not confirmed or convicted violations, alleged violations. This could be particularly devastating for employers that 

are the target of union corporate campaigns or competitors who 

simply want a competitive edge against their competition. This 

highly elevates the risk of frivolous complaints and the loss of business. 

This executive order represents an overstep of authority by the 

President at the expense of employers and workers and the taxpayers. 

Rather than impose additional layers of bureaucracy, the administration would be better served working with Congress and stakeCEWDOCROOM with DISTILLER

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holders to ensure the rules and regulations implementing our laws 

are modernized and streamlined. Then, the administration can 

work with good employers to ensure compliance rather than punishing them after the damage is done. 

Prepared Statement of Byrne, Hon. Bradley, a Representative in Congress 

from the State of Alabama 

The vast majority of federal contractors are responsible employers who obey the 

law and do right by their employees. 

There will always be, as the Chairman noted, bad actors who deny workers basic 

protections and we can all agree they should not receive taxpayer dollars for work 

on federal contracts. 

However, even the most responsible employer can occasionally run afoul of labor 

and employment laws, or simply be accused of doing so. 

The Executive Order we’re examining today unfairly shifts the regulatory burden 

to employers while removing the burden of proof from labor violation claims, resulting in a much less efficient system of government acquisition for both taxpayers and 

those seeking government contracts. 

Furthermore, the Executive Order’s ban on pre-dispute arbitration clauses is a direct violation of the Federal Arbitration Act, which ensures the validity and enforcement of arbitration agreements - a practice that the United States Supreme Court 

has repeatedly reaffirmed. 

The President has exceeded his authority to make such a change and is in direct 

violation of the law. 

What’s worse – through its new reporting requirements, this Executive Order 

shifts an incredible regulatory burden to contractors themselves by requiring prime 

contractors, some of which have thousands of subcontractors, to collect information 

on their subcontractors related to 14 different federal labor and employment laws 

and over 500 different state laws. 

For example, the Fair Labor Standards Act is the cornerstone of worker wage and 

hour protection. However, the regulations implementing that law are flawed and 

outdated. 

Even the Department of Labor, which enforces the Fair Labor Standards Act, has 

run afoul of the law’s requirements from time to time. 

This will have a major effect on these sub-contractors, many of them small businesses with limited resources to handle such an undertaking. 

Many will be forced to divert resources to handle this new administrative task 

that will not have to be completed just once, but every six months. 

These aggressive new regulations are going to unreasonably block responsible parties from participating in federal government contracts while seriously affecting the 

willingness of new employers to even seek federal contracts in the first place. 

The result of this new process will be a significantly delayed contracting process 

that limits both healthy competition and the efficient delivery of goods to the U.S. 

government at a reasonable price to taxpayers. 

Instead of helping employers comply with complicated regulatory requirements, 

the administration has added yet more red tape to the federal procurement system 

that has the potential of blacklisting responsible employers when there is already 

a system in place for weeding out truly bad actors. 

To make matters worse, contracts will be put in jeopardy by alleged violations. 

This could be particularly devastating for employers that are the target of union 

corporate campaigns or competitors who simply want a competitive edge against 

their competition. 

This highly elevates the risk of frivolous complaints and the loss of business. 

This executive order represents an overstep of authority by the President at the 

expense of employers and workers. 

Rather than impose additional layers of bureaucracy the administration would be 

better served working with Congress and stakeholders to ensure the rules and regulations implementing our laws are modernized and streamlined. 

Then the administration can work with good employers to ensure compliance 

rather than punishing them after the damage is done. 

I thank you, Mr. Chairman, and I yield back. 

Chairman WALBERG. I thank the gentleman. 

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9 

And I will take a point of personal privilege here to make mention to the two subcommittees that Chairman Roe, who would normally be sitting in the spot where Mr. Byrne is filling today as vice 

chairman, has been home for an extended period of time with his 

wife, who is going through some extremely challenging health situations. And so we wish our colleague and friend the best, and I 

would ask us all to keep Phil and Pam in prayer at this time. 

Having said that, now I yield to my distinguished colleague from 

Colorado, Congressman Polis, the ranking member on the Health, 

Employment, Labor, and Pensions Subcommittee, for his opening 

remarks. 

Mr. POLIS. Thank you, Mr. Chairman. 

This is a joint subcommittee hearing. I appreciate the opportunity of the HELP Subcommittee to ask questions and provide 

input on this important issue of how we can better serve taxpayers 

and improve the efficiency of federal contracting. 

I was pleased to see in the Chairman’s opening remarks he stated that bad actors should not be awarded contracts and that we 

should deny federal contracts to bad actors. That is really what 

this rule and hearing are about here today, how we can better 

reach that goal. 

Frankly, if that were the case, we wouldn’t need to be here, we 

wouldn’t need to be discussing the rule. 

Unfortunately, there is a pervasive problem among federal contractors. A recent GAO report showed—investigating—that looked 

at 15 contractors, showed that the federal government awarded 

these 15 contractors over $6 billion in government contract obligations in one year alone. Clearly there is a problem that requires additional steps to address with regard to the following of our labor 

laws of our federal contractors. 

The President is doing his job in this regard. He is charged in 

U.S. Code—40 USC 121—with, ‘‘The President may prescribe policies and directives that the President considers necessary to carry 

out this subtitle,’’ referring to federal contracts. 

And he is simply taking a step that will, as the Campaign for 

Quality Construction put it, which is a group of contractors who 

strongly support this rule, believe that this hearing should be entitled and that this rule will serve the taxpayers well with improved 

federal contract economy, efficiency, and performance with more 

discerning and uniform federal prime contractor and subcontractor 

selection procedures. 

I hope that these rules are enough—the proposed rules are 

enough to address this pervasive problem. 

To put a human face on the problem, we have an individual with 

us today who has been impacted directly by these issues. Edilcia, 

a single mother of three, who worked at the food court at Ronald 

Reagan Federal Building for three years. 

[Speaking foreign language.] 

I met her before this hearing and she is with us here today. 

Even though she worked 10 hours a day— 

[Speaking foreign language.] 

Ten hours a day, seven days a week, she never received a dime 

of overtime pay. 

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10 

How could that happen? She has filed for over $30,000 in back 

wages and damages because what her employer did is they forced 

her to clock in and out of two different businesses within the 

Reagan Building, both owned by the same person. 

Is this the kind of behavior of a federal contractor that we want 

to reward with more contracts? Or, is this the type of behavior that 

we want to make sure that contractors rectify and what happened 

to Edilcia does not happen to other employees? 

So even though Edilcia worked in some cases more than 70 hours 

a week, she didn’t receive a dime of overtime. She started to speak 

up, and when the government shut down in 2013 her employer 

fired her. 

And companies like this need to be put on a remedial path towards acting responsibly, which is what these rules are all about. 

I have a letter expressing the support of 70 organizations dedicated 

to eradicating discrimination in the workplace and promoting good 

jobs, and they agree that this executive order is an important step 

towards this goal. 

Mr. Chairman, I ask permission to submit the letter? 

[The information follows:] 

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Chairman WALBERG. Without any objection. 

Mr. POLIS. Thank you. 

I also want to mention another example of a federal contractor, 

Tyson Foods, that received half a billion dollars in federal contracts 

in 2012 alone, but they had almost $7.2 million in penalties and 

assessments for workplace safety violations and back pay for overtime or other violations. 

Companies cannot just try to see these costs and fees as a cost 

of doing business. They need to know that when they violate our 

labor laws, which we take very seriously as a country, that there 

are ramifications to their business and to their future potential to 

be a contractor of the federal government. 

I find it interesting that this hearing is also being held solely on 

speculation since we haven’t even seen the regulations and guidance from DOL or OMB. The contractors who are concerned that 

their record of violations may be problematic aren’t even aware of 

the details of how this will be implemented because it simply 

hasn’t been presented yet. 

But it is a really simple concept: If you are consistently breaking 

the law with regard to your workers, taxpayers, or the community, 

you should not receive millions of dollars of taxpayer contracts. 

Companies that are cutting corners on safety, not paying their 

workers on time, not paying overtime, or in dozens of other areas, 

shouldn’t be allowed to compete against good actors who follow our 

law. 

Everyone needs to start from a level playing field. It is simply 

not fair if one company is paying people below the minimum wage 

or withholding salaries from their workers. They don’t have an actual economic ability to bid at a lower cost, but because they violate 

our labor laws they, in fact, might take out the excess profits or 

bid at a lower cost. 

Unfortunately, unscrupulous actors who pervasively ignore the 

law are allowed to compete with those who follow our labor laws. 

And right now there are some bad actors receiving billions of dollars in federal contracts. I hope that this rule will address that. 

I look forward to the information that our expert witnesses will 

be providing before us today, and I yield back the balance of my 

time. 

[The statement of Mr. Polis follows:] 

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Chairman WALBERG. I thank the gentleman. 

Pursuant to committee rule 7(c), all subcommittee members will 

be permitted to submit written statements to be included in the 

permanent hearing record. And without objection, the hearing 

record will remain open for 14 days to allow statements, questions 

for the record, and other extraneous materials referenced during 

the hearing to be submitted in the official hearing record. 

At this time, let me also enter, if there is no objection, two letters—one coming from a group of employers who are concerned 

with fair pay and safe workplaces and the executive order—to be 

submitted to the record; as well as a letter from the Associated 

Builders and Contractors on their concerns, as well. 

[The information follows:] 

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Chairman WALBERG. Hearing no objection, they will be submitted for the record. 

It is now my pleasure to introduce our distinguished panel of witnesses. 

First, Willis Goldsmith is a partner with Jones Day in New York. 

Mr. Goldsmith represents management in labor and employment 

law matters. 

Welcome. 

Angela Styles is a partner with Crowell & Moring LLP in Washington, D.C. Ms. Styles was a former administrator for federal procurement policy at the Office of Management and Budget. 

Welcome. 

Karla Walter is the associate director of the American Worker 

Project at the Center for American Progress in Washington, D.C. 

Ms. Walter’s work focuses primarily on increasing workers’ wages 

and benefits, promoting workplace protections, and advancing 

workers’ rights. 

Welcome. 

And finally, Stan Soloway is the president and CEO of the Professional Services Council in Arlington, Virginia. The Professional 

Services Council is the principal national trade association representing the government professional and technical services industry. 

Welcome. 

I will now ask our panel of witnesses to stand and raise your 

right hand for being sworn in. 

[Witnesses sworn.] 

Let the record reflect the witnesses answered in the affirmative. 

You may be seated. 

Before I recognize you to provide your testimony, let me briefly 

remind you of the lighting system and encourage you to keep attention to that, at least with one eye, as you give your testimony. We 

don’t want to become a hindrance to your testimony, but we do 

have time issues and we will have plenty of questions to ask you, 

as well. 

The green light begins the process. You will have four minutes 

with that light on. 

Then the yellow light will come on for the final minute. We 

would encourage you to wrap up as soon as possible within the context of your sentence or short paragraph when the red light comes 

on. 

The same will be true for our members on the panel as we ask 

our questions, and we will keep to that five minute sequence also. 

So with that, let me recognize Mr. Goldsmith for your five minutes of testimony. 

TESTIMONY OF MR. WILLIS GOLDSMITH, PARTNER, JONES 

DAY, NEW YORK, NY, TESTIFYING ON BEHALF OF THE U.S. 

CHAMBER OF COMMERCE 

Mr. GOLDSMITH. Thank you. 

Chairman Walberg, Ranking Member Polis, Ranking Member 

Wilson, and members of the subcommittees, thank you for inviting 

me here to testify today. By way of background, I am a partner 

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with Jones Day, resident in our firm’s New York City office. I have 

practiced labor and employment law for over 40 years. 

Since 1974 I have advised employers regarding compliance with 

seven of the 14 federal statutes and regulations that are encompassed by the executive order. I have tried cases and argued appeals, including in six United States courts of appeals and in the 

United States Supreme Court, arising under various of those or related laws. 

I am pleased to be here today on behalf of the United States 

Chamber of Commerce. As you know, the Chamber is the world’s 

largest business federation, representing more than 3 million businesses of all sizes, industry sectors, and geographic regions. The 

President’s Fair Pay and Safe Workplaces Executive Order will significantly and adversely impact many of these entities. 

First, let me provide a brief overview of the executive order. The 

order requires contractors and subcontractors to self-report supposed violations of federal and state labor laws. Based on these reports, contracting officers must determine whether an entity is, ‘‘a 

responsible source that has a satisfactory record of integrity and 

business ethics.’’ 

In making that determination, the contracting officer consults 

with the agency’s labor compliance advisor, an entirely new position created by the order. Contractors are likewise required to 

make responsibility determinations for the subcontractors. 

The most fundamental problem with the executive order is that 

it oversteps the President’s authority. Congress has already enacted detailed enforcement and penalty mechanisms for federal 

labor laws. The order improperly alters those regulatory schemes. 

The order is also invalid because it encroaches on employers’ 

rights under the Federal Arbitration Act. For contracts and subcontracts exceeding $1 million, the order prohibits employers from 

enforcing advance agreements to arbitrate certain claims. This prohibition impermissibly conflicts with employers’ rights under the 

Federal Arbitration Act. 

As if these problems weren’t enough, the order is riddled with 

uncertainties that make it entirely unworkable. It is absolutely impossible to predict how it will work in the real world, except to say 

that it is certain to create chaos among contractors, subcontractors, 

and within agencies. 

For example, the order requires entities to report any administrative merits determination, arbitral award or decision, or civil 

judgment. Leaving aside whatever those words mean—and they 

are not defined—even when an agency finds a violation through its 

administrative process, it is not at all uncommon for that decision 

to be reversed by a court. 

That process can take many years, often due to agency inaction. 

It would be manifestly unfair to disqualify businesses from federal 

contracts simply based on violations that years later prove to be 

entirely baseless. 

In addition, contractors are left simply to guess as to whether 

they must report all violations regarding all of their activities or 

whether they must report only violations involving the performance 

of a federal contract. A reporting requirement that extends to all 

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activities of a large corporate entity would flood agencies with information that may be entirely irrelevant to the contract at issue. 

The order is likewise silent on which state law violations trigger 

the reporting requirement. The order applies to 14 federal labor 

laws, executive orders, and ‘‘equivalent state laws.’’ 

Depending on how equivalence is defined, contracting officers 

and labor compliance advisors may have to master literally hundreds of state laws. That simply cannot be done, period. 

Finally, agencies must consider whether a violation is sufficiently 

serious—I am quoting—‘‘serious, repeated, willful, or pervasive’’— 

to warrant remedial action. Many of the included federal labor laws 

are themselves exceedingly complex. 

Even the best-intentioned employers have run afoul of these laws 

in isolated circumstances or in situations where the rules are illdefined. An employer that is ultimately found guilty of violating 

these laws is not necessarily a bad or unethical employer. 

Finally, even courts struggle to interpret such terms as ‘‘repeated, willful, and pervasive.’’ There is certainly no reason to believe that agencies are better equipped to do so. These terms will 

inevitably be applied inconsistently, further shrinking the pool of 

eligible contracts. 

Moreover, as a practical matter the order is impossible to implement. As to contracting officers, it requires contracting officers to 

master a complex web of hundreds of interrelated and constantly 

evolving state and federal laws. I have been doing this for over 40 

years and I know to a certainty I would not be able to do this, nor 

would any lawyer I have ever known be able to do so. 

Then the order floods the contracting offices with information regarding violations, most of which will bear little relationship to an 

entity’s integrity or business ethics. The contracting officers then 

are supposed to sift through this deluge of statutes and data, consult with a labor compliance advisor, and make a responsibility determination. 

Then they have to do this every 6 months. This is just not 

achievable in the real world. There are comparable burdens imposed on contractors and subcontractors and may drive businesses 

from the contracting world—perhaps especially small businesses, 

including those run my minority— 

Chairman WALBERG. Mr. Goldsmith, we have to ask you to wrap 

up your time— 

Mr. GOLDSMITH. Thank you. 

Chairman WALBERG.—and— 

Mr. GOLDSMITH. The order is so deeply flawed in so many ways 

that it is simply beyond redemption. There is no way it could be 

modified or tweaked into something workable. 

Thank you, Mr. Chairman. 

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Chairman WALBERG. Thank you. 

Ms. Styles, we recognize you for your five minutes. 

TESTIMONY OF MS. ANGELA STYLES, PARTNER, CROWELL & 

MORING, LLP, WASHINGTON, D.C. 

Ms. STYLES. Thank you. 

Chairman Walberg, Congresswoman Wilson, Congressman Polis, 

and members of both subcommittees. I appreciate the opportunity 

to appear before you today to discuss the Fair Pay and Safe Workplaces Executive Order. As a former administrator for federal procurement policy at OMB, as a government contracts practitioner, 

and as a taxpayer, I can tell you that I care a great deal about the 

effective and efficient functioning of our federal procurement system. 

While I can’t say that I was surprised that this executive order 

was issued, the concept of imposing greater sanctions on federal 

contractors for purportedly unacceptable labor practices has been 

around for at least two decades. I was, however, astonished when 

I started contemplating the practical effects of how this administration planned to go about subjectively sanctioning companies for actual and alleged labor violations. 

The potential negative impact of this executive order cannot be 

overstated. The potential disruption and damage is particularly 

troubling because adequate mechanisms exist in our current procurement system to exclude companies with unacceptable labor 

practices. 

To put it simply, if a pipe breaks at your house you hire a plumber to fix it; you don’t go build a new house. 

If this administration truly believes that companies with unacceptable labor practices are not being properly excluded from federal contracting, why aren’t they using or bolstering the current, 

well-established, objective, and fair processes to do just that? Why 

instead are they building a new house; a new house with vast, complex, and highly subjective processes for sanctioning companies? 

My written testimony goes into great detail about the processes 

being created and the ridiculous administrative burden it will place 

on our federal contracting officers and the new contemplated labor 

compliance advisors. Our federal contracting officers simply do not 

have the bandwidth to review extensive volumes of labor information, consult with labor compliance advisors, determine the appropriate remedial action, and consult with prime contractors regarding the labor practices of hundreds of thousands of subcontractors. 

There are not enough hours in the day or enough employees in 

the federal government to implement this executive order as written. The federal government will be either unable to purchase essential goods and services or forced to create a system that unfairly 

targets contractors for special attention. 

What I must highlight, however, is the devastating impact of this 

executive order on small businesses. While it should be relatively 

simple for a small business—and I think inexpensive—for a small 

business to collect and report on their own labor violations, it will 

be impossible and cost-prohibitive for a small business to try to collect information regarding their subcontractors and make responsibility determinations regarding their subcontractors. 

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The reality is that today small businesses rely on other businesses, including many, many large businesses, to perform substantial portions of their federal contracts. So they receive a federal 

contract and they award subcontracts to other businesses, including large businesses. So these small businesses that receive a 

prime contract will be faced with the overwhelming task of trying 

to collect and understand labor violations made by some of the 

largest businesses in the world and make a responsibility determination based upon that information. So if, for example, a small business in Virginia wins a $5 million 

information technology contract at the Department of Defense but 

needs to subcontract $500,000 of that work to a multibillion dollar, 

multinational information technology company to actually successfully complete the work, the small business will be tasked with collecting and understanding all federal labor laws, the labor laws of 

all 50 states, as well as determining whether this large, multinational company has taken sufficient remedial steps to improve 

their labor practices. So even if the federal contracting officer and 

the labor compliance advisor or the Department of Labor answers 

the phone to help this small business make a decision, it is a monumental task that the small business will not be capable of performing. 

Ultimately, small businesses will be left in the difficult decision 

of willfully failing to meet the terms and conditions of their prime 

contract with the federal government—requiring them to collect 

and assess this labor information—or they will not be able to do 

business as a prime contractor with the federal government. 

As a bottom line, the articulated rationale for this E.O. fails objective scrutiny. The suspension and debarment process was created and operates with the purpose of fairly and objectively excluding companies that are not responsible from doing business with 

the federal government. Through the suspension and debarment 

process, the federal government makes a single, unified decision 

based upon all available evidence and affords contractors an appropriate level of due process. 

This concludes my prepared remarks, but I am happy to answer 

any questions you may have. Thank you. 

[The testimony of Ms. Styles follows:] 

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Chairman WALBERG. Ms. Styles, thank you. 

Ms. Walter, it is now your time for five minutes of testimony. 

Thank you. 

TESTIMONY OF MS. KARLA WALTER, ASSOCIATE DIRECTOR, 

AMERICAN WORKER PROJECT, CENTER FOR AMERICAN 

PROGRESS, WASHINGTON, D.C. 

Ms. WALTER. Thank you. 

Thank you, Chairman Walberg, Ranking Members Wilson and 

Polis, for this opportunity to present in support of the Fair Pay and 

Safe Workplaces Executive Order. I would also like to thank the 

workers who may be personally affected by the executive order for 

being here today. 

My name is Karla Walter. I am associate director of the American Worker Project at the Center for American Progress Action 

Fund. 

In my testimony today I will make three main points. First, far 

too often companies with long and egregious records of violating 

workplace laws continue to receive federal contracts. This not only 

harms workers, but also taxpayers and law-abiding businesses. 

Second, the contractor review process is supposed to prevent this 

from happening by ensuring that only responsible companies receive federal contracts, but the system is broken. Third, President 

Obama’s Fair Pay and Safe Workplaces Executive Order strives to 

help fix this broken system and ensure that law-breaking contractors come into compliance. 

The federal government spends hundreds of billions of dollars 

each year contracting out everything from janitorial services to the 

design and manufacture of sophisticated weapon systems. Indeed, 

one in five American workers are actually employed by a company 

that contracts with the government. 

The government is supposed to contract only with companies 

that have a satisfactory record of performance, integrity, and business ethics. But the contracting system does not effectively review 

the responsibility records of companies before awarding contracts, 

nor does it adequately impose conditions that encourage them to 

reform their practices. 

Instead, the federal government all too often awards contracts to 

workplace violators with no strings attached. As a result, contractors that violate workplace laws have little incentive to improve 

their practices. 

For example, a 2013 report by the Senate HELP Committee 

found that government contractors are often among the worst violators of workplace laws. Nearly 30 percent of top violations were received by companies that continued to receive government contracts. 

Workers at these companies were shortchanged by $82 million, 

and at least 42 people died from workplace accidents at these companies. The victims ranged from a 46-year-old father of four who 

was killed while trying to clear a clothes jam in an industrial 

dryer, to 13 workers killed at a sugar refinery explosion sparked 

by combustible dust, to workers at two separate companies killed 

in oil refinery explosions. 

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When governments continue to contract with these law-breaking 

companies, it also frequently results in poor contract performance, 

wasting taxpayer dollars, and delivering low-quality services. Analysis from my organization shows that one in four companies that 

committed the worst workplace violations and later received federal 

contracts had significant performance problems. These ranged from 

contractors submitting fraudulent billing statements, to cost overruns and scheduling delays during the development of major weapons systems, to contractors falsifying firearm safety test results for 

courthouse security guards, to an explosion in the Gulf of Mexico 

that spilled millions of barrels of oil. 

Finally, the current system puts law-abiding companies that respect their workers at a competitive disadvantage against bad actors that lower costs by paying below what they are legally required and cutting corners in workplace safety. 

The federal government could have prevented many of these 

problems and promoted an efficient procurement process by reviewing companies’ records of workplace violations before awarding a 

government contract. Unfortunately, the existing tools to ensure 

that this actually happens are inadequate. The database tracking 

contractor responsibility fails to include many serious violations, 

enforcement agencies provide no analyses of contractors’ legal 

records, and contracting officers receive little guidance from existing regulations on how to evaluate records. 

The executive order strives to ensure that contractors’ records of 

workplace violations will be taken into account in determining 

whether or not they have a satisfactory record. It aims to create 

a fair, efficient, and consistent process by which the federal government can ensure all federal contractors are responsible and that 

law-breakers come into compliance. 

The order is informed by best practices from the state and local 

governments and, in limited instances, federal agencies. Even in 

the private sector, it is becoming increasingly common for companies to factor in a bidder’s record of safety in contracting decisions. 

President Obama’s order strives to ensure that companies that 

respect their workers are not put at a competitive disadvantage 

compared to law-breaking companies. Indeed, that is why six contractor associations are submitting for the record today their joint 

statement in support of the order. 

While opponents have argued that these sorts of policies can bar 

or even blacklist companies with minor violations from receiving 

any federal contracts, improved responsibility guidance and a thorough investigation process promises to allow the government to 

identify only persistent violators and provide them an opportunity 

to clean up their acts. Moreover, the administration has indicated 

that this new system will simply require law-abiding companies to 

check a box to certify legal compliance, a process similar to how 

firms currently report on tax delinquency and contract fraud. 

States and localities have found that adopting these laws to raise 

workplace standards actually has increased competition among 

contractors. For example, after Maryland implemented a contractor 

living standard, the average number of bids for contracts in the 

state increased by 27 percent. 

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Congress has the opportunity to support implementation of the 

order and thereby strive to ensure that companies with egregious 

records of violating workplace laws come into compliance. This will 

make a difference for millions of working Americans, ensuring that 

law-abiding companies can compete on an even playing field, and 

prevent the waste of taxpayer dollars. 

Thank you. 

[The testimony of Ms. Walter follows:] 

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Chairman WALBERG. Thank you. 

And now we turn to Mr. Soloway for your five minutes of testimony. 

TESTIMONY OF MR. STAN SOLOWAY, PRESIDENT AND CEO, 

PROFESSIONAL SERVICES COUNCIL, ARLINGTON, VA 

Mr. SOLOWAY. Thank you, Mr. Chairman, members of the subcommittees. I appreciate the opportunity to be here. 

In the interest of avoiding being overly redundant with my colleagues on the panel, I would like to just make a couple of core 

points to lead into the discussion and your questions as we go forward. 

First, let me also mention my own personal involvement with 

this issue. The Fair Pay and Safe Workplaces Executive Order is 

actually the stepchild of a Clinton-era executive order called the 

Contractor Responsibility Rule, which was known in those days as 

the ‘‘blacklisting rule.’’ I was the lead official at the Clinton administration Department of Defense dealing with the writing and development of that rule at the time. 

And, as with this rule, that rule was poorly constructed, it was 

poorly thought out, and it was rushed through the system without 

any consideration of the unintended consequences it could create 

despite the fact that it was based on a perfectly reasonable and appropriate tenet. In fact, I would fully associate myself with the 

comments of everybody on the Committee who has spoken thus far, 

including Mr. Polis and others, who have talked about the need to 

avoid giving contracts to bad actors. 

This executive order does not make policy in that regard. It is 

well-established in federal law and federal procurement practice 

that bad actors can be and should be denied federal contracts. 

The real issue at stake here with regard to that particular point 

is the degree to which current information systems in the government adequately interface with each other and provide collective 

information to the parties that appropriately need it to make reasoned, expert decisions—particularly suspension and debarment officials and others. Instead of fixing the information system, this 

order creates a broad, sweeping regulatory regime that, as others 

have already said, raises significant questions of executability and 

of due process. 

Second, the executive order and many of the reports and statistics already cited in this hearing, including the Senate HELP report, ignore the fact that a substantial if not majority of the cases 

involved and reported are tied directly to either the government’s 

failure to appropriately exercise its responsibilities or the sheer 

complexity of implementing the Service Contract Act, the DavisBacon Act, and other prevailing wage laws. 

This is not to suggest that we argue in favor of getting rid of 

them, but it is to suggest if you look at the record and you talk 

to officials in the Wage and Hour Division at DOL and elsewhere, 

they will fully acknowledge that it is absolutely routine for companies who are trying to do business under the rules established by 

Davis-Bacon and Service Contract Act to have violations, many of 

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plexity of trying to determine how to match a job to a given wage 

and benefits rate as prescribed by the Department of Labor. 

And even in the reports that have come out of the Senate, something like half of the cases of violations of these laws resulted from 

the government’s failure to include in the contract the appropriate 

clauses to tell the contractor, ‘‘You are subject to these particular 

laws.’’ So this is a really complex implementation challenge on 

the—both government and contractor side, which I think this proposed executive order and many of the reports that deal with some 

of these issues tend to overlook dramatically. 

Third, this executive order kind of upends a very important concept that Ms. Styles addressed a moment ago, or alluded to, and 

that is this whole concept of present responsibility. 

Every institution experiences wrongdoing. I think we all agree 

with that. And often it is said that the best measure of an institution is how it responds to that wrongdoing and adjusts going forward. 

This rule does not open up the door to that kind of a—it completely changes that. Allegations, settlements without finding of— 

on either party’s side automatically considered violations that are 

to be considered. 

What would you do if you were a government contractor? You 

wouldn’t go to the trouble of trying to figure out all the details of 

every case on every—of every bidder that is coming in the door; you 

are going to just say, ‘‘I can’t deal with this,’’ and any allegation, 

any situation that raises any red flags, you are simply going to 

walk away. 

That is the way the system will work because it is the safest way 

to protect yourself. That is fundamentally unfair. 

Finally, just one comment with regard to some previous testimony—the idea that this is simply a checking of the box, like we 

do for tax responsibility. I would urge you to go back to the record 

of discussion and debate over tax—over the legislation that led to 

that simple box-checking, because the same issues were at stake 

there that are at stake here. 

Fully adjudicated tax violations we all agreed to—not allegations, 

not tax liens that were not yet fully adjudicated. There was a whole 

process of defining what I was—what I would be certifying to if I 

checked that box. 

That process has not been gone through with regard to this executive order. 

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Chairman WALBERG. I thank the gentleman. 

I thank all of the panel for your testimony and look forward now 

to questions that can bring further clarification to this issue. Again, 

the whole effort of this panel is to find a means by which we, indeed, can make sure that our contracting system produces the right 

things for the employers, for the government, and for the taxpayer, 

and that the systems in place are usable and used effectively to 

make sure that that happens. 

I now recognize myself for five minutes of questioning. 

Mr. Soloway, it is evident that there are no contractors on this 

panel. And again, that is not because we haven’t had contractors 

submit a lot of concern about this proposed executive order, but it 

is a concern that they feel, right or wrong, potential retaliation for 

being here. So you are the guy in the hot seat to answer some of 

the questions, I trust. 

Can you explain some of the frustrations your members have 

with this executive order and how they feel about being targets of 

excessive administrative action over the past year? 

Mr. SOLOWAY. That is a large question, but this is about the fifth 

or sixth executive order in the labor realm that we have seen over 

the last few years from this administration, not just the last year. 

By and large, the earlier executive orders were not nearly as controversial, though implementation and execution was a challenge, 

but we all agreed with, again, the intent there. 

This is by far the most sweeping that we have seen, and it raises 

a number of concerns, because the fundamental policy question 

that drove this issue back in the 1990s in the Clinton administration was whether you could actually deny a contract to a company 

for something they did in work that was unrelated to the work for 

the government. For example, the BP oil spill—would that have 

been a reason to deny BP a government contract since the oil spill 

was not a government contract? 

That issue has been long since decided, and the answer is yes 

you can, and we do it routinely today. 

So from our perspective, from the company’s perspective, they 

know that they are responsible to adhere to federal law. They have 

extensive compliance systems in place. But the concern is that we 

are continually shifting responsibility for massive compliance regimes on the companies rather than focusing on the much smarter 

and more effective method of saying—of, as I said, collecting information once and using it multiple times. 

Why would I do this every six months? Why does the government 

not use the Office of Federal Contract Compliance, DOL Wage and 

Hour Division, all the other elements of government that have responsibility for labor law implementation and have records of who 

has violated what when and where? 

Why are those information systems not centrally feeding into an 

area where people can use it? Why do I, as a company, need to go 

through that detail? And the regulatory compliance burdens here 

are enormous. 

Second, it is a certification. You are not just saying, ‘‘I think I 

am responsible’’; you are saying as a company that, ‘‘We have no 

violations that would be reportable.’’ 

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If I am wrong and I don’t know about something that a field office in Texas or elsewhere did, I am liable—I will leave it to my 

legal colleagues, but I am liable under the False Statements Act for 

some very, very severe penalties. 

And third, there is already mammoth exercise of oversight by the 

Department of Labor. The Department of Labor itself has talked 

about adding I think it is over 1,000 investigators over the last six 

years on Service Contract Act. 

Companies are routinely dinged. And even when the fault is with 

the government, the company often has to make the employee 

whole. 

So I think it really—the concern on our part is this just really 

ignores the massive complexity of the system and is just—it is a 

blunt instrument that is unnecessary. 

Chairman WALBERG. Okay. 

Ms. Styles, the executive order unfairly slants the federal contracting competition against contractors with minor infractions 

that may have no bearing on the employer’s integrity or business 

ethics. Could you explain how requiring contractors to disclose this 

information affects the relationship between prime contractors and 

subcontractors? 

Ms. STYLES. Well, it completely changed the dynamic between 

prime contractors and subcontractors. So right now under the law, 

the dynamic is largely one of an arms-length transaction for good 

reason. So you want your prime contractors going to the marketplace and competing the subcontract work and having an armslength transaction between them. 

This causes the prime contractor to become very involved in the 

subcontractor’s business, which is not the way that it operates 

right now. The prime contractor is going to have to ask for this list, 

they are going to have to understand it, they are going to have to 

go back and consult with the Department of Labor and the labor 

compliance advisors and determine whether the remedial action is 

appropriate. 

And what happens when it turns around and you are their subcontractor? Because even the largest of companies are prime contractors and subcontractors, and they team together, and they are 

primes to each other and subcontractors to each other. So you are 

sharing what is, you know, very sensitive information and giving 

the prime contractor an extraordinary ability to try to negotiate 

some deal related to labor issues. 

Chairman WALBERG. Is there a concern also about disclosing 

trade secrets in this process? 

Ms. STYLES. Absolutely. So, you know, and then what happens 

when it changes around and they are the prime and you are the 

sub in another situation and you have just disclosed trade secrets, 

or they are competing against you in another procurement? 

Chairman WALBERG. I see my time is about expired so I will not 

violate my own rules. 

And so I will now recognize the distinguished lady from Florida, 

Ranking Member Ms. Wilson. 

Ms. WILSON of Florida. Thank you, Mr. Chairman. Some of the 

people you see in the audience are from Good Jobs Nation. 

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And, Ms. Walter, these workers are actually wearing stickers on 

their sweatshirts with the amount stolen from them in wages—actual money from these workers. So as I listened, one witness testified that there is no evidence of willful, pervasive, or repeated violation of federal contractors that would merit adopting this executive order. 

Do you agree with this conclusion? Could you please give us 

some specific examples of pervasive or repeated violations? I would 

appreciate it. 

Ms. WALTER. Certainly. And I should say, I had said in my opening remarks that the HELP Committee’s report found that there 

were $82 million in wage theft violations found at these companies 

that they—that were severe violators of federal contracts that continue—or severe violators of wage theft laws that continued to receive federal contracts. 

This included paying workers at chemical weapon storage facilities for time spent—not paying workers at chemical weapon storage facilities for time spent donning safety gear. I mean, these 

were workers who were protecting us as Americans, and they were 

owed in 18 instances $6 million in—or they were owed—there were 

18 instances of back pay, but yet they continued to receive federal 

contracts. And this affected 1,300 workers. 

There are issues of workers being—failing to pay more than 

25,000 workers at call centers for overtime, and this was—this involved Cingular Wireless, and yet AT&T continued to receive $620 

million in federal contracts. 

And work—instances of mis-classing workers responsible for 

helping recently released prisoners reenter society and find work, 

owing these workers $1.7 million in back wages, and yet the company continued to receive $28.8 million in federal contracts. 

Ms. WILSON of Florida. Thank you. 

In Florida there is a construction company called Concrete Plus. 

They went after contracts for 20 jobs with state or federal funding—mainly projects to build or improve low-income housing. It 

won just seven, well below the company’s usual rate of success. 

Concrete Plus was constantly underbid by companies that were 

cheating by misclassifying employees. Is misclassification of employees a way for contractors to shift costs to workers or leave 

them without basic protections, such as workers’ compensation, 

and thus underbid a job? 

Ms. Walter? 

Ms. WALTER. Certainly it is. 

From that story from McClatchy that uncovered the issue of Concrete Plus and the American Recovery and Reinvestment Act funds 

we found that they documented the real story of one company trying to do well by their workers and being underbid over and over 

again on these—the Recovery Act funds. And this definitely transferred to companies throughout the Recovery Act and throughout 

the contracting system in general. 

And what we see is that at the state level there have been lots 

of states who have undertaken this question of how do we ensure 

that our contractors are responsible by and ensure that it is efficient contracting process? And some of the states have specifically 

looked at misclassification of independent contractors as an issue. 

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Minnesota is one of the most recent examples that passed a law 

that became effective in 2015 that takes a closer look at the 

misclassification issue. 

Ms. WILSON of Florida. Thank you. 

This question is for Mr. Soloway and Ms. Styles: Five trade associations for general contractors—especially trades covering sheet 

metal, mechanical, electrical, finishing, bricklayers—submitted a 

statement today applauding the executive order as sound public administration propriety policy. 

Operating under the banner of Campaign for Quality Construction, they said that the E.O. will promote high workforce standards 

for the benefit of the public project owner—that is the taxpayer. It 

will raise the bar in the market for federal construction, and they 

contend it will enhance due process rights for contractors in the 

procurement process, compared to the status quo. 

While these contracting groups have suggestions to make the executive order workable through the rulemaking process, is there 

something that these five trade associations, which represent thousands of construction workers, failed to appreciate regarding the 

implication of this executive order? 

Why don’t these companies see the E.O. as harmful to their economic self-interest, as you seem to suggest it will be for the companies you represent? Do these companies want to uphold a higher 

standard than the companies you represent? 

Chairman WALBERG. The gentlelady’s time is expired, but for the 

record, let’s get a brief answer. 

Mr. SOLOWAY. I will just be very brief and say no, I don’t think 

it suggests that they want to be held to a higher standard. I don’t 

know enough about the construction side of the business and so 

forth to understand and—nor would I comment on what other organizations are saying or doing. 

I would be very careful, however, when we hear things like 

‘‘wage theft’’ terms, because it does occur and it needs to be punished and it needs to be dealt with. But it needs to be determined 

to have been intentional and willful. 

‘‘Misclassification’’ is also a very tricky term, and it takes a—we 

don’t have time today to go into how it actually works when you 

are under the Service Contract Act and you are classifying a position. Misclassification can be done by the Department of Labor, it 

can be done by a contracting officer, it can be done by a company, 

and it can be all across the board. 

So I would be just very careful at sort of accepting at face value 

that all these things amount to unethical lowballing of government 

contract prices in the workforce, because I don’t think that is the 

case. 

Chairman WALBERG. Thank you. 

I now recognize my colleague from Alabama, Mr. Bradley Byrne. 

Mr. BYRNE. Thank you. 

Ms. Walter asserted that there was a problem with the present 

process. 

I would like to ask you, Mr. Goldsmith, given your 40 years of 

experience, do you see any deficiency in the present process to determine if we have got a bad actor in a government contractor? 

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Mr. GOLDSMITH. I don’t, Mr. Byrne. As has been pointed out by 

other witnesses, the government has had in place for many, many 

years systems to deal with bad actors and the like. 

I would add that saying an entity is a bad actor is a question 

of definition. It doesn’t necessarily suggest that an employer is a 

bad actor for having, for example, had a charge filed with the 

NLRB or the EEOC or, for that matter, the Department of Labor 

under the FLSA, and had decided, for whatever reasons, to resolve 

that charge. And that doesn’t make that entity a bad actor or an 

entity that doesn’t act with integrity. 

I think part of the problem with this entire executive order is 

that words are used without really much care for what they mean 

and how they have been interpreted even by the courts. And to use, 

frankly, words like ‘‘bad actor,’’ ‘‘pervasive,’’ ‘‘longstanding,’’ and 

other words, ‘‘law-breaking’’ is just—simplifies something that is 

not at all simple. 

Mr. BYRNE. I appreciate that. 

Ms. Styles, given your substantial experience, do you find the 

present process that we have insufficient in any way? 

Ms. STYLES. Not at all. It is a very robust process for suspension 

and debarment. 

Companies that have had integrity issues, that have had labor 

issues, are considered by the suspension and debarment officers at 

the various federal agencies. Some federal agencies are better at it 

than others; I think there are some ways to make some of them 

more robust in terms of how they consider particular issues, be 

they labor issues or be they other integrity issues. 

But the system is there. The system is robust. It is fair, it has 

an appropriate level of due process. 

And many of the examples that I have heard here today, you 

know, my question is why weren’t they sent to the suspension and 

debarment officer at the various agencies? I mean, if there is a 

problem then it needs to go to them so they can fairly consider 

whether that business should be doing business with the federal 

government anymore. 

Mr. BYRNE. Mr. Soloway, same question to you, given your substantial experience. 

Mr. SOLOWAY. I don’t think it is a process issue, sir. I think it 

is a question of the appropriate, efficient collection of information 

and sharing of the appropriate information across the system, because there are so many tentacles to the compliance regime. 

And I think to Ms. Styles’ points, if you look even at the Senate 

HELP Committee report, there were numerous cases in there 

where the contracting officer didn’t even look at the excluded parties list, which is designed to list all of these companies that are 

not appropriate recipients—didn’t even look to see if they were on 

there. So yes, they got a contract. 

So I think it is not the process; I think it is the sharing and gathering of information by the government internally, for its own uses, 

not putting this burden on the private sector. 

Mr. BYRNE. Ms. Walter, I want to give you an opportunity to respond to that. Tell me what, from your experience and your expertise, leads you to the conclusion—which is contrary to what these 

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rience, your background and expertise, leads you to your conclusion 

where you disagree with them? 

Ms. WALTER. Certainly. I think the Harkin report is a great example, and that is not the first report to find that— 

Mr. BYRNE. But that is a report. I am asking what is your experience, based—they stated their experience. What is your experience 

here before the Committee today that leads you to that conclusion? 

Not a report— 

Ms. WALTER. Oh, well, I can tell you about my experience talking 

with business owners who say that that is a problem. We have 

heard from business owners who have, at the District of Columbia 

level, have said, ‘‘Before they passed the responsible bidder provision I couldn’t compete. It wasn’t worth it. Now that there is a responsible bidder provision in place, I can compete. There is a fair 

playing field.’’ 

Mr. BYRNE. Do you have a list of those businesses you talked to? 

Ms. WALTER. Certainly. 

Mr. BYRNE. Would you submit that to the Committee. 

Ms. WALTER. I can submit some letters and—some more information. I am happy— 

Mr. BYRNE. Okay. Other than reading a report and talking to 

some businesses, what experience do you have to lead you to that 

conclusion? 

Ms. WALTER. Well, I am a researcher at the Center for American 

Progress, so I can talk to you a little bit about the research we 

have done about these problems translating to poor quality for taxpayers, as well. You know, we found that one in four companies 

with these sorts of violations also had significant performance problems. 

This included contractors KBR being assessed $1.1 million in 

back wages for violations of the Davis-Bacon Act. Contractors 

then—the company continued to receive significant federal funds— 

$11.4 billion over five years. 

In the end, there were performance problems: contractors submitting fraudulent billing statements to the federal government, 

failing to meet a performance level— 

Mr. BYRNE. My time is going to run out, so I am making sure— 

you have talked to some businesses, got some research— 

Ms. WALTER. We certainly do. We certainly do. 

Mr. BYRNE.—and that is what you are bringing to bear to make 

the conclusions you have made. 

Thank you, Mr. Chairman. I yield back. 

Chairman WALBERG. Thank the gentleman. 

Before I recognize the next colleague I want to welcome our 

friend and colleague from Minnesota, Mr. Keith Ellison, to join us 

at the dais here. 

I know you have a strong interest in this issue. We are glad to 

have you join us. 

Without objection? Hearing none. 

Welcome. 

I now recognize the gentleman from Colorado, Mr. Polis. 

Mr. POLIS. Thank you, Mr. Chairman. 

Ms. Styles, I—you have a rather ominous prediction that you 

have given us of what will occur if the E.O. is implemented. To be 

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specific, you said if the E.O. is implemented, ‘‘purchases by the federal government will grind to a halt.’’ 

Does that mean that if the E.O. is implemented there will not 

be any purchases by the federal government—there cannot be any 

purchases by the federal government? 

Ms. STYLES. No. That is not at all what I mean. I just think that 

the process that is put into place by the executive order is so—such 

an overwhelming administrative burden in terms of the number of 

steps they have to go through— 

Mr. POLIS. So what does ‘‘grind to a halt’’ mean if it doesn’t mean 

‘‘stop’’? Because usually ‘‘halt’’ means ‘‘stop,’’ so if it is—if they are 

not going to stop federal purchases, what do you define ‘‘grind to 

a halt’’ as? 

Ms. STYLES. They will be really slow. Only the most important 

ones will be able to— 

Mr. POLIS. So grind to a slower pace perhaps, not grind to a halt? 

Ms. STYLES. Significantly slower pace, yes. 

Mr. POLIS. Would you like to change your testimony, as opposed 

to grind—or do you want to keep it as ‘‘grind to a halt’’? 

Ms. STYLES. I will keep it as ‘‘grind to a halt.’’ 

Mr. POLIS. So then how do you define ‘‘halt’’? 

Ms. STYLES. Some of the most important purchases that we need 

to make aren’t going to happen— 

Mr. POLIS. Okay, well—reclaiming my time—‘‘halt’’ means ‘‘stop.’’ 

So you are saying federal purchases will stop. I again offer you an 

opportunity to modify your testimony if you would like. 

Ms. STYLES. I am not going to modify my testimony— 

Mr. POLIS. So again, you are—now you are contradicting yourself. You told us, this Committee, that federal purchases would 

halt, which means stop, if this E.O. went through. I just asked you, 

‘‘Would federal purchases stop if this E.O. went through,’’ and your 

answer is again—I will give you another opportunity to answer 

that? 

Ms. STYLES. I think many will. 

Mr. POLIS. Some will, and others will go through under this E.O. 

Ms. STYLES. I am sure some will go through, yes. 

Mr. POLIS. Okay. So again, your testimony to us is that if the 

E.O. is implemented purchases by the federal government will 

grind to a halt. You didn’t provide any conditions to that statement. So again, if you are saying federal purchases will slow—but 

you did not agree to make that change— 

Ms. STYLES. I can say ‘‘generally grind to a halt,’’ if that would 

be better. 

Mr. POLIS. Okay, will ‘‘some’’—how about ‘‘some purchases by the 

federal government—′′ 

Ms. STYLES. I will say ‘‘generally grind to a halt.’’ 

Mr. POLIS. Okay. Again, if you are saying that some might grind 

to a halt, perhaps the ones that would stop would be the ones from 

pervasive violators of our labor law. 

I would like to go to Ms. Walter on that. 

Now, there have been several states, including New York, Minnesota, and Massachusetts, that have required labor compliance reviews, similar to those under this E.O. I would like to ask you if 

federal purchases have generally halted in New York? 

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Ms. WALTER. No, they haven’t. 

Mr. POLIS. Have federal purchases generally halted in Minnesota? 

Ms. WALTER. No, they haven’t. 

Mr. POLIS. Have federal purchases generally halted in Massachusetts? 

Ms. WALTER. No. 

Mr. POLIS. Can you answer why they might not halt in those 

states if we are given this testimony that somehow they are going 

to halt in the country—generally halt? 

Ms. WALTER. I can’t say why Ms. Styles is—Ms. Styles is predicting that. What I can say is that they are using these programs 

successfully. They have been able to efficiently use systems such as 

prequalification to get contractors—take a closer look at contractors 

and still uphold high standards. 

Mr. POLIS. Has there been any noticeable or observable slowdown in the efficiency of contracting in New York, Massachusetts, 

or Minnesota? 

Ms. WALTER. No. And I would say that other sorts of contracting 

standards, such as the contracting living standard that was implemented in Maryland, actually increased competition. 

Mr. POLIS. Now, so getting back to kind of why we are here 

today, do you think that under current rule there are adequate 

mechanisms to exclude companies with unacceptable labor practices? 

Ms. WALTER. No. The current regulations have a—well, and let 

me be clear here: Responsibility review is not about suspension and 

debarment. 

This is about upholding higher standards, taking a closer look at 

companies with problems, and when there is a problem, resolving 

those problems so that that company can come back into the fold 

and bid in a responsible manner that isn’t going to shortchange its 

workers and put them in harm’s way. 

Mr. POLIS. And to be clear, in this proposed executive order, is 

there any black list? 

Ms. WALTER. No. No. That is— 

Mr. POLIS. And the same label, as you know, was applied to the 

2008 legislation, which created a federal database that includes 

certain federal contractors. It seems that it is common every time 

there is more contractor accountability added opponents seem to 

label it ‘‘blacklisting.’’ 

There is no, again, for the record, the expert testified there is no 

blacklist in this, nor has there been a general halt to contracting 

in the states that have moved forward in this regard. I also am 

confident that there would not be any form of general halt of contracting here at the federal level. 

Really we are discussing the inadequacy of current mechanisms 

of enforcement of labor practices among federal contractors. There 

are gaps to be filled. The E.O. goes some of the way towards doing 

that. 

But certainly companies need to be held accountable if workers 

aren’t being paid, if they are engaged in discriminatory behavior, 

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menting the congressional intent with regard to applying the law 

to federal contractors. 

And I yield back the balance of my time. 

Chairman WALBERG. I thank the gentleman. 

I now recognize the gentlelady from North Carolina, Dr. Foxx. 

Mrs. FOXX. Thank you, Mr. Chairman. 

I want to just make a point for the record, there have been some 

statements made about suspensions and disbarments, and it is my 

understanding that during fiscal year 2012 and 2013, DOL registered no suspensions or disbarments of federal contractors, and I 

will give the source of this for the record, if I might do that later 

on. 

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Chairman WALBERG. Without objection. 

Mrs. FOXX. Thank you. 

I wonder, Ms. Styles, if you could answer a question for me? Can 

you describe the current process for contractor responsibility determinations? 

What types of violations or allegations are taken into account 

when a contracting officer makes a responsibility determination? 

Can a contractor contest an adverse determination? 

Ms. STYLES. Absolutely. 

So there is a part of the Federal Acquisition Regulation, it is 

called Part 9, and a contracting officer, before they actually execute 

a contract with a company, has to go through a number of articulated steps to determine if the company is responsible. It includes 

everything from financial responsibility, to their past performance 

in particular jobs, to their integrity as a business. Labor violations 

absolutely can be taken into consideration, in terms of the integrity 

of a business, so in many ways this is already existing, in terms 

of the ability of a contracting officer to consider it. 

If that decision is made—adverse to a contractor—by an individual contracting officer, it actually can be appealed through the 

protest process currently, but it is a pretty arduous process for appeal. 

Mrs. FOXX. Thank you very much. Mr. Goldsmith, federal labor 

laws already contain remedies to address violations. How does this 

executive order, which introduces new remedies, effectively rewrite 

U.S. labor laws and run afoul of congressional intent? 

Mr. GOLDSMITH. Well, it does precisely that. It augments existing 

remedies in a way that would not only put at risk contractors who 

currently have contracts with the federal government, but as a result of that, it really is unconstitutional. 

It is not the prerogative of the President to decide to rewrite the 

laws to augment remedies. For example, under the NLRA the law 

has been longstanding that a—the government cannot—the executive branch cannot simply add to remedies, nor can the states, for 

that matter. It is a case called Gould that has been around for 

many years. 

So this executive order does precisely that and it is unlawful? 

Mrs. FOXX. You know, this is a recurring pattern with this administration, it seems to me. There are 57 oversight hearings going 

on this week in the House of Representatives, and I just wonder 

how many of those hearings are focusing on unconstitutional actions taken by this administration. 

It simply is mindboggling that every day we learn of more and 

more of these unconstitutional actions being taken by an administration doing its best to write laws or rewrite laws, and we really 

need to start keeping long lists of these, because I don’t think the 

American people are aware of all of the violations that have occurred. 

Mr. Chairman, I am going to do something very unusual. I am 

going to yield back the balance of my time. 

Ms. WALTER. Representative Foxx, could I make just one point 

on that? 

Chairman WALBERG. No question was asked. Appreciate you can 

maybe work that into an answer of the next question you get. 

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I now recognize Mr. Scott for his five minutes of questioning. 

Mr. SCOTT. Thank you, Mr. Chairman. And I would point out the 

fact that a oversight hearing was held does not—is not evidence 

that a—conclusive evidence that any violation has occurred. There 

are oversight hearings all the time. 

Ms. Walter, you wanted to respond? 

Ms. WALTER. Certainly. Thank you for giving me the time. 

I just wanted to make clear that, first of all, the purpose of a responsibility determination is not to penalize a federal contractor 

but to promote an efficient procurement process. And the Federal 

Property and Administrative Services Act authorizes the President 

to create processes to ensure that contractors are responsible. 

And the courts have actually upheld this right several times. 

They have upheld it under previous administrations, if you—including E–Verify proposals, the right to post notices for workers 

that—informing of their rights not to join unions; and it has been 

upheld during this administration with the Project Labor Agreements Executive Order. 

Mr. SCOTT. Thank you. 

Can you explain how this process is significantly different than 

the present process? 

Ms. WALTER. Certainly. Right now there is a contractor responsibility database. However, significant number of labor law violations 

are not included in it, and there is no guidance for contracting officers on how they should implement these—if a contracting officer 

finds out about a legal violation there is no guidance on how they 

should consider it or how much of a warning sign this is. 

What the order does is it allows, through a process that will include advice from labor compliance advisors, from the Department 

of Labor, it will provide contracting officers the information they 

need to make an informed decision. It is not requiring contracting 

officers to find a contractor not responsible because of anything 

that they report, but the reporting mechanism throws up a warning signal that contracting officers should take a closer look. 

Mr. SCOTT. Ms. Walters, can persons with unresolved issues be 

punished? 

Ms. WALTER. Again, it is not a punishment process. This— 

Mr. SCOTT. Well, can people with unresolved issues have contracts withheld or not be awarded contracts because of allegations 

that haven’t been resolved? 

Ms. WALTER. So I am not a member of the administration, so I 

can’t tell you exactly what the administrative merits determinations are going to include, but what I can say is that, again, this 

is about throwing up a warning signal, taking a closer look, figuring out what is going on in those instances and whether or not 

that would jeopardize taxpayer dollars to contract with that organization before they take remedial action. 

Mr. SOLOWAY. Mr. Scott, can I offer a comment briefly on that? 

I don’t want to take your time. 

The answer to your question is absolutely yes, and this is one of 

the issues that has been missed in this discussion. Yes, we do not 

have the regulations yet to know exactly how they will be implemented, but the executive order sets the construct for those regulations and it very clearly references situations where there is no 

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finding of intent or willful violation. Allegations are included, and 

so forth, so the answer to your question is yes. 

Mr. SCOTT. Well, you kind of fuzzified that intent. You could 

have a violation— 

Mr. SOLOWAY. Correct. Correct. And there are multiple levels at 

which there are questions. One is on the allegations. 

As you said a moment ago, the holding of a hearing is not necessarily proof of wrongdoing. We apply that same standard to the 

executive order. 

Mr. SCOTT. Okay, well, let me follow through. If you have a contractor who is systematically underpaying, not paying overtime, 

and otherwise essentially cheating, what effect does that have on 

the competition? 

Mr. SOLOWAY. Are you asking me, sir? 

Mr. SCOTT. Yes. 

Mr. SOLOWAY. Absolutely, that contractor shouldn’t be considered 

if, in fact, that contractor has a repeated, willful history. There are 

a whole slew of opportunities for the government to deny that contractor the right to bid, and so I think that we have to be very 

careful here that we don’t mix issues. 

In the case here, we are not changing policy about whether companies can or cannot get contracts because they are law-violators. 

What we are doing is creating a broad new regulatory regime, and 

even mixing issues. 

When we talk about what is going on in Massachusetts or New 

York or Minnesota, there are other standards that are far more 

prominent in those responsibility determinations, like do they pay 

a living wage? Well, the living wage debate is a very different debate. Contractors pay what the government tells them they have 

to pay job by job under the Service Contract Act or Davis-Bacon 

Act—— 

Mr. SCOTT. Well, is it true that people with chronic underpayments and chronic violations are getting contracts? 

Mr. SOLOWAY. There absolutely may be cases of that, and that 

doesn’t mean it is right. We are not defending that. There is nothing— 

Mr. SCOTT. So we should do everything we can to prohibit people 

who are chronic violators of labor laws and fair wage laws from 

getting contracts. 

Mr. SOLOWAY. And we have all the mechanisms to do it, as I said 

before. 

I believe that fundamentally it is – A.) you have to deal with 

what is the violation, as you said. Has it been proven or is it just 

an allegation? And then the second question is, why are we not focusing on technology and information-sharing as the answer, which 

is what the logical answer is, rather than this massive burdensome 

regime that raises far more questions than it answers? 

Mr. SCOTT. Time is up. 

Chairman WALBERG. Thank the gentleman. Time is expired. 

I now recognize Mr. Russell, the gentleman from Oklahoma. 

Mr. RUSSELL. Thank you, Mr. Chairman. 

And, panelists, thank you for your testimony today, thank you 

for your extensive work and experience and bringing light to this 

issue. 

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Mr. Goldsmith, given the enormous burden of reporting and compliance requirements that the executive order calls for, what, in 

your opinion, is the net effect of now having timely contracts and 

having the best companies provide government needs? 

Mr. GOLDSMITH. I think it is going to be a huge burden. I think 

it is going to take some companies that would otherwise be federal 

contractors out of that business. It is going to add to a reporting 

burden that exists for not just major employers, many of whom can 

deal with it on one level or another, but especially for small businesses who have enormous difficulties complying with the existing 

burdens. 

So now when you talk about a subcontractor to a large contractor, as Ms. Styles was talking about in her testimony, it just 

adds more of a burden, more of a problem, more of a cost, and it 

is going to drive— especially small business, as I said in my testimony, including especially perhaps those owned and run by minorities and women— out of the federal contracting arena. It is a bad 

idea. 

Mr. RUSSELL. I appreciate that. 

And, Ms. Styles, given that, if contracts fail to meet cost and 

timeliness due to the burdens of the executive order, would that be 

a halt in efficiency and a failure of the best laws to contract? 

Ms. STYLES. Absolutely. You know, if you stop getting the performance that you need, there are mechanisms in place to take 

that contractor out of the whole procurement system. 

Mr. RUSSELL. In your view, if that is the case, what is the motivation behind the executive order, if we already have laws, as 

many of you have testified, to meet this? In your view, what is the 

motivation behind the executive order if it is not to fix something 

that is not broken? 

Ms. STYLES. I would only be speculating as to the motivation, although I have to say, when I look at the executive order and how 

it is implemented—so if you have a problem and you want to fix 

it, like I said, you bring in the plumber to fix the pipe. 

If there is a problem here and there isn’t enough information 

going to the suspension and debarment officials, there is a way 

within the current system to fix it. So I am mystified why you 

would create a vast bureaucracy to fix something that you already 

have a well-functioning system to take care of. 

Mr. RUSSELL. And, Mr. Soloway, especially with your defense 

background, given the vital role that contracts play in the defense 

of our nation, and having been on the receiving end of contracts, 

or the lack of timely delivery of them while fighting in the field, 

what impact does the executive order have on our constitutional requirement to provide for the common defense? 

Mr. SOLOWAY. Sir, I am going to take a slightly different view 

on that than Ms. Styles, not to disagree substantively at all, because we share a view on this. And this goes back to Mr. Polis’ 

question about a grinding halt. 

I think the biggest danger here is exactly the reverse, is that we 

are going to have—you have multiple bidders for contracts, as the 

President himself said, the vast majority of whom are ethical performers, and a red flag, such as Ms. Walter said, comes up on one 

company, an allegation, something completely unproven, something 

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completely undocumented but just an allegation or several allegations, or one contract which could have, you know 1,000 violations 

just because of one mistake, and the contracting officer is going to 

say—excuse me—contracting officer will say, ‘‘I don’t have time to 

deal with this. I am going over here.’’ 

That is as much as a danger to the system as the grinding halt, 

and that is a rush to judgment because there is so much of a pressure to get things done. I think the—what we are missing in this 

discussion is that the context and the framework set up by the executive order does not require that it be proven to have been, at 

that moment, a bad actor. It simply looks at, quote, as Ms. Walter 

put it, ‘‘red flags.’’ Well, there are a lot of red flags on this. 

Mr. RUSSELL. Well, do you believe, then, you know, given the 

amount of contracts that our military relies upon for the delivery 

of their systems, their weaponry, their, in many cases, services— 

many things, what impact would this executive order have on providing for our common defense? 

Mr. SOLOWAY. The biggest impact, according to the experts I 

have talked to—and I would be glad to get the report for the Committee for the record, because there has been some analysis done 

on this—is one colleague of mine at a major firm who is—not a defense firm—has analyzed this suggests that this executive order in 

and of itself could raise the cost of compliance by 20 percent. 

In other words, there is now, at most estimates, compliance with 

federal regulations, they are somewhere in the 20 to 25 percent of 

every dollar, and in their estimate this could raise it to 30 cents 

on the dollar. So it could well be a cost impact at a time we are 

trying to reduce expenses. 

Now, that is not to say if it were to achieve its intended outcome 

that that is not worthwhile. Our view is it won’t achieve the intended outcome, so why would we do this? 

Mr. RUSSELL. Well, I appreciate that, and hopefully we can get 

this overturned with the powers of Congress. 

And thank you, Mr. Chairman. I yield back my time. 

Chairman WALBERG. I thank the gentleman. 

Now I recognize the gentlelady from Oregon, Ms. Bonamici. 

Ms. BONAMICI. Thank you very much, Mr. Chairman. 

And thank you, to our panel of witnesses, for their testimony. 

This has been a very thought-provoking discussion about an important issue. 

My constituents back home in Oregon would be very glad to hear 

that we are having a hearing to address unfair labor practices by 

federal contractors. The federal government pays billions of dollars 

out in federal contracts, and it sounds like we all agree that we 

should have good policies that hold our contractors accountable for 

labor standards. 

And as members of Congress we should be good stewards of taxpayer dollars, and that means that we need to work together to 

protect those dollars and protect American workers. And the executive order seeks to do just that, and I look forward to seeing the 

regulations, as we have all acknowledged do not exist yet. 

I want to ask you, Ms. Walter, I am concerned to learn that with 

the current state of federal contracting, in addition to potentially 

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ally be costing the federal government even more. And you talk 

about the link between labor law violations and poor contract performance. So if violators are not good business partners we 

shouldn’t keep rewarding them with taxpayer dollars. 

So could you elaborate on the connection between labor violations 

and poor contracting performance and talk about how this executive order could save the government money in the long run? And 

I do want to save time for one more question. 

Ms. WALTER. Certainly. Our report took a look at the universe 

of contractors that have had the worst labor law violations and 

said, so what happened to those federal contracts? And what we 

found is that when contractors continued to receive contracts after 

they had had these serious violations, there was poor performance. 

One in four had performance problems. 

So, you know, this was a report that looked at a small universe 

of companies, but if the number of companies is anywhere near 

that, this should raise a red flag not just in the terms of workers 

and in terms of law-abiding businesses, but also in terms of taxpayers and taxpayer value. 

Ms. BONAMICI. Terrific. Thank you very much. 

And I want to follow up on the conversation that Ranking Member Scott was having with you and Mr. Soloway, because it sounded like you acknowledge that there are some current federal contractors, or have been federal contractors, with labor law violations. 

But then I also hear people saying we have a system that works 

and so we don’t need this executive order. 

So do you want to explain, if there are federal contractors with 

labor law violations, how that is consistent with witnesses saying, 

‘‘We have a system; we don’t need the executive order?’’ 

Mr. SOLOWAY. Of course there are contractors with violations. 

There are contractors with violations from five years ago or 10 

years ago. There are contractors with violations driven by the fact 

that the government forgot to put the contract clause in to tell 

them what—that they were subject to the Service Contract Act or 

the Davis-Bacon Act. 

When you say ‘‘violation,’’ this is one of the fundamental problems with the executive order. We are taking the fact of a violation 

and equating it to intent, whether it is nefarious or administrative. 

It is widely accepted in both government and industry—and I am 

talking about the Department of Labor when I talk, the Wage and 

Hour Division. We do training on the Service Contract Act with the 

Department of Labor three times a year, and it is widely accepted 

that there are administrative errors made all the time on both 

sides. But every one of those errors equates to a violation, so it 

would be listed as a violation. 

So we are using terminology here a little too freely. 

Ms. BONAMICI. Understood. I want to ask one more question. 

There is some testimony about how a number of states—New 

York, Minnesota, Massachusetts—have required labor compliance 

reviews, and there—in fact, it has increased competition in some 

of those states. 

Can you, Mr. Soloway, and then I want to ask Ms. Styles also, 

how do those differ from the executive order? 

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Mr. SOLOWAY. I am not familiar with each of the states, but I 

can tell you that a number of states that have looked at this kind 

of an approach don’t have prevailing wage laws to begin with. 

Some do, some don’t. 

Ms. BONAMICI. Ms. Styles? 

Ms. STYLES. I think it is an issue of the number of laws that they 

are reviewing and making certifications to. So you take what we 

have in the federal government, which is almost 100,000 contract 

actions over $500,000 every year, then you take what it looks like 

the executive order is saying with regards to the number of labor 

violations, the potential violations, and you multiply that by 50. 

And so I think it may be that it is simply easier to administer 

and they have created an easier-to-administer system at the state 

level. 

Ms. BONAMICI. I just want to say, if there is a model for labor 

compliance reviews that is working and that is increasing competition, that has the potential to make sure that contractors with 

labor law violations do not get federal contracts, we should be 

doing that. It is important to preserve taxpayer dollars and make 

sure that the contractors have a good record on labor laws. 

So I look forward to working on this Committee to make sure 

that we implement the executive order. 

And I have a few seconds left. Ms. Walter— 

Ms. WALTER. One quick point: Most of these state laws, they are 

looking at federal law compliance and state law compliance. So 

they are looking at a myriad of laws. 

Ms. BONAMICI. Terrific. Thank you. 

Sounds like we have the same goal on mind. I think we can get 

there. 

Thank you, Mr. Chairman. I yield back. 

Chairman WALBERG. Thank the gentlelady. 

Now I recognize the gentleman from Georgia, Mr. Allen. 

Mr. ALLEN. Thank you, Mr. Chairman. 

And I feel like I should be down giving testimony. I have been 

in the contracting business for 37 years and I have to say, we did 

one job for the federal government and promised our people that 

we would never do that again. And the reason for it is because of 

the compliance requirements that I felt like were a total waste of 

taxpayer money. 

Now, how we can continue to add compliance to contracts when— 

and save taxpayers money, I don’t know how that works, but I can 

tell you, I am a witness to see, you know, some of the things were 

just maddening, particularly when it comes to the thing about even 

contractors in the private sector—which we were in business 37 

years and, you know, we paid overtime because—not because the 

law required it, but because it was the right thing to do, for crying 

out loud. 

And I can’t imagine a contractor out there who is not paying lawfully overtime. I mean, it just—because there are so many complying agencies that require that reporting, and the opportunities 

for folks to go and get relief from that sort of thing. 

But anyway, since—Mr. Goldsmith, you know, the federal agencies have been found to violate federal labor law, and can you talk 

about how onerous and expensive compliance regulations imposed 

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by executive order would drive many employers away from contracting and how this will hurt the taxpayer, as well as the employees who work for them? 

Mr. GOLDSMITH. Well, I don’t think that there is any question 

but that the executive order would add significant compliance burdens on potential federal contractors, and as a result, significant 

cost. And much as you did in your business, I don’t doubt that 

there would be any number of otherwise highly qualified contractors that would choose to exit the federal contracting business because it is just not worth it, on top of every other federal and state 

and local obligation that they have to meet. 

And with respect to overtime, there has been a lot of talk about 

overtime and the Fair Labor Standards Act. I would just like the 

record to reflect that the Fair Labor Standards Act has been 

around since the mid-1930s and it is the statute that now is the 

subject of more litigation probably than any other in the labor and 

employment field because people just don’t understand it. 

So not paying overtime does not in any way suggest that there 

is an intent not to pay overtime. It suggests that there is a complexity in a workplace with respect to hours of work and how those 

hours of work are calculated. 

And I think part of the problem with this discussion this morning is that there has been an extraordinary amount of kind of loose 

talk, in my judgment—that is to say, talking about reports and 

linkages and severity and willful— without any appreciation of the 

underlying facts, which actually count in these assessments, as to 

how that might affect the performance of a contractor. 

And so far as I am concerned, there is absolutely no linkage that 

I am aware of. I have never read a report or a study that is at all 

credible that suggests that there is a linkage of any sort between 

a contractor’s failure to, in the eyes of a Department of Labor investigator, to not pay overtime properly and that contractor’s performance. 

It is easy to say; it is not so easy to prove. And I think that is 

the problem. 

We are talking about words, we are talking about contractors, we 

are talking about facts, and you can’t just pull all of this out of context and assume that just because you say it is so, it is so. I don’t 

know what report Ms. Walter was talking about that suggests that 

there is linkage. I would like to know. 

Thank you. 

Mr. ALLEN. Thank you, Mr. Goldsmith. 

Ms. Styles, your testimony outlines seven new steps that must 

occur before a contracting officer can award a contract under this 

new scheme. You also note the new burdensome reporting requirements for both prime and subcontractors. Can you estimate the 

cost on federal contractors to gather and maintain this information? 

Ms. STYLES. I cannot estimate the cost, although it has got to be 

substantial, particularly in the context of trying to determine if 

your subcontractor is responsible. I mean, that just is an extraordinary requirement to add to a prime contractor to do that with all 

of their subcontracts over $500,000. 

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Mr. ALLEN. How about the cost imposed on the government to 

ensure contracting officers are reviewing all this information and 

delays this will cause in the procurement system? 

Ms. STYLES. Well, I certainly can’t estimate that. It seems like 

an extraordinary thing to ask our already overburdened contracting 

officers to go through all these steps, and to put new labor compliance advisors in place to go through all these steps as well. 

Mr. ALLEN. Plus the fact they are arbitrary. 

Ms. STYLES. Yes. They are very subjective. I will say, they are 

very subjective. 

Mr. ALLEN. Yes. 

Mr. Chairman, I yield back my time. 

Chairman WALBERG. I thank the gentleman. 

Now I recognize the gentleman from Wisconsin, Mr. Pocan. 

Mr. POCAN. Thank you very much, Mr. Chairman. 

Mr. Allen, you have nine years on me in business. I am 28 years 

in May, so congratulations to you. 

And, you know, I come here as a member of actually three local 

chambers back home, and I got to tell you, I personally see it very 

different from a business perspective. I see it from the perspective 

of what we are actually finding in real application in places like 

Maryland. 

I am more likely to bid on something knowing that I am doing 

a fair bid, that I am bidding at the same level playing field—not 

someone who is cutting the corners, not someone who is doing 

something else. And I do bids with local and state government. Obviously I can’t do federal ones because of my job, but we do a lot 

of local and state. 

So I kind of—when I listen to some of the words that have been 

used about the process—that it is chaos, aggressive regulations, 

vast bureaucracy, it is going to divert resources, this is a robust 

process—and when I look at as I understand the process, if I have 

no labor violations—and by the way, Mr. Chairman, I would have 

loved to have on this panel—we are lawyered up today, which is 

great, but I would have loved to have seen some contractors here, 

perhaps, that—especially contractors maybe that have a violation 

and not paying overtime, because I would love them to discuss that 

and why they think they should get another contract of our taxpayer dollars while they are in violation of federal law. I— 

Chairman WALBERG. If the gentleman will yield, I would answer 

that. 

Mr. POCAN. Or in a future hearing would be fine, too— 

Chairman WALBERG. Well, we mentioned that we would love to 

have them here, but they were afraid to be in front of the panel. 

Mr. POCAN. And, you know, that is a problem, Mr. Chairman, 

isn’t it, right? That alone speaks volumes, that the very contractors 

who violate the law don’t want to come before a Committee to actually speak the truth. 

Chairman WALBERG. These were contractors in general who 

feared retribution. 

Mr. POCAN. Well, I am watching all the contractor associations 

today that came out in support of this because they have got members, hopefully like my business and the people who I belong to at 

my local chambers who are law-abiding businesses, who want to 

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compete for contracts fairly but we don’t want to compete unfairly 

when it comes to that. 

So my first question, Ms. Walter, what exactly is the process for 

someone like me? If I have no labor violations and I am competing 

in this, what does the chaos, aggressive regulations, and diverting 

of resources I am going to be involved with on a putting something 

in if I was a federal contractor? 

Ms. WALTER. You will check a box. 

Mr. POCAN. Let me just try that. 

That was the compliance right there? 

Ms. WALTER. Yes. 

Mr. POCAN. All right. I am going to do it for another business. 

Yes. I just did it for two businesses who follow the law, right? 

Okay, then if I do have something that I can’t check the box, 

does that mean I am automatically banned from being able to be 

a federal contractor? 

Ms. WALTER. Certainly not. It means that the federal government will take a closer look. 

Mr. POCAN. And a closer look, so it is not automatic. Instead, it 

is allowing them to enter a process, if I understand, to perhaps improve the law. 

And if they really are a business who just has something that 

ran a little astray and they are trying to get back in compliance, 

doesn’t this set up a process for them? 

Ms. WALTER. There will be a process for that, and there will be 

a process for contracting officers who are not expert in every single 

law to look to experts to get some guidance. 

Mr. POCAN. And let me just, if I can for a second—Mr. Goldsmith 

talked about that you had the linkage on the last question. Would 

you mind addressing that? 

Yes, Ms. Walter. 

Ms. WALTER. Say it again? 

Mr. POCAN. Mr. Goldsmith mentioned that you didn’t refer to the 

linkage. You had it but you didn’t— 

Ms. WALTER. Oh, I am sorry. The report. 

Mr. POCAN. Yes. 

Ms. WALTER. The report finds that one in four contractors with 

these problems also have performance problems. We cannot establish a causal relationship; that would be very difficult. 

And we would love to see better data coming out from the government so we could look at a larger universe, but that simply— 

you know, Mr. Soloway has pointed out that there are opportunities for better data. We fundamentally agree. 

Mr. POCAN. Sure. Wasn’t there also a New York study, the Fiscal 

Policy Institute? Could you just talk about that for a second? 

Ms. WALTER. Certainly. They found that contractors were—with 

labor law violations were five times more likely to have performance problems. 

And 30 years ago the HUD inspector general actually came to 

similar results looking at HUD projects, finding that there was an 

increased performance problems in companies that had workplace 

law violations. So we were not the first to find this relationship. 

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Mr. POCAN. Well, and again, Mr. Chairman, that is part of it. As 

a business owner I want to have a level playing field. I want every 

business to have that level playing field. 

But it becomes an unlevel playing field when someone who can 

violate the law and, by violating the law, cut some corners, get a 

better bid, and this is something that I see as pro-small business. 

And I—certainly I disagree with the lawyer for the Chamber, but 

as a small business owner, since I had hair, you know, 23 years 

old starting up a business, that is exactly what I want in place. 

And that is probably why these contracting organizations want this 

in place. 

And, Mr. Chairman, I hope that if we have another hearing on 

this if there is a way to compel some of these contractors who have 

violated the law, I—it would be great to have them in front of us 

to explain why they think they should still be eligible for federal 

contracts while they are in violation of safety and labor practices. 

I yield back. 

Chairman WALBERG. Would the gentleman yield? 

Appreciate the time. 

Let me just—Mr. Soloway, respond to that if you would, please, 

because you are the only contractor, as it were, here today. 

Mr. SOLOWAY. Mr. Pocan, we are the largest organization of government contractors, professional services, technology firms—large, 

small, medium-sized—and our members are universally opposed to 

this not for the reasons you think. They are opposed to it because 

of the regime it creates and the unfairness it structures. 

You are confusing violation with administrative errors, complexity of implementation. So I—it is a much longer conversation, 

but I think that there is a universal concern amongst our membership. 

Chairman WALBERG. I thank the gentleman. 

Now I recognize the gentlelady from Massachusetts, Ms. Clark? 

Ms. CLARK. Thank you, Mr. Chairman. 

And thank you, to all the panelists, for being here today. 

My first question is for Ms. Walter. We know that two-thirds of 

low-wage workers, who are the most vulnerable to poor labor practices, are women. And we know that, according to some estimates, 

firms that contract with the federal government hire approximately 

22 percent of the entire American workforce. 

So if we are able, through this executive order, to raise our labor 

standards, what do you think the effect would be on working 

women in this country? 

Ms. WALTER. Well, I think that, you know, there are plenty of 

working women here who can tell you their personal stories of 

what the effect would be to know that they are going to take home 

a higher paycheck because it is the wages they have earned. Not 

because we are requiring contractors to raise wages, but because 

they have worked hard and they are getting the wages they have 

earned. They have the powerful stories here, and I think that this 

is the reason why we are here. 

Ms. CLARK. And do you think this would have a net effect on pay 

equity across the country for women? 

Ms. WALTER. I would certainly hope so. 

Ms. CLARK. Yes. 

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Mr. Goldsmith, I was caught by part of your written testimony 

when you were talking about Section 6 of this executive order that 

bans for, in certain circumstances, compulsory arbitration, pre-dispute arbitration clauses, for sexual assault and sexual harassment. 

You wrote in your testimony that this encroaches on employers’ 

rights. 

I just want to be sure I understand your position and that of the 

U.S. Chamber. Is it your position that the executive order’s prohibition on contracting with companies who require compulsory predispute arbitration of sexual assault and sexual harassment claims 

should be overturned? 

Mr. GOLDSMITH. It is my position that the courts have uniformly 

permitted employers to require arbitration in connection with all 

manner of employment disputes, whether it is sex harassment, 

whether it is race discrimination, whether it is age discrimination, 

whether it is disability discrimination, whether it is anything else. 

That regime has been in place for a long time. It has existed certainly with the sanction of the support of the Supreme Court in the 

Gilmer Case in 1991, and it continues to exist today. 

So to the extent that this executive order suggests that with a 

contract of over $1 million you cannot have any kind of arbitration 

process to resolve the employment disputes, it simply flies in the 

face of volumes and volumes of cases in all—basically all of the circuits. So it is wrong, and it seeks to overturn that. 

Ms. CLARK. In basically all of the circuits. There is a 5th Circuit 

case, right, that has—the Jones versus Halliburton—that did not 

allow arbitration to cover sexual assault. Is that right? 

Mr. GOLDSMITH. I don’t know that case. I believe I read it when 

it came out. I would be happy to read it again and tell you if I 

agree or not with your assessment of it. 

Ms. CLARK. So basically, your position is that pre-dispute arbitration, no matter what the incident, whatever kind of intentional tort 

may occur in the workplace, is a work-related incident that should 

be covered under arbitration. Is that right? 

Mr. GOLDSMITH. Well, that begs the question of intentional tort. 

It is absolutely common throughout businesses large and small in 

the United States to have a regime in place where there is an arbitration process to resolve all manner of workplace disputes. 

If there is an intentional tort—I am not sure exactly what you 

mean by that, but if there is an intentional tort, you know, the punitive plaintiff may have other opportunities and there may be 

ways in which that punitive plaintiff can circumvent the arbitration clause. But as a general proposition, there is no question in 

my mind—none—that this provision in the executive order that 

seeks to preclude employers from having pre-dispute arbitration to 

resolve employment disputes for those contracting in excess of $1 

million flies in the face of the overwhelming majority of courts’— 

district courts, courts of appeals, and the United States Supreme 

Court—decisions. 

Ms. CLARK. Can you think of an example where a sexual assault 

in the workplace would not be an intentional tort? 

Mr. GOLDSMITH. I don’t know what—this is why I say facts matter. I don’t know what you mean by ‘‘sexual assault.’’ You know, 

there are plaintiff’s lawyers who have all manner of theories about 

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what is and isn’t sexual harassment, sex discrimination, sexual assault. 

If you give me the facts, I will be happy to take a—I will be 

happy to give you my thoughts. But I don’t know what you mean 

by ‘‘sexual assault.’’ 

Ms. CLARK. I see my time has expired. 

Chairman WALBERG. I thank the gentlelady. 

Now I recognize the gentleman from California, Mr. DeSaulnier. 

Mr. DESAULNIER. Thank you— 

Chairman WALBERG. Did I get close to that? 

Mr. DESAULNIER. I get asked that every time a chair— 

Chairman WALBERG. That was my first opportunity to say it. 

Mr. DESAULNIER. Anything close, with a name like mine, I will 

respond. 

I want to associate my comments with both Mr. Allen and Mr. 

Pocan, as somebody who spent somewhere around the same period 

of time owning businesses and is still responsible for businesses. 

Mr. Soloway, you said in your testimony—I am reading from it: 

Logically, it is unfair for contractors with repeated, willful, and 

pervasive violations of labor laws to gain competitive advantage 

over the vast majority of contractors who are acting diligently and 

responsibly to comply with complex web of labor requirements. 

So in my previous elected office in California we did a lot of work 

around the underground economy and found that the contractors 

and the employers who violated labor laws were also violating 

health and human service—health and safety laws. So my question 

to you is—and we also found that some of the things that you suggested and Mr. Goldsmith suggested from our chamber was true, 

that for a small business, which I was one, although never dealt 

very much with the government directly on contracts, that they 

needed more help getting through it. 

So two-part question: I am assuming that all of us want to get 

rid of the bad actors, the ones that, in my perspective, sometimes 

take a fairly sophisticated risk management approach to whether 

they are going to get caught or not, and then also sort of take the 

fines as a cost of doing business. 

So knowing that your members, most of them, are doing the 

right thing, what are you doing first to educate smaller members 

so they don’t get those administrative violations? And secondly, 

what are you doing to make sure that most of your members—I 

think you would have a political problem if you weren’t being aggressive to those people were repeatingly, as you suggest, have an 

unfair competition? 

Mr. SOLOWAY. We spend a great deal of time internally on this. 

As I said earlier, three times a year we conduct major training on 

the Service Contract Act, which is the principal of the prevailing 

wage laws, I mean, that affect our membership, because we are on 

the services and technology side. 

We do training in partnership with the Department of Labor 

Wage and Hour Division on the Service Contract Act. We sell out 

every single course, and it is an enormous mix of small, medium, 

and large companies because everybody faces the same complexity. 

We have done numerous programs on government ethics requirements, government compliance requirements. If I went through for 

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you the list of compliance requirements that a government—a federal government contractor would have to face, I could be fairly certain that there would be very few states in the country that would 

match the list, although California has some fairly—has recently 

put in place some new laws. 

But the second thing I would say—and I just want to urge the 

committee to keep this in mind: When we talk about the biggest 

violators of these laws—and one example that was used was KBR 

as a—one of the major violators, at $1 million in either 

misclassified or wage theft or whatever term you want to use, that 

is against the baseline of billions, literally, with a ‘‘b,’’ in salaries 

they were paying over that period of time. So I am not excusing the $1 million. I don’t know if it was intentional, if it was a technical error or an administrative error, but 

does that make it a pervasive problem just because the number 

sounds big? You could have a small business that has 10 people 

that it underpaid and it might be half their workforce. 

So you have to be really careful. These numbers are being 

thrown around today that are—that really—the interconnectivity is 

not at all clear. 

But to answer your question, we spend an inordinate amount of 

time as an organization, and I think it is fair to say Ms. Styles and 

Mr. Goldsmith and their firms spend an inordinate amount of time 

with their clients trying to coach them through what is an incredible complex thicket. 

Mr. DESAULNIER. Have you found clients that had a pattern of 

avoiding labor laws that you no longer—you refuse to— 

Mr. SOLOWAY. The ones that I am aware of that have actually 

had a pattern of willful abuse of labor—or other laws, by the way— 

have been suspended or debarred, and many of them have gone out 

of business. And some of them, of course, come back because they 

have taken remedial action. 

Mr. DESAULNIER. Have you ever found any of your clients— 

Mr. SOLOWAY. I am sorry? 

Mr. DESAULNIER. Have you ever found any of your clients to do 

that, and have you taken action to— 

Mr. SOLOWAY. I don’t have a legal authority to take action. I am 

not quite sure what I would— 

Mr. DESAULNIER. Well, just, if you think there is a law being violated do you have a legal obligation to tell the authorities? Have 

you ever had occasion to do that? 

Mr. SOLOWAY. I wouldn’t have that kind of knowledge, personally. 

Mr. DESAULNIER. Okay. 

Mr. Goldsmith, similar, the Chamber we found in California that 

a lot of it was actually education, so the Chamber and NFIB actually spent money trying to help people. Have you done the same 

thing? 

Mr. GOLDSMITH. Absolutely. Our clients, especially our larger clients—have large and highly skilled human resources staffs who 

spend virtually all of their time in training their direct reports, and 

their direct reports training— 

Mr. DESAULNIER. Mr. Goldsmith, I am going to take that as a 

yes. I appreciate it. 

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Ms. Walter, we have talked about overreach. Do you have any 

opinions on under-reach by previous administrations when it comes 

to enforcement of compliance laws? 

Ms. WALTER. Well, I think our—currently we are under-reaching. 

We have responsibility compliance laws. 

I think the other panelists have focused on, well, we have suspension and debarment. Well, we also in our regulations have responsibility provisions because we want to uphold high standards, 

we want to protect taxpayer dollars. 

Companies are already required to report into a database. They 

are already required to update that information every six months. 

They are already responsible for their subcontractors. 

But the system is not working. It is not working because they are 

not reporting what is important. And the system is not working because contracting offices don’t have analysis about what is important, and they don’t have guidance, and they don’t have the technical expertise they need that this new order will help institute. 

Mr. DESAULNIER. Thank you. 

Chairman WALBERG. Thank you. Time is expired. 

I recognize the gentleman from New York, Mr. Jeffries. 

Mr. JEFFRIES. Thank you, Mr. Chair. 

And I want to thank the witnesses for their presence and testimony here today. 

Think I will begin, Mr. Goldsmith, by just picking up on the previous line of questioning from my colleague, Representative Clark. 

I think you indicated that you are concerned with the inclusion of 

the pre-dispute arbitration category as a criteria, correct? 

Mr. GOLDSMITH. That is correct. 

Mr. JEFFRIES. And you have indicated, I believe, that courts have 

concluded in large parts of the country, although there is some dispute as to the 5th Circuit’s perspective on this, that pre-arbitration 

clauses are permissible. True? 

Mr. GOLDSMITH. Correct. 

Mr. JEFFRIES. But I think that there is a distinction between 

what is permissible and what there is a right to do. And is it your 

position that employers and contractors have an absolute right to 

mandate that their employees sign off on a pre-dispute arbitration 

clause? 

Mr. GOLDSMITH. I am not sure I understand the distinction between an absolute right and a right, but it is certainly well-established in the law that employers can insist upon, if you will, a predispute arbitration provision. 

Mr. JEFFRIES. Right. The dispute is not between— 

Mr. GOLDSMITH. It has been the law for a long time. 

Mr. JEFFRIES. The dispute is not between an absolute right and 

a right. The dispute is between the opportunity to do something 

that is lawful and whether you have an absolute right to. 

You have an absolute right not to be discriminated against, but 

you don’t necessarily have an absolute right to secure certain contracting opportunities from the federal government, correct? 

Mr. GOLDSMITH. And I think that is true. I agree with that. 

Mr. JEFFRIES. So then it is not clear to me how you can take 

issue in the context of a duly elected President’s administration, 

elected twice, coming to the public policy conclusion that it is not 

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necessarily appropriate in certain instances to mandate that employers require pre-dispute arbitration. 

Let me turn to— 

Mr. GOLDSMITH. May I respond to that? 

Mr. JEFFRIES. Yes, certainly. 

Mr. GOLDSMITH. I mean, the problem with that is that it is not 

the President’s call; it is Congress’ call. And it is especially the case 

when you are talking about well-established legal precedent. 

And I would also suggest that to the extent that a provision like 

that exists in this executive order, which, as I said, you know, can’t 

be tweaked to be saved, that is going to discourage employers— 

large employers—from the federal contracting space, which can’t be 

a good thing for the country or the taxpayers. 

Mr. JEFFRIES. Is there any evidence, Ms. Walter, to suggest that 

the interest in federal contracting opportunities, which can be pretty lucrative in this country—we are talking about hundreds of billions of dollars, presumably, each and every year, if not more—is 

there any evidence to suggest that the interest or the lines will dry 

up because of this executive order that has been put in place? 

Ms. WALTER. None that I have seen. I have addressed the state 

examples of states instituting these sorts of provisions. I am not familiar and I am not as familiar with the pre-arbitration requirements being instituted at the state level, but efforts at the state 

level to uphold higher responsibility levels among contractors have 

been met with either what we have seen as no change or actually 

increasing levels of competition. 

Mr. JEFFRIES. And it seems to me that this executive order is designed to promote at least three values that I think should be important to the Congress and to the American people—you know, 

protect employees from harmful conditions at the workplace, protect taxpayers from the integrity of these contracting opportunities 

to ensure that those that receive the opportunity to contract with 

the federal government are deserving within the framework of law 

and statute that already exists, and then, of course, just to make 

sure that any business benefitting from taxpayer dollars are, in 

fact, law-abiding. 

I mean, does this strike you as the intent and the goal of the executive order, and are these worthy goals? 

Ms. WALTER. Certainly. And it is continuing further down the 

path of what Congress did when it enacted the contractor responsibility database, where it is trying to uphold higher standards 

among contractors to protect taxpayers. 

Mr. JEFFRIES. Are you aware of anything in law, statute, common law, Supreme Court jurisprudence, the Constitution, that provides an absolute right to contractors in America to federal contracting opportunities? Is it a right or is it just an opportunity 

within the parameters of what is established by the Congress, the 

administration, or both? 

Ms. WALTER. What has been established by Congress is that you 

have to be considered responsible in order to receive a federal contract. There hasn’t been good definitions about what that means, 

in terms of business integrity, to date. 

All this does is add to that definition so that contracting officers 

can make an informed decision. 

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Mr. JEFFRIES. Thank you, Mr. Chair. I yield back. 

Chairman WALBERG. I thank the gentleman. 

And now I recognize a member who is not a member of this subcommittee but has a interest in it, and we are delighted to have 

him here, the gentleman from Arizona, Mr. Grijalva. 

Mr. GRIJALVA. Thank you very much, Mr. Chairman, and for 

your courtesy in allowing me to participate in this meeting. 

And thank you, to the witnesses. 

We have talked a lot about the impact of the executive order on 

the function of business and the function of federal contractors. 

There is a concurent effect as well, and that is the effect on workers that have been affected by wage theft and have been affected 

by a process currently in the Department of Labor where the authority doesn’t exist for disbarment or for the compliance issues 

that the executive order is bringing up. 

Antonio Banejas, from my district, who is not here in D.C., came 

in 2010 and worked until May 2013 at the Reagan Building at a 

fast-food establishment. He did everything—cooked, cleaned, handled the register. And he was working over 60 hours a week and 

not being paid overtime. 

Antonio and others stood up to complain and to use their collective voice to say, ‘‘We need fair labor practices here and we need 

to be paid for what we work.’’ The consequence of that is Antonio 

was then turned over to Immigration by the business; he was detained for four days, released, and now two years later that wage 

theft complaint is still waiting to be resolved. The executive order 

means to expedite that. 

And I should—my friend, Mr. Ellison, left, and through his leadership, on four separate occasions Congress approved an amendment either by voice or by roll call that essentially has the outlines 

of the content of the executive order on wage theft and what—and 

disbarring businesses who do that. Four times, including—all appropriations bills, and including the appropriations for the Department of Defense, where those are the big contractors. 

Department of Labor is a smaller player, other departments 

smaller player. The Departments of Defense and Homeland Security are the big contracting players, and I mention that because if 

I may, Mr. Soloway, ask you a question—Raytheon-Abouie, through 

their subcontractors you have a bad actor in violation of current 

law, wage law, in violation of other issues. 

That big actor that gets hundreds and hundreds of millions of 

dollars of contract work—essential work for the Department of Defense—their responsibility without this executive order to police, 

for lack of a better word, and assure that their subs are treating 

their employees in a fair way, consistent with the current law, how 

does that happen if there is no accountability to the big contractor 

to essentially make sure that none all the way down the hundreds 

of millions of workers are not being shortchanged or abused in the 

workplace? 

Mr. SOLOWAY. They can have, under current law, tremendous responsibility for that. I have to go back to the premise of the statement, sir, because I think several of you— 

Mr. GRIJALVA. Well, but— 

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Mr. SOLOWAY. I am going to answer your question. I understand. 

But— 

Mr. GRIJALVA. Chairman was courteous enough to give me a few 

minutes. 

Mr. SOLOWAY. I think the answer is that this rule, or this proposed executive order and the proposed rule that will implement it, 

doesn’t change current policy. 

But you made the comment that you—that the Department of 

Labor doesn’t currently have the authority. It has all the authorities it needs. The length of time to adjudicate whatever is happening at the Reagan Center, which has not yet been adjudicated, 

which is indefensible, that length of time, doesn’t get changed and 

expedited by this executive order. 

What this executive order does is open the door to expedition by 

saying, ‘‘Okay, well if you have been alleged or you have had several violations you are bad.’’ That is a whole different standard. 

Mr. GRIJALVA. Ms. Walter, to the point that the gentleman is 

making, if there is such a mechanism—a functioning mechanism to 

disbar and suspend contractors, why is this whole executive order 

needed then? 

Ms. WALTER. Well, I mean, I think the executive order is about 

present responsibility. So we are talking about is the contractor responsible in the present tense? 

And so if there are warning signals that they are—they may not 

be responsible, it is something that the government should take a 

closer look at. 

Mr. GRIJALVA. Thank you. And I think you have made that point 

over and over again. I think the executive order does that—shed 

light, and in the present tense—and thank you for that phrase— 

to begin to create some balance between the interests of the workers and the interests of the contractor. 

With that, Mr. Chairman, again, thank you for your courtesy, 

and I yield back. 

Chairman WALBERG. I thank the gentleman. 

And now I recognize the Ranking Member, Ms. Wilson from Florida, for closing statements. 

Ms. WILSON of Florida. Thank you, Mr. Chair. 

I would like to thank all of our witnesses for testifying and answering our questions today. 

And I want to thank the workers for attending this hearing and 

for your attention, and we appreciate all that you do and appreciate that you are here with us. 

President Obama’s Fair Pay and Safe Workplaces Executive 

Order has widespread support in the public and private sectors. 

The executive order lays out ways that the Department of Labor 

can provide compliance assistance or remedial measures to contractors who are struggling to adhere to labor laws. 

I personally believe that this is more than fair. Our nation’s children can fail, according to federal standards, after a single assessment. They call it high stakes. Yet government contractors are 

given chance after chance to receive multimillion dollar contracts 

while continuing to blatantly abuse labor laws. 

Last year the Miami Herald and McClatchy newspapers conducted a year-long investigation in Florida and 27 other states and 

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135 

found that unethical contractors worked on taxpayer-funded building projects even as they ignored labor laws and avoided paying 

state and federal taxes. This is a no-brainer. 

If you want to do business with the federal government, you 

must obey federal laws. It is critical that we support law-abiding 

companies, that we support our workforce, and that we eliminate 

inefficiency and waste in government. This will lead to a stronger, 

healthier, and more productive nation. 

This executive order will improve the lives of millions of workers, 

helping to ensure they have access to fair pay, benefits, and safe 

working conditions. For those who suggest that this process will be 

too burdensome, there is a simple solution: Comply with the law. 

Comply with the law. 

If you comply with the law you can check the box indicating that 

there are no violations and that your company wants to uphold 

high standards. 

I would like to enter the following documents into the record 

under unanimous consent: the President’s Executive Order on Fair 

Pay and Safe Workplaces; letters from 68 women’s organizations; 

the Leadership Conference on Civil and Human Rights; and the 

Campaign for Quality Construction in support of the Fair Pay and 

Safe Workplaces Executive Order; Center for American Progress— 

‘‘At Our Expense: Federal Contractors that Harm Workers Also 

Shortchange Taxpayers;’’ Government Accountability Office—‘‘Assessments and Citations of Federal Labor Law Violations by Selected Federal Contractors;’’ and Senate HELP Committee report— 

‘‘Acting Responsibly? Federal Contractors Frequently Put Workers’ 

Lives and Livelihoods at Risk;’’ McClatchy newspapers—‘‘For Florida Companies That Play By the Rules, Success is as Tough as 

Nails.’’ 

[The information follows:] 

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Ms. WILSON of Florida. Thank you, Mr. Speaker—Mr. Chair. 

Chairman WALBERG. I thank the gentlelady, and I would appreciate not being given that title. 

I too want to thank the members—witnesses who are here today. 

I appreciate your time and attention from all sides of the issue, to 

speak to us, to listen to our questions and concerns, and to sit 

there and wish that we asked some other questions, as well, to get 

the nub of it. We will have that opportunity. We would appreciate 

your response. 

The letter that I received from multiple business organizations— 

H.R. Policy Association, U.S. Chamber of Commerce, Professional 

Services Council, American Hotel and Lodging Association, Trucking Association, contractors, et cetera, et cetera—expressed the concerns of this entire Committee, that definitely we want to make 

sure that bad actors in the contracting field don’t remain as bad 

actors in the contracting field—that they are removed or they benefit from the training and the resourcing that can be given using 

present law that is in place, using the capabilities that ought to be 

there with our agencies to instruct them in very difficult—very difficult law that is in place to protect employees, the workplace, as 

well as the employers. 

We have heard testimony that there are associations and client 

bases that are being trained, but that ought to come from our government level, as well. And I think that is where my concern comes 

with this executive order. 

It is based upon the fact—and I think I would quote what the 

President said in his executive order, that he said that the vast 

majority of federal contractors play by the rules. But he also said 

that they would not—they would likely not be impacted by it. I disagree with that. 

I agree with the fact that the vast majority of our contractors do 

play by the rules. And even those that sometimes find themselves 

in violation of rules simply because they weren’t told the rule or 

they weren’t instructed in the rule, yet want to play by the rules. 

But these who are good actors and play by the rules will be impacted by this executive order. There is no way that they won’t. 

And so my concerns, as we take up this order, are several, and 

I will just sift them down into just a few. 

I am concerned about the lack of due process protections under 

the executive order, that we will have a situation where self-reporting requirement to go back, at great risk of not knowing every single incidence that a subcontractor, for instance, might have run 

amuck of some rule or some policy, in many cases through no fault 

of their own, just not being aware of it. All of a sudden we have 

due process concerns that innocent—that our—these contractors 

are considered guilty until proven innocent. I have got a concern 

about that. 

I have a concern about burdensome reporting requirements 

added on top. And if we are concerned about employees having 

their jobs and having the security of their jobs, if we are concerned 

about minority and women-owned businesses, for example, of being 

able to continue to contract, and yet in general, in most cases, 

being small entities without the ability to have vast resources of 

legal backup and background to ferret them through the process of 

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the contracting with this executive order and the great burden that 

that puts on, specifically in the area of making a mistake through 

no fault or no effort of their own, and now running amuck of this 

executive order and the new provisions. I have a concern with that. 

But I think I also have a concern with the fact that this is an 

administrative order that very likely has illegal ramifications. And 

I stand here as—or sit here as a member of Congress, very concerned that, Democrat or Republican, that we continue to uphold 

the primacy of the People’s House, the People’s Congress, the Article 1 of our Constitution, with significant responsibilities for all of 

these laws that we protect the people we represent and we don’t 

give over that authority to Article 3, the executive office, without 

the authority being given by the Constitution to the President. 

I know that can be battled in the court of law, and I am afraid 

that if this executive order is implemented there will be plenty of 

court battles, indicating that, in fact, this administration overstepped their bounds of authority. 

The unprecedented level of subjectivity introduced into the responsibility determination process of this executive order and the 

possible consideration of non-final adjudications establishes the executive order as an anti-competitive administration initiative that 

I believe will greatly impede government contracting. And that is 

my concern, and that is why I am glad we had this hearing today. 

This isn’t the end. And I can say for employer and employee 

alike, we want to get down to the problem to make sure that we 

use the present law effectively to protect all concerned, but also 

make sure that we don’t allow impediments to come in with good 

intentions that will hurt all aforementioned. 

So, having stated my piece right now and having heard the questions and the responses and the testimonies, with no further business to come before the subcommittee, it is adjourned. 

[Additional submissions by Mr. Walberg follow:] 

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[Additional submission by Ms. Walter follows:] 

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[Questions submitted for the record:] 

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[Response to questions submitted for the record:] 

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[Whereupon, at 12:15 p.m., the subcommittees were adjourned.] 

Æ 

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