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96–853 2015

THE BLACKLIST: ARE SMALL BUSINESSES GUILTY 

UNTIL PROVEN INNOCENT? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CONTRACTING AND 

WORKFORCE 

JOINT WITH THE

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT 

AND REGULATIONS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

SEPTEMBER 29, 2015 

Small Business Committee Document Number 114–023 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

TOM RICE, South Carolina 

CHRIS GIBSON, New York 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

CARLOS CURBELO, Florida 

MIKE BOST, Illinois 

CRESENT HARDY, Nevada 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

YVETTE CLARK, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRENDA LAWRENCE, Michigan 

ALMA ADAMS, North Carolina 

SETH MOULTON, Massachusetts 

MARK TAKAI, Hawaii 

KEVIN FITZPATRICK, Staff Director 

STEPHEN DENIS, Deputy Staff Director for Policy 

JAN OLIVER, Deputy Staff Director for Operation 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Richard Hanna ................................................................................................ 1 

Hon. Crescent Hardy ............................................................................................... 2 

Hon. Mark Takai ..................................................................................................... 3 

Hon. Alma Adams .................................................................................................... 4 

WITNESSES 

The Hon. Angela B. Styles, Chair and Partner, Crowell & Morning, Washington, DC ............................................................................................................. 5 

Mr. Theron M. Peacock, P.E., BSCP, Senior Principal/President, WOODS/ 

PEACOCK Engineering Consultants, Alexandria, VA, testifying on behalf 

of the American Council of Engineering Companies ......................................... 7 

Ms. Debbie Norris, Vice President, Human Resources, Merrick & Company, 

Greenwood Village, CO, testifying on behalf of the Society for Human 

Resource Management ......................................................................................... 8 

Mr. William J. Albanese, Sr., General Manager, A & A Industrial Piping, 

Inc., Fairfield, NJ, testifying on behalf of the Mechanical Contractors Association of America and the Campaign for Quality Construction ...................... 10 

The Hon. Anne Rung, Administrator, Office of Federal Procurement Policy, 

Office of Management and Budget, Washington, DC ....................................... 20 

Mr. Lafe Solomon, Senior Labor Compliance Advisor, Office of the Solicitor, 

United States Department of Labor, Washington, DC ..................................... 21 

APPENDIX 

Prepared Statements: 

The Hon. Angela B. Styles, Chair and Partner, Crowell & Morning, 

Washington, DC ............................................................................................ 32 

Mr. Theron M. Peacock, P.E., BSCP, Senior Principal/President, WOODS/ 

PEACOCK Engineering Consultants, Alexandria, VA, testifying on behalf of the American Council of Engineering Companies .......................... 40 

Ms. Debbie Norris, Vice President, Human Resources, Merrick & Company, Greenwood Village, CO, testifying on behalf of the Society for 

Human Resource Management .................................................................... 48 

Mr. William J. Albanese, Sr., General Manager, A & A Industrial Piping, 

Inc., Fairfield, NJ, testifying on behalf of the Mechanical Contractors 

Association of America and the Campaign for Quality Construction ....... 55 

The Hon. Anne Rung, Administrator, Office of Federal Procurement Policy, Office of Management and Budget, Washington, DC ......................... 72 

Mr. Lafe Solomon, Senior Labor Compliance Advisor, Office of the Solicitor, United States Department of Labor, Washington, DC ...................... 76 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

ABC - Associated Builders and Contractors, Inc. .......................................... 118 

PSC - Professional Services Council ............................................................... 135 

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(1) 

THE BLACKLIST: ARE SMALL BUSINESSES 

GUILTY UNTIL PROVEN INNOCENT? 

TUESDAY, SEPTEMBER 29, 2015 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, SUBCOMMITTEE ON CONTRACTING AND WORKFORCE

JOINT WITH THE

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT AND

REGULATIONS

Washington, DC. 

The Subcommittees met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. Richard Hanna [chairman of the subcommittee on Contracting and the Workforce] presiding. 

Present from Subcommittee on Contracting and the Workforce: 

Representatives Hanna, Takai, Rice, Knight, Bost, and Kelly. 

Present from Subcommittee on Investigations, Oversight 

and Regulations: Representatives Hardy, Adams, and 

Clarke. 

Chairman HANNA. Thank you for being here. I am sorry I am 

a little bit late, so let us get started. I call this hearing to order. 

At a time when small contractors are disappearing from our industrial base—we have lost over 100,000 since 2013—the administration continues to place additional burdens on those that would 

like to sell their goods and services to the Federal Government. We 

should be working to expand the universe of contractors, not shrink 

it. However, I feel the administration’s actions will further reduce 

the number of small contractors that are participating in the federal marketplace. 

Since 2009, President Obama has issued 13 executive orders that 

relate to government contracting, which have resulted in 16 new 

regulations so far, and there are likely to be more to come. While 

some of these mandates may be well intentioned, they also have 

cost, and too often costs significantly outweigh the actual positive 

effects. In that fact, it is estimated that compliance with government unique regulations cost almost 30 cents of every contract dollar. 

Today, we are going to talk about the Executive Order 13673, 

which the administration has titled Fair Pay and Safe Workplaces. 

As a former small business owner, I support the idea of fair pay 

and safe workplaces. I am sure we all do. Companies with labor 

law violations that affect their performance of contracts should be 

suspended or debarred; however, the executive order and the resulting proposed legislation and guidance so far go way beyond 

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2 

that. Instead, it seems to punish companies for unproven allegations. The Department of Labor and Federal Acquisition Regulatory Council have the primary responsibility for implementing 

Executive Order 13673. So I am glad that we have key officials 

from both agencies here today. I hope they listen to the small businesses that are testifying and truly consider the significant negative consequences associated with their proposals. There are valid 

concerns that implementation of this executive order will result in 

potentially innocent small businesses effectively being blacklisted 

from participating in government contracting. 

I do not believe that the Obama administration would intend this 

to be the result, but as drafted, implementation of Executive Order 

13673 is likely to yield this result. So from my standpoint, this 

seems to be an executive order in search of a problem, but I am 

here to listen today to those that would be affected and those that 

will be implementing this executive order to determine if there is 

anything that the administration could do to make it more workable. 

With that, I yield to Chairman Hardy for his opening remarks. 

Chairman? 

Chairman HARDY. Thank you, Chairman Hanna. 

I am please our Subcommittee is holding this hearing to examine 

the impact of Executive Order 13673 on small businesses. In my 

opinion, this executive order is just another example of the executive overreach that has become the hallmark of the Obama administration, and it could have a devastating impact on small business 

and government contractors. I agree that the companies who are 

considered bad actors in their field should not be rewarded with 

federal contracts, but there is already a process that allows the 

Federal Government to weed out these bad actors. Instead of using 

the existing process, the Obama administration is going to impose 

significant new burdens on all federal contractors, even though it 

says that the vast majority of federal contractors play by the rules. 

Small businesses do not need to be forced to settle unproven 

claims. They should not be forced to disclose commercially sensitive 

information to their competitors. And they also should not be forced 

to report information that the Federal Government already has. 

Most importantly, they should not be blacklisted from participating 

in federal contracting based on the accusations that they were ultimately being proven innocent for the past labor law violations in 

which they have already paid fines or otherwise corrected. 

I am particularly concerned that this executive order will lead to 

fewer small businesses selling goods and services to the Federal 

Government. We need a healthy industrial base with many small 

businesses working to provide the government with the innovative 

goods and cost-effective services. When fewer small businesses compete for federal contracts, the outcome will be less innovation and 

higher cost to the taxpayer. This is not good for the United States. 

I cannot help but think the additional mandates that have been 

piled on to the government contractors by this Obama administration has led some small businesses to leave the marketplace and 

discourage others from entering it. After all, increasing the costs 

and complexity of government contracting makes it more difficult 

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3 

for small businesses to sell goods and services to the Federal Government. 

I would like to thank the witnesses for appearing before the Subcommittee today, and I look forward to hearing your concerns of 

the small government contractors, and I look forward to discussing 

their concerns with the representatives from the Department of 

Labor and the Federal Acquisition Regulatory Council. With that 

I yield back, Mr. Chairman. 

Chairman HANNA. Thank you. 

Mr. Takai, the ranking member? 

Mr. TAKAI. Thank you, Mr. Chairman. Good morning and aloha. 

Thank you, Mr. Chairman, for holding this important hearing. 

Small business participation in the federal marketplaces has always been a priority for this Committee and Congress. When entrepreneurs are able to sell their goods and services to federal agencies there is a win-win situation. Taxpayers receive more bank for 

their bank with the delivery of quality products and services being 

supplied by the government. Meanwhile, many small firms are able 

to grow, confident that they have a client and a partner that will 

provide them with a steady stream of reliable work. 

The federal marketplace continues to constitute a significant portion of the U.S. economy with government spending at 447.6 in fiscal year 2014. In the past, Congress has used its significant financial might to help drive forward a number of policy goals. We 

passed legislation, for instance, aimed at ensuring small businesses 

get a fair shot at these projects. Likewise, this Committee has 

worked in a bipartisan manner to help women and minority-owned 

businesses navigate the procurement process. The fact of the matter is as a large customer, the Federal Government has the ability 

to use its buying power to advance priorities important to our nation as a whole. 

It is in that context that we must view the president’s most recent executive order, which is designed to ensure that firms that 

contract with the Federal Government understand and comply with 

laws. We should be clear of the businesses that perform work for 

the government, the overwhelming majority comply with labor and 

safety laws and do right by their employees while remaining providing excellent goods and services at competitive prices. 

That said, this Committee has heard a number of bad actors who 

have skirt the law and continue to receive federal contract work. 

Not only is this bad for workers but it puts honest firms that abide 

by these rules at a disadvantage. Simply put, federal agencies 

should not be rewarding companies with a poor labor and safety 

record with additional opportunities at taxpayer expense. Executive 

Order 13673 is an attempt to address this challenge by requiring 

companies to disclose previous labor and safety law violations from 

the past three years. Even if a contract has such violations on 

record, firms would only be denied contracts in the most egregious 

of instances. While this is a reasonable goal, all of us want to see 

safe workplaces. We must monitor carefully the details of how it 

is implemented. 

There remains a number of thorny technical questions about how 

this new proposal will impact small businesses. For instance, many 

small businesses act as subcontractors to larger companies that bid 

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4 

on federal work. In most cases, the work they do fulfills the majority of the scope of work under the contract. Under this new order, 

prime contractors would be required to obtain labor law violations 

certifications from their subs. 

There are reasonable concerns that prime contractors may avoid 

doing work with certain subs all together in the event of any previous problems with labor laws. This raises issues about whether 

subcontractors should simply certify directly at the agency level. 

These and other issues will need to be addressed as this Committee 

examines this executive order. As always, it will be our challenge 

to balance small businesses’ very real concerns against the legitimate needs to protect the public and, in this case, ensure federal 

dollars are spent in a way that does not harm workers. 

I look forward to hearing the witnesses’ perspective on these important topics, and I yield back. Thank you, Mr. Chairman. 

Chairman HANNA. Thank you. 

Ranking Member Adams? 

Ms. ADAMS. Thank you, Mr. Chairman. 

Each year the Federal Government spends over $400 billion in 

taxpayer dollars to provide private companies for goods and services. And while these funds boost the economy and allow firms to 

hire more employees, we have seen instances in which these same 

businesses violate safety and wage laws to increase their profits. 

According to one report, almost half of the total initial penalty dollars assessed for occupational safety and health administration violations in 2012 were against companies holding federal contracts. 

Unfortunately, the safety and labor violations do not stop there. 

Multiple employees at some facilities have sustained injuries and 

some have even lost their lives. However, rarely were the businesses where these incidents occurred debarred or suspended from 

the federal marketplace as a result of their unsafe working environments. Labor laws are crucial to a healthy economy. When 

workers receive their proper wages, they participate in the economy as consumers. Additionally, providing a safe working environment in which injuries are unlikely allows employees to continue 

working and employers to increase their productivity. 

Therefore, to ensure that contractors are adhering to these important laws, President Obama issued the Fair Pay and Safe Workplaces Executive Order last year. The order is intended to increase 

efficiency and cost savings in the work performed by contractors by 

ensuring they understand and comply with labor laws. Under the 

proposed guidance issued to implement the order, contractors who 

are bidding on contracts valued at over $500,000 will have to disclose their labor law violations that have occurred within the past 

three years. Contracting officers, with the help of labor compliance 

advisors, will then use this information to help determine whether 

or not a business is responsible. If the regulations fit into the existing procurement process, the contracting officer will just have access to additional information regarding contractors’ labor history. 

Furthermore, the order also provides employees protections to ensure that they receive accurate wages and have the opportunity to 

litigate certain claims in a court rather than by arbitration. 

However, as we hear today, there is some concern that the executive order will be overly burdensome on small businesses. Small 

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5 

businesses provide quality goods and services at affordable prices, 

meaning a better deal for the government and the taxpayer. Yet, 

they have smaller margins and new regulations can be harder for 

them to absorb. With small businesses creating over two-thirds of 

new jobs, our economy needs both small businesses and healthy 

and safe employees to properly operate. 

Therefore, in moving forward with the implementation of this executive order, it is important that we find a balance in which small 

businesses are not overly burdened by complying with the guidelines while still ensuring that contractors who habitually put their 

employees in harm’s way are removed from the contracting process 

until they have shown progress in correcting their labor law compliance. 

And with that, Mr. Chairman, I would like to thank the witnesses for testifying today, and I yield back. 

Chairman HANNA. Thank you. 

If Committee members have an opening statement prepared, I 

ask that they submit it for the record. 

Just for information—you probably already know this—you have 

five minutes. When the light goes yellow, you have one, but we will 

be lenient. So with that, our first witness is the Honorable Angela 

Styles, who currently serves as chair and partner of Crowell and 

Moring, and co-chair of the firm’s Government Contracts Group in 

Washington, D.C. From 2001 to 2003, Ms. Styles served as the administrator of the Office of Federal Procurement Policy at the Office of Management and Budget. 

Ms. Styles, in the interest of time, you may begin. 

STATEMENTS OF ANGELA B. STYLES, CHAIR AND PARTNER, 

CROWELL AND MORING; THERON M. PEACOCK, P.E., BSCP, 

SENIOR PRINCIPAL/PRESIDENT, WOODS PEACOCK ENGINEERING CONSULTANTS; DEBBIE NORRIS, VICE PRESIDENT, 

HUMAN RESOURCES, MERRICK AND COMPANY; WILLIAM J. 

ALBANESE, SR., GENERAL MANAGER, A&A INDUSTRIAL PIPING, INC. 

STATEMENT OF ANGELA B. STYLES 

Ms. STYLES. Thank you. Thank you, Chairman Hanna, Chairman Hardy, Congressman Takai, Congresswoman Adams, and 

members of the Subcommittees. I appreciate the opportunity to appear before you today. 

As co-chair of Crowell and Moring’s Government Contracts 

Group, and as former administrator for Federal Procurement Policy 

at the Office of Management and Budget, I have worked closely 

with small business contractors throughout my professional career. 

I am deeply concerned that the executive order will undermine the 

government’s longstanding policy of maximizing contract opportunities for small businesses. If the EO is aimed only at a small number of bad actors, then surely there is a more efficient way to accomplish this goal than imposing requirements that will lead to 

procurement delays, the blacklisting of ethical companies, and reduced competition in the federal marketplace. 

My written testimony today highlights the following five principle concerns. Potentially severe unintended consequences for 

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6 

small businesses, the high compliance cost that will deter small 

businesses from participating in the federal marketplace, the diversion of federal employees from assisting and growing our small 

businesses to collecting data, monitoring compliance, monitoring 

enforcement of federal and state labor laws with a high risk of de 

facto debarment of companies, a flawed Regulatory Flexibility Act 

analysis, and really failure to give even the most basic rationale for 

the necessity of this rule. 

For a more in-depth analysis of many portions of this rule, I refer 

you to the official comments submitted by the National Association 

of Manufacturers. They are a client of Crowell and Moring’s and 

I attached it to my written testimony. We really worked for months 

and months with the National Association of Manufacturers and 

many companies in industry to really fully understand this rule 

and the potential impacts of the rule. 

But even then you do not consider everything. I was sitting last 

night thinking about the rule itself and really the hypocrisy of the 

situation quite striking to me. While on the one hand you have a 

relatively new OFPP administrator that is issuing commendable 

and forward-thinking memorandum on efficiency and performance 

and improvements and cost savings for taxpayers, and on the other 

hand you have this administration issuing the most bureaucratic, 

far-reaching, extensive EO and proposed rule that I have seen in 

my entire career in federal procurement. You cannot have it both 

ways. You cannot have it both ways. You cannot be efficient while 

at the same time issuing something that is such a bureaucratic morass for companies, but really particularly for small businesses. 

I think for me, a significant and wholly unanswered question is 

why the Federal Government is creating this burdensome process 

in the first place. As Chairman Hanna said, this is an EO in search 

of a problem. Each and every labor law identified in the EO has 

its own separate penalties for companies who violate the respective 

laws, and unlike the EO, those labors laws and associated penalties 

were created by Congress rather than mandated by the executive 

branch. 

The Federal Procurement System also has adequate remedies to 

prevent companies with unsatisfactory labor records from being 

awarded federal contracts. Specifically, suspension and debarment 

officials within every federal agency have broad discretion to exclude companies from federal contracting based upon evidence of 

any cause—this is a quote—‘‘any cause so serious or compelling in 

nature that it affects the present responsibility of a government 

contractor.’’ To the extent that a contractor’s compliance record impacts its present responsibility, FAR subpart 9.4 sets forth proper 

channels for suspension and debarment proceedings. With established and effective systems in place, it makes no sense to create 

a new bureaucracy to review these contracts on a contract-by-contract basis with a possibility of astoundingly inconsistent decisions 

by different agencies and different contracting officers. 

Given the scope and complexity, this EO will be impractical, if 

not impossible, to implement. The substantial cost of compliance 

imposed on federal contractors will likely lead to higher procurement costs, and I think drive many small businesses out of the federal marketplace all together. These costs will be borne disproporSBREP-219 with DISTILLER

7 

tionately by companies who can least afford them, our small businesses. This is an entirely unacceptable outcome. The goals of the 

EO are targeting contractors with the most egregious violations, 

but it could be accomplished with the enforcement of existing labor 

laws and our existing suspension and debarment system. 

This concludes my prepared remarks but I am happy to answer 

any questions. 

Chairman HANNA. Thank you. 

Our next witness, Theron Peacock, the senior principal and president of Woods Peacock Engineering Consultants, a service-disabled 

veteran-owned small business with 16 employees located in Alexandria, Virginia. Mr. Peacock has 38 years of experience and cofounder. His present business after 22 years at three other firms. 

He is here testifying on behalf of the American Council of Engineering Companies. 

Mr. Peacock? 

STATEMENT OF THERON M. PEACOCK 

Mr. PEACOCK. Thank you, Mr. Hanna. 

Subcommittee Chairman Hanna, Hardy, Ranking Members 

Takai and Adams, and members of the Committee, I appreciate the 

opportunity to testify before you today about the issues surrounding the Fair Pay and Safe Workplace Executive Order. My 

name is Theron Peacock. I am a senior principal and the president 

of Woods Peacock Engineering Consultants located in Alexandria, 

Virginia, and we have 16 employees. 

Woods Peacock is a service-disabled, veteran-owned small business that focuses on service to a very broad range of federal agencies. My firm is an active member of the American Council of Engineering Companies, the voice of America’s engineering industry. 

ACEC’s over 5,000 member firms represent hundreds of thousands 

of engineers and other specialists throughout the country. They are 

engaged in a wide range of engineering works that propel the nation’s economy and enhance and safeguard America’s quality of life. 

Almost 85 percent of our firms are small businesses. 

First, ACEC appreciate the Labor Department and the FAR 

Council’s efforts to improve labor compliance practices with federal 

contracts. However, as Chairmen Chaffetz and Kline have noted, 

this guidance is fixing a problem that does not exist. The Council 

is concerned that the guidance will make compliance so difficult 

that it will drive a significant amount of private industry, both 

large and particularly small business, from the federal market. 

There are three broad issues with the guidance that the Department of Labor and the FAR Council released this past May. First, 

the reporting is burdensome and duplicative. Under the guidance 

there are 14 federal laws and executive orders that implicate the 

law. Are you aware that much of the reporting data that is requested is already reported to a variety of federal agencies? For example, annual compliance reports are required for EEOC, OSHA, 

and the Rehabilitation Act, and Davis-Bacon requires weekly reporting. Additionally, all federal contractors are required to file annual reports in SAM. Why add another report when the data has 

already been received? 

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8 

Let me just give you an example. As a subconsultant, we have 

contracts with over 30 prime AEs. If we need to submit these reports to all 30 primes, who in turn submit the information to the 

government, you will be getting the very same information multiple 

times and putting it in the same database. When you consider that 

each prime needs to have multiple firms under their contracts, this 

accumulates into a very significant duplication of record that will 

do nothing more than create confusion. 

Second, these regulations will significantly complicate the relationship between primes and subcontractors and will likely result 

in the development of a blacklist for subcontractors, significantly 

reducing the number that will quality to do federal work. Under 

the guidance at the time of execution, contractors must require 

subcontractors to disclose any administrative merit determinations 

or other complaints within the preceding three years. This will 

force the contractors to bar any subcontractor that is stuck in any 

judicial process. In engineering, roughly 50 percent of prime engineering work is subcontracted. Primes and subcontractors switch 

positions frequently. By requiring primes and subs to share confidential business information, they are sharing information that 

can damage your ability to compete against each other in the future. 

Third, there are due process implications with these regulations. 

Under the guidance, claims that have not been decided or even 

heard by a judge will obligate the firm to make a report. This will 

allow for claims that will not have had the benefit of a third-party 

hearing of the dispute to potentially place the firm in positions to 

lose their business. It also places the contracting officer in an untenable position. Under the guidance, the labor advisor has three 

days to decide on the outcome of a report. If the labor advisor does 

not submit a report, then the contracting officer will have to make 

the decision regarding a firm’s labor compliance. The contracting 

officer will become the judge in a complaint, and they are not qualified to do that. Given the risk adverse nature of contracting, this 

requirement will force the contracting officer to disqualify the firm 

or subcontractor so that they are not subject to the risk of censure. 

ACEC asked the Committee to work with Labor and the FAR 

Council on redrafting the rule to make sure that construction services can succeed in the federal marketplace. These regulations have 

the potential to unfairly prohibit my firm and many of ACEC’s 

member firms from participating in these opportunities. 

Thank you for the opportunity to participate in today’s hearing, 

and I would be happy to respond to any questions from the Committee members. 

Chairman HANNA. Thank you. 

Our third witness is Ms. Debbie Norris, who served as vice president of Human Resources for Merrick and Company, a federal contractor based in Greenwood Village, Colorado, which is located just 

outside of Denver. 

Ms. Norris, you may begin. 

STATEMENT OF DEBBIE NORRIS 

Ms. NORRIS. Chairman Hanna and Hardy, Ranking Members 

Adams and Takai, and distinguished members of the SubcommitSBREP-219 with DISTILLER

9 

tees, my name is Debbie Norris, and I am vice president of Human 

Resources at Merrick and Company, a small business federal contractor located in Colorado. I appear before you today on behalf of 

the Society for Human Resource Management (SHRM). Thank you 

for the opportunity to testify today on my experience as a representative of small business competing for and managing federal 

contracts. 

Mr. Chairman, first, let me make clear that the president’s goal 

of providing fair pay and a safe workplace is a shared goal. After 

all, who would not be for that? In fact, I work to provide a safe 

workplace and to help make Merrick an employer of choice, not just 

because it is the right thing to do but because it provides us a competitive advantage in our industry. Unfortunately, this order as 

written is unworkable and should be withdrawn. 

In Fiscal Year 2014, my company, Merrick, managed 329 federal 

contracts, some of which we were prime and some of which we 

were sub, for the Department of Defense, Department of Energy, 

NNSA, National Science Foundation, among many others. We have 

been recognized as a best company to work for in Colorado on five 

different occasions. Our internship program has been recognized as 

a best practice in the Denver Metro area. And I mention these 

awards because despite the fact that my company invests significant time and resources on compliance and creating a sought after 

work environment, we believe the FAR Council regulations and the 

DOL guidance to implement the Fair Pay and Safe Workplace executive order will have a significant and negative impact on our ability to maintain current contracts, compete for new ones, as well as 

attract employees. 

In my testimony today, I will address some of the key concerns 

small businesses have with this proposal. First, I am really concerned about requirements to report nonfinal agency actions. In my 

experience, it is not uncommon for companies to undergo agency investigations and even be issued a notice of a violation that turns 

out to be unfounded. If nonfinal agency actions are considered, 

companies like mine could lose a contract as a result of cases or 

investigations that are not yet final or eventually dismissed. 

I would like to offer one example. As a federal contractor, 

Merrick is audited by the OFCCP on a periodic basis. Our current 

audit started in September 2014, and we still have not received a 

determination from the OFCCP. Not very timely. 

We are concerned that unresolved actions like this will have a 

negative impact on our ability to compete for future federal contracts. In addition, federal contractors will feel pressured to settle 

a claim or enter into a labor compliance agreement with a federal 

agency even if they feel they have done nothing wrong. 

Second, I am very concerned by DOL’s proposal to create powerful new positions called Agency Labor Compliance Advisors. These 

advisors insert themselves into an existing relationship between 

contractors and contracting officers to provide guidance on assessing the seriousness of reported violations. Due to the ambiguity of 

definitions in the guidance, inappropriately broad discretion is 

given to these advisors. 

Third, I am also concerned about the recordkeeping and ongoing 

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porting on information deemed a labor violation under 14 different 

laws and unnamed number of state laws will not be an easy task. 

Doing so will require contractors to create a company-wide, centralized electronic record of federal and eventually state violations over 

the past three years. 

Merrick has 18 different offices in eight states, as well as offices 

in Mexico and Canada. This proposal places an additional burden 

at headquarters of ensuring that each office is regularly and accurately reporting this information to us. When staff time is directed 

to responding to compliance requirements, it takes away from the 

HR department’s focus on the needs of our employees and meeting 

our business and clients’ objectives. 

Contractors will likely handle this situation in one of two ways— 

they either will try to make due with existing staff, which may result in a failure to meet the contracting obligations, or they will 

hire additional staff, which will end up costing the government 

more. And a third reason is they may actually just exit the federal 

market. 

Fourth, this information is already collected. As a contractor, we 

already report this information to the government and they should 

use the data it already collects. 

In closing, SHRM believes that the proposals create an unworkable system that will cause harm to the federal contracting process 

and impose requirements on contractors and subcontractors that 

are impractical and hugely expensive, especially for smaller business. 

Mr. Chairman, thank you again for allowing me to share SHRM’s 

views on the FAR Council and DOL proposals. I welcome your 

questions. 

Chairman HANNA. Thank you very much. 

I now yield to Ranking Member Adams for the introduction of 

our final witness. 

Ms. ADAMS. Thank you, Mr. Chair. 

It is my pleasure to introduce Mr. William Albanese. Mr. 

Albanese is the general manager of A&A Industrial Piping in Fairfield, New Jersey, a business with over 20 years of experience. Mr. 

Albanese is testifying today on behalf of the Campaign for Quality 

Construction. The campaign represents six specialty construction 

employer associations that have over 20,000 members, the vast majority of which are small businesses. These members perform construction projects in the public and private construction market as 

prime contractors and subcontractors. 

Welcome, Mr. Albanese. 

STATEMENT OF WILLIAM J. ALBANESE, SR 

Mr. ALBANESE. Thank you. Good morning, Chairman Hanna, 

Chairman Hardy, Ranking Member—I thought I get an extra couple minutes. 

Good morning, Chairman Hanna, Hardy, Ranking Members 

Takai and Adams. Thank you for the opportunity to testify in support of the goals of President Obama’s Fair Pay and Safe Workplaces Executive Order. 

I would like to state upfront that we support the goals of the executive order and believe that if it is implemented carefully so that 

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the Labor Department is able to evaluate the responsibility of 

prime contractors and subcontractors alike, as to their legal compliance, it will help achieve the goal of encouraging law-abiding companies of all sizes to be able to compete on a level playing field for 

government contractors. 

The Campaign for Quality Construction Groups are the leading 

specialty construction groups representing the subcontracting component of the construction industry, which comprises nearly 65 percent of the construction industry. That is by the Bureau of Labor 

Statistics and Employment Data. It is 20,000 members strong. We 

are the lion’s share of the industry. General contractors, construction managers, and heavy construction firms make up the far lesser share of total employment. 

It must be stressed for the purposes of this hearing that the vast 

majority of all construction work on building projects of significant 

scope is performed by subcontractors. Also, our member companies 

have a balanced perspective of federal procurement issues. As we 

typically perform public works projects as either subcontractors or 

prime contractors, our views are multidimensional. Likewise, our 

position benefits both small businesses and large business competitors in the federal market. 

Competitive bidding and project performance are both greatly 

improved when marginal performances are discouraged from corrupting fair competition in the market, and quality firms can compete without being undercut by nonresponsible contractors. Agencies and taxpayers are the beneficiary of these improved conditions. 

So now just a little about me to lay the groundwork for the summary of our written statement. I have been in the construction industry all of my adult life. I started out completing a five-year, federally-approved apprenticeship program. That was a long time ago. 

I started the A&A group over 25 years ago. During that period, I 

served as the president of the New Jersey Mechanical Contractors. 

I currently serve as a member of the New Jersey Economic Development Authority. I chaired the New Jersey Mechanical Contractors Industry Fund. I served as a trustee of the Union Pension and 

Welfare Fund, along with chairing the MCAA Legislative Committee. 

When A&A started with a good deal of hard work and some luck, 

we graduated to a firm with an annual value of about 25 million 

today with our full-service mechanical contracting, HVA service 

business, and a separate construction management division. A&A 

has performed many direct federal, as well as state and local public 

construction jobs on the East Coast at all contracting levels. We are 

the mechanical prime on a $4 billion World Trade Center project. 

Our contract is 60 million on that project. We were also the mechanical prime on a Dulles Carter Metro Rail Project and project 

at the New Jersey Picatinny Arsenal, just to name a few of the direct federal grant projects. 

We are also agency construction managers for public entities— 

municipalities, community colleges, New Jersey school projects, 

county projects, and we also are administering three projects for 

FEMA. So we bring the general contractor construction management perspective to these issues also. 

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We also perform mechanical contracting work for a number of 

private owners, including Merck, Stepan Chemical, and other pharmaceutical firms, and public agencies, including the New Jersey 

DPMC, Port Authority New York/New Jersey, New Jersey Transit. 

We have a broad perspective of accepted industry standards for the 

strict and comprehensive qualification requirements in the private 

and public sector, and that should be germane to the Committee’s 

deliberation on this issue today. 

So our balanced perspective on the executive order is as follow: 

We support the overall goals of the order—more careful screening 

of prospective federal prime contractors in order to improve competitive conditions and improve federal construction project performance. Best practices in the private sector prove that more time 

and effort invested on project screening and planning upfront pays 

off in improved project performance. Substantially poor legal compliance records may well be the leading indicator of overall poor 

business practices and increased project nonconformance. 

In my experience, those who cut corners on law and safety usually are the ones who are cutting corners on contracting requirements. We need a level playing field. If the executive order discourages marginal performance from entering the market, fair competition standards will be improved. And then top quality firms will reenter the market. 

Second, the provisions of the executive order seeking to stem 

work on misclassification are entirely laudable. Rapid 

misclassification of employees as independent contractors is the 

scourge of fair competition in construction and leads to other abuse 

of public laws in both public and private sector. 

Chairman HANNA. Mr. Albanese, if you could—you are over 

your time, but please continue. 

Mr. ALBANESE. Oh, I am sorry. 

Chairman HANNA. If you could wrap it up. 

Mr. ALBANESE. Let me wrap it up. 

Chairman HANNA. If possible. 

Mr. ALBANESE. So to conclude, allow me to respectfully dissent 

from the title of the hearing. It is neither blacklisting nor adverse 

to the best interest of legally compliant small businesses or any 

other businesses. 

So Co-Chairmen Hanna, Hardy, Ranking Members Takai and 

Adams, and the Committee members, thank you for this opportunity. That concludes my remarks, and I look forward to your 

questions. 

Chairman HANNA. Thank you. 

Mr. ALBANESE. Thank you. 

Chairman HANNA. Mr. Albanese, I have not heard anyone here 

disagree with you in terms of the goal. What I have heard, and feel 

free to correct me, is that this is a very subjective, has the potential to be extremely arbitrary and capricious, that the people who 

are asked to do this work are neither judges nor juries, that the 

difficulty associated with outcomes with this is that people are essentially convicted before they are proven innocent, that any disgruntled other contractor, someone in your business could register 

a complaint with you—about you, have that hanging over your 

head, and it is up to you to figure out how to get rid of it. So I 

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do not think there is anybody here that argues that people who are 

bad actors, who are appropriately litigated in that regard are at 

issue. 

But with that, Ms. Styles, would you like to respond? 

Ms. STYLES. I think that is exactly the problem. I mean, there 

are adequate remedies already. And if people do not think that the 

remedies are adequate in terms of what Congress decided for the 

labor laws or how the suspension and debarment system is working, then that is where we should focus on fixing this. If those are 

the goals, you already have too many legal remedies under labor 

law and the suspension and debarment system to really get it 

right, to make sure that bad actors are not participating in the federal procurement system. 

Chairman HANNA. Okay. So what is driving his? 

Ms. STYLES. Why, I assume it is labor interests. I assume that 

there are other reasons behind this. 

Chairman HANNA. So what would—I mean, if you feel comfortable saying so, what do you mean by that? 

Ms. STYLES. Well, I mean, my presumption is, in part, that 

many would prefer that these jobs be done by federal employees. 

Many would prefer that private companies with labor unions make 

sure that private companies that do not have labor unions are not 

benefitted by particular labor laws. I also think it is an effort to 

have a mechanism. For example, the term ‘‘compliance agreement.’’ 

You will not find the term ‘‘compliance agreement’’ in any statute 

or regulation except for this proposed rule. If you ask me, it is a 

way to extort settlements out of companies on a case-by-case basis 

where the Department of Labor wants—— 

Chairman HANNA. Well, there is an insidious nature to all of 

this. 

Ms. STYLES. Well, it is certainly—I cannot come up with an objective rational explanation. 

Chairman HANNA. Mr. Peacock, would you like to respond? 

Mr. PEACOCK. This is a little difficult as a small business because, first of all, in the AE industry, we are selected based upon— 

I am sure you are familiar with the Brooks Act. We are selected 

based upon our qualifications. So it does not make—we are not 

going to succeed in a business if we do not have high-quality people, if we are mistreating our people. I cannot hire good quality 

people by not paying them a fair wage, by not giving them good 

benefits, and by mistreating them. They are professionals. They are 

going to go someplace else. 

Chairman HANNA. In your statement you mention that. Most of 

this is an anathema to what you would do to run a normal business that is successful, like your business, Ms. Norris. 

Mr. PEACOCK. Absolutely. I have to, you know, when we are selected based upon qualifications, I have to compete with a large 

number of my fellow firms. And in order to do that, I have to be 

able to prove that I am better than they are. That I have more experience. That I am better qualified. That I have the integrity and 

the experience to do the project. 

Chairman HANNA. You are okay with the punishment; you just 

do not like the lack of due process? 

Mr. PEACOCK. Absolutely. 

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Chairman HANNA. Ms. Norris? 

Ms. NORRIS. I fully support what Ms. Styles and Mr. Peacock 

have said. We do work hard to make our company a place that people want to come to work. And if I did not pay a fair wage, if I 

did not follow safety requirements—we have a huge safety culture 

in our company. Every meeting starts with a safety moment. So we 

do all the things. And again, we do not have any violations right 

now that we could even talk about. It is that potential of how much 

it is going to cost us to maintain the records for that, the things 

that we have to create, because there is nothing in place to track 

all that. It is just—it does not make sense. 

Chairman HANNA. Thank you. 

I yield to Ranking Member Takai. 

Mr. TAKAI. Thank you, Mr. Chairman. 

First question to Mr. Albanese. There are those that argue that 

discretion is already given to agency officials to seek out labor law 

violations before an award of a contract. In your experience, how 

often are contracting officers asking for this type of information? 

Mr. ALBANESE. In my experience working, as I said, for private 

agencies, private companies, contractor prequalification is mandated. It is commonly done. New York City has VENDEX. The 

State of New Jersey has DPMC. Port Authority not only has a very 

strict qualification requirement but they have an integrity monitor 

that is on the job. This is common business sense. In other words, 

it makes good business sense to vet the contractor before he gets 

the job. It is common in our industry. We do it all the time, and 

we do not see it as being a burden to any legitimate, fair contractor 

that is playing by the rules. It is done all the time. 

Mr. TAKAI. My question though is how often are the contracting 

officers asking for this type of information? 

Mr. ALBANESE. Specific contracting officers? When we did the 

Dulles job, we did not have very much vetting at all. We were just 

awarded the contract. 

Mr. TAKAI. Right. So my follow up then is how effective can this 

discretion given to contracting officers be if it is rarely utilized to 

search for violations defined in the executive order? 

Mr. ALBANESE. This executive order will mandate a fair level 

playing field for everybody is involved. That is what this will do. 

And there will not be the gap. They give this guy the job. Let us 

not check if he has labor violations, or he does not have labor violations, or he violated Davis-Bacon, or he has safety issues that were 

never investigated. 

Mr. TAKAI. Okay. So you are advocating that all subcontractors’ 

responsibility determinations be made by the agency. What are 

your concerns with the prime contractor making these determinations? 

Mr. ALBANESE. Well, some of the regulations are so hyper technical. On the basis of that, I do not think as a prime contractor, 

if I was the prime, because we are primes many times, that we 

want to get into this hyper technical evaluation. We feel it would 

be much better if it would be done by a government agency, a CO, 

an LCA, to do that process for us. FAR right now does have some 

regulations that are moving in that direction. That would be a 

great thing to do. 

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Mr. TAKAI. Okay. Thank you. 

Mr. Peacock, you have addressed concerns regarding the disclosure of your violation to primes, contending that this could harm 

your business relationships, and in some instances, eliminate the 

competitive advantage. However, could not some of these concerns 

be alleviated if the subcontractors went to the Department of Labor 

for the determination as this guidance allows? 

Mr. PEACOCK. Well, I believe what you are asking is should we 

be dealing directly with the Department of Labor on these issues 

as opposed to running it through our competitors. And one of our 

concerns is that sharing a lot of our business information with our 

competitors certainly does put us at a disadvantage. When we have 

to compete for particularly personnel, highly qualified personnel, 

there is a shortage of good quality engineers out there. And to keep 

those people, it is very important for us to treat them fairly and 

be able to maintain those. And so for us to go—if you want me to 

deal—I would much rather deal with the Labor Department. My 

analogy is if we—most of us have security clearances. I deal with 

the Department—the Security Department if there is an issue. If 

I have an employee who has an issue, I deal directly with them. 

They tell me I have to report to them and they tell me what I have 

to do as the facility security officer. It should actually be the same 

thing. If I have something going on in my company, then I should 

be dealing directly with the Labor Department and solve that problem and not passing it through a million different people. 

Mr. TAKAI. Okay. Great. Thank you. 

I yield back. 

Chairman HANNA. Mr. Hardy? 

Chairman HARDY. Thank you, Mr. Chairman. 

Ms. Styles, do you think it is realistic to expect the labor compliance officers to have the expertise on 14 different federal labor 

laws and numerous state requirements and laws? Do you think 

people have that expertise or could afford that in small business? 

Ms. STYLES. I think it is impossible. I mean, we cannot even 

write my testimony with just me because it takes a government 

contractors lawyer and a labor lawyer. I do not know how one person or even one set of people can really get a handle on all those 

laws and how they operate. 

Chairman HARDY. Does anybody else care to add to that in any 

way, shape, or form? 

Go ahead, Mr. Peacock. 

Mr. PEACOCK. Well, I would like to comment. 

Chairman HARDY. Yes, go ahead. 

Mr. PEACOCK. The issue of complying with this, in looking at 

the prequalification forms that I fill out, it would take 10 or 15 

minutes of looking at the prequalification form to see that there are 

questions such as have you had OSHA violations? Have you had 

Davis-Bacon violations? Do you have any criminal action or civil action going on? Your financial status. Do you owe so much money? 

These are common, basic items that are listed in the 

prequalification. It would be easy to vet on those specific issues. 

That would raise the flag, and then you could go into a deeper 

analysis of it. 

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Chairman HARDY. Last year there were over 77,000 pages of 

new administrative laws placed out; 3,280 some-odd new regulations. How many of those do you understand today—have you read, 

your company read, and understand today? 

Mr. PEACOCK. Honestly, probably zero. 

Chairman HARDY. Okay. So with these compliance laws, do you 

believe that you can still keep up with that regular order? 

I will move on here. Mr. Peacock, let us talk compliance for a second. They say what it will take to implement this is probably only 

about eight hours in the FAR Council, and the DOSL estimated it 

will only take eight hours to figure these rules out. Is that correct? 

Mr. PEACOCK. Well, we currently have 24 IDIQ contracts, and 

estimate at least another 16 single scope contracts. That is 40 contracts. And if I take—sorry, I am an engineer—if I take 40 and I 

divided it by eight hours, that gives me 12 minutes to deal with 

each one of those contracts, compliance with each one of those contracts. Now, personal opinion is I am going to, because I am a subcontractor, I am going to get an email from my point of contact of 

the prime. They are going to say, ‘‘Can you please submit this information to us?’’ Realize that not all of these are going to occur 

at the same time. They are going to occur on the anniversary date 

of the contract, and every six months after that as it is currently 

proposed as I understand it, I am going to get an email. I have to 

respond to the email. I have to get my administrative people to pull 

the information, put it together. I have to respond back in an 

email, and then I am going to get a telephone call saying, ‘‘Oh, 

could you give me this in a different format?’’ You know, that is 

just the way it goes. I cannot do all that in 12 minutes. And my 

estimation is that it is going to take me two hours at the minimum 

to deal with each one of those. That gives me 80 hours on 40 contracts, and I have got to do this twice a year? I mean, that eight 

hour estimation is way, way underestimated. And it is going to 

vary for every company, depending on the number of contracts you 

have. 

Chairman HARDY. Ms. Styles, another quick question. As a contractor, I have been a prime myself for a number of jobs, and with 

that, usually, typically sometimes there is upwards of 30 or 40 subs 

of some kind on major projects. And through that process should 

I be required—how can I follow up with all my subs to make sure 

that they are in compliance, and any guestimation what would 

happen if I am awarded a contract and I find out that somebody 

all of a sudden becomes under violation? Any estimation what 

might happen there? 

Ms. STYLES. Well, it also requires the prime contractors to become experts on all of these laws and all of these regulations, and 

the mitigating circumstances and what should be done to be compliant by all of the subcontractors that they have. I mean, even 

small businesses, and many small businesses are prime contractors, they will have large business subcontractors. They will have 

the largest defense contractors in our country—the Lockheed Martins, the UTCs, the Boeings will be their subcontractors. So you are 

going to have this small business asking Boeing for all of their 

labor compliance information. And then that small business has to 

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assess that and has to decide whether they are really compliant or 

not. I do not know how they do that. 

Chairman HARDY. Thank you, Mr. Chairman. I yield back. 

Chairman HANNA. Ms. Adams? 

Ms. ADAMS. Thank you, Mr. Chairman. 

Ms. Norris, you indicated in your testimony that the disclosures 

required in the executive order are duplicative as they are collected 

by different agencies already. However, state violations are not reported and the contracting officers at the various agencies do not 

have access to the information at issue. So how would you recommend making these disclosures available to the contracting officer, if not through the method proposed through the guidance? 

Ms. NORRIS. Well, first off, we do not know what state laws are 

going to be required. That has not been spelled out. So that is a 

little bit difficult to answer. Let me regroup here. Because the proposal process asks for this information, it seems to me that it is 

already being asked for and that it seems redundant to have a 

whole executive order to handle a process that is already part of 

the FAR proposal process. And so I do not know how you would tell 

the state, other than through the current process where you list 

what has been a violation on the current proposal process. I am 

sorry, that is not part that I am familiar with on the state side. 

Ms. ADAMS. Ms. Styles, would you like to comment? I think you 

also mentioned the duplicative. I believe I heard you say that. 

Ms. STYLES. I did mention the duplicative piece of it but we 

cannot say anything about the state piece because they have not 

implemented it yet. But the duplication issue is to avoid de facto 

debarment of a particular company. So what is happening is that 

for each contract over $500,000 and each subcontract over $5,000, 

the contracting officer has to receive all of the information about 

the violations, including the mitigating circumstances and evaluate 

it. And then the guy next door or at the next agency. So maybe it 

is a contracting officer at DoD. The contracting officer at VA has 

to look at all of that information again and make their own independent determination as well. And so even if it is two contracting 

officers sitting next to each other in DoD, they cannot talk to each 

other about it. They have to make their own independent determination. And so it is really duplicative collection of exactly the 

same information for a prime contractor and exactly the same information for subcontractors as well. So there is a reason for it, because they want to avoid de facto debarment of contractors and 

subcontractors, but it is a huge collection of information over and 

over—the same information over and over and over again. 

Ms. ADAMS. All right. I have another question. The goal of the 

executive order is to ensure that the government is not put at risk 

as a result of awarding contracts to those who did not comply with 

labor laws. Mr. Albanese, do you know if instances in your business 

history where marginal performers undercut more responsible bidders and the public agency ended up with a bad project as a result? 

Mr. ALBANESE. The interesting part about that on say public 

agency jobs that we do, all the contractors have gone through this 

vetting process. We know that their financial backgrounds support 

it. As an example, on the state work, you are allowed, you are getting an amount of money that you can bid up to or have an aggreSBREP-219 with DISTILLER

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gate of work in place. So my experience is that rarely do we see 

violations or these violators doing work and getting away with it 

because they have already been vetted. 

Ms. ADAMS. Okay. Follow-up, Mr. Albanese. Is it not just good 

business practice to keep track of the information required in the 

executive order? 

Mr. ALBANESE. It makes absolute perfect business sense to vet a contractor before you are going to give him a $5 million job to 

make sure—and the list goes on in my prequalification list. There 

is no criminal, there is no civil violations, there is no OSHA violations. That this contractor has paid Davis-Bacon accurately, and he 

is not skirting the issues. It makes perfect business sense. 

Ms. ADAMS. Thank you, sir. 

Mr. Chair, I yield back. 

Chairman HANNA. Mr. Rice? 

Mr. RICE. Thank you, Mr. Chairman. 

I kind of want to step back and look at this from an even bigger 

picture because I think this particular executive order is just a 

symptom of a larger problem that this country faces. Here we sit 

seven years after the Great Recession and our economy continues 

to struggle. We vacillate between zero or negative growth and 2 

percent growth, where most economists thing we should have had 

a significant snapback by now. And I think one of the big problems 

that is holding our economy back is this vast mushrooming regulatory burden that all you guys face. 

So the SBA estimates that the cost of federal regulation on a firm with fewer than 20 employees is $10,585 per employee per 

year. The president apparently agrees with me. He constantly says 

we must reduce and streamline regulations on small business. But 

do not be fooled by what he says; look at what he actually does. 

According to a recent study by the Mercado Center, this administration has issued 120,000 new regulations. They claim the prize. 

They have issued more regulations than any administration since 

Linden Johnson. And not only that, they have done it in six years 

instead of eight. We still have two more years to go. So when you 

look at what he says—we need to reduce regulation—what he actually does, adding all this regulatory burden like this proposed executive order, we should not be surprised when the economy is stifled. 

Right now, for the first time in 80 years, we have had five consecutive years where more businesses are dissolved in America 

than are formed in America. The first time since the Great Depression. More Americans have left the workforce than at any time in 

the last 35 years. Homeownership in America is as low as it has 

been in 50 years. I do not think any of this is coincidental. I think 

it is all a direct result of the mushrooming regulatory burden that 

we place on small business. 

So I have a question for you all. You guys are in the regulatory 

business or in small businesses. Can you name for me—let me ask 

you this. Ms. Styles, do your clients see a streamlined and reduced 

regulatory burden under this administration? 

Ms. STYLES. No, they do not. 

Mr. RICE. Okay. I have to go quick. 

Mr. Peacock? 

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Mr. PEACOCK. No, sir. Not at all. We are drowning in paperwork. 

Mr. RICE. Okay, thank you. Thank you. 

Ms. Norris? 

Ms. NORRIS. No, we do not. 

Mr. RICE. Mr. Albanese? 

Mr. ALBANESE. No, I do not. 

Mr. RICE. Okay, thank you. 

Ms. Styles, can you name for me one instance where this administration has generated a streamlined or reduced regulatory burden? I am not talking about a minor thing. I am talking about any 

meaningful reduction in cost or time on small business? 

Ms. STYLES. Well, I will say that Ms. Rung, who is testifying 

after me, did issue a memorandum on efficiency on December 14th 

of last year. So to the extent that that is actually implemented— 

but I do not see how you implement it—— 

Mr. RICE. So have your clients seen any benefit yet from any 

streamlined or reduced—I am talking about material change? 

Ms. STYLES. No. 

Mr. RICE. Mr. Peacock? 

Mr. PEACOCK. No. 

Mr. RICE. Ms. Norris? 

Ms. NORRIS. No. 

Mr. RICE. Mr. Albanese? 

Mr. ALBANESE. No, to that question. 

Mr. RICE. So somehow the rhetoric does not match what we are 

actually doing here. I think that, you know, it goes back to the 

book, The Death of Common Sense. We are drowning in regulation. 

If we do not get a hold of this, I think our economy will continue 

to suffer. I think it bodes very poorly for this next generation coming up in America. When you ask Americans, do you think that 

your children have a brighter future than you did, and two-thirds 

of them say no, that bodes badly for this country. And I think this 

is one of the underlying foundational reasons why Americans feel 

this way. 

I yield back. 

Chairman HANNA. I want to thank you all for being here today. 

And for the record, I have 35 years in the Operating Engineers 

Union. I support Davis-Bacon. I get it. But it seems to me that 

there really is a lot of rules and regulations that may even be unconstitutional since the regulation was not—which we will get into 

in the next hearing, but the whole idea of a lack of due process and 

the subjective nature that is given to a guy whose job it is to manage a project, a contracting officer, my biggest concern is that it is 

a race to defend and protect the behind of that particular person 

who has an incentive necessarily to race to the bottom, but yet at 

the same time, if that person is not thoroughly qualified or in any 

way not open minded about the people who have been low bidder, 

then he has an opportunity to find virtually any reason he likes, 

or she likes, to put at risk a company that has been years in business, does great work, may have made a mistake or two in their 

lives—and we all do—and summarily, execute them from a particular job without any formal process. 

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So with that I want to thank you all for being here. We are going 

to go to the next panel. And Mr. Hardy will be taking the chair. 

Thank you. 

Chairman HARDY. Good morning. We will start with a quick introduction. I guess I better start the meeting. Thank you for being 

here. 

I would just like to start with a quick introduction to our panelists. First, we have Ms. Anne Rung. She is our first witness on the 

panel. She is the administrator of the Office of Federal Procurement and Policy Office of Management and Budget. Our second 

witness is Mr. Lafe Solomon. He serves as the senior labor compliance advisor in the Office of the Solicitor at the United States Department of Labor. 

So with that, Ms. Rung, we will let you have five minutes. 

STATEMENTS OF ANNE RUNG, ADMINISTRATOR, OFFICE OF 

FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET; LAFE SOLOMON, SENIOR LABOR COMPLIANCE ADVISOR, OFFICE OF THE SOLICITOR, UNITED 

STATES DEPARTMENT OF LABOR 

STATEMENT OF ANNE RUNG 

Ms. RUNG. Chairman Hanna, Ranking Member Takai, Chairman Hardy, and Ranking Member Adams, and members of the 

Subcommittees, thank you for the opportunity to appear before you 

today to discuss the administration’s implementation of Executive 

Order 13673, Fair Pay and Safe Workplaces. My comments today 

will primarily focus on actions being taken by the Federal Acquisition Regulatory Council, the FAR Council, which I chair as administrator of the Office of Federal Procurement Policy (OFPP). 

It is important to emphasize at the outset that OFPP and the 

FAR Council have been working in close partnership with the Department of Labor on rules and guidance to implement this executive order. Our respective organizations are fully committed to implementing the EO in a clear, fair, and effective manner, and have 

been actively seeking feedback from stakeholders since issuance of 

the EO more than a year ago. We did this to ensure that we had 

sufficient information and insight from stakeholders, including 

small businesses, to achieve these goals. 

This EO is designed to improve contractor compliance with labor 

laws in order to increase economy and efficiency in federal contracting. As Section 1 of the EO explains, contractors that consistently adhere to labor laws are more likely to have workplace practices that enhance productivity and deliver goods and services to 

the Federal Government in a timely and predictable and satisfactory fashion. 

While the vast majority of federal contractors abide by labor 

laws, studies conducted by the General Accountability Office, the 

Senate Health Education Labor and Pension Committee, and others, suggest that a significant percentage of the most egregious 

labor violations identified in recent years have been by companies 

that receive federal contracts. In addition, studies performed by 

others have found a nexus between companies with labor violations 

and significant performance problems on government contracts. 

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As explained in the preamble to the proposed FAR rule and in 

my written statement, we have taken a number of steps in the proposed rule consistent with direction in the EO to minimize the implementation burden for contractors and subcontractors, including 

small businesses. Let me just provide you with a few examples. 

One, the proposed prior rule builds on existing processes and 

principles, including the longstanding requirement that a prospective contractor be a responsible source. Two, many of the contracts 

performed by small businesses, including contracts valued at 

$500,000 or less and subcontracts for commercial off-the-shelf 

items, are exempt from the proposed FAR rules disclosure requirements. 

Further, during listening sessions held by DOL, OMB, and relevant councils, stakeholders raised concerns regarding the potential complexity and burden associated with two aspects of the EO 

in particular. One, provisions addressing disclosure of violations of 

equivalent state laws; and two, provisions addressing disclosure 

and evaluation of subcontractor violations. 

In response to what we learned from these sessions, requirements in the EO addressing the disclosure of violations of equivalent state laws, with the exception of OSHA state plans, will be 

phrased in at a later date. In addition, the FAR Council has developed alternative proposals that seek to address concerns at HERD 

regarding the challenges contractors might face in evaluating violations disclosed by their subcontractors. This includes a possible 

phase-in of subcontractor disclosure requirements, and the proposed FAR rule has invited public comment on additional or alternative approaches to this issue. 

Stakeholder feedback has been a very key component in the development of the proposed FAR rule, and currently, the FAR Council is carefully reviewing the many and diverse public comments received in response to the proposed rule published at the end of May 

to determine where additional revisions are needed. In considering 

comments, the FAR Council seeks to ensure that the final rule is 

both manageable and impactful in achieving the EO’s objective of 

bringing contractors with significant labor violations into compliance with the law in a timely manner. Without question, implementation of the EO requires the government’s policy, operational, 

and technology officials to address a number of difficult issues head 

on, and it is hard work, but work that is critical to the integrity 

of our procurement system, ensuring economy and efficiency in contracting and security the well-being of American workers. 

Thank you, and I am happy to answer any questions you may 

have. 

Chairman HARDY. Thank you, Ms. Rung. 

I would like to turn the time over to Mr. Solomon for five minutes. 

STATEMENT OF LAFE SOLOMON 

Mr. SOLOMON. Good morning, Chairman Hardy and Hanna, 

and Ranking Members Adams and Takai. Thank you for the invitation to appear before your Subcommittees to speak about DOL’s 

proposed guidance to implement the Fair Pay and Safe Workplaces 

Executive Order. 

SBREP-219 with DISTILLER

22 

For the past year, I have led the efforts at DOL to implement 

this EO. Although most federal contractors comply with applicable 

laws and provide high-quality goods and services to the government and taxpayers, a small number of federal contractors have 

committed a significant number of labor laws in the last decade. 

Those contractors who invest in their workers’ safety and maintain 

a fair and equitable workplace should not have to compete with 

contractors who offer lower bids based on savings from skirting 

labor laws. 

To address this issue, President Obama signed this EO last year 

requiring prospective federal contractors on covered contracts to 

disclose certain labor law violations, and giving agencies guidance 

on how to consider those labor violations when awarding federal 

contracts. With this EO, the president pledged to hold accountable 

federal contractors to put workers’ safety, hard-earned wages, and 

basic workplace rights at risk. 

The EO builds on the existing procurement system and changes 

required by the EO fit into established contracting practices that 

are familiar to both procurement officials and the contracting community. In addition, DOL will provide support directly to contractors so that they understand their obligations under the EO and 

can come into compliance with federal labor laws without holding 

up their proposals in response to specific federal contracting opportunities. Finally, DOL will work with labor compliance advisors 

across agencies to minimize the amount of information that contractors have to provide and to help ensure efficient, accurate, and 

consistent decisions across the government. 

The objective of the EO is to help contractors come into compliance with federal labor laws, not to deny them contracts, and it encourages compliance, not suspension and debarment. The processes 

and tools envisioned by the EO are designed to identify and help 

contractors address labor violations and come into compliance before consideration of suspension and debarment. The EO does not 

in any way alter the suspension or debarment process; however, 

the expectation is that the processes and tools envisioned by the 

EO will drive down the need for an agency to consider suspension 

and debarment and help contractors avoid the consequences of that 

process. As a result, this EO, once implemented, will offer contractors an opportunity to come into compliance and maintain the 

privilege of being a federal contractor, unlike the suspension and 

debarment process, which could exclude them from receiving 

awards. 

On May 28th of this year, DOL published proposed guidance. On 

that same day, the FAR Council also issued proposed regulations 

integrating the EO’s requirements and the provisions of DOL’s 

guidance into the existing procurement rules. 

DOL’s proposed guidance would do several things. First, it would 

define the terms used in the EO—administrative merits determinations, civil judgments, and arbitral awards or decisions, and provide guidance on what information related to these determinations 

must be reported by covered contractors and subcontractors. Second, it would define serious repeated, willful, and pervasive violations and provide guidance to contracting officers and labor compliance advisors for assessing a contractor’s history of labor law comSBREP-219 with DISTILLER

23 

pliance and considering mitigating factors, most notably efforts to 

remediate any reported labor law violations. Third, it would provide guidance on the EO’s paycheck transparency provisions. 

We have received numerous comments and are now reviewing 

them. Nothing I say today should be taken as a prejudgment of any 

issue as I do not want to prejudge the outcome of that process. We 

are working through the comments to produce a quality guidance 

document that will better inform federal procurement decisions, 

provide contracting officers with the necessary information to ensure accurate, efficient, and consistent compliance with labor laws, 

help contractors meet their legal responsibilities, and remove truly 

bad actors from federal contract consideration, creating a more 

level playing field for law-abiding contractors. Most importantly, it 

will also ensure that hardworking Americans get the fair pay and 

safe workplaces they deserve. 

I appreciate the invitation to testify, and will be happy to take 

any questions you may have. 

Chairman HARDY. Thank you, Mr. Solomon. And with that, I 

will yield myself five minutes of time for questioning. 

With your statement, Mr. Solomon, it sounds like there’s quite 

a bit of challenges out there with people needing to be debarred or 

suspended. Is that correct? Is that the way I understand your 

statement, that there are a lot of issues out there that we are having with cause and effect that we need to make sure we are issuing 

debarments or suspensions? 

Mr. SOLOMON. Well, Mr. Chairman, the executive order is not 

about suspending and debarment. It is to bring contractors into 

compliance so we can avoid having to go through for a contractor 

a suspension and debarment process. 

Chairman HARDY. That is back to my question. So bring them 

into compliance. So is there a lot of noncompliance out there? 

Mr. SOLOMON. What we have said is the vast majority of contractors do play by the rules and do not violate labor laws. But for 

the contractors that do violate the labor laws, we are—that is what 

the executive order is designed to get at. 

Chairman HARDY. So when you were at the NLRB as our counsel, how many people did you debar or suspend while you were 

there? 

Mr. SOLOMON. Well, the NLRB has no debarment or suspension process. 

Chairman HARDY. Department of Labor? Okay. How many did 

you refer, I guess, is the question. 

Mr. SOLOMON. Well, the NLRB, like various enforcement agencies at DOL, have a jurisdiction that is beyond federal contractors. 

So it does not come up in an investigation at the NLRB as to 

whether the employer involved is the federal contractor or not. 

Chairman HARDY. Okay. Ms. Styles testified that the proposed 

rule was a chance for agencies to extort settlements from small 

businesses. What is your opinion on that? 

Mr. SOLOMON. I do not think that is a fair statement. What 

this executive order does is looking for the most egregious violations, a pattern of a basic disregard of labor laws. The executive 

order is clear that not one violation of a labor law is going to lead 

to any problem in the contracting process. 

SBREP-219 with DISTILLER

24 

Chairman HARDY. Thank you. 

Ms. Rung, the construction contractors commonly state that they 

have usually if they are in the general they have more than seven 

tiers of subcontractors. In the EO proposal, as a prime, would I 

need copies and records of all seven tiers? 

Ms. RUNG. I appreciate your question. It was extremely helpful 

feedback this morning from a lot of the small businesses. We have 

been out meeting with small businesses to talk about this and 

other issues. The one issue they have raised is the flow down piece 

of this, how primes will sort of implement this piece of it to track 

and measure performance by their subcontractors. And in response 

to that, we have done a number of things and put a number of proposals in this rule. Just to mention one, for example, one alternative in which we are seeking feedback on would allow subcontractors to take their information on labor violations and provide it directly to Department of Labor and work with Department 

of Labor to assess those violations. So you would essentially be taking those prime contractor out of the role of sorting through that 

information and evaluating the records provided to them. 

Chairman HARDY. Does that individual, that prime, need to 

make sure that they monitor those performance also? 

Ms. RUNG. So the prime contractor has always been responsible 

for ensuring that their subcontractors are responsible subcontractors, so that role would continue. So they have always had to ensure that their subcontractors are performing. 

Chairman HARDY. Let us bring in OSHA rules. I, myself, have 

an OSHA 40. I am on the site continually when I was working. I 

have other officers that have their OSHA 40 and make sure that 

things are complied with. It is typically the subcontractor that you 

sometimes have a challenge with on that and it puts me at risk. 

You know, I can run that individual off, but does that put me in 

violation when it is somebody else’s employee and we are doing everything we can to keep on track? Is that a violation? 

Ms. RUNG. Thank you for the question. And certainly, if my colleague from DOL wants to jump in at any point he can, but we are 

really focused on the most egregious violations. So I think the GAO 

report from 2010 that cited several examples, gives you a good indication of what we mean by serious violations. So when they refer 

to, for example, a food company that has over 100 OSHA violations 

that ultimately result in an employee being killed, that is an example of what we are talking about. 

Chairman HARDY. Can I stop you there? My time is running 

out. But does that violation—we are talking about violations, and 

what happens is it gets stuck, as you heard, in the process. It is 

a violation. I might be bidding on another project, and as long as 

that is hanging over my head, I am guilty until proven innocent. 

Ms. RUNG. Well, I think there are a couple things. One, this EO 

has a number of provisions designed to ensure that we are not 

slowing down the process. So one of the key parts of this is to encourage companies to work with Department of Labor very early in 

the process, well before award, to help bring these companies into 

compliance. 

Chairman HARDY. Thank you. My time is expired. 

SBREP-219 with DISTILLER

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Ms. Adams? I would like to recognize Ms. Adams for five minutes. 

Ms. ADAMS. Thank you, Mr. Chair. 

Ms. Rung, some subcontractors have expressed concern that 

prime contractors do not have the requisite knowledge in labor law 

to make an informed decision as to their responsibility. Is there not 

enough regulatory discretion in the executive order and in the Federal Acquisition Regulatory Council itself to justify having the 

agency contracting officer and the labor compliance advisor review 

all covered prime contractors and subcontractors in the initial responsibility review process? 

Ms. RUNG. Thank you for the question. So it has been a longstanding tenet of the federal procurement system that the prime 

contractors are responsible for the performance and ensuring that 

their subcontractors are responsible companies. The LCAs and the 

contracting officer are responsible for making that determination of 

business integrity and ethics for the primes. And that is the way 

historically it has worked. In this case, as I just explained, we very 

much appreciate and have heard from a lot of small businesses the 

concern about primes tracking the subcontracting piece of this, and 

as such, we have laid out a number of alternatives in this proposed 

rule for which we seek feedback, including this notion that subcontractors could go directly to Department of Labor to work with 

them on the reporting piece and to have Department of Labor 

evaluate that information. 

Ms. ADAMS. Thank you. One of the main concerns voiced by 

those opposed to the executive order is that they fear that due to 

de facto, debarments will occur if contracting officers are relying on 

the same recommendation when making a responsibility determination. So what mechanisms are in place to ensure that this 

does not happen? 

Ms. RUNG. So we are very much focused on bringing companies 

into compliance and not excluding them. And so we are doing a 

number of things to ensure that we can achieve that goal. And one 

of them is setting up a process within Department of Labor to have 

them work with the companies very early in the process well before 

the bidding to help bring them into compliance. We want to create 

a system where information can be shared among all the agencies, 

so we are ensuring that consistent decisions are being made, and 

we are also limiting burden to the extent possible for our contractors in terms of reporting many times. 

Ms. ADAMS. Okay. There has been much criticism as to the inclusion of administrative merit determinations in the executive 

order. Mr. Solomon, can you explain why the decision was made to 

include these decisions in the disclosure requirements? 

Mr. SOLOMON. Thank you for the question. 

I think it is important to start with what administrative merit 

determinations are not. And they are not charges that are filed by 

workers with the enforcement agency saying that—alleging that 

there have been violations of the federal labor laws. Once the 

charge is filed, there is a full and thorough investigation by a neutral government factfinder. They take into account all evidence presented by both the workers and by the company. And in my experience, most—there are a significant number of these charges that 

SBREP-219 with DISTILLER

26 

are found to be without merit in all these enforcement agencies. So 

what an administrative merit’s determination is, is after this complete, thorough investigation, the agency concludes that there has 

been a violation of the labor law. And what we say in the proposed 

guidance—and we have a lot of comments on this portion of the 

guidance—but the guidance says that the notice or complaint that 

is served on the employer by the enforcement agency is, in fact, the 

administrative merits determination. And I would also add that 

there is a significant percentage of these administrative merits determinations that, in effect, become final determinations because 

they are either settled, or if they are litigated by the employer, 

which the employer has every right to do, the government has a 

very, very high win rate of those. 

Ms. ADAMS. Okay. I am just about out of time. Mr. Chairman, 

I yield back. 

Chairman HARDY. The gentlelady yields back. 

I would like to recognize Chairman Hanna for five minutes. 

Chairman HANNA. Thank you. 

If you know who all these violators are and they have committed 

all these egregious problems, which, you know, I am sure they are 

out there, why not just go after them? Why create a burden for 

companies who have—they have hundreds of subcontractors and 

the process does not work the way you described it, I do not think, 

we do not know—a contractor does not know who he is going to 

hire until the day he may bid the job. So how is he supposed to 

screen all this stuff and all these people, use their number which 

may be low or whatever, and then rely on that number, put his 

business at risk, and hope that you guys go along? 

And the other problem I have with this is what does ‘‘egregious’’ 

mean and what does ‘‘significant’’ mean? I mean, those are subjective words that any contract officer or any judge or jury or person 

can use in any way they like. So I wonder if you really have—I 

mean, if you have a notion of how you are going to navigate that 

with some degree of earnest fairness that produces the outcome 

you want when apparently you already know who these people are 

based on—if it is egregious and significant, then I guess I could 

find out who those people are. But our worry is, my worry, is that 

this will trickle downhill depending on who decides what that 

means and what some outside force, unhappy other contractor or 

second bidder, labor person, you know, union or nonunion, so what 

do you say to that? 

Ms. RUNG. So let me, perhaps I will address the question about 

the information is already out there and then my colleague can 

jump in on some of the definitions. 

The challenge for us is that the information is not always available to us. So the current penalty triggers for reporting violations 

into the performance system may be higher than the individual 

labor violations. And secondly, a contractor is not required to enter 

information into the federal awardee, integrity, and performance 

system unless it has done more than $10 million in business. And 

third, not all violations are accessible to us. And I think as GAO 

has emphasized, that our contracting officers, for whatever reasons, 

are not using the information to make accurate responsibility determinations. So what we are trying to do here is ensure that our 

SBREP-219 with DISTILLER

27 

contracting officers have timely and complete and detailed information to make these responsibility determinations which they are already required to do. 

Chairman HANNA. Not for these jobs. I mean, this contractor 

shows up. He or she, the company is low bid. They have hired— 

they have based their assumptions on all these different prices that 

came in from who knows how many companies. And they do enter 

the picture and you say this person and that person is not qualified. How do you reconcile that in the real world? 

Ms. RUNG. I think, you know, what we heard from some of the 

panelists this morning is that we are creating a level playing field 

by ensuring that only those contractors that play by the rules are 

competing in the federal marketplace. 

Chairman HANNA. How could it possibly be level if they do not 

know in advance who those people are? Is it really a contractor’s 

problem to get on there when apparently the information is out 

there? 

Ms. RUNG. The information is not always available, and it is not 

always out there, and it is not available in a timely fashion, and 

it is not always available in a complete fashion. And I think the 

evidence has been borne out by the GAO report. So the outcomes 

are showing that we are awarding taxpayer dollars to companies 

that commit serious labor violations. And our goal here is to simply 

ensure that we protect taxpayer dollars. 

Chairman HANNA. Mr. Solomon? 

Mr. SOLOMON. To answer part of your question, I mean, the intent behind the guidance and the intent behind the creation of 

labor compliance advisors throughout the government is to provide 

a mechanism for uniform and consistent decision-making across the 

government. I think there is an understanding that contracting officers do not necessarily have the knowledge base to be able to 

make decisions over a company’s labor law compliance. 

Chairman HANNA. The GAO report did not evaluate whether 

federal agencies considered, or should have considered, these violations in awarding the federal contract. Thus, no conclusions on the 

topic can be drawn from this analysis. I mean, it really seems as 

though you have got a lot of work ahead of you to implement this 

in a way that is in any way reasonable or fair or provides the outcome that you want. 

Ms. RUNG. Well, you know, the part—the most compelling part 

of the GAO report to me were the examples of the kind of companies that are receiving federal taxpayer dollars even though they 

have committed serious violations, including OSHA cited a company for over 100 health and safety violations. And after an employee was fatally asphyxiated after falling into a pit containing 

poultry debris. 

Chairman HANNA. Sure, I get that. But I mean, my time has 

expired. 

Ms. RUNG. That is the kind of violations we are talking about. 

Chairman HANNA. But why is that company even out there? I 

mean, if you know who they are, and you do today, why did you 

not know yesterday? Why is that not someplace in the public domain? I swear that it must be. 

Ms. RUNG. Yeah. 

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Chairman HANNA. My time is expired, but thank you. I apologize for cutting you off. 

Chairman HARDY. The gentleman’s time has expired. I would 

like to recognize Mr. Takai for five minutes. 

Mr. TAKAI. Thank you, Chairman. 

I am concerned about some of the comments made by the previous panel about the effects that this executive order may have on 

the federal marketplace. So Ambassador Rung, what do you say 

about those—what do you say about those arguments made by 

them about primes and subcontractors exiting the federal marketplace if they have to comply with this executive order? 

Ms. RUNG. Yeah. Thank you for the question. 

I think when the Federal Awardee Performance and Information 

Integrity System—I know that is quite a name, FAPIIS, was introduced per statute in 2010, we heard similar concerns that by making transparent performance information and violations we would 

be keeping good companies out of the marketplace or, you know, 

discouraging primes from engaging with subcontractors. And in the 

end, we did not see an impact on the type of companies entering 

our federal marketplace. However, I do agree with you that we 

need to do more to ensure that we are continuing to bring good 

companies into the marketplace. And I think there are a number 

of reasons why they are not entering the marketplace today, many 

of which I outlined back in a December 4, 2014 memo where I 

talked about ways to drive greater economy an efficiency in the federal marketplace, and not the least of which is I think it is incredibly challenging for our contractors to navigate through 3,200 separate procurement units across the federal marketplace with very 

little collaboration and sharing of information. 

Mr. TAKAI. Yeah. I appreciate our efforts to bring more companies into the federal marketplace. I think the question is that we 

currently have companies in the federal marketplace that we might 

be pushing out. 

So my other question is in regards to providing prime contractors 

with the opportunity to work with contracting officers and the 

LCAs on disclosures. So will subcontractors have the opportunity 

to access the LCAs regarding the disclosures? 

Ms. RUNG. If I could just address your one point about this driving out companies already in the marketplace, particularly small 

businesses. We are taking a number of steps to really help minimize the burden on companies, and in particular, small businesses. 

A couple examples. We are phasing in parts of this rule over time 

to give companies a chance to acclimate themselves to this new 

rule. And secondly, you know, we have outlined some alternatives 

that I have discussed earlier that I think will help minimize that. 

The reporting requirements of subs to primes. We are improving 

the IT infrastructure. Most importantly, and I think this really 

cannot be emphasized strongly enough, we are limiting this executive order to contract awards over $500,000. And when you start 

with a base of several hundred thousand small businesses in the 

federal marketplace and you take away from that companies that 

are doing business under the 500,000 threshold for which this EO 

would not even apply, and then you take from that the vast 

amount of companies that are already complying with labor laws, 

SBREP-219 with DISTILLER

29 

you are talking about a very small fraction of companies that 

would have any disclosure requirements whatsoever. 

Mr. TAKAI. But you are talking about 500,000 for the prime, or 

500,000 for every sub? 

Ms. RUNG. The 500,000 limit applies to both primes and subs. 

Mr. TAKAI. Okay. So that could be problematic for subs. 

Ms. RUNG. No. This is an advantage to them because what we 

are saying in the executive order is if you are awarded a contract 

under $500,000 at both the prime or sub level, this executive order 

does not apply to you. And for the vast majority of small business 

transactions, they fall under the $500,000 award. 

Mr. TAKAI. Okay. Well, if you can get us information regarding 

that, that will be helpful. 

Okay. So my next question is would a subcontractor who is 

deemed nonresponsible by a prime have the same process of redress that a prime has if it is ruled nonresponsible by the contracting officer? In other words, yeah, does the subprime contractor 

have redress in this particular case? 

Ms. RUNG. Yeah. So historically, the performance of the subcontractor has been the responsibility of the prime. So it would be the 

prime that would ensure that there is satisfactory performance 

and/or there is business integrity and ethics. And that is a relationship between the two of them that the sub would work through 

with its prime. 

Mr. TAKAI. Okay. But if they are being labeled as nonresponsible by prime, is there recourse at your level? Is there anything 

they can do? I have eight seconds. 

Ms. RUNG. I am not aware of that. 

Mr. TAKAI. All right. 

Ms. RUNG. But I am happy to look into it and see if I can get 

you a more complete answer. 

Mr. TAKAI. Okay. Thank you. 

Thank you, Mr. Chairman. 

Chairman HARDY. The gentleman yields back. 

I would like to recognize Mr. Rice for five minutes. 

Mr. RICE. Thank you, Mr. Chairman. 

This is all very interesting to me. You heard me talking earlier, 

I think, about the fact that for the last five years the regulatory 

burden has mushroomed under the federal government. You also 

heard me tell the SBA—not just the Federal Government, the SBA 

says that for a firm under 20 employees, the federal regulatory 

burden costs $10,585 per employee per year. So let me ask you, 

with respect to small businesses that have to comply with this new 

law, is this going to be free for them or is it going to cost them 

money? 

Ms. RUNG. So we very much recognize that there is a cost to 

this proposed rule. 

Mr. RICE. So the answer is yes. 

Mr. Solomon, do you agree with that? 

Mr. SOLOMON. Yes. 

Mr. RICE. Okay. We have had more small businesses closing 

than we have being formed in this country in the last five years, 

the first time that happened since the Great Depression. I think 

that has a lot to do with this mushrooming regulatory burden. Do 

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30 

you think this new rule is going to ease their regulatory burden or 

is it going to pile more on their heads? 

Ms. RUNG. This is designed to create a more level playing field 

for small businesses. 

Mr. RICE. Okay. So I will take that as it is going to add more. 

Mr. Solomon, what do you think? 

Mr. SOLOMON. I agree with my colleague. 

Mr. RICE. Okay. Good. 

You know, you were saying that you are trying to protect taxpayer dollars. I mean, any single transaction that occurs in commerce, I guess we could look at every single transaction from a 

bank deposit to a withdrawal and say there may be a taxpayer dollar involved so we should get involved in that. Should the government be involved in every single transaction? 

Ms. RUNG. So it has been a longstanding tenet of the federal 

procurement system that when we spend taxpayer dollars we are 

doing so while we are also ensuring that the contractor receiving 

those taxpayer dollars are a responsible source. And that means 

that there—— 

Mr. RICE. Ms. Rung, is this the only regulation that you oversee? 

Ms. RUNG. I oversee the federal acquisition regulations, so there 

are several. 

Mr. RICE. What have you done? How long have you been with 

this department? 

Ms. RUNG. I was confirmed a year ago this month. 

Mr. RICE. Okay. What have you done that has a material reduction in small business cost or time in your regulatory authority? 

Ms. RUNG. So there have been a number of successful steps forward in the small business arena in the past year. One was creating set-asides for small businesses on task and delivery orders. 

One was working into senior management performance plans, 

small business goals. And we have also, you know, worked on a 

number of other provisions—— 

Mr. RICE. How much time or money do you think you have 

saved small businesses as a result of these? 

Ms. RUNG. I think in the end, by doing business with companies 

that comply with labor laws and all laws, we ensure a greater economy and efficiency in federal procurement, and that has long been 

understood. 

Mr. RICE. So the answer would be none, is that what you are 

saying? 

Ms. RUNG. The answer is the intent of this executive order is 

to ensure that we promote economy and efficiency by ensuring that 

we do business with companies that comply with laws. 

Mr. RICE. Mr. Solomon, you were at the National Labor and Relations Board when, I think, in fact, you were the guy who issued 

the opinion that Boeing could not move their Dreamliner production line from Washington to South Carolina; is that right? 

Mr. SOLOMON. I issued the complaint. It was not as you state. 

The theory of the case was not as you state. It was not about the 

opening of South Carolina. 

Mr. RICE. Do you think the government should be able to say 

where businesses can open their production lines? Do you think the 

SBREP-219 with DISTILLER

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Federal Government should be able to dictate where a business can 

open its production line? 

Mr. SOLOMON. The business of the complaint was not saying 

where Boeing could locate its business. The theory of the complaint 

was that they would have built this line in Seattle as they have 

done all other lines except for the fact that their employees unionized and would go on strike. 

Mr. RICE. All right. So if you believe that the government has 

that level of intrusive authority into a business, do you not think 

that this new proposed rule could very easily be used for political 

purposes to grant government contracts to people who are favored 

by the administration? It seems to me like this rule is rife with potential for corruption. 

Mr. SOLOMON. With all due respect, Congressman, I think you 

will find nothing in the guidance or the FAR rule that would lead 

to that conclusion. 

Mr. RICE. All right. I appreciate very much your time and I 

yield back. 

Chairman HARDY. The gentleman yields back. 

Thank you for being here. Thank you for your participation. I 

just would like to state a couple of things. Fifty-seven percent of 

the Associated Builders and Contractors say that under this rule 

they will no longer participate on government contracts. That is 

huge. Last year, small businesses received over 57 billion of noncommercial item contracts. This is nearly 60 percent of the prime 

contract dollars spent with small businesses. At a time when the 

federal contractors are already struggling, I wish I could say that 

I am leaving here today convinced that the administration heard 

the concerns being expressed by our small businesses witnesses 

and are going on to respond in an appropriate manner. So I hope 

you really consider what has been said here today and think about 

it. I thank you for being here. I appreciate your testimony. I know 

it is hard to come here and stand before people sometimes, and unfortunately, this happens, but I hope you will reconsider your 

thought process, at least at my standpoint, and thank you for being 

here. 

Mr. SOLOMON. Thank you. 

[Whereupon, at 11:46 a.m., Subcommittees were adjourned.] 

SBREP-219 with DISTILLER

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1Fair Pay and Safe Workplaces Proposed Rule, 80 Fed. Reg. 30,548 (May 28, 2015); Guidance 

for Executive Order 13673, Fair Pay and Safe Workplaces, 80 Fed. Reg. 30,574 (May 28, 2015); 

EO 13673, Fair Pay and Safe Workplaces 79 Fed. Reg. 45,309 (Aug. 5, 2014). 2Fact Sheet: Fair Pay and Safe Workplaces Executive Order Jul 31, 2014, http://www.dol.gov/ 

asp/fairpay/FPSWFactSheet.pdf (last visited July 2, 2015). 

A P P E N D I X 

STATEMENT OF ANGELA B. STYLES 

CHAIR, CROWELL & MORING LLP 

BEFORE THE HOUSE COMMITTEE ON SMALL BUSINESS 

SUBCOMMITTEE ON CONTRACTING AND WORKFORCE 

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT AND 

REGULATIONS 

SEPTEMBER 29, 2015 

CHAIRMAN HANNA, CHAIRMAN HARDY, CONGRESSMAN TAKAI, 

CONGRESSWOMAN ADAMS, AND MEMBERS OF BOTH SUBCOMMITTEES

I appreciate the opportunity to appear before you today to discuss 

the impact of the proposed Federal Acquisition Rule (‘‘FAR’’) Rule 

and Department of Labor (‘‘DOL’’) Guidance implementing the Fair 

Pay and Safe Workplaces Executive Order (‘‘EO 13673’’).1

As Chair of the Crowell & Moring Government Contracts Group, 

and as former Administrator for Federal Procurement Policy at the 

Office of Management and Budget, I have worked closely with 

small business contractors throughout my professional career. 

Based upon over two decades of experience in federal procurement, 

I am deeply concerned that the EO will undermine the government’s long-standing policy of maximizing contracting opportunities 

for small businesses. Certainly, no one opposes the principles of 

‘‘fair pay’’ and ‘‘safe workplaces’’ for employees of government contractors, and the Administration itself has acknowledged that ‘‘the 

vast majority of federal contractors play by the rules.’’ 2 But if the 

EO is aimed at only a small number of bad actors, then surely 

there is a more efficient way to accomplish this goal than imposing 

requirements that will lead to procurement delays, the blacklisting 

of ethical companies, and reduced competition in the federal marketplace. My testimony today highlights five principal concerns 

about the substance of the EO as it relates to small businesses: 

• Potentially severe unintended consequences for small businesses. 

• High compliance costs that will deter small businesses 

from participating in the federal marketplace. 

• The diversion of federal employees from assisting and 

growing our small businesses to collecting data, monitoring 

compliance, and enforcement of federal and state labor laws 

with a high risk of de facto debarment. 

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• A flawed Initial Regulatory Flexibility Act analysis. 

• Failure to give even the most basic rationale for the necessity of this rule. 

For a more in-depth analysis of other portions of the Proposed 

Rule and the potential effect on the entire procurement system, I 

refer you to the official comments to the Proposed Rule submitted 

by the National Association of Manufacturers (‘‘NAM’’), a client of 

Crowell & Moring, and attached to this testimony. Over the course 

of several months, we have been fortunate to assist NAM with an 

analysis of the Proposed R7ule and preparation of comments for official submission. While I am testifying on my own behalf today, I 

have worked extensively with industry in understanding and assessing the potential impact of this rule. 

The EO Creates Potentially Severe Unintended Consequences for 

Small Businesses 

On May 28th, the Administration released a 131-page Proposed 

FAR Rule and a 106-page Proposed DOL Guidance to implement 

EO 13673. Under the EO, a small business bidding on a federal 

prime contract or subcontract valued at more than $500,000 will be 

required to disclose ‘‘violations’’ of the fourteen enumerated labor 

laws and be required to provide mitigating documentation to the 

federal government and/or prime contractors. The collection and 

provision of documentation on a wide array of labor compliance 

issues will cause significant disruption to small businesses, and 

forces the delivery of competitively sensitive information to prime 

contractors, the Department of Labor, or both. The notion of providing this information to prime contractors is especially problematic in the government contracts marketplace where it is not uncommon for contractors to team on one project only to be competitors on a separate procurement. Under the arrangement proposed 

by the EO, prime contractors will learn significant information 

about a small business subcontractor’s labor compliance history 

that could then be used as ammunition in bid protests against the 

company in subsequent competitions. In other words, the EO could 

radically alter the prime/subcontractor relationship that the government depends on for the delivery of innovative products and solutions. 

There is also the risk—acknowledged in the Proposed Rule—that 

prime contractors will shy away from doing business with subcontractors with any kind of labor violation, no matter how minor, 

because it could slow down the award of the potential contract or 

jeopardize the award of the contract altogether. This raises the 

chilling specter of small businesses with minor labor issues being 

‘‘frozen out’’ of the marketplace. 

And let us not forget that over twenty percent of federal procurement dollars are awarded to small businesses as prime contractors 

on federal projects. Under the EO, these small business prime contractors will face a daunting task. In addition to satisfying the 

rule’s onerous compliance and reporting requirements with respect 

to their own corporate history, they will be charged with collecting, 

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3 E.O. § 4 

analyzing, and updating information with respect to their subcontractors. If any of those subcontractors are large federal contractors—which is often the case—it is not hard to imagine a small 

business being subsumed in paperwork when its large business 

subcontractor forks over boxes and boxes of paperwork on its historical labor compliance, mitigating circumstances, and other information required under the EO. Instead of delivering critical services to federal agencies that rely on their support, small business 

prime contractors will be forced to re-allocate precious resources to 

generate paperwork for paperwork’s sake. 

Pricey Compliance Costs will Diminish Small Businesses 

Participation in the Federal Marketplace 

One fact is crystal clear: compliance with the new requirements 

will be incredibly expensive and burdensome. These costs hit small 

contractors especially hard, as they have limited resources to build 

new compliance infrastructure, track legal allegations, or even 

challenge frivolous claims. All of this comes at a time when the 

Government is attempting to encourage more innovative small 

businesses and commercial item contractors to enter the government marketplace. 

Section 4 of EO 13673 requires the FAR Council to minimize the 

burden of complying with the regulation on small entities.3 While 

the Proposed Rule contains several steps to minimize the burden 

such as the possible phasing-in of flow-down requirements and the 

exemption of subcontracts for Commercial Off the Shelf (‘‘COTS’’) 

purchases, the Proposed Rule introduces a host of new labor law 

compliance reporting requirements and creates substantial administrative burdens for small businesses that want to sell goods and 

services to the federal government. 

For even the largest, most sophisticated government contractors, 

the collection of subcontractor labor compliance data will create an 

unprecedented data collection and reporting burden. If compliance 

will be difficult for large contractors with in-house personnel and 

expertise, satisfying the requirements will be near impossible for 

small businesses when they are awarded prime contracts and are 

therefore required to make responsibility determinations for their 

own subcontractors. Many small businesses lack the staffing or 

compliance infrastructure to collect and evaluate information about 

labor law violations from subcontractors with hundreds or even 

thousands of employees. In all likelihood, small businesses will be 

overwhelmed with the task of trying to collect and evaluate the 

labor violations of their subcontractors, and this heavy burden is 

compounded by the fact that the process will have to be repeated 

every six months after award. 

Small business contractors are already expending substantial resources to comply with federal labor laws and regulations, oftentimes without the benefit of large administrative staffs, and sophisticated legal counsel. The additional costs, risks, and compliance 

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4SBA Office of Advocacy, Regulatory Comment Letter re: Proposed Regulation to Implement 

Executive Order 13673 ‘‘Fair Pay and Safe Workplaces,’’ 80 Federal Register 30,547, May 28, 

2015, FAR Case 2014-025, available at https://www.sba.gov/sites/default/files/ 

2015—08—26—15—20—33—2.pdf 5The DOL announced in its Guidance that it will define ‘‘equivalent state laws’’ as part of 

a future rulemaking. 

requirements associated with the EO may force some small businesses to exit the federal marketplace altogether. In the same vein, 

potential new entrants to the government contracts market may be 

deterred by the up-front investment that will be required to comply 

with the EO. I think we can all agree that reducing the number 

of companies competing for federal contracts is bad for everyone: 

bad for our job-creating small businesses, which will lose critical 

contracting opportunities; bad for thegovernment, which will have 

greater difficulty meeting statutorily-mandated socioeconomic contracting goals; and bad for the taxpayers, because reduced competition will lead to higher prices. 

Concerns about the collateral effects of the EO on small entities 

is shared by the Small Business Administration (‘‘SBA’’) Office of 

Advocacy, the federal government’s own small business watchdog. 

According to public comments submitted by that Office, the Proposed Rule is ‘‘very burdensome,’’ ‘‘raises the cost of doing business 

with the federal government,’’ and could lead to the ‘‘reduction of 

the number of small businesses that participate in the federal marketplace.’’ 4 Notably, the SBA’s Office of Advocacy recommends that 

the new requirements not apply to small businesses at least until 

the subsequent rulemaking when DOL identifies the state equivalents of the fourteen federal labor laws. 

Diversion of Federal Employee Resources to Data Collection and 

Enforcement with a Specter of De Facto Debarment 

The Proposed Rule and Guidance do not address how the federal 

acquisition workforce is expected to divert resources from guiding 

and growing small businesses to the collection, analysis, and enforcement of labor laws in a fair and even-handed way. As a 

threshold matter, each of the fourteen federal laws identified in EO 

13673 is extremely complex, and the caselaw is constantly evolving. 

There is not a lawyer in Washington who could claim to be an expert on each of the fourteen identified federal labor and employment laws, much less the yet-to-be-identified ‘‘equivalent state 

laws.’’ 5 So it is wholly unreasonable to assume that a contracting 

officer (‘‘CO’’) or agency labor compliance advisor (‘‘ALCA’’) will 

have a sufficient understanding of the universe of relevant labor 

laws to be able to make the required responsibility determinations, 

and to make them consistently. 

The tasks delegated to COs and ALCAs under EO 13673 and the 

Proposed Rule are made more difficult because of the short window 

of time in which responsibility determinations must be made. In 

order to meet the requirements of the Proposed Rule, a CO will be 

required to take the following steps for every contract award over 

$500,000 in which an offeror reports a labor violation: 

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6Fair Pay and Safe Workplaces Proposed Rule, 80 Fed. Reg. 30,548 (May 28, 2015) (‘‘The Executive Order (EO) requires that prospective and existing contractors disclose certain labor violations and that contracting officers, in consultation with labor compliance advisors, consider the 

disclosures, including any mitigating circumstances, as part of their decision to award or extend 

a contract.’’) 

• First, the CO must check to see if the contractor has disclosed any violations in the System for Award Management 

(‘‘SAM’’) as part of the initial certification; 

• Second, the CO must request all relevant information 

about the administrative merits determinations, civil judgment, or arbitral award; 

• Third, the CO must furnish the ALCAs with all of this information and request that the ALCA provide written advice 

and recommendations within three business days of the request; 

• Fourth, the CO must review the DOL Guidance and the 

ALCA’s recommendation; 

• Fifth, the CO must consider the mitigating circumstances 

such as the extent to which the contractor has remediated the 

violation or taken steps to prevent its recurrence;6

• Sixth, the CO must make a responsibility determination as 

to whether the contractor is a responsible source with a satisfactory record of integrity and business ethics; 

• Lastly, the CO will need to take the tine to document the 

various stages of this process in order to develop a more favorable administrative record in preparation for bid protests regarding the responsibility determination. 

Of course, the burden on small business contractors, subcontractors, and the acquisition workforce does not end there. After contract award, the contractor has to provide updated information for 

itself and its subcontractors every six months. 

Given the number of contract actions that will be subject to this 

process, these requirements will no doubt result in a less efficient 

and more cumbersome procurement process. Due to the enormous 

demands on a CO’s time, and the complexity of making responsibility determinations, the requirements of the Proposed Rule will 

likely result in conflicting and redundant decisions by COs. 

The most troubling unresolved question is whether these responsibility decisions could result in de facto debarment without the 

due process or the procedural protections embedded in Subpart 9.4 

of the FAR. For instance, one CO may find a small business to be 

non-responsible after determining that a handful of OSHA violations constitute evidence of a ‘‘pervasive’’ problem. Another CO, in 

an effort to reduce her crushing workload, could understandably 

decide to follow his or her colleague’s responsibility determination—about the same underlying facts—without conducting the required independent analysis. Indeed, such failure would seem 

much more likely when a small business is involved, a small business without the resources to fight back against an arbitrary decision made without independent analysis. If this were to occur, the 

government would have improperly effectuated a de facto debarment. While small businesses’ understand that contracting with 

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7 Reeve Aleutian Airways, Inc. v. United States, 982 F.2d 594, 598 (D.C. Cir. 1993). 8Phillips, et. Al, v. Mabus et. al, Civ. Action No. 11-2021, 2012 WL 476539 (D.D.C.) (‘‘De facto 

debarment occurs when a contractor has, for all practical purposes, been suspended or 

blacklisted from working with a government agency without due process, namely, adequate notice and a meaningful hearing.’’) citing Trifax Corp. v. Dist. Of Columbia, 314 F.3d 641, 643- 

44 (D.C. Cir. 2003). 9 Accompanying the Proposed Rule is a Regulatory Impact Analysis (‘‘RIA’’) that is required 

under EO 12866 (and, by adoption, EO 13563). See Federal Acquisition Regulation (FAR) Case 

2014-025, Fair Pay and Safe Workplaces Regulatory Impact Analysis Pursuant to Executive Orders 12866 and 13563. 10 EO 12866 directs federal agencies to assess the economic effects of their proposed significant 

regulatory actions, including consideration of reasonable alternatives. 11 44 U.S.C. §§ 3501-3521. 12 5 U.S.C. § 605(b). 

the federal government is a privilege and not a right, contractors 

(and particularly small businesses) have a due process liberty interest in avoiding the damage to their reputation and business 

caused by the stigma of broad preclusion from government contracting.7 In sum, the requirements of the EO create a slippery 

slope to the ‘‘blacklisting’’ of companies—effectively preventing 

them from competing for federal contracts—based upon the opinion 

of one contracting officer.8

The EO is grounded in the proposition that a greater understanding of—and compliance with—labor laws will lead to increased economy and efficiency in the procurement process. But 

rather than ensuring the timely and predicable delivery of goods 

and services, the EO and the implementing regulations divert precious federal resources and inject uncertainty into the procurement 

process that will delay critical federal purchases and side-step the 

procedural due process rights of contractors. 

The FAR Council’s Initial Regulatory Flexibility Analysis is Flawed 

In addition to the substantive flaws, the FAR Council’s regulatory analysis 9 falls short of the obligations imposed by EO 

12866,10 the Paperwork Reduction Act,11 and the Regulatory Flexibility Act (‘‘RFA’’).12 Due to the fact that the Proposed Rule is likely to have a significant impact on a substantial number of small 

businesses, the RFA requires that the FAR Council prepare an Initial Regulatory Flexibility Analysis (‘‘IRFA’’) describing the impacts 

of the rule on small entities. Under the RFA, the IRFA must address a number of required elements including ‘‘a description of the 

projected reporting, recordkeeping and other compliance requirements of the Proposed Rule,’’ and a description of any ‘‘significant 

alternatives to the proposed rule which accomplish the stated objectives of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities.’’ Here, the 

FAR Council’s IRFA does not adequately consider these elements 

and fails to calculate the true impact that the new requirements 

will have on small businesses across the country. 

Absent from the FAR Council’s IRFA is any substantive analysis 

of the recordkeeping or ongoing compliance requirements that will 

be imposed on small businesses. For most contractors, just the initial step of determining whether their company has any violations 

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tion collection and reporting requirements of the EO. In order to 

comply, contractors will be required to create new databases and 

collection mechanisms to account for information subject to disclosure. Moreover, contractors would be required to develop new internal policies and procedures and hire and train new personnel to ensure compliance with the proposed requirements. 

Moreover, the IRFA fails to consider alternatives to the Proposed 

Rule that could accomplish the same objectives. Had the FAR 

Council considered less costly alternatives, the Council would have 

concluded that federal dollars would have been better spent improving existing processes rather than requiring data collection and 

self-reporting which will only increase costs for small businesses. 

Under the present system, DOL already reviews federal contractors’ compliance with federal labor laws through the Wage and 

Hour Division, the Occupational Safety and Health Administration, 

and the Office of Federal Contract Compliance Programs. DOL collects data from these enforcement agencies and makes much of it 

publicly available through its Online Enforcement Database 

(‘‘OED’’). Rather than requiring contractors to collect and report 

data that the government already has in its possession, the government could improve its own information-sharing channels so that 

COs can have the information they need at their fingertips when 

making responsibility determinations. 

The EO is Unnecessary and Redundant 

Finally, a significant and wholly unanswered question: why is 

the federal government creating this burdensome process in the 

first place? Each and every labor law identified in the EO has its 

own separate penalties for companies who violate the respective 

laws. And, unlike the EO, those labor laws and the associated penalties were created by Congress rather than mandated by the Executive Branch. The federal procurement system also already includes adequate remedies to prevent companies with unsatisfactory 

labor records from being awarded federal contracts. Specifically, 

the suspension and debarment official (‘‘SDO’’) within each federal 

agency has broad discretion to exclude companies from federal contracting based upon evidence of any ‘‘cause so serious or compelling 

a nature that it affects the present responsibility of a Government 

contractor.’’ To the extent that a contractor’s labor compliance 

record impacts its present responsibility, FAR Subpart 9.4 sets 

forth the proper channels for suspension and debarment proceedings. 

With an established and effective system in place, it makes no 

sense to create a new bureaucracy to review these issues on a contract-by-contract basis with the possibility of astoundingly inconsistent decisions by different agencies and different COs. 

Conclusion 

Given its scope and complexity, this EO will be impractical—if 

not impossible to implement. The substantial costs of compliance 

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imposed on federal contractors will likely lead to higher procurement costs and will likely drive many small businesses out of the 

federal marketplace altogether. Moreover, these costs will be borne 

disproportionately by companies who can least afford them—our 

small businesses. This is an entirely unacceptable outcome considering that the goals of the EO—targeting contractors with the most 

‘‘egregious violations’’—could be accomplished through the enforcement of existing labor laws and our existing suspension and debarment system. As such, the FAR Council and DOL should rescind 

the Proposed Rule and Guidance. This concludes my prepared remarks. I am happy to answer any questions you may have. 

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Good afternoon, I am Debbie Norris, Vice President of Human 

Resources at Merrick & Company, a federal contractor 

headquartered in Greenwood Village, Colorado, just outside Denver. I am pleased to be here today on behalf of the Society for 

Human Resource Management, or SHRM, to discuss my significant 

concerns with the proposed rule issued by the Federal Acquisition 

Regulatory (FAR) Council and guidance issued by the Department 

of Labor (DOL) to implement the Executive Order on Fair Pay and 

Safe Workplaces. 

SHRM and our members have also sent comments to the FAR 

Council and to the DOL in response to the proposed rule and guidance. SHRM’s comments were submitted in conjunction with our 

affiliate, the Council for Global Immigration (CFGI) and the College and University Professional Association for HR (CUPA-HR). 

Founded in 1948, SHRM is the world’s largest HR membership 

organization devoted to human resource management. SHRM has 

more than 575 affiliated chapters within the United States and 

more than 275,000 members, a significant percentage of whom 

work in organizations that currently hold contracts with the federal 

government or seek to enter the federal contracting field. 

Merrick & Company is an employee-owned company. We have 

been in business for over 60 years and have a broad scope of services that we provide to federal and commercial clients. Our primary 

federal clients are the departments of Defense, Education, Agriculture and Homeland Security; the National Science Foundation; 

and the U.S. Antarctic Program. In Fiscal Year 2014 we managed 

329 federal contracts. Like many in the contracting community, our 

company serves as both a prime contractor and a subcontractor on 

various contracts. 

Let me first make clear that the President’s goal of providing fair 

pay and a safe workplace is a shared goal—after all, who isn’t for 

that? In fact, as Vice President of Human Resources at Merrick, I 

work to provide a safe workplace and to help make us an employer 

of choice—not just because it is the right thing to do but because 

it provides us a competitive advantage in our industry. We have 

been recognized as a Best Company to Work for in Colorado on five 

different occasions. We have also been recognized nationally as a 

Best Firm to Work For through the ZweigWhite conference. Our internship program has been recognized as a Best Practice in the 

Denver Metro Area. I mention these awards because, despite the 

fact that my company invests significant time and resources on 

compliance and creating a sought-after work environment, we believe the new FAR rules will have a significant and negative impact on our ability to maintain current contracts and compete for 

new ones. 

As a small business working in the federal contracting world, we 

must track a variety of employee size thresholds just to determine 

which federal, state, or local laws and regulations apply to us. As 

noted before, we not only try to be an employer of choice, but we 

also spend a tremendous amount of time ensuring that we are in 

compliance with all applicable laws. In addition, we are required 

to meet the current FAR requirements in all of our contracting acSBREP-219 with DISTILLER

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tivities and are subject to Defense Contract Audit Agency (DCAA) 

audits and pricing requirements. In order to meet DCAA timekeeping requirements as well as other reporting requirements, 

Merrick has invested millions of dollars in a new enterprise system 

to track information and meet all of our federal contracting requirements. The existing standards, in which we have invested significant resources to ensure compliance, already provide the government with ample information about our fitness as a federal contractor. 

The proposed regulations and guidance to implement the Executive Order on Fair Pay and Safe Workplaces raise many issues for 

those of us who work as contractors, especially smaller federal contractors. In my testimony today, I will address key concerns with 

the proposals including the role that the newly-created position of 

Agency Labor Compliance Advisor (ALCA) will play in the contracting process; the expansive and vague definiti8ons used in the 

proposals; the burden of recordkeeping and ongoing reporting requirements; and the damage to relationships between prime and 

subcontractors and delay in the contracting process that will result 

from these proposals. 

First, as described in the DOL guidance, the ALCAs will be layered onto the existing relationship between Merrick and our contracting officers in order to provide guidance on ‘‘whether contractors’ actions rise to the level of a lack of integrity or business ethics’’ after reviewing reported violations and assessing whether 

those violations are ‘‘serious, repeated, willful, or pervasive. ...’’ The 

definition of ‘‘violation’’ used by DOL is expansive. In addition, the 

DOL guidance purports to narrow that expansive definition of violation by excluding violations that are not considered ‘‘serious, repeated, willful, or pervasive.’’ The problem with these definitions is 

that they are vague as applied to specific situations. On top of what 

is already required by individual statutes, DOL has added these 

terms and definitions and given a great deal of discretion to the 

ALCAs to interpret these terms. 

For example, under the proposed definition of ‘‘repeated,’’ a violation will be deemed a ‘‘repeat’’ violation if the violations are ‘‘substantially similar’’—meaning they share ‘‘essential elements in 

common’’ but need not be ‘‘exactly the same.’’ Under this definition, 

would a Title VII claim for sexual harassment be considered a repeat violation if the contractor previously had an Office of Federal 

Contract Compliance Programs (OFCCP) show cause notice on a 

sex-based hiring discrimination claim? The definitions provide no 

clear guidance as to which violations and what number and type 

of violations could prevent an employer from contracting with the 

government. Contractors are left not knowing with any certainty 

what situations will yield a recommendation by the ALCA that a 

contractor lacks ‘‘integrity and business ethics’’ or a determination 

of ‘‘not responsible’’ by the contracting officer based on that recommendation. 

In addition, ALCAs, by the nature of their duties, will be interpreting labor laws at both the federal and state levels. Assigning 

federal agency employees the responsibility to not only interpret 

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federal law but also state law is curious—particularly given the 

complexity of the overlapping and sometimes conflicting state and 

federal laws. The federal contractors who are required to interact 

with the ALCAs are greatly exposed when they take advice regarding legal compliance with these laws. 

For example, can a contractor rely on the advice that the ALCA 

provides for compliance and will such reliance constitute a goodfaith defense? It is unclear from the proposed regulations whether 

the enforcement agencies will be bound by and follow the same interpretation that the ALCAs provide. If federal contractors are not 

able to appeal the determinations of the ALCAs, they are unable 

to properly present their views to a neutral body. Small businesses, 

in particular, will be at risk since they are less likely to have inhouse legal counsel or access to outside counsel, leaving them completely reliant on the ALCA’s determination, possibly to their great 

detriment. I also believe that adding ALCA review and consultation 

with contracting officers onto the process will inevitably lead to 

delay in contracting, an issue I will discuss in more depth later. 

I am equally, if not more concerned, about the requirement to report non-final agency actions. The proposal requires reporting of 

any ‘‘administrative merits determination, civil judgment, or arbitral award or decision rendered against [a federal contractor] during the preceding three-year period for violations of any of 14 identified Federal labor laws and executive orders or equivalent State 

laws,’’ although which state laws are implicated by this proposal is 

yet undefined. 

It is not uncommon for companies to undergo agency investigations and even be issued a notice of a violation that turns out to 

be unfounded. I am concerned that if non-final agency actions are 

considered by the ALCA and contracting officer as part of the responsibility determination, companies like mine could lose a contract as a result of cases or investigations that are not yet final or 

are eventually dismissed. For example, in fiscal year 2014, the 

Equal Employment Opportunity Commission received 88,778 

charges. In that same year, well over half of charges filed were 

found to have ‘‘no reasonable cause’’ and less than one-half of one 

percent of those charges matured into lawsuits. 

An unfortunate outcome of considering non-final agency actions 

is that federal contractors will feel pressured to settle a claim, even 

if they feel they have done nothing wrong. If a contractor has a big 

contract award coming up, it will fear that even an unfounded and 

unresolved issue could reflect poorly on it during the decision-making process. In our experience, government investigations and processes typically take a long time to resolve complaints or investigations. 

I would like to offer one example. As a federal contractor, 

Merrick files an annual Equal Employment Opportunity, or EEO1, report and Affirmative Action Plan. We are audited by the 

OFCCP whenever it deems necessary but not on any regular schedule. We are currently part of a desk audit that started in September 2014, and we have provided all requested documentation to 

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the agency. After a year, we have still not received a determination 

from the OFCCP. 

The desk audit takes weeks of preparation and, depending on the 

timing of the audit, we may need to complete a mid-year Affirmative Action Plan that requires us to spend many more hours in addition to hiring a consultant for assistance working on a mid-year 

affirmative action plan. In the meantime, if the proposed rule were 

to go into effect as drafted, it is not clear to us whether this is a 

reportable agency action, although we strongly feel it should not be 

reportable. We are concerned that unresolved actions will have a 

negative impact on future federal contracts. For these reasons, 

SHRM believes that the regulations should only require the reporting of final, non-appealable adjudications. 

Other major areas of concern are the recordkeeping and ongoing 

reporting burdens created by the proposals. Collecting and reporting on information deemed a ‘‘labor violation’’ under 14 different 

federal laws and an as-yet untold number of state laws will not be 

an easy task. This is compounded by the need to oversee the labor 

law compliance of our subcontractors. Doing so will require federal 

contractors to crate a company-wide, centralized electronic record 

of federal, and eventually state, violations over the past three 

years. Federal contractors will also have to require their subcontractors to collect this data, as well. In addition, contractors will 

have to determine, in consultation with the DOL contracting officers and labor compliance officers, whether a subcontractor is a ‘‘responsible source,’’ take remedial action when necessary, and report 

this information every six months. 

Merrick has 18 different offices in eight states and the District 

of Columbia as well as offices in Mexico and Canada. We run our 

HR department from our headquarters in Colorado, tracking violations on a corporate-wide basis although other federal contractors 

do not currently keep this data in a centralized place. Even though 

Merrick collects the information corporate-wide, the proposal places 

an additional burden of ensuring that each office is accurately reporting this information to us. 

Additional compliance and tracking requirements may cause my 

company to hire more staff, resulting in costs that will ultimately 

be passed on to the federal government. Currently whenever the 

OFCCP requests an audit, for example, it means my employees will 

work overtime to meet the demanding 30-day requirement to respond. When staff time is directed to responding to compliance requirements, it takes away from the HR department’s focus on the 

needs of our employees and meeting our business objectives. Federal contractors will likely handle this situation in one of two ways: 

They will either try to make do with existing staff, which may result in a failure to meet the contracting obligations, or they will 

hire additional staff, which will end up costing the government 

more. 

The proposed FAR regulations require an employer that has been 

awarded a contract to submit information on violations every six 

months during the life of the contract in order to determine whether to permit the contractor to continue performing. The proposed 

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regulations, however, do not say when this six-month reporting requirement begins or whether contractors can update the information to cover the reporting requirements for all of their contracts 

at the same time. 

As a federal contractor, Merrick already reports information to 

the federal government. Rather than placing additional and duplicative data collecting and reporting requirements on federal contractors, the federal government should seek to use the data is already collects. The additional and duplicative reporting requirements we will force us to find another way to manage compliance 

reporting. I doubt that we will have the staff in-house to manage 

this and will instead have to hire additional staff to meet the requirements. While it is unlikely we will have any violations since 

we have not had any in the past, we still have to track and report 

against 14 different federal laws plus state laws that have their 

own set of compliance standards. 

We are also concerned about the significant delays that these 

proposals will cause in the procurement process. Contractors will 

be required to report violations occurring within the previous three 

years along with the contract proposal, including reports on the 

subcontractors within their supply chain. In order to avoid jeopardizing the timeliness of their bid or proposal, prime contractors will 

have to start very early to collect the information needed from subcontractors. The agencies will also have to factor in time for the 

ALCA to review and evaluate the reports being provided by all 

competitors in a particular procurement, determine when to seek 

mitigating information, assess that information, and work with the 

contractor, subs, and other enforcement agencies to enter into labor 

compliance agreements and make recommendations. Given that 

each contracting agency will have only one ALCA to evaluate all 

of the disclosures, the process, by design, will take significant time. 

When we are trying to negotiate a contract through the contracting officer, it can already take longer than anticipated to get 

a working contract. In the meantime, we have employees who are 

idle waiting to work. When these employees are not working on 

projects, revenue is lost to the organization. 

We also believe that the information requested through the proposed rule could damage the relationships between prime contractors and subcontractors. As a company that has been both a prime 

and a sub on different federal contracts, we understand the burdens these proposals crate for both roles. Prime contractors should 

not be placed in an enforcement or legal interpretation role; that 

should instead be handled directly between subcontractors and the 

government. Reporting of a labor violation could be a competitive 

advantage to the prime contractors and lead to blacklisting of subcontractors. On the other hand, a prime contractor will not want 

to do business with a subcontractor with any kind of labor violation, no matter how minor, because it could slow down the evaluation and awarding of the potential contract or jeopardize the award 

of the contract altogether. For these reasons, SHRM believes that 

the final regulations should create a process for subcontractors to 

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report their violations directly to the government—hopefully 

through a process that will not intensify delay. 

In conclusion, SHRM believes that the proposals create a vague 

and unworkable system that will harm the federal contracting 

process and impose requirements on contractors and subcontractors 

that are impractical and hugely expensive. For these reasons, we 

believe the Executive Order should be withdrawn or substantially 

modified. 

Again, I appreciate the opportunity to express my concerns with 

the proposed rule on behalf of SHRM and our 275,000 members. 

The burdens presented by the proposals are substantial. I hope 

that the federal government will make modifications to ensure that 

businesses, and small businesses in particular, can afford to remain federal contractors. 

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EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND BUDGET 

WASHINGTON, D.C. 20503 

www.whitehouse.gov/omb 

TESTIMONY OF ANNE E. RUNG 

ADMINISTRATOR FOR FEDERAL PROCUREMENT POLICY 

OFFICE OF MANAGEMENT AND BUDGET 

BEFORE THE SUBCOMMITTEE ON CONTRACTING AND 

WORKFORCE AND 

INVESTIGATIONS, OVERSIGHT, AND REGULATIONS 

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF REPRESENTATIVES 

September 29, 2015 

Chairman Hanna, Ranking Member Takai, Chairman Hardy, 

Ranking Member Adams and Members of the Subcommittees, 

thank you for the opportunity to appear before you today and discuss the Administration’s implementation of Executive Order (E.O.) 

13673, Fair Pay and Safe Workplaces. My comments today will primarily focus on actions being taken by the Federal Acquisition Regulatory Council (FAR Council), which I chair as Administrator of 

the Office of Federal Procurement Policy (OFPP). 

It is important to emphasize at the outset that OFPP and the 

FAR Council have been working in close partnership with the Department of Labor (DOL) on rules and guidance to implement E.O. 

13673. Our respective organizations are fully committed to implementing the E.O. in a manner that is clear, fair, and effective, and 

have been actively seeking feedback from stakeholders since 

issuance of the E.O. more than a year ago. We did this to ensure 

that we had sufficient information and insight from stakeholders, 

including small businesses, to achieve these goals. As part of this 

outreach, my office took part in a roundtable held this summer by 

the Small Business Administration’s (SBA) Office of Advocacy to 

hear the small business’s views on DOL’s proposed guidance and 

the proposed change to the Federal Acquisition Regulation (FAR) 

published in the Federal Register on May 28, 2015. 

E.O. 13673 is designed to improve contractor compliance with 

labor laws in order to increase economy and efficiency in Federal 

contracting. As section 1 of the E.O. explains, contractors that consistently adhere to labor laws are more likely to have workplace 

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practices that enhance productivity and deliver goods and services 

to the Federal Government in a timely, predictable, and satisfactory fashion, While the vast majority of Federal contractors abide 

by labor laws, studies conducted by the Government Accountability 

Office, the Senate Health, Education, Labor and Pensions Committee, and the Center for American Progress (CAP) suggest that 

a significant percentage of the most egregious labor violations identified in recent years have been regarding companies that received 

Federal contracts. In addition, CAP and studies performed by others have found a nexus between companies with labor violations 

and significant performance problems on Government contracts. 

In recent years, important steps have been taken by this Administration to better protect taxpayers from the waste and abuse that 

comes from doing business with contractors that are not responsible sources. These steps include the deployment of the Federal 

Awardee Performance and Integrity Information System (FAPIIS) 

that supports agencies as they evaluate whether a company has 

the requisite integrity to do business with the Government. We 

have also sought to strengthen agency suspension and debarment 

programs to protect the Government from harm. Despite these 

steps, many labor violations that are serious, willful, repeated, or 

pervasive are not considered in awarding a contract, in large part 

because contracting officers are not aware of them. In addition, 

even if information regarding labor violations is made available to 

the agency, contracting officers generally lack the expertise and 

tools to evaluate the severity of the labor law violations brought to 

their attention and therefore cannot easily determine if a contractor’s actions show a lack of business ethics and integrity. 

The E.O. requires that prospective and existing contractors on 

covered contracts disclose violations of certain labor laws and that 

contracting officers, in consultation with labor compliance advisors 

(LCAs), consider the disclosure, including any mitigating circumstances, as part of their decision to award or extend a contract. 

DOL and the FAR Council have been working closely together to 

create a comprehensive process that is manageable and avoids the 

uncertainty that drives up the cost of contractors doing business 

with the government. Once finalized, the FAR rule will provide direction to contracting officers on how they are to obtain disclosures 

from contractors on their labor violations, how to make responsibility determinations that take into account disclosed labor violations, and how they will work with LCAs, who will advise contracting officers in evaluating violations. DOL’s guidance will work 

hand-in-hand with the FAR rule by addressing how LCAs should 

identify from among disclosed violations those serious, willful, repeated, or pervasive violations that may warrant heightened attention because of the nature of the non-compliance. The guidance will 

also explain how contractors can obtain compliance assistance from 

DOL. 

In addition to the new requirements to improve labor compliance, 

the FAR rule will address requirements in the E.O. to ensure workers on covered contracts are given the necessary information each 

pay period to verify the accuracy of what they are paid. It will also 

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tracts for non-commercial items over $1 million agree not to enter 

into any mandatory pre-dispute arbitration agreement with their 

employees or independent contractors on any matter arising under 

Title VII of the Civil Rights Act, as well as any tort related to or 

arising out of sexual assault or harassment. 

As explained in the preamble to the proposed FAR rule, we have 

take a number of steps in the proposed rule, consistent with direction in the E.O., to minimize the implementation burden for contractors and subcontractors, including small businesses: 

• The proposed FAR rule builds on existing processes and 

principles, including the long-standing requirement that a prospective contractor be a responsible source that has a ‘‘satisfactory record of integrity and business ethics.’’ 

• Many of the contracts performed by small businesses, including contracts valued at $500,000 or less and subcontracts 

for commercial-off-the-shelf items, are exempt from the proposed FAR rule’s disclosure requirements. 

• The proposed FAR rule preserves and emphasizes the requirement in the FAR that if a contracting officer finds a prospective small business contractor to be nonresponsible, the 

matter shall be referred to SBA. If SBA concludes that the 

small business is responsible, SBA will issue a Certificate of 

Competency. 

• The focus of the proposed FAR rule is on the most problematic labor violations that are most likely to have the greatest bearing on an assessment of a contractor or subcontractor’s 

record of integrity and business ethics. 

• LCAs will provide labor expertise to support contracting 

officers in evaluating labor violations. 

• DOL will work with LCAs to coordinate evaluations to promote consistency and certainty. 

• Efforts are underway to develop a single website to centralize reporting of labor violations by contractors. 

Further, during listening sessions held by DOL, OMB, and relevant policy councils, stakeholders raised concerns regarding the 

potential complexity and burden associated with two aspects of the 

E.O. in particular: (1) provisions addressing disclosure of violations 

of equivalent State laws, and (2) provisions addressing disclosure 

and evaluation of subcontractor violations. In response to what we 

learned from these sessions, requirements in the E.O. addressing 

the disclosure of violations of equivalent State laws, with the exception of OSHA State Plans, will be phased in at a later date. In 

addition, the FAR Council has developed alternative proposals that 

seek to address concerns it heard regarding the challenges contractors might face in evaluating violations disclosed by their subcontractors. This includes a possible phase-in of subcontractor disclosure requirements. The proposed FAR rule has invited public 

comment on additional or alternative approaches to this issue. 

Stakeholder feedback has been a key component in the development of the proposed FAR rule. Currently, the FAR Council is carefully reviewing the many and diverse public comments received in 

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response to the proposed rule published at the end of May to determine where additional revisions are needed. In considering comments, the FAR Council seeks to ensure that the final rule is both 

manageable and impactful in achieving the E.O.’s objective of 

bringing contractors with significant labor violations into compliance with the law in a timely manner. 

Without question, implementation of the E.O. requires the Government’s policy, operational, and technology officials to address a 

number of difficult issues head on. It is hard work, but work that 

is critical to the integrity of our procurement system, ensuring 

economy and efficiency in contracting, and securing the well-being 

of American workers. 

Thank you and I am happy to answer any questions you may 

have. 

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Statement of 

Lafe Solomon 

Senior Labor Compliance Advisor, Office of the Solicitor 

U.S. Department of Labor 

before the 

Subcommittee on Investigation, Oversight and Regulations & 

Subcommittee on Contracting and Workforce 

Committee on Small Business 

U.S. House of Representatives 

September 29, 2015 

Good morning Chairmen Hardy and Hanna and Ranking Members Adams and Takai. Thank you for the invitation to appear before your Subcommittees to speak about the Department of Labor 

(DOL or the Department) proposed guidance to implement Executive Order 13673, the Fair Pay and Safe Workplaces Executive 

Order (EO or the Order). 

Although most Federal contractors comply with applicable laws 

and provide high-quality goods and services to the government and 

taxpayers, a small number of Federal contractors have committed 

a significant number of labor law violations in the last decade. In 

2010, the Government Accountability Office issued a report that 

found that almost two-thirds of the 50 largest wage-and-hour violations and almost 40 percent of the 50 largest workplace health-andsafety penalties issued between Fiscal Year (FY) 2005 and FY 2009 

occurred at companies that later received government contracts. 

Beyond their human cost, these violations create risks to the 

timely, predictable, and satisfactory delivery of goods and services 

to the Federal Government, and Federal agencies risk poor performance by awarding contracts to companies with histories of 

labor law violations. Poor workplace conditions lead to lower productivity and creativity, increased workplace disruptions, and increased workforce turnover. For contracting agencies, this means 

receipt of lower quality products and services, and increased risk 

of project delays and cost overruns. Contracting agencies can reduce execution delays and avoid other complications by contracting 

with contractors with track records of labor law compliance—and 

by helping to bring contractors with past violations into compliance. Contractors that consistently adhere to labor laws are more 

likely to have workplace practices that enhance productivity and 

deliver goods and services to the Federal Government in a timely, 

predictable, and satisfactory fashion. 

Moreover, by ensuring that its contractors are in compliance, the 

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ers’ safety and maintain a fair and equitable workplace should not 

have to compete with contractors who offer slightly lower bids— 

based on savings from skirting labor laws—and then ultimately deliver poor performance to taxpayers. By helping contractors improve, the Federal Government can ensure that taxpayers’ money 

supports jobs in which workers have safe workplaces, receive the 

family leave they are entitled to, get paid the wages they have 

earned, and do not face unlawful workplace discrimination. 

To address this issue, President Obama signed this EO last year, 

requiring prospective Federal contractors on covered contracts to 

disclose certain labor law violations and giving agencies more guidance on how to consider those labor violations when awarding Federal contracts. With this Order, the President pledged to hold accountable Federal contractors that put workers’ safety, handearned wages, and basic workplace rights at risk. 

The EO builds on the existing procurement system, and changes 

required by the Order fit into established contracting practices that 

are familiar to both procurement officials and the contracting community. In addition, the Department will provide support directly 

to contractors and subcontractors so that they understand their obligations under the Order and can come into compliance with Federal labor laws without holding up their proposals in response to 

specific Federal contracting opportunities. Finally, the Department 

will work with Labor Compliance Advisors across agencies to minimize the amount of information that contractors have to provide 

and to help ensure efficient, accurate, and consistent decisions 

across the government. 

Nothing in the Order displaces the existing authority of the 

Small Business Administration to make a definitive determination 

of a small business’s responsibility to perform a particular contract. 

If a contracting officer makes a determination on non-responsibility 

involving a small business apparent successful offeror, the contractor must be given the opportunity to apply to the Small Business Administration for a ‘‘certificate of competency.’’ If SBA grants 

the certificate of competency, SBA’s determination overrides the responsibility decision made by the contracting officer—even a decision made pursuant to this Order. 

The objective of the Order is to help contractors come into compliance with Federal labor laws, not to deny them contracts, and 

it encourages compliance, not suspension and debarment. The processes and tools envisioned by the Order are designed to identify 

and help contractors address labor violations and come into compliance before consideration of suspension and debarment. The Order 

does not in any way alter the suspension or debarment process; 

however, the expectation is that the processes and tools envisioned 

by the Order will drive down the need for an agency to consider 

suspension and debarment and help contractors avoid the consequences of that process. As a result, this Order, once implemented, will offer contractors an opportunity to come into compliance and maintain the privilege of being a Federal contractor, unlike the suspension and debarment process, which could exclude 

them from receiving awards. 

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The Order also ensures that contractors’ employees are given 

necessary information to make sure their paychecks are accurate. 

It also ensures that more workers who may have had their civil 

rights violated or been sexually assaulted can have their day in 

court. 

On May 28, 2015, the Department published proposed guidance 

to assist contracting agencies and the contracting community in applying the Order’s requirements. On that same day, the Federal 

Acquisition Regulatory Council (FAR Council) also issued proposed 

regulations integrating the Order’s requirements and the provisions of the Labor Department’s guidance into the existing procurement rules. 

The Department’s proposed guidance would do several things. 

First, it would define ‘‘administrative merits determination,’’ ‘‘civil 

judgment,’’ and ‘‘arbitral award or decision,’’ and provide guidance 

on what information related to these determinations must be reported by covered contractors and subcontractors. Second, it would 

define ‘‘serious,’’ ‘‘repeated,’’ ‘‘willful,’’ and ‘‘pervasive’’ violations 

and provide guidance to contracting officers (or contractors with respect to their subcontractors) and Labor Compliance Advisors 

(LCAs) for assessing reported violations, including mitigating factors to consider. Third, it would provide guidance on the Order’s 

paycheck transparency provisions, including identifying those 

States whose wage statement laws are substantially similar to the 

Order’s wage statement requirement, such that providing a worker 

with a wage statement that complies with any of those State laws 

satisfies the Order’s requirement. It would also provide a roadmap 

to contracting officers, Labor Compliance Advisors, and the contracting community for assessing contractors’ history of labor law 

compliance and considering mitigating factors, most notably efforts 

to remediate any reported labor law violations. 

The Department and representatives of the FAR Council have 

been very active in seeking out stakeholder feedback with the goal 

of ensuring that the drafters of the guidance and related FAR rule 

receive a wide range of views and information so that the EO is 

implemented in a manner that is clear, fair, and effective. For example, on July 22, 2015, representatives from DOL and the FAR 

Council attended a public roundtable sponsored by the Small Business Administration’s Office of Advocacy to hear feedback from 

small businesses and gain a better understanding of the types of 

concerns they can expect to be raised in comments from this community. 

During those sessions, the regulated community stressed the importance of effective implementation of the order and the need to 

streamline the disclosure process and minimize the burden on contractors. In response to what we learned from the regulated community in these sessions and in an effort to ensure that this rule 

creates a fair, reasonable, and implementable process, the proposed 

guidance and Notice of Proposed Rulemaking (NPRM) would: 

1.) Leverage existing Federal acquisition processes and systems with which contractors are familiar. Federal contracting 

officers already must assess a contractor’s record of integrity; 

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however, the information about a prospective or current contractor’s workplace violations is not readily available to contracting officials. The regulations and guidance would propose 

that contracting officers have access to additional information 

to make more informed decisions, and provide greater transparency for contractors as to the information that will be considered in making that determination. 

2.) Phase in parts of the rule over time. Contractors would 

not be required to disclose violations related to equivalent 

State laws immediately (other than violations of OSHA state 

plans), which is expected to significantly reduce the number of 

violations they will need to report. Separate guidance and an 

additional rulemaking will be pursued at a future date to identify equivalent State laws, and such requirements will be subject to notice and comment before they take effect. In the proposed FAR rule, the regulated community is also asked to comment on the phased-in subcontractor reporting requirements. 

3.) Provide an alternative proposal, under which subcontractors would directly report violations to DOL, rather than to 

their contractor. If this alternative is adopted in the final rule, 

the contractor could then rely on DOL’s review of the subcontractor’s violations in determining whether the subcontractor is responsible. Moreover, the proposed FAR rule has invited public comment on additional or alternative approaches 

to subcontractor disclosure and reviews of the disclosures. 

We are working through the comments to produce a quality guidance document that will better inform Federal procurement decisions; provide contracting officers with the necessary information to 

ensure accurate, efficient, and consistent compliance with labor 

laws; help contractors meet their legal responsibilities; and remove 

truly bad actors from Federal contract consideration—creating a 

more level playing field for law-abiding contractors. Most importantly, it will also ensure that hardworking Americans get the fair 

pay and safe workplaces they deserve. 

I appreciate the invitation to testify and will be happy to take 

any questions you may have. 

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1For 40 years, PSC has been the leading national trade association of the government technology and professionals services industry. PSC’s nearly 400 member companies represent 

small, medium, and large businesses that provide federal agencies with services of all kinds, 

including information technology, engineering, logistics, facilities management, operations and 

maintenance, consulting, international development, scientific, social, environmental services, 

and more. Together, the association’s members employ hundreds of thousands of Americans in 

all 50 states. See www.pscouncil.org. 

2Fair Pay and Safe Workplaces FAR Proposed Rule, 80 Fed. Reg. 30548 et seq, May 28, 2015, 

available at http://www.gpo.gov/fdsys/pkg/FR-2015-05-28/pdf/2015-12560.pdf. 

3Guidance for Executive Order 13673, ‘‘Fair Pay and Safe Workplaces’’, 80 Fed. Reg. 30574 

et seq, May 28, 2015, available at http://www.gpo.gov/fdsys/pkg/FR-2015-05-28/pdf/2015- 

12562.pdf. 

4 CODSIA Comments on Fair Pay and Safe Workplaces proposed implementing regulations, 

August 28, 2015, available at www.pscouncil.org/PolicyIssues/LaborIssues/Comments—on—Fair—Pay—and—Safe—Workplaces.aspx. 

Introduction 

The Professional Services Council commends the Subcommittee 

on Contracting and the Workforce for holding this hearing and appreciates the opportunity to provide a written statement for the 

record.1 The issue of today’s hearing is an important one with a 

long history and its effects must be fully understood and considered 

before there should be any consideration of imposing its requirements on contractors. 

PSC supports the logical premise that it is unfair that contractors with repeated, willful, and pervasive violations of labor laws 

gain a competitive advantage over the vast majority of contractors 

that are acting diligently and responsibly to comply with a complex 

web of labor requirements. That said, we are strongly opposed to 

Executive Order 13673 signed on July 31, 2014, and its implementation tools, because they go far beyond the Executive Order’s stated intent and are unnecessarily excessive, largely unworkable and 

unexecutable. More specifically, the Executive Order will act as a 

de facto blacklisting of well-intentioned, ethical businesses, further 

restrict competition for contracts, create procurement delays, and 

add to the cost of doing business with the government. And despite 

its laudable intent, the Executive Order will also create significant 

new implementation and oversight costs for the government for 

what even the administration acknowledges is a relatively small 

problem. 

In simple terms, this Executive Order lacks crucial, fundamental 

characteristics of fairness, logic, and objectivity. The same is true 

about the Executive Order’s implementing tools—a Federal Acquisition Regulation proposed rule 2 and Department of Labor (DoL) 

proposed guidance 3 issued simultaneously on May 28, 2015. In 

fact, the DoL proposed guidance is far more aggressive than what 

is required by the Executive Order and in many aspects is incomplete. PSC commented extensively on the proposed rule and guidance via our participation in the Council of Defense and Space Industry Associations (CODSIA), which we have added as an appendix to this written statement.4 If fully implemented, the Executive 

Order will have a significant negative affect on law abiding small 

businesses already performing in the federal market and will act 

as a substantial barrier to any small business seeking to do business with the Federal government. 

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5To date, there is no federal requirement that imposes a contractural obligation to comply 

with state labor laws. The E.O. will require the Department of Labor to determine when labor 

laws are ‘‘equivalent.’’ 6Fact Sheet: Fair Pay and Safe Workplaces Executive Order, available at http:// 

www.whitehouse.gov/the-press-office/2014/07/31/fact-sheet-fair-pay-and-safe-workplaces-executive-order. 

About the Executive Order 

Executive Order 13673 (E.O.) seeks to ensure that only those 

contractors who abide by a myriad of federal and ‘‘equivalent’’ state 

labor laws are permitted to receive federal contracts.5 The E.O. and 

its supporting materials state that the E.O. is necessary because of 

instances in which companies have failed to comply with existing 

laws related to wage requirements, workplace safety, and employer 

anti-discrimination. However, the White House also recognizes that 

the ‘‘vast majority of federal contractors play y the rules,’’ 6 which 

itself raises serious questions about the necessity of such a sweeping and significant new compliance regime. 

To achieve its intended goal, the E.O. would require that federal 

procurements for goods and services over $500,000 include a provision in the solicitation requiring every prospective contractor (offeror) to represent, to the best of the offeror’s knowledge and belief, 

whether there have been any administrative merits determinations, arbitral award decisions, or civil judgments—that were undefined in the Executive Order but are defined in the DoL proposed 

guidance—rendered against the offeror within the preceding three 

year period, for violations of 14 enumerated federal labor laws and 

their equivalent state laws. Examples of the laws that would be 

covered by the E.O. include the Fair Labor Standards Act (FLSA), 

Occupational Safety and Health Act (OSHA), the National Labor 

Relations Act, the David-Bacon Act, and the Service Contract Act. 

Based on the information received from offerors, government contracting officers must make a determination about each offeror’s 

present responsibility, thus determining whether the offeror is suitable for a contract award. 

If awarded the contract, the awardee must require all of their 

subcontractors to also disclose to the awardee any of its labor-related findings or violations and the awardee must evaluate every 

disclosure by a subcontractor and make a determination regarding 

whether that subcontractor is a ‘‘presently responsible sources’’ 

with satisfactory records of integrity and business ethics. 

The E.O. would also create a new function within each agency 

and require the appointment of a senior agency official to serve as 

the ‘‘Labor Compliance Advisor’’ (LCA). It tasks LCAs with assisting agency contracting officers with making decisions about contractors’ compliance with labor laws and whether contractors are 

‘‘presently responsible.’’ The LCA is also to provide assistance to 

the agency suspension and debarment official when initiating suspension and debarment proceedings. Finally, the E.O. requires DoL 

to assist prime contractors with making their decisions about their 

subcontractors’ ‘‘present responsibility.’’ To our knowledge, no 

mechanism exists today within DoL for providing such assistance 

to prime contractors. 

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7Written Statement of Stan Soloway, President and CEO of the Professional Services Council, 

before a joint hearing of the Workforce Protections and Health, Employment, Labor, and Pensions Subcommittees of the House Education and Workforce Committee, February 26, 2015, 

available at http://www.pscouncil.org/PolicyIssues/LaborIssues/GeneralLaborIssues/Testimony—on—Fair—Pay—and—Safe—Workplaces—Executive—Order.aspx. 8 65 Fed Reg 40830, et seq, published on June 30, 2000, available at http://www.gpo.gov/fdsys/ 

pkg/FR-2000-06-30/pdf/00-16266.pdf. 

9 65 Fed Reg 80256, et seq, published on Dec. 20, 2000, available at http://www.gpo.gov/fdsys/ 

pkg/FR-2000-12-20/pdf/00-32429.pdf. 

History 

The Fair Pay and Safe Workplaces Executive Order is similar in 

several respects to previous initiatives under the Clinton administration. PSC is familiar with this history because, at that time, 

PSC’s President and CEO Stan Soloway was a deputy undersecretary of defense and served as the primary lead for DoD on those 

proposed rules. As Soloway stated during his February 26, 2015 

testimony during a House Education and Workforce hearing:7

‘‘even at that time, there was a great deal of concern across the 

administration about whether that proposed rule was fair or 

implementable and whether it would hinder the Defense Department’s (or other agencies’) ability to effectively partner with essential 

and ‘‘responsible’’ private sector entities. In my view, those concerns 

remain valid today, as well, particularly since this E.O. goes well 

beyond the prior version.’’ 

As you may know, building on a commitment from then-Vice 

President Gore in 1996, the Civilian Agency Acquisition Council 

and the Defense Acquisition Regulations Council in 2000 published 

a proposed rule called the ‘‘Contractor Responsibility Rule.’’ 8 The 

driving force behind the proposal was actually a single case, albeit 

a significant one, involving a company with scores of labor violations. At stake was the core question of whether a company could 

be denied a federal contract solely on the basis of violations unrelated to its ability to perform on the contract. Many in the federal 

acquisition field believed the concept of ‘‘present responsibility,’’ a 

fundamental concept of federal acquisition law then and today, said 

that the answer to the question was ‘‘yes.’’ However, others disagreed and the company was awarded additional work. As a result, 

as one of its last regulatory acts, the Clinton administration issued 

the final version of the ‘‘Contractor Responsibility Rule.’’ 9 Then, as 

now, the intent was laudable. But then, as now, the rule was poorly thought-out, overly broad, and completely unexecutable. And, as 

you may also know, the final rule was rescinded by the incoming 

Bush administration just a few weeks later. 

Since then, however, the issue at the heart of that debate—the 

government’s ability to deny a contract award on the basis of broad 

compliance with federal law—has largely been settled. Over the 

last decade, numerous cases, from Enron to British Petroleum, 

have repeatedly demonstrated the government’s authority to deny 

contract awards to companies with documented, pervasive, and 

willful violations of law, even when those violations were entirely 

unrelated to the company’s performance on a government contract. 

Nonetheless, the Fair Pay and Safe Workplaces E.O. shares many 

of the same attributes as its Clinton-era predecessor: it is poorly 

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thought-out and constructed, overly broad and of fundamentally 

questionable fairness. It is also unnecessary. There is no debate 

today about whether pervasive violations of law, including federal 

labor laws, can be used as the reason to deny future federal contracts to a company through existing suspension and debarment 

procedures. And there is no real debate as to whether the government already has at its disposal any number of tools to penalize 

bad actors. 

Challenges 

As stated previously, this E.O. and its implementing tools pose 

a number of challenges that renders this E.O. unworkable. They 

also create a number of unintended consequences, and most notably, are completely unnecessary. While we learn more about the adverse effects of the E.O. every day, there are many aspects that we 

will not know about until well into implementation. I hope we do 

not get to that point because this E.O. has too many undefined 

terms, too few objective standards, and too much potential for adversely affecting the federal procurement process. 

The Executive Order is Unnecessary 

There is no evidence of a widespread problem of pervasive, repeated or willful violations of labor laws by federal contractors. As 

the White House Fact Sheet accompanying the E.O. states, the vast 

majority of contractors play by the rules. That is not to say that 

there are not instances where contractors have violated labor laws. 

And some of these infractions may well have been intentional. The 

courts have even found that the U.S. Government has violated the 

Fair Labor Standards Act for some of its employees. But the fact 

is that the labor laws involved are so complex and challenging to 

execute that many companies, sometimes at the direction of the 

government itself, take actions that result in honest mistakes. Yet, 

each mistake is, technically, a violation of law and these honest, 

administrative errors make up the vast bulk of such ‘‘violations.’’ 

Beyond that, there are numerous existing mechanisms and processes available to federal agencies that are more suitable and less 

intrusive than the E.O. for dealing with those cases in which there 

has been nefarious intent. 

First, contracting officers are already required to evaluate each 

offeror to determine whether it is a ‘‘responsible’’ contractors, and 

that evaluation is based on the totality of the contractor’s performance history. FAR 9.104 states that such determination is to include whether the contractor has a satisfactory record of integrity 

and business ethics. To assist contracting officers with making such 

determinations, contracting officers are required to review government maintained databases, including what was called the Excluded Parties List System (EPLS)—which lists all suspended or 

debarred contractors—and the Federal Awardee Performance Information and Integrity System (FAPIIS), which contains information 

about previous non-responsibility determinations, contract terminations, and any criminal, civil and administration agreements in 

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10DoL Fact Sheet #67: The McNamara-O’Hara Service Contract Act (SCA), July 2009, available at http://www.dol.gov/whd/regs/compliance/whdfs67.pdf. 

which there was a finding or acknowledgement of fault by a contractor tied to the performance of a federal contract. 

In addition, under FAR 9.4, which outlines the federal government’s suspension and debarment structure, federal agencies have 

the authority to suspend or debar a contractor for a number of enumerated actions, including for ‘‘commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a government contractor or subcontractor.’’ This catch-all provision provides 

the necessary authority for initiating suspension and debarment 

action against a contractor for violations of, among other things, 

federal labor laws. This authority is also reiterated in several 

places on the DoL website, and specifically on DoL’s published fact 

sheets outlining the penalties for contractor violations of the Service Contract Act.10 In addition to the FAR suspension and debarment process, the Department of Labor has independent statutory 

authority to debar a contractor for significant federal labor law violations. 

Examples of other existing remedies include criminal 

presecutions, civil actions, substantial fines, liquidated damages, 

and contract terminations. Federal contractors know these actions 

are serious as each of them carries significant consequences. The 

E.O., however, fails to acknowledge that the existing remedial actions even exist, let alone are effective, and instead assumes that 

only stripping contractors of their contracts or denying on the 

president’s own assertion that the vast majority of federal contractors play by the rules, the existing deterrents and the current system for reviewing and adjudicating potential violations of labor 

laws are working effectively. That said, we recognize that there will 

be bad actors. But, based on historical GAO reports and the data 

in Senator Harkin’s report (discussed in greater detail below), it is 

clear that contractors that violate federal labor laws are already 

being identified by DoL and the procuring agencies and that action 

is being taken against those that violate the law. 

With regard to labor law violations, it is important to recognize 

that it is the Department of Labor that initiates reviews and administers federal contractors’ compliance with federal labor laws 

through a number of DoL offices, such as the Wage and Hour Division and the Office of Federal Contract Compliance Programs. As 

such, the result of any of their own reviews, including settlement 

agreements, penalties, or other punitive actions, should be known 

and recorded by the Department of Labor. If this is not happening, 

the administration would be better served by focusing on improving 

its own data collection and information sharing efforts rather than 

adopting another costly, complex compliance and reporting regime. 

There is little evidence to demonstrate that the above existing 

authorities are not, or could not, be effective on their own, without 

creating new and significant bureaucracies as required by the E.O. 

In fact, much of the information collection that the E.O. imposes 

on contractors is information that the government already has. 

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Rather than creating duplicative and burdensome reporting requirements, the government should examine its existing reporting 

mechanisms and identify and correct any shortcomings without duplicating that effort by imposing additional requirements on industry. 

The Executive Order is Excessive 

Many of the most complicated challenges associated with the 

E.O. are created by its expansion of, or redundancy with, the current compliance regime, while providing very little additional benefit to the government. For example, the E.O. fails to limit reporting requirements to findings directly tied to federal laws only. By 

expanding the reporting requirements to include findings related to 

‘‘equivalent state laws,’’ the E.O. adds significant and unneeded 

complexity. First, DoL does not have jurisdiction over these often 

disparate state laws. Second, it is unreasonable to expect that any 

of the LCAs will have even marginal knowledge or understanding 

of even a few, let alone all 50 states’ labor laws, administrative 

processes, and/or due process rights afforded to federal contractors 

who do business in those states. 

Adding to the complexity of the E.O.’s inclusion of state labor 

laws is the fact that the E.O. does not limit reporting of state activity to violations tied to the performance of a federal contract. It is 

common for federal contractors to compete in the commercial marketplace in addition to the work done for the federal government, 

but it is also common that companies separate their federal and 

commercial business units for ease of complying with a myriad of 

other federal government-unique compliance, oversight and reporting regimes associated with federal procurements. Because of this 

expansive coverage, companies would have to initiate a substantial 

data collection effort from all business units, even if the vast majority of its total revenue is derived from its commercial business. Additionally, because the E.O. fails to limit reporting of findings to 

only those in which there is a finding or acknowledgement of fault 

by the contractor, the reporting burden will be much more intensive than necessary or appropriate to meet the objectives of the 

E.O. 

Given the E.O.’s inclusion of state labor laws beyond those tied 

to a contractors’ performance of federal contracts, and the fact that 

there need not be a finding or acknowledgement of fault to trigger 

a report and review, it is easy to see just how massive a data collection and reporting effort will need to be undertaken by those 

companies simply wishing to bid on a federal contract. Many will 

sit out the competition because of it, even if there are no company 

violations, particularly because compliance reporting is required 

twice per year once a contract is won. 

Ultimately, the E.O. should be focused on federal contractors, 

their compliance with federal laws, and on their performance of 

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eral labor laws, or in which the company was neither found to have 

committed, or admitted to, any wrongdoing. 

Even more troublesome is the fact that the DoL proposed guidance fails to define any ‘‘equivalent’’ state laws beyond state occupational safety and health laws that are ‘‘OSHA-approved.’’ Yet, 

the proposed guidance grants DoL the authority to add state law 

‘‘equivalents’’ in the future. Thus, the proposed guidance is incomplete and will result in cumulative, additional costs for contractors 

as DoL determines—likely without significant public input or cost 

impact assessment—which other state laws to cover. 

In recent years there have been a few reports seeking to highlight instances in which companies with labor law violations have 

received, or continued to perform, federal contracts. These reports 

are riddled with flaws that seek to paint a picture of contractor 

abuse that is woefully inaccurate. One such report, published by 

the office of Senator Tom Harkin in December 2013, reaches back 

to 2007 to identify contractors with OSHA and wage violations 

even if those violations had nothing to do with the companies’ work 

under a federal contract. Also, the report included a listing of top 

contractors that were tied to instances in which back wages were 

owed to their employees. What the report failed to highlight is that, 

in early half of the top 15 cases listed in the report, the contractor 

was not at fault for the violations. Many contract-related cases involving back pay occur because the contracting agency, i.e. the government, failed to include required Service Contract Act or DavisBacon Act clauses or correct wage determinations into the contract. 

While long viewed as technical or administrative errors, they have 

never been objectively considered evidence of willful behavior. Yet 

under these circumstances, federal contractors are often adversely 

affected by mistakes by the government. Also concerning is that 

the report failed to limit its finding to cases that had been fully resolved, thus falsely inflating the appearance of contractor violations. PSC has seen time and again determinations later overturned by administrative bodies or the courts, but the E.O., like the 

Harkin Report, fails entirely to account for such subsequent actions. 

The Executive Order is Ambiguous and Unworkable 

The E.O. requirement that prime contractors mandate their subcontractors to report their violations of labor laws will be exceptionally onerous, if not impossible, for prime contractors to administer 

and creates a number of unintended consequences related to prime 

and subcontractor relationships. 

First, the E.O. requires prime contractors to update their certification of compliance with labor laws every six months and requires 

the same reporting and certification by their subcontractors at 

identical intervals. The reporting burden on prime contractors for 

just reporting and certifying for their company is onerous in and 

of itself as discussed above. Adding subcontractor reporting adds a 

significant level of complexity to the information collection and related mitigating processes outlined in the E.O. Primarily, prime 

contractors cannot, and should not, be tasked with ensuring the 

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labor compliance of their subcontractors or their entire supply 

chain on a recurring basis when such compliance is entirely unrelated to the federal contract under which the prime and subcontractor are partnered. Some larger contractors, for example, have 

supply chains and subcontracting agreements numbering in the 

tens of thousands. Just to review this number of companies is 

unexecutable even if only a limited number of companies have a reported violation of the E.O.’s covered labor laws. But if one-third 

of a large companies’ supply chain has even a minor violation of 

a covered labor law, that could be 10,000 cases that need to be reviewed by the company and possibly by both the contracting officer 

and the yet-to-be created Office of Labor Compliance within DoL. 

Not only do the companies not have the resources to conduct the 

reviews, the federal government would also be overwhelmed by responsibility reviews of even minor cases that would ultimately be 

cleared. 

Second, the E.O.’s subcontractor flow-down requirement means 

that subcontractors will be providing sensitive business compliance 

information to their prime contractors. But the E.O. fails to recognize that many companies that subcontract with each other also 

compete against each other for other federal contracting opportunities. This business dynamic raises legitimate concerns by companies who do not want to provide information to their prime contractors because the prime contractor could use even minor infractions 

to gain a competitive advantage, or to initiate a contract award 

protest, against the company in a future acquisition in which the 

companies were competing against each other. Again, why is the 

E.O. creating a vast new reporting regime, and placing the burden 

on industry, to collect information that the government already 

has, or should have, access to through existing channels? 

Third, the E.O. requires a pre-award assessment of labor compliance on a proposal-by-proposal basis. For companies that bid on 

multiple opportunities, these reviews mean that different contracting officers, and different LCAs, will be making assessments 

about a contractor’s labor record and may come to different conclusions about a contractor’s ‘‘responsibility’’ after reviewing identical 

information about a contractor’s historical compliance with labor 

laws. This subjective analysis means that, in some cases, a contractor could be determined to be ‘‘presently responsible’’ by one 

contracting officer but based on identical information found to be 

not ‘‘presently responsible’’ by another contracting officer. This lack 

of consistency creates enormous risk and uncertainty for both the 

government and contractors. Alternatively, once one contracting officer or LCA makes a determination that a contractor is not a responsible source, based on their individual subjective analysis, then 

it is foreseeable that every other contracting officer will make the 

same determination to avoid inconsistency or having to justify a 

different conclusion. Contracting officers are not labor law experts. 

Since contracting officers are faced with burgeoning workloads and 

pressure to get contracts awarded quickly, it is also foreseeable 

that a contracting officer would avoid making any award to a contractor with any labor violation simply to avoid the time, burden, 

and delay associated with coordinating with the LCA or having to 

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justify making such an award. Under these scenarios, and given 

the fact that mere allegations would be considered during reviews, 

a contractor would be confronted with a de facto debarment—a 

‘‘blacklisting’’—without being afforded the due process that is required to be provided to contractors under existing federal acquisition regulations. 

Fourth, in order for the E.O. to be implemented in a workable 

manner, the federal aencies would have to hire a significant number of new staff to serve as (and support) the role of the LCAs. 

Within the Department of Defense alone, the LCA would be required to support the activities of approximately 24,000 contracting 

officers and hundreds of contracting offices. Additionally, the DoL 

would need significant additional resources to support prime contractors seeking guidance about whether potential subcontractors’ 

violations warrant a decision by the prime contractor not to award 

a subcontract to the entity. As stated above, for some large prime 

contractors that have several thousands subcontractors and suppliers, the requests for assistance to the DoL could be tremendous. 

Even if the federal government could somehow ramp up its capacity to provide DoL and LCAs resources to the federal agencies and 

prime contractors, a significant amount of time would be needed to 

effectively train personnel in the new positions to correctly carry 

out their duties in a fair and consistent manner. The cost of hiring 

and training new personnel will be substantial. 

Fifth, the E.O. is riddled with undefined and ambiguous terms 

that we feared would result in contractors having to report nonfully-adjudicated cases of alleged ‘‘violations.’’ For example, the 

E.O. directs contractor disclosure of any ‘‘administrative merits determination, arbitral award or decision, or civil judgment (as defined in guidance issued by the Department of Labor)’’ against the 

offeror within the preceding three year period for violations of any 

number of listed federal or ‘‘equivalent state labor laws.’’ Our fears 

were exceeded when DoL issued its proposed guidance that defines 

the above terms in a manner that clearly rob contractors of due 

process. In our comments on the proposed guidance and FAR proposed rule, we focus extensively on the shortcomings of DoL’s definitions of these key terms. But in summary, it is clear that mere 

allegations about contractor violations of labor laws could be taken 

into consideration by the federal government. It is also clear that 

‘‘violations’’ that are ultimately the result of government error 

would also be reportable. For example, DoL will issue a Form WH56 to a contractor indicating that the contractor has agreed to pay 

certain ‘‘back wages’’ associated with Service Contract Act (SCA) 

requirements. Under the DoL proposed guidance, the receipt of a 

WH-56 form is a reportable ‘‘offense,’’ yet the proposed guidance 

fails to recognize that the issuance of a WH-56 is often a result of 

the federal contracting entity failing to put the required SCA 

clauses into the contract. Such an aggressive approach puts contractors in a position where they are assumed to be guilty of a violation and must take proactive, tedious actions to prove their innocence. To include in the definition findings that are not fully adjudicated raises the risk of situations where an agency prematurely 

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ers) when the allegation may be reviewed and ultimately dismissed. 

The terms ‘‘serious, repeated, willful or pervasive nature of any 

violation,’’ are also broadly defined in the DoL guidance and would 

require virtually all allegations or violation, no matter how minor, 

to be reported. 

The Executive Order will Cause Procurement Delays 

The federal contracting process is already widely criticized for 

being overly burdensome and too slow. The E.O. could add significant delays to the federal procurement process pending resolution 

of even the smallest of infractions that would eventually lead to a 

contracting officer’s affirmative responsibility determination. Such 

delays may be further exacerbated by disputes between LCAs and 

contracting officers about a contractor’s present responsibility. Further questions must also be addressed regarding how such disputes 

are to be resolved. Delays would also be driven by prime contractors having to delay moving forward with contract performance 

while they await support and guidance from DoL about the present 

responsibility of any of their subcontractors. Finally, the increase 

in procurement award protests because of the E.O. standard will 

further lengthen the time of the federal contract award process. 

The Executive Order Will Result in Less Competition for Federal 

Contracts and Increased Costs of Doing Business with the Government 

In addition to the substantial reporting and related costs associated with complying with the E.O., the E.O. will subject contractors 

to significant risks. Such risks include increased liability associated 

with potential false claims or false statements accusations because 

of inaccurate reporting or certification of compliance under the E.O. 

Rather than risking such liability and complying with burdensome 

and costly requirements of the E.O., some companies will simply 

choose not to do business with the federal government. Ultimately, 

this only hurts federal agencies by denying them the ability to access companies that may be able to offer the best and most costeffective solutions. The E.O. will also discourage new entrants from 

coming into the federal marketplace because of the significant business risks and extraordinary requirements not required in the commercial sector. These effects on the federal marketplace are particularly concerning because they are contrary to this administration’s separate initiatives aimed at reducing regulatory burdens 

and reducing the cost of doing business with the government in the 

hope that more commercial companies, and particularly small businesses, will compete for federal contracts. 

The effects of this Executive Order must also be considered in 

conjunction with the other 12 Executive Orders that focus on federal contractors, and in many cases federal contractors’ labor practices. While some of those orders have the support of industry—this 

one certainly does not—the cumulative cost of implementing and 

complying with the orders has been significantly down-played by 

the government. 

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Conclusion 

This Executive Order fails on so many fronts that it can never 

be effectively implemented in its current form. We believe that 

more can be done to ensure that intentional violators of the law do 

not receive federal contracts. But this Executive Order is not the 

right approach. It should be rescinded and the administration. Congress and industry should work together to find alternative solutions that rely considerably on the existing regulatory and statutory framework. PSC has offered our engagement to key representative of the Executive Branch. It is essential that Congress also be 

engaged in this process, and that is why we commend and thank 

you for your attention to this issue and for holding this hearing. 

PSC looks forward to working with the Congress and the administration on needed improvements. 

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