a

GAO

United States General Accounting Office

Report to Congressional Requesters

November 2002 GOVERNMENT 

CONTRACTING

Adjudicated Violations 

of Certain Laws by 

Federal Contractors

GAO-03-163
Page i GAO-03-163 Adjudicated Contractor Violations

Contents

Letter 1

Results in Brief 5

Background 6

Thirty-Nine Federal Contractors Had Adjudicated Violations of 

Federal Environmental, Labor, or Antitrust Laws 14

FAR Rule Implementation Issues Identified in Determining 

Incidence of Law Violations by Contractors 27

Agency Comments and Our Evaluation 32

Appendixes

Appendix I: Objectives, Scope, and Methodology 34

Appendix II: Agency Cases Where a Law Violation Was Found by a Federal 

Court or Adjudicated Administrative Decision 42

Appendix III: GAO Contacts and Staff Acknowledgments 68

GAO Contacts 68

Acknowledgments 68

Tables Table 1: Number of Federal Contractors with Adjudicated 

Violations of Federal Environmental, Labor, Antitrust, 

Consumer, or Tax Laws 15

Table 2: Disposition of EPA and DOJ Environmental Law Cases 

Involving Federal Contractors Closed during Fiscal Years 

1997 through 1999 18

Table 3: Disposition of NLRB, DOL, and DOJ Labor and 

Employment Law Cases Involving Federal Contractors 

Closed during Fiscal Years 1997 through 1999 21

Table 4: Disposition of FTC and DOJ Antitrust Law Cases Involving 

Federal Contractors Closed during Fiscal Years 1997 

through 1999 23

Table 5: Disposition of CPSC and FTC Consumer Protection Cases 

Involving Federal Contractors Closed during Fiscal Years 

1997 through 1999 25

Table 6: Federal Contractors That Would Have Been Required to 

Report a Law Violation in the Certification in Their Offers 

under Our Conceptual Application of the FAR Rule 29

Table 7: Percent of False Matches for Cases Reviewed 39
Contents

Page ii GAO-03-163 Adjudicated Contractor Violations

Abbreviations

ALJ Administrative Law Judge

CERCLA Comprehensive Environmental Response, Compensation and 

Liability Act

CFR Code of Federal Regulations

CPSC Consumer Product Safety Commission

DOJ Department of Justice

DOL Department of Labor

DUNS Data Universal Numbering System

EIN Employee Identification Number

EPA Environmental Protection Agency

EPCRA Emergency Planning and Community Right-to-Know Act

ERISA Employee Retirement Income Security Act

FAR Federal Acquisition Regulation

FLSA Fair Labor Standards Act

FMLA Family and Medical Leave Act

FPDS Federal Procurement Data System

FTC Federal Trade Commission

GSA General Services Administration

IRS Internal Revenue Service

NESHAP National Emission Standards for Hazardous Air Pollutants

NLRA National Labor Relations Act

NLRB National Labor Relations Board

OFCCP Office of Federal Contract Compliance Programs

OMB Office of Management and Budget

OSHA Occupational Safety and Health Administration 

PWBA Pension and Welfare Benefits Administration

TIN Taxpayer Identification Number

TSCA Toxic Substances Control Act

WHD Wage and Hour Division
Page 1 GAO-03-163 Adjudicated Contractor Violations

United States General Accounting Office

Washington, D.C. 20548

A

November 15, 2002 Letr

The Honorable Tom Davis

Chairman, Subcommittee on Technology

and Procurement Policy

Committee on Government Reform

House of Representatives

The Honorable Stephen Horn

Chairman, Subcommittee on Government Efficiency,

Financial Management, and Intergovernmental Relations 

Committee on Government Reform

House of Representatives

Each year the federal government awards billions of dollars in contracts for 

goods and services. By statute, federal agencies are required to award 

contracts to “responsible sources.”1

 This statutory requirement has been 

implemented in the Federal Acquisition Regulation (FAR), which requires 

that government purchases be made from, and government contracts be 

awarded to, responsible prospective contractors only.2

 In accordance with 

the statutory definition of “responsible source,”3

 the FAR establishes “a 

satisfactory record of integrity and business ethics” as one of the general 

standards a prospective contractor must meet to be responsible. In 

December 2000, amidst considerable controversy, a revision to the FAR 

(“the FAR rule”) was promulgated through the regulatory rulemaking 

process to clarify what constituted “a satisfactory record of integrity and 

business ethics.”4

 This now-revoked FAR rule stated that a satisfactory 

record of integrity and business ethics includes a record of satisfactory 

compliance with the law, specifically environmental, labor and 

employment, antitrust, consumer protection, and tax laws. It also required 

prospective contractors to certify in their bids or proposals submitted in 

response to government contract solicitations as to their compliance with 

these laws within the past 3 years. Specifically, for federal government 

1

10 U.S.C. § 2305(b) (3) and (4) (C); 41 U.S.C.§ 253b (c) and (d) (3). 

2

FAR, 48 C.F.R. § 9.103(a).

3

41 U.S.C. § 403(7).

4

Federal Acquisition Regulation; Contractor Responsibility, Labor Relations Costs, and 

Costs Relating to Legal and Other Proceedings, 65 Fed. Reg. 80,256-80,266 (Dec. 20, 2000). 
Page 2 GAO-03-163 Adjudicated Contractor Violations

contracts expected to exceed $100,000, prospective contractors were to 

certify whether, relative to these areas of law, they have been convicted of a 

felony (or have felony indictments pending against them), have had a 

federal court judgment in a civil case brought by the United States rendered 

against them, or have had an adverse decision by a federal administrative 

law judge (ALJ), board, or commission indicating a willful violation of law. 

The FAR rule also provided guidance to agency contracting officers when 

considering a prospective contractor’s compliance history. 

Although the FAR rule was revoked in December 2001, prospective 

contractors are still required by statute and the FAR to be responsible 

sources (including having a satisfactory record of business ethics and 

integrity). As a result of the FAR rule revocation, the FAR itself does not 

provide specific guidance to contracting officers on applying the standard 

for a satisfactory record of business ethics and integrity (bid protest 

decisions from courts and our Office that address the standard do, 

however, continue to provide guidance). Also, prospective contractors no 

longer have to certify, as they did under the FAR rule, as to their 

compliance with environmental, labor and employment, antitrust, 

consumer protection, and tax laws.

Because of your interest in this area, you asked that we address the 

following questions: 

• To what extent have federal contractors violated federal environmental, 

labor and employment, antitrust, consumer protection, and tax laws 

(the areas of law specified in the FAR rule)?

• What FAR rule implementation issues were identified in our work in 

response to the first question?

To determine the extent of contractor violations, we gathered information 

on contractors that were awarded new federal contracts of at least 

$100,0005

 in fiscal year 2000 and federal enforcement agency6 cases closed 

5

For our purposes, each individual contract had to be a new contract awarded during fiscal 

year 2000 with $100,000 or more obligated against it at that time. 

6

We identified pertinent enforcement agencies by referring to statutes and regulations in the 

environmental, labor and employment, antitrust, consumer protection, and tax areas; 

consulting with agency officials; and reviewing the U.S. Government Manual enforcement 

agency Web sites and our past products. 
Page 3 GAO-03-163 Adjudicated Contractor Violations

during fiscal years 1997 through 1999 (October 1996 through September 

1999).7

 These were the types of contracts and cases that would have been 

covered by the FAR rule’s contractor certification requirement had it been 

applied beginning with fiscal year 2000,8

 the last full fiscal year for which 

contractor data were available at the start of our work. 

We then matched the names of contractors listed in the Federal 

Procurement Data System (FPDS)—which is maintained by the General 

Services Administration (GSA)—shown as having new federal contracts 

awarded in fiscal year 2000 to names in enforcement agency cases closed 

during fiscal years 1997 to 1999. These names were in the databases 

maintained by seven federal agencies responsible for enforcing or 

administering many federal environmental, labor and employment, 

antitrust, consumer protection, or tax laws.9 However, the name-matching 

process was sometimes imprecise because contractor names can vary 

widely due to such factors as spelling, name combinations, and 

parent/subsidiary relationships. Nevertheless, this was generally the only 

viable method available for identifying contractors involved in these cases 

because, usually, common numeric identifiers were not available. 

Therefore, due to name variations, we likely did not identify all of the 

contractors involved in the cases in the databases maintained by the 

7

The total number of enforcement agency cases includes all cases closed by those agencies 

during the applicable time period. However, for some agencies not all of the cases involved 

enforcement actions. For example, DOJ’s Executive Office for U.S. Attorneys tracks other 

types of cases handled by local U.S. Attorneys reflecting the wide variety of types of 

litigation in which the United States is necessarily involved. Further, for some agencies, not 

all of these cases involved determinations of law violations. For example, Environmental 

Protection Agency (EPA) “Superfund” cases included in the total number of enforcement 

agency cases we reported typically do not involve determinations of law violations but 

rather the assessment of liability for hazardous waste cleanup costs under the 

Comprehensive Environmental Response, Compensation and Liability Act.

8

We limited our review to cases closed by enforcement agencies because these cases 

reflected final dispositions and because of limitations in obtaining information relating to 

ongoing litigation or enforcement actions. Some cases that may have been covered by the 

FAR rule, such as adverse district court or administrative law judge rulings, may have 

remained open in an enforcement agency’s records where the contractor was appealing the 

decision or continuing with further adjudicatory proceedings. Such cases were not included 

in our review.

9

The laws involved are those enforced or administered by the seven federal agencies we 

identified and which provided us data on their closed cases. The seven federal agencies are 

EPA, the Department of Labor (DOL), the Department of Justice (DOJ), the National Labor 

Relations Board (NLRB), the Federal Trade Commission (FTC), the Consumer Product 

Safety Commission (CPSC), and the Internal Revenue Service (IRS).
Page 4 GAO-03-163 Adjudicated Contractor Violations

enforcement agencies we examined. Conversely, we found some false 

matches—companies with similar names involved in the cases but which 

were not the same companies as the contractors. Where we detected false 

matches, we eliminated them. See appendix I for further information about 

the accuracy of the matches.

When we matched a name associated with a closed case involving a federal 

enforcement agency with the name of a contractor, we reviewed the 

disposition of the case as characterized by the agency in its database. 

Where a case resulted in an actual decision by a court or an administrative 

adjudicator finding that a violation (including convictions and plea 

agreements in criminal cases) had occurred, we reported the numbers of 

such cases under the “violation found” column in tables 2 through 5 of this 

report corresponding to the areas of law for which the enforcement 

agencies are responsible. Adjudicated violations were the type of 

information on violations of laws that contracting officers were instructed 

by the FAR rule to give the greatest weight in making their responsibility 

determinations. For cases that did not result in an actual decision (such as 

those that were dismissed, withdrawn, or settled) or for cases that 

generally could not have resulted in a determination of a law violation 

(such as Environmental Protection Agency (EPA) “Superfund” cases 

involving the assessment of liability for cleanup costs), we reported the 

total number of such cases under the “other/resolved before decision”

column of the respective tables because such cases were resolved either 

through a process that did not involve a law violation determination or 

without an actual adjudicated determination of a law violation. 

To identify FAR rule implementation issues from our work in response to 

the first objective, we analyzed information from the enforcement agency 

cases we matched to federal contractors and considered what information 

the contractors would have had to certify under the FAR rule’s certification 

requirement. Additionally, we discussed FAR rule implementation issues 

and concerns with (1) contracting officers and other officials from the 

federal agencies included in our review and (2) contractors involved in the 

cases we selected for detailed review. Finally, we requested comments on 

the results of our work from officials from the seven federal agencies, 

DOD, NASA, and GSA, and the Administrator for Federal Procurement 
Page 5 GAO-03-163 Adjudicated Contractor Violations

Policy.10 We conducted our work from July 2000 through October 2002 in 

accordance with generally accepted government auditing standards. A 

more detailed description of our scope and methodology is included in 

appendix I.

Results in Brief We identified 39 contractors among the 16,819 contractors that were 

awarded new federal contracts in amounts of at least $100,000 during fiscal 

year 2000 and that were found by a federal court or adjudicated 

administrative decision to have violated one or more federal 

environmental, labor and employment, or antitrust laws in enforcement 

agency cases that were closed during fiscal years 1997 through 1999. Of 

these 39 contractors, 7 had been convicted of a crime in federal court; 5 had 

a federal court judgment in a civil case brought by the federal government 

rendered against them, and 27 had an adverse decision by a federal ALJ, 

board, or commission indicating a violation of law.11 We did not identify any 

contractors that were found by a federal court or adjudicated 

administrative decision to have violated consumer protection or tax laws. 

We also identified another 3,403 contractors that were involved in 

enforcement agencies’ cases (not including IRS tax penalty assessments) 

covered by our review and closed during this 3-year period. However, most 

of these cases that involved alleged law violations were resolved before a 

decision by a court or administrative adjudicator was reached as to 

whether a violation of law had occurred. In most instances, these cases 

were resolved through some form of “administrative agreement” or 

“settlement” with the government in which the contractor typically did not 

admit—and sometimes specifically denied—the violation charged and 

which did not constitute a judgment or adjudicated administrative decision 

that a violation had actually occurred.

10The FAR is prepared, issued, and maintained; and the FAR system is prescribed jointly by 

the Secretary of Defense, the Administrator of GSA, and the Administrator of the National 

Aeronautics and Space Administration (NASA), who, with the Administrator for Federal 

Procurement Policy, are the members of the FAR Council. The FAR system was established 

for implementing uniform policies and procedures for acquisitions by all executive 

agencies.

11Appendix II provides a description of criminal cases from enforcement agencies where the 

contractor pled guilty (or no contest), a plea agreement was reached, or the contractor was 

otherwise convicted, and civil and administrative cases from enforcement agencies where a 

violation of law was determined by a court or adjudicated administrative decision.
Page 6 GAO-03-163 Adjudicated Contractor Violations

We identified several FAR rule implementation issues through our work in 

determining the incidence of contractor violations in response to the first 

question. First, the FAR rule’s contractor certification requirement focused 

on only certain types of law violations. As a result—on the basis of our 

conceptual application of the certification criteria specified in the revoked 

FAR rule—only 7 of the 39 contractors we identified as being found by a 

court or administrative decision to have violated the law would have been 

required to report the violations in their certifications if they were 

prospective contractors submitting an offer. The remaining 32 contractors 

with violations found by a court or administrative decision, as well the 

3,403 contractors whose cases were otherwise resolved, would not have 

been required to report any noncompliance with the law. Further, although 

many cases were resolved through administrative agreements 

(settlements)—and the FAR rule stated that contracting officers should 

take such information into consideration—the FAR rule did not require 

prospective contractors to report such agreements. Second, we found that 

contracting officers would face significant difficulties in verifying or 

obtaining contractor compliance history information. Third, the FAR rule 

may have required additional record keeping for some prospective 

contractors in order for them to track their companies’ compliance with 

applicable laws and accurately certify as to their compliance when 

submitting their offers. Of the 43 federal contractors who provided us 

information on the issue of tracking their compliance history, 18 told us 

that they did not have the capability to identify or track all of the various 

types of enforcement actions that may have been taken against them. 

The federal agencies involved in our review either had no comments or 

provided us technical comments on a draft of this report. We made changes 

to this report based on these technical comments where appropriate. 

Background Prior to January 2001, the FAR had not provided any elaboration on what it 

means for a prospective contractor to have “a satisfactory record of 

integrity and business ethics.” The FAR simply restated the statutory 

language that a “responsible source” is one that has a “satisfactory record 
Page 7 GAO-03-163 Adjudicated Contractor Violations

of integrity and business ethics.”

12 In December 2000, the FAR Council 

issued a final rule, effective January 19, 2001, to clarify what constituted “a 

satisfactory record of integrity and business ethics” in making contractor 

responsibility determinations,13 including satisfactory compliance with the 

law, specifically environmental, labor and employment, antitrust, consumer 

protection, and tax laws. According to the FAR Council, the lack of 

guidance in the FAR as to what constitutes a satisfactory record of integrity 

and business ethics had caused contracting officers to be extremely 

reluctant to exercise their discretion in making this determination; and, as 

a result, the government continued to award contracts to firms that have 

violated procurement and other federal laws, in some cases repeatedly. In 

promulgating the FAR rule, the FAR Council surmised that by giving 

contracting officers a clearer basis for declining to contract with such 

businesses, the government could improve the integrity of the contracting 

process, reduce the risk of fraud or noncompliance, and encourage 

standards of integrity and compliance with the law. According to the FAR 

Council, by ensuring that its contractors possess a satisfactory record of 

compliance with the law, the government increases its confidence that a 

contractor is a responsible, reliable company that will perform the contract 

in an efficient, responsible, and timely manner and should also reduce the 

risk that compliance issues will interfere with performance of the contract. 

12The term “responsible source” is defined at 41 U.S.C. § 403(7) as a prospective contractor 

who has (or has the ability to obtain) adequate financial resources to perform the contract, 

the necessary organization, experience, accounting and operational controls, and technical 

skills, as well as the necessary production, construction, and technical equipment and 

facilities; is able to comply with the required or proposed delivery or performance schedule; 

has a satisfactory performance record; has a satisfactory record of integrity and business 

ethics; and is otherwise qualified and eligible to receive an award under applicable law and 

regulation. Under the FAR, no purchase or award shall be made unless the contracting 

officer makes an affirmative determination of responsibility. The FAR requires that in the 

absence of information clearly indicating that the prospective contractor is responsible, the 

contracting officer shall make a determination of nonresponsibility. Further, the FAR states 

that a prospective contractor must affirmatively demonstrate its responsibility. 

13Federal Acquisition Regulation; Contractor Responsibility, Labor Relations Costs, and 

Costs Relating to Legal and Other Proceedings, 65 Fed. Reg. 80,256 – 80,266 (Dec. 20, 2000). 

The FAR rule was based on an earlier proposed rule (65 Fed. Reg. 40,830 – 40,834 (June 30, 

2000)), which replaced the proposed rule published on July 9, 1999 (64 Fed. Reg. 37,360 –

37,361). The FAR rule would have also revised cost principles to disallow charging to the 

government the costs of influencing unionization decisions and litigating proceedings 

brought by the government if there is a finding that the contractor violated law or 

regulation. These cost principle provisions are not addressed in this report. 
Page 8 GAO-03-163 Adjudicated Contractor Violations

The FAR rule provided guidance to contracting officers on the application 

of the integrity and business ethics standard. Specifically, the FAR rule 

stated that a contracting officer’s determination that a prospective 

contractor has a satisfactory record of integrity and business ethics in 

order to receive a government contract “can be made by examining a 

prospective contractor’s record of compliance with the law.” The guidance 

further stated that in making a responsibility determination based upon 

integrity and business ethics, contracting officers “must consider all 

relevant credible information” but should give the greatest weight to 

violations of laws that have been adjudicated within the last 3 years 

preceding the prospective contractor’s offer.14 The guidance stated that 

normally, a single violation of law will not give rise to a determination of 

nonresponsibility, but evidence of repeated, pervasive, or significant 

violations of the law may indicate an unsatisfactory record of integrity and 

business ethics. The guidance instructed contracting officers to give 

consideration to any administrative agreements entered into with 

prospective contractors who take corrective action after disclosure of law 

violations by an enforcement agency (i.e., after an initial charge or 

complaint is filed against the contractor by the agency alleging a law 

violation). The FAR rule specified that these prospective contractors, 

despite findings of law violations by the enforcement agency, may continue 

to be responsible contractors because they had corrected the conditions 

that led to the alleged misconduct. On the other hand, according to the FAR 

rule, failure of a prospective contractor to have complied with the terms of 

an administrative agreement is evidence of a lack of integrity and business 

ethics.

The FAR rule required contracting officers to consider information based 

on the following, in descending order of importance. 

• Convictions of and civil judgments rendered against the prospective 

contractor for

• commission of fraud or a criminal offense in connection with 

obtaining, attempting to obtain, or performing a public (federal, state, 

or local) contract or subcontract;

14The term “offer” means the “bid” or “proposal” submitted by a prospective contractor in 

response to a solicitation issued by the government.
Page 9 GAO-03-163 Adjudicated Contractor Violations

• violation of federal or state antitrust statutes relating to the 

submission of offers; or

• commission of embezzlement, theft, forgery, bribery, falsification or 

destruction of records, making false statements, tax evasion, or 

receipt of stolen property.

• Indictments for the above offenses.

• Relative to tax, labor and employment, environmental, antitrust, or 

consumer protection laws

• federal or state felony convictions;

• adverse federal court judgments in civil cases brought by the United 

States;

• adverse decisions by a federal ALJ, board, or commission indicating 

violations of law; or

• federal or state felony indictments.

Finally, the FAR rule stated that contracting officers might consider other 

relevant information, such as civil or administrative complaints or similar 

actions filed by or on behalf of a federal agency, board, or commission, if 

such action reflects an adjudicated determination by the agency.

To provide a mechanism for contracting officers to consider a prospective 

contractor’s compliance history, the FAR rule amended existing 

certifications15 required to be included in solicitations where the contract 

value is expected to exceed the simplified acquisition threshold

15FAR, 48 C.F.R. § 52.209-5, Certification Regarding Debarment, Suspension, Proposed 

Debarment, and Other Responsibility Matters for noncommercial item solicitations, and 

FAR, 48 C.F.R. § 52.212-3(h), Certification Regarding Debarment, Suspension or Ineligibility 

for Award for commercial item solicitations.
Page 10 GAO-03-163 Adjudicated Contractor Violations

($100,000).16 Specifically, under the existing certification,17 the prospective 

contractor is to certify, by checking the appropriate box on the form, 

whether, to the best of its knowledge and belief, it or its principals18

• are or are not presently debarred, suspended, proposed for debarment, 

or declared ineligible for the award of contracts by any federal agency;

• have or have not, within the preceding 3 years, been convicted of or had 

a civil judgment rendered against them for 

• commission of fraud or a criminal offense in connection with 

obtaining, attempting to obtain, or performing a federal, state, or 

local government contract or subcontract;

• violation of federal or state antitrust statutes relating to the 

submission of offers; or

• commission of embezzlement, theft, forgery, bribery, falsification or 

destruction of records, making a false statement, tax evasion, or 

receiving stolen property;

• are or are not presently indicted for, or otherwise criminally or civilly 

charged by a government entity with commission of any of these 

offenses.

The FAR rule added to this existing certification whether the prospective 

contractor or its principals have, relative to tax, labor and employment, 

environmental, antitrust, or consumer protection laws:

• been convicted of a federal or state felony (or have federal or state 

felony indictments pending against them);

16The FAR authorizes certain simplified acquisition procedures for the acquisition of 

supplies and services the aggregate amount of which does not exceed the simplified 

acquisition threshold of $100,000.

17This existing certification predates the FAR rule, was effective concurrently with (as 

modified by) the FAR rule, and still currently applies to prospective contractors 

notwithstanding the revocation of the FAR rule.

18“Principals” for purposes of the certification means officers, directors, owners, partners, 

and persons having primary management or supervisory responsibilities within a business 

entity (such as a general manager).
Page 11 GAO-03-163 Adjudicated Contractor Violations

• had a federal court judgment in a civil case brought by the United States 

rendered against them; or 

• had an adverse decision by a federal ALJ, board, or commission 

indicating a willful violation of law. 

The FAR rule specified that a contractor needed to provide additional 

detailed information only upon request of the contracting officer and 

generally only when that contractor was the apparent successful offeror.

In January 2001, immediately after its effective date, several agencies 

suspended their implementation of the FAR rule under an authorized FAR 

“class deviation” procedure.19 After further review, the FAR Council 

temporarily set aside the rule in April 2001 because the 30-day effective 

date did not give contractors and the government sufficient time to meet 

the new obligations and responsibilities imposed by the rule.20 Specifically, 

the FAR Council stated that government contracting officers had not had 

sufficient training, and prospective contractors had not had sufficient time 

to establish a system to track compliance with applicable laws and keep it 

current in order to properly fill out the certification. The FAR Council 

recognized that it would take more time than it had anticipated for 

businesses to put the systems in place. After further consideration and 

public comment, the FAR Council revoked the FAR rule in December 

2001.21 According to the FAR Council, the benefits of the FAR rule were 

outweighed by the burdens imposed. The FAR Council stated that it was 

not clear that there is a justification for including the added categories of 

covered laws in the rule and its implementing certification, that the rule 

provided sufficient guidelines to contracting officers to prevent arbitrary or 

abusive implementation, or that the rule was justified from a cost-benefit 

perspective.

In revoking the FAR rule, the FAR Council stated that it fully supports the 

proposition that government contracts should be awarded to law-abiding 

19FAR, 48 C.F.R. § 1.404. GSA and several other agencies issued individual class deviations 

under this authority.

20The stay had the effect of restoring the previous FAR language, including the earlier 

version of the certification.

21See 66 Fed. Reg. 17,754-17,760 (stay and proposed revocation) (Apr. 3, 2001); 66 Fed. Reg. 

66,984-66,991 (termination of stay and revocation) (Dec. 27, 2001).
Page 12 GAO-03-163 Adjudicated Contractor Violations

entities and that the government should do business only with those 

entities willing and able to comply with the laws enumerated in the FAR 

rule. According to the FAR Council, the problem lies in the means for 

ensuring that the entities with which the government conducts business are 

good corporate citizens and adhere to the myriad of regulations and laws. 

The FAR Council determined that the existing suspension and debarment 

process is the proper vehicle to accomplish this goal. Specifically, the FAR 

Council noted that the suspension22 and debarment23 rules contain well 

established and defined decision-making criteria and due process 

safeguards, which have evolved through case law precedent and agency 

practices. The FAR Council noted that an agency debarring official is 

authorized to consider a company’s responsibility at any time whether the 

company is a current competitor for a government contract or not; and if 

the debarring official should determine that the company is not 

responsible, the official may impose a debarment of the company. This 

debarment is effective with regard to all federal agencies as well as to many 

state and local governments that choose to use a debarment list of their 

own. According to the FAR Council, when a question of a company’s 

honesty and integrity is raised, reliance on debarment and suspension 

remedies provides effective intervention.

While the decision to debar or suspend a contractor is made within the 

discretion of the agency involved, the determination of a contractor’s 

responsibility (including whether it has a satisfactory record of business 

ethics and integrity) continues to be mandatory for each contract award. 

Although the FAR rule was revoked, the statutory standard of a satisfactory 

record of business ethics and integrity remains one of the standards 

required for a prospective contractor to be considered a responsible source 

for the award of a government contract. This standard continues to be 

implemented in the FAR. However, as a result of the FAR rule revocation, 

the FAR itself no longer provides specific guidance to contracting officers 

on applying the standard. Nonetheless, contracting officers are not entirely 

without guidance since they do have available legal interpretations from 

the courts and the Comptroller General as to the application of the 

22Suspension means action taken by the government under FAR procedures to temporarily 

disqualify a contractor from government contracting and government-approved 

subcontracting. The causes for suspension are listed in FAR, 48 C.F.R. § 9.407-2.

23Debarment means action taken by the government under FAR procedures to exclude a 

contractor from government contracting and government-approved subcontracting for a 

reasonable, specified period. The causes for debarment are listed in FAR, 48 C.F.R. § 9.406-2.
Page 13 GAO-03-163 Adjudicated Contractor Violations

standard. These interpretations are in the context of bid protest decisions 

addressing challenges to responsibility determinations in the award of 

government contracts.24 Also, while prospective contractors no longer (as a 

result of the FAR rule revocation) have to specifically certify as to their 

compliance with environmental, labor and employment, antitrust, 

consumer protection, and tax laws, prospective contractors must still 

certify as to debarment, suspension, and the offenses listed in the existing 

certifications. A contracting officer must still check whether a prospective 

contractor is suspended or debarred before awarding a contract.

We issued two reports several years ago that addressed the issue of federal 

contractors who had violated nonprocurement-related laws.25 Our October 

1995 report identified federal contractors found by the NLRB to have 

violated the National Labor Relations Act (NLRA), and our August 1996 

report identified contractors charged with Occupational Safety and Health 

Act violations by the Occupational Safety and Health Administration 

(OSHA). In the first report, we found that 80 firms with over 4,400 federal 

contracts valued at over $23 billion in fiscal year 1993 had violated the 

NLRA as determined in adjudicated decisions of the NLRB. These 

contractors accounted for 2 percent of the nearly 200,000 federal contracts 

in effect in fiscal year 1993 that were being performed by over 57,000 

parent firms. However, 6 of the 80 firms with NLRA violations accounted 

for almost 90 percent of the $23 billion in contracts. In the second report, 

we identified 261 firms that had federal contracts in effect in fiscal year 

24For example, the U.S. Court of Federal Claims recently referred to the more extensive 

debarment regulations for guidance in considering the application of the standard for a 

satisfactory record of business ethics and integrity. Impresa Construzioni Geom. 

Domenico Garufi v. U.S., 52 Fed. Cl. 421, 425 (May 3, 2002). The Comptroller General has 

also issued a number of legal decisions over the years that consider the application of the 

business ethics and integrity standard. See, for example, Blocacor, LDA, B-282122.3, Aug. 2, 

1999, 99-2 CPD ¶ 25 (agency reasonably would have found firm nonresponsible for illegal 

dumping of hazardous materials containing asbestos during performance of earlier 

contract); Service Deli, Inc., B-276251, Mar. 14, 1997, 97-1 CPD ¶ 110 (determination by 

contracting officer that offeror, should it be in line for award, would be nonresponsible for 

lack of integrity is reasonable because of criminal conviction in connection with obtaining, 

attempting to obtain, or performing a public contract); Standard Tank Cleaning Corp., 

B-245364, Jan. 2, 1992, 92-1 CPD ¶ 3 (contracting agency reasonably determined firm was 

nonresponsible based upon information from various state agencies that showed a history 

of environmental violations).

25U.S. General Accounting Office, Federal Contractors and Violations of Labor Law, 

GAO/HEHS-96-8 (Washington, D.C.: Oct. 24, 1995); and Occupational Safety and Health: 

Violations of Safety and Health Regulations by Federal Contractors, GAO/HEHS-96-157

(Washington, D.C.: Aug. 23, 1996). 
Page 14 GAO-03-163 Adjudicated Contractor Violations

1994 that had been “initially charged” with OSHA violations that carried a 

possible fine or penalty of more than $15,000 for noncompliance with 

health or safety regulations. We did not include or discuss the resolution of 

any of these cases in the report, such as the adjudicated outcome. 

Thirty-Nine Federal 

Contractors Had 

Adjudicated Violations 

of Federal 

Environmental, Labor, 

or Antitrust Laws

We identified 39 federal contractors (involved in 47 cases), among the 

16,819 contractors awarded new federal contracts in amounts of at least 

$100,000 during fiscal year 2000, that had been found by a federal court or 

adjudicated administrative decision to have violated one or more federal 

environmental, labor or employment, or antitrust laws in cases closed by 

enforcement agencies during fiscal years 1997 through 1999. As table 1 

shows, 7 of these 39 contractors had been convicted of a crime in federal 

court; 26 5 had a judgment in a civil case brought by the federal government 

in federal court rendered against them; and 27 had an adverse decision by a 

federal ALJ, board, or commission finding a violation of law.27 These 39 

contractors had 39 different contracts of $100,000 or more totaling 

approximately $855 million.28 We did not identify any contractors that were 

found by a federal court or adjudicated administrative decision to have 

violated consumer protection or tax laws during this time frame. 

26Since we only used closed cases, we did not review pending federal indictments in 

criminal cases (the FAR rule required pending felony indictments in the five areas of law to 

be reported by a prospective contractor and considered by a contracting officer). We also 

limited our review to federal criminal convictions (including plea agreements) reported in 

agency databases. The FAR rule encompassed state felony convictions and indictments as 

well. Because of time and resource constraints, we did not attempt to match contractor 

names with names of parties indicted or convicted in state criminal proceedings.

27In the administrative enforcement area an adverse decision could include charges or 

complaints by an enforcement agency alleging a law violation that the contractor does not 

contest through the adjudicatory process and that become final orders of the administrative 

tribunal. However, all the cases with adjudicated violations that we matched to contractors 

involved contested allegations resulting in actual administrative decisions on the merits.

28GSA’s database showed that in fiscal year 2000, 82,622 contractors had a total of 162,212 

federal contracts in effect for goods and services valued at over $203 billion. Of these, 16,819 

contractors were awarded 29,032 new federal contracts in fiscal year 2000 in amounts of at 

least $100,000 for each contract, totaling approximately $62 billion.
Page 15 GAO-03-163 Adjudicated Contractor Violations

Table 1: Number of Federal Contractors with Adjudicated Violations of Federal 

Environmental, Labor, Antitrust, Consumer, or Tax Laws

a

Because the table reports on the number of contractors with adjudicated violations, we listed the one 

contractor with violations adjudicated in both federal court and administratively only under Civil (federal 

court).

Source: GAO analysis of enforcement agency data.

In addition, we identified another 3,403 contractors involved in another 

6,705 cases29 closed during the 3-year period covered by our review and 

listed in the databases of one or more of the agencies responsible for 

enforcing or administering federal environmental, labor and employment, 

antitrust, consumer protection, or tax laws (not including IRS tax penalty 

assessments, which are discussed below). However, most of these cases 

that involved alleged law violations were resolved before a court or 

adjudicated administrative decision was made as to whether a violation of 

law had occurred. The resolution usually involved some kind of 

“administrative agreement” (settlement). Although the agreements reflect 

that the enforcement agency charged the contractor with a violation, the 

contractor typically did not admit (or deny) 30 any wrongdoing, and 

sometimes the agreement actually contained language whereby the 

contractor specifically denied any violation. In these cases, the parties 

Number of contractors by type of adjudication

Area of law

Criminal

(federal court)

Civil (federal

court)

Administrative

(federal ALJ,

Board, or

Commission) Total violators

Environmental 7 2 2 11

Labor and 

employmenta 0 2 25 27

Antitrust 0 1 0 1

Consumer 

protection 0 0 0 0

Tax 0 0 0 0

Total 7 5 27 39

29We identified a total of 3,442 contractors involved in the 6,752 cases closed during fiscal 

years 1997 to 1999. As mentioned earlier, due to name variations, we likely did not identify 

all of the contractors involved in the enforcement agency cases (see app. I).

30We did not construe contractors as conceding or admitting to law violations in the 

administrative agreements we reviewed.
Page 16 GAO-03-163 Adjudicated Contractor Violations

reached some alternate resolution, usually involving the contractor taking 

corrective action, assuring compliance with the law, and agreeing to make 

some form of payment to the government. Many of these agreements also 

provided for penalties and remedies if the contractor did not abide by the 

agreement. Even though a federal court or an administrative adjudicator, 

such as an ALJ, typically approved the agreement (i.e., through a consent 

order) and the case was considered “adjudicated” on that basis, this 

approval did not constitute an adjudicated decision that a violation had 

actually occurred. We recognize, of course, that enforcement agencies 

often attempt to reach agreements with alleged violators to achieve 

compliance instead of litigating cases to the point of an adjudicated 

decision. As set out below, we report on the number of cases that were 

resolved before an adjudicated decision was reached or that were 

otherwise resolved—cases that include agreements between enforcement 

agencies and alleged violators for achieving compliance.

Eleven Federal Contractors 

Had Adjudicated Violations 

of Federal Environmental 

Laws 

EPA has administrative law enforcement authority in the majority of 

federal environmental statutes, including (1) the Clean Air Act (regulates 

air emissions and authorizes EPA to establish air quality standards to 

protect public health and the environment); (2) the Clean Water Act 

(regulates discharges of pollutants into the waters of the United States by 

giving EPA authority to implement pollution control programs and to set 

water quality standards and by prohibiting the discharge of any pollutant 

from a point source into navigable waters unless a permit is obtained); (3) 

the Resource Conservation and Recovery Act (authorizes EPA to regulate 

the generation, transportation, treatment, storage, and disposal of 

hazardous waste); and (4) many others, such as the Toxic Substances 

Control Act, the Emergency Planning and Community Right-To-Know Act, 

and the Federal Insecticide, Fungicide, and Rodenticide Act. EPA may 

issue administrative orders assessing civil penalties and directing 

compliance. 31 EPA may also bring civil or criminal enforcement actions, in 

31These administrative actions are subject to a formal administrative adjudication process. 
Page 17 GAO-03-163 Adjudicated Contractor Violations

which case the Environment and Natural Resources Division of the DOJ or 

local U.S. Attorneys handle the matter.32

EPA and DOJ also handle cases under the Comprehensive Environmental 

Response, Compensation and Liability Act (CERCLA), which provides a 

federal “Superfund” to clean up hazardous-waste sites. Actions under 

CERCLA typically involve the assessment of liability of responsible parties 

for cleanup costs rather than the determination of a statutory or regulatory 

violation. Where EPA performs a cleanup, it will seek to recover the 

cleanup costs from financially viable parties once a response action has 

been completed. However, CERCLA can be violated, for example, where a 

party fails to comply with an order or agreement or fails to report 

hazardous substance releases as required.

We matched 443 contractors (involved in 698 cases) to cases closed by EPA 

during fiscal years 1997 through 1999. We also matched 75 contractors 

(involved in 124 cases) to cases closed by DOJ during this period. Further, 

as shown in table 2, contractors involved in 11 of the cases were found by a 

court or adjudicated administrative decision to have violated one or more 

environmental laws. These 11 cases involved 11 contractors. 

32The U.S. Army Corps of Engineers has environmental protection responsibilities for 

wetlands and waterways under the Rivers and Harbors Act and the Clean Water Act that it 

implements through the issuance of permits. Although the Corps has an administrative 

hearing process, these proceedings are not formal adjudications under the Administrative 

Procedure Act. Accordingly, we did not match with federal contractor names the parties 

involved in those proceedings. However, the Corps can pursue further civil or criminal 

action by referring matters to the local U.S. Attorney for litigation. Such legal proceedings 

would have been captured in our matching of DOJ environmental compliance cases. Civil or 

criminal cases referred to DOJ by other federal agencies with specific environmental law 

enforcement responsibilities, such as the Fish and Wildlife Service of the Department of the 

Interior (endangered species) and the Department of Commerce (marine sanctuaries) 

would also be included in the DOJ cases. 
Page 18 GAO-03-163 Adjudicated Contractor Violations

Table 2: Disposition of EPA and DOJ Environmental Law Cases Involving Federal 

Contractors Closed during Fiscal Years 1997 through 1999

a

Violation found – A federal court or adjudicated administrative decision found a violation of law. 

b

Other/Resolved before decision – Cases that did not involve a determination of law violation (such as 

liability for hazardous waste cleanup under CERCLA), cases where no violation was found, cases 

closed before a decision was made by a federal court or an administrative adjudicator (such as 

administrative agreements and consent orders), and cases that were otherwise closed/resolved.

c

Only selected cases were reviewed and verified.

d

We excluded from this analysis 11 additional cases involving federal contractors because EPA’s data 

showed that the cases were combined with other cases and did not show the cases’ final disposition 

and 81 other cases involving federal contractors because EPA’s data did not show the disposition of 

the cases. 

 eDOJ environmental cases managed by DOJ’s Environment and Natural Resources Division or U.S. 

Attorneys. 

Source: GAO analysis of enforcement agency data.

Twenty-Seven Federal 

Contractors Had 

Adjudicated Violations of 

Federal Labor and 

Employment Laws

NLRB administers the National Labor Relations Act, the primary federal 

law governing relations between labor unions and employers in the private 

sector. The act guarantees the right of employees to organize and to 

bargain collectively with their employers or to refrain from such activity. 

NLRB’s statutory mission is to prevent and remedy unlawful acts, called 

unfair labor practices, by either employers or unions. The agency does not 

act on its own motion but processes charges or allegations of unfair labor 

practices against an employer or labor organization. If, after an 

investigation, the NLRB finds reasonable cause to believe a violation of the

Environmental laws

Violation

founda

Other/Resolved

before decisionb Total

Responsible agency/case disposition

Environmental Protection Agency

Criminal 4 1 5

Civilc 0 295 295

Administrativec 2 396 398

Subtotal 6 692 698d

Department of Justicee

Criminal 3 0 3

Civilc 2 119 121

Subtotal 5 119 124

Total 11 811 822
Page 19 GAO-03-163 Adjudicated Contractor Violations

law has occurred, the agency can seek a voluntary settlement to remedy 

the violation. If settlement efforts fail, a formal complaint can be issued and 

the case is heard by an ALJ. The case can be appealed to the full Board for 

a final agency determination. 

The U.S. Department of Labor (DOL) is responsible for enforcing federal 

labor and employment laws. We focused our work on the following DOL 

offices:

• The Wage and Hour Division (WHD) works to enhance the welfare and 

protect the rights of the nation's workers through enforcement of the 

federal minimum wage, overtime pay, record keeping, and child labor 

requirements of the Fair Labor Standards Act; the Family and Medical 

Leave Act; and employment standards and worker protections provided 

in certain other laws. Additionally, WHD administers and enforces the 

prevailing wage requirements of the Davis-Bacon Act, the Service 

Contract Act, and other statutes applicable to federal contracts for 

construction and for the provision of goods and services.

• The Pension and Welfare Benefits Administration (PWBA) is 

responsible for promoting and protecting the pension, health, and other 

benefits of the over 150 million participants and beneficiaries in over 6 

million private sector employee benefit plans under the Employee 

Retirement Income Security Act of 1974 (ERISA).

• The Office of Federal Contract Compliance Programs (OFCCP) 

enforces equal opportunity standards and affirmative action for women, 

minorities, Vietnam era veterans, and persons with disabilities employed 

by more than 200,000 contractors and subcontractors that participate in 

the federal procurement process. Applicable authorities include 

Executive Order 11246 (Equal Opportunity in Federal Employment), the 

Rehabilitation Act of 1973, the Vietnam Era Veterans’ Readjustment 

Assistance Act of 1974, and the Americans With Disabilities Act of 

1990.33

33Because OFCCP’s mission specifically involves equal employment opportunity issues 

among federal contractors, we did not include in our review the Equal Employment 

Opportunity Commission (EEOC), which has related jurisdiction over laws prohibiting 

discrimination in the workplace and, in particular, laws prohibiting discrimination in 

compensation. We did, however, match one contractor to a civil case brought by EEOC and 

tracked by DOJ. This case is reported in appendix II.
Page 20 GAO-03-163 Adjudicated Contractor Violations

• The mission of OSHA, as defined in its enabling legislation, the 

Occupational Safety and Health Act, is to “[a]ssure so far as possible 

every working man and woman in the Nation safe and healthful working 

conditions.” This mandate involves standards development, 

enforcement (such as through workplace inspections), and compliance 

assistance so that employers maintain safe and healthful workplaces. 

These agencies have formal administrative adjudication processes for 

complaints filed in enforcing the laws for which they are responsible. 

Under certain circumstances, DOL may also debar contractors for 

violations of certain labor laws or declare them ineligible for failure to 

satisfy the equal opportunity or affirmative action obligations of federal 

contracts.

For the time period covered by our review, we matched 29 contractors 

(involved in 34 cases) to cases closed by NLRB; 2,847 contractors (involved 

in 5,128 cases) to cases closed by DOL; and 6 contractors (involved in 6 

cases) to cases closed by DOJ —3 of the DOJ cases were handled by DOJ’s 

Civil Rights Division, and 3 cases were handled by U.S. Attorneys. As 

shown in table 3, contractors involved in 30 of the NLRB cases, 4 of the 

DOL cases, and 1 of the DOJ cases were found to have violated one or more 

federal labor or employment laws by a federal court or adjudicated 

administrative decision. In total, 27 different federal contractors were 

involved in these 35 cases identified as having labor and employment law 

violations. The remaining cases were resolved with a wide range of 

outcomes, including consent agreements and orders, before a decision by a 

court or administrative adjudicator was reached as to whether a violation 

of law had occurred.34

34For example, if a compliance review or complaint investigation by OFCCP indicates a 

material violation of the equal opportunity clause of a federal contract and if the contractor 

is willing to correct the violation or deficiency, a written conciliation agreement may be 

entered into providing for necessary remedial action. According to OFCCP, when a federal 

contractor agrees through a conciliation agreement to correct the compliance issue, that 

contractor is deemed to be in compliance.
Page 21 GAO-03-163 Adjudicated Contractor Violations

Table 3: Disposition of NLRB, DOL, and DOJ Labor and Employment Law Cases 

Involving Federal Contractors Closed during Fiscal Years 1997 through 1999

a

Violation found – A federal court or adjudicated administrative decision found a violation of law. 

b

Other/Resolved before decision – Cases that did not involve a determination of law violation, cases 

where no violation was found, cases closed before a decision was made by a federal court or 

administrative adjudicator (such as administrative agreements and consent orders), and cases that 

were otherwise closed/resolved. 

c

NLRB administrative cases include ALJ and Board decisions (we did not include cases for which the 

NLRB, under its statutory authority, obtained injunctive relief in federal court because these cases are 

still pending full review by the Board or enjoin conduct the Board has already found unlawful).

d

Only selected cases were reviewed and verified.

e

We excluded from this analysis 557 additional cases involving federal contractors because DOL’s data 

did not show the disposition of the cases. We also excluded another 67 DOL cases that were decided 

by an ALJ, Review Commission, or appeals court ruling because the cases were not included in our 

case selection and the final disposition of the cases could not be determined. 

f

Labor and employment compliance action cases managed by the DOJ’s Civil Rights Division or U.S. 

Attorneys. 

Source: GAO analysis of enforcement agency data.

One Federal Contractor Was 

Convicted in Federal Court 

of Violating Federal 

Antitrust Laws

The Bureau of Competition of the Federal Trade Commission (FTC) and 

DOJ’s Antitrust Division enforce the federal antitrust laws. FTC enforces 

the Federal Trade Commission Act, which prohibits unfair methods of 

competition. DOJ’s Antitrust Division has responsibility for enforcing the 

Sherman Antitrust Act, which prohibits conspiracies or agreements that 

restrain trade, fix prices, divide market territories or groups of customers, 

boycott other firms, or use coercive tactics with the intent and effect of 

Labor and employment laws Violation founda

Other/Resolved

before decisionb Total

Responsible agency/case disposition

National Labor Relations Board 

Administrativec 30 4 34

Subtotal 30 4 34

Department of Labor

Civil 1 1 2

Administratived,e 3 5,123 5,126

Subtotal 4 5,124 5,128c

Department of Justicef

Civilc 1 5 6

Subtotal 1 5 6

Total 35 5,133 5,168
Page 22 GAO-03-163 Adjudicated Contractor Violations

injuring competition. Both FTC and DOJ have jurisdiction under the 

Clayton Antitrust Act, which prohibits mergers and acquisitions of stock or 

assets that may substantially lessen competition or that tend to create a 

monopoly and which bars certain forms of price discrimination. Both 

agencies also are responsible for reviewing proposed corporate mergers 

under the Hart-Scott-Rodino Act. FTC uses both administrative and judicial 

remedies to enforce the law through litigation before administrative law 

judges or in federal court. DOJ investigates and prosecutes criminal 

violations of federal antitrust laws; and where criminal prosecution is not 

appropriate, DOJ may institute a civil action seeking a court order 

forbidding future violations of the law and requiring steps to remedy the 

anticompetitive effects of past violations.

We matched 22 contractors (involved in 25 cases) to cases closed by FTC 

and 7 contractors (involved in 7 cases) to cases closed by DOJ during fiscal 

years 1997 through 1999. As shown in table 4, in 1 of the 32 cases the 

contractor was convicted of violating federal antitrust laws in federal court 

after pleading guilty in a case prosecuted by DOJ.35 This case is described 

in appendix II. None of the other 31 cases—including proposed merger 

reviews36—involved a decision by a federal court or administrative 

adjudicator that a violation of antitrust law had or had not occurred; i.e., 

the contractors and the government settled or the case was otherwise 

resolved.

35One of the charges in this case (see app. II for a case description) involved bid rigging on 

government contracts, which is a criminal antitrust violation. A prospective contractor 

would currently have to report such a criminal conviction in the certification accompanying 

its offer notwithstanding the revocation of the FAR rule certification.

36In merger cases where the merger is challenged and the competitive concerns are resolved 

before the merger is consummated (such as through consent orders), no law violation has 

occurred. 
Page 23 GAO-03-163 Adjudicated Contractor Violations

Table 4: Disposition of FTC and DOJ Antitrust Law Cases Involving Federal 

Contractors Closed during Fiscal Years 1997 through 1999

a

Violation found – A federal court or adjudicated administrative decision found a violation of law. 

b

Other/Resolved before decision – Cases that did not involve a determination of law violation, cases 

where no violation was found, cases closed before a decision was made by a federal court or 

administrative adjudicator (such as administrative agreements and consent orders), and cases that 

were otherwise closed/resolved. 

c

FTC has independent authority to litigate all but civil penalty and criminal antitrust cases. FTC 

administrative cases include ALJ and Commission decisions.

d

Antitrust cases managed by DOJ’s Antitrust Division or U.S. Attorneys. 

Source: GAO analysis of enforcement agency data.

No Federal Contractors Had 

an Adjudicated Violation of 

Federal Consumer 

Protection Laws 

The mission of federal agencies that enforce federal consumer protection 

laws is generally to either ensure consumer product safety or stop 

deceptive or unfair trade practices against consumers. The Consumer 

Product Safety Act of 1972 consolidated federal safety regulatory activity 

for consumer products within the Consumer Product Safety Commission 

Antitrust laws Violation founda

Other/Resolved

before decisionb Total

Responsible agency/case disposition

Federal Trade Commissionc

Civil 0 1 1

Administrative 0 24 24

Subtotal 0 25 25

Department of Justiced

Criminal 1 1

Civil 6 6

Subtotal 1 6 7

Total 1 31 32
Page 24 GAO-03-163 Adjudicated Contractor Violations

(CPSC), whose jurisdiction encompasses about 15,000 types of products.37

CPSC can impose civil penalties and take other enforcement action for 

violations of federal consumer product safety standards through 

administrative adjudication and judicial processes. Protecting consumers 

against unfair, deceptive, or fraudulent practices is a mission of FTC under 

the Federal Trade Commission Act. FTC is also responsible for enforcing 

several laws, such as the Truth-in-Lending Act and the Fair Credit 

Reporting Act, that prohibit specifically defined trade practices. FTC 

enforces its consumer protection mandate (as well as trade regulations 

issued by the Commission) through administrative actions and federal 

court litigation.

We matched no contractors to the cases that were closed by CPSC during 

fiscal years 1997 through 1999. We matched 12 contractors (involved in 13 

cases) to FTC consumer protection cases closed during this period. As 

shown in table 5, all of these cases were resolved before a court or the FTC 

reached any adjudicated decision as to a violation of consumer protection 

law. Specifically, FTC and the contractors settled all the cases through the 

use of administrative agreements.

37Several other federal agencies have roles ensuring consumer product safety. For example, 

certain food products, drugs, and cosmetics are covered by the Food and Drug 

Administration of the Department of Health and Human Services; and automobiles and 

trucks are within the jurisdiction of the National Highway Traffic Safety Administration of 

the Department of Transportation. However, because CPSC’s jurisdiction is so broad, we 

limited our review to that agency. 
Page 25 GAO-03-163 Adjudicated Contractor Violations

Table 5: Disposition of CPSC and FTC Consumer Protection Cases Involving Federal 

Contractors Closed during Fiscal Years 1997 through 1999

a

Violation found – An adjudicated federal court or administrative decision found a violation of law. 

b

Other/Resolved before decision – Cases that did not involve a determination of law violation, cases 

where no violation was found, cases closed before a decision was made by a federal court or 

administrative adjudicator (such as administrative agreements and consent orders), and cases that 

were otherwise closed/resolved. 

c

FTC administrative cases include ALJ and Commission decisions.

Source: GAO analysis of enforcement agency data.

No Federal Contractors Had 

an Adjudicated Violation of 

Federal Tax Laws

The Internal Revenue Service (IRS) is a branch of the Department of the 

Treasury and administers the Internal Revenue Code enacted by Congress. 

IRS records as unpaid taxes or assessments amounts that taxpayers have 

identified that they owe but have not paid in tax returns they file, and 

amounts it determines are owed by taxpayers through its various 

enforcement programs. IRS can make formal deficiency assessments of 

tax, penalties, and interest. 

Penalties levied by IRS are meant to encourage voluntary compliance with 

the Internal Revenue Code. By law, IRS imposes penalties against 

taxpayers for such things as failure to properly deposit employment taxes, 

failure to pay tax by the applicable due date, failure to file a tax return, and 

underpaying quarterly estimated taxes. Taxpayers may choose to pay the 

penalty, challenge the penalty assessment within IRS, negotiate a 

Consumer protection laws Violation founda

Other/Resolved

before decisionb Total

Responsible agency/case disposition

Consumer Product Safety 

Commission 0 0 0

Federal Trade Commission 

Civil 0 4 4

Administrativec 0 9 9

Total 0 13 13
Page 26 GAO-03-163 Adjudicated Contractor Violations

compromise, or await enforcement action through the judicial process.38

IRS levies these penalties administratively; but the assessment itself is not 

the result of an administrative adjudication process, such as through an 

ALJ. 

IRS does not handle civil or criminal tax law cases; this is done by DOJ, 

which maintains the records on all closed cases, whether adjudicated in the 

U.S. Tax Court, the Court of Federal Claims, or the U.S. District Court. IRS 

does, however, track the payment status of those taxpayers owing taxes or 

assessed penalties in its accounts receivables. These are the data we 

matched against GSA’s FPDS list of contractors to identify contractors with 

at least one tax-related penalty.39

During tax periods covering fiscal years 1997 through 1999, 7,864 of 13,058 

contractors40 were assessed at least one penalty by IRS during this period. 

IRS assessed the penalties against the 7,864 contractors administratively; 

but because these assessments themselves were not the result of formal 

adjudication, we did not count these cases in our tally of enforcement 

agency cases. However, we searched the DOJ data for tax cases it 

handled. We matched no contractors to tax cases that were closed by DOJ 

during fiscal years 1997 through 1999 where a court decision found the 

contractor had violated federal tax laws. We matched one contractor, a 

security services company, to a case handled by DOJ where a stipulated 

judgment was entered in federal court in which the company, as successorin-interest of the taxpayer (whose assets and business had been acquired 

38Prior to making a formal deficiency assessment of tax, penalties, and interest, IRS sends 

the taxpayer several notices of the proposed assessment, including a 90-day statutory 

notice, giving the taxpayer an opportunity for Tax Court review. During this period, IRS may 

not take action to collect the deficiency.

39The IRS data we used included only penalties outstanding at the time of our matching 

because penalties are dropped from this data system once they are paid. Due to privacy 

issues concerning IRS taxpayer information, we did not review contractor cases in which 

IRS assessed penalties. 

40The universe of 13,058 contractors was different from the universe of contractors matched 

to the other agencies’ case data because we were able to match company taxpayer 

identification numbers (TIN), instead of company names, between IRS and GSA’s FPDS 

databases. Although matching this common denominator between the databases was more 

precise, the number of contractors meeting our criteria, which is described in appendix I, 

was smaller because, among other things, contractors or subsidiaries with different names 

may have the same TIN. As a result, the number of contractor names was larger than the 

number of TINs. 
Page 27 GAO-03-163 Adjudicated Contractor Violations

by the company), agreed to pay $170,000 in full satisfaction of its 

predecessor’s unpaid tax liability.

According to an IRS chief counsel official, large corporations, which 

include many government contractors, almost universally run afoul of 

some tax law provision, which could result in a penalty assessment. Of the 

7,864 contractors we matched to a penalty, 75 percent had each been 

assessed one or more penalties totaling under $11,000. The median amount 

that contractors were assessed for one or more penalties was $1,944. About 

2 percent, or 138 of the 7,864 contractors, had been assessed more than $1 

million in penalties—one-fourth of these were Fortune 500 companies, and 

one-fifth were state and local agencies or universities.41

FAR Rule 

Implementation Issues 

Identified in 

Determining Incidence 

of Law Violations by 

Contractors 

The numerous public comments on the FAR rule, as well as the FAR 

Council’s published analysis and discussion of these comments, identified 

and addressed numerous FAR rule implementation issues. However, in this 

report we are limiting our analysis and reporting of implementation issues 

under the revoked FAR rule to those we identified in determining the 

incidence of contractor law violations. We found that few contractors in 

our review would have actually had to report past violations in the FAR rule 

certification accompanying their offers. Additionally, contracting officers 

would face significant difficulties in verifying or obtaining contractor 

compliance history information. Moreover, the FAR rule may have created 

the need for additional record keeping by contractors in order to monitor 

their compliance histories.

As described earlier, the objective of the FAR rule was to provide clarifying 

revisions to the existing regulatory language in the FAR about what 

constitutes a satisfactory record of integrity and business ethics. The FAR 

rule stated that a satisfactory record was one that included satisfactory 

compliance with the law, specifically environmental, labor and 

employment, antitrust, consumer protection, and tax laws. The FAR rule 

also instructed contracting officers to consider all relevant credible 

information, giving the greatest weight to violations that have been 

adjudicated within the last 3 years preceding the prospective contractor’s 

offer. To provide this information to contracting officers, the FAR rule 

41These amounts are totals of outstanding accumulated assessments incurred by the 

taxpayer and may remain on IRS’s records for extended periods, depending on the status of 

collection efforts.
Page 28 GAO-03-163 Adjudicated Contractor Violations

included a certification requirement that required prospective contractors 

to indicate whether they had or had not, within the past 3 years, relative to 

environmental, labor and employment, antitrust, consumer protection, or 

tax laws:

• been convicted of a federal or state felony (or had any federal or state 

indictments currently pending against them); or 

• had a federal court judgment in a civil case brought by the United States 

rendered against them; or 

• had an adverse decision by an ALJ, board, or commission indicating a 

willful violation of law. 

Few Certifications Would 

Have Indicated Law 

Violations 

As discussed earlier in this report, 6,752 enforcement agency cases that 

were closed during fiscal years 1997 through 1999 involved federal 

contractors that were awarded new federal contracts of at least $100,000 in 

fiscal year 2000. From these cases, we identified 39 contractors that were 

found by a court or ALJ, board, or commission decision to have violated 

federal law in the areas specified by the FAR rule. However, most of these 

contractors would not have been required to report the law violations to 

the contracting officer in the certification in their offers (that is, by 

checking the box in the certification indicating that the prospective 

contractor or its principals have had a violation) if they had been 

prospective contractors. As shown in table 6, based on our conceptual 

application of the revoked FAR rule’s certification criteria, 7 of the 39 

contractors would have been required to report their violations in the 

certification accompanying their offers. The violations by the other 32 

contractors did not meet the FAR rule criteria for reporting and thus would 

not have been required to be reported. For example, misdemeanor criminal 

convictions would not have been reported because the FAR rule required 

only felony convictions and indictments to be reported. Similarly, most of 

the adjudicated decisions by an ALJ, board, or commission would not have 

been reported because the decisions did not find a “willful” violation of the 

law, the criterion in the FAR rule certification. Willfulness is a specific legal 

standard that excludes less serious or inadvertent violations of law. For 

example, in 30 of the 34 NLRB cases we matched to contractors, NLRB 

determined that there were violations of law, yet none of these violations 

were specifically determined to be “willful” violations. Indeed, our review 

indicated that in the majority of the enforcement agencies’ administrative 

cases, the determination of “willfulness” was not involved at all. 
Page 29 GAO-03-163 Adjudicated Contractor Violations

Table 6: Federal Contractors That Would Have Been Required to Report a Law 

Violation in the Certification in Their Offers under Our Conceptual Application of the 

FAR Rule

a

Violations found by a federal court or adjudicated administrative decision.

b

Violations found by a federal court or adjudicated administrative decision that also met the FAR rule 

certification criteria.

Source: GAO analysis.

In addition, administrative agreements or settlements resolving cases were 

not reportable under the FAR rule’s certification requirement. Even if such 

agreements were incorporated into a judicial or administrative order, they 

did not constitute a decision rendered against the contractor by a court or 

administrative adjudicator finding a violation of law; rather, they 

constituted the contractor’s and the government’s agreement on resolving 

the matter—typically without an admission of wrongdoing by the 

contractor. Although the FAR rule guidance stated that contracting officers 

should give consideration to any administrative agreements entered into 

with prospective contractors who take corrective action after disclosure of 

an alleged law violation (in the initial charge or complaint filed by the 

enforcement agency), the FAR rule did not specifically require prospective 

contractors to report such agreements. Thus, it is unclear how contracting 

officers would have become aware of such agreements in making their 

responsibility determinations.

The FAR Council indicated that the certification intentionally was not as 

broad as the FAR’s responsibility standard of “a satisfactory record of 

integrity and business ethics.” The FAR Council considered the 

certification as an implementation measure designed to provide the 

contracting officer with the information that the FAR Council anticipated 

would be most useful in making the responsibility determination. Thus, the 

FAR Council recognized the “relatively narrow focus” of the certification 

Areas of law covered 

by the FAR rule

Number of contractors

matched with violationsa

Number of matched

contractors with reportable

violationsb

Environmental 11 5

Labor and employment 27 1

Antitrust 1 1

Consumer protection 0 0

Tax 0 0

Total 39 7
Page 30 GAO-03-163 Adjudicated Contractor Violations

and stated that it reflected the FAR Council’s attempt to craft a certification 

that is clear and that does not impose an undue reporting burden on 

prospective contractors. However, it is unclear whether the “relatively 

narrow focus” of the certification was intended to be as narrow as it 

actually would have been in practice—at least in regard to adjudicated 

administrative decisions and administrative agreements and settlements. 

Further, it is not clear how contracting officers were supposed to consider 

all relevant credible information about a prospective contractor’s 

compliance history, even that limited to adjudicated decisions, when such 

limited information would have been required to be reported by 

contractors. 

Contracting Officers Would 

Face Significant Difficulties 

Verifying or Obtaining 

Contractor Compliance 

Histories

The FAR rule required contracting officers to consider all relevant credible 

information regarding a contractor’s compliance history in determining 

whether a prospective contractor had a satisfactory record of integrity and 

business ethics in order to make a responsibility determination. As 

discussed above, the FAR rule established a certification in which 

prospective contractors report certain compliance information. However, 

unless reported by prospective contractors themselves, contracting 

officers would face significant difficulties obtaining or verifying 

compliance history information on prospective contractors that are eligible 

for competing for government contracts. 

A large majority of the 32 contracting officers we contacted from the 

agencies covered by our review reported that they did not have timely 

access to enforcement agency databases that captured prospective 

contractors’ compliance history information. Although a large majority of 

these contracting officers also reported that they use GSA’s list of debarred 

contractors42 as a source of information for evaluating a prospective 

contractor’s record of compliance with laws and regulations, this list does 

not contain compliance history information on prospective contractors 

that have not been debarred or suspended, that is, those that are eligible to 

compete for government contracts (the vast majority of prospective

42“List of Parties Excluded from Federal Procurement and Nonprocurement Programs.” This 

list is compiled and published by GSA and searchable online at http://epls.arnet.gov. It 

contains the names of parties that are currently (or have been) suspended or debarred from 

doing business with the federal government as well as other relevant information, such as 

the cause of the debarment. Contracting officers are required to check this list prior to 

awarding a contract.
Page 31 GAO-03-163 Adjudicated Contractor Violations

contractors).43 Some compliance information is accessible by the public on 

the World Wide Web (Web) sites maintained by some enforcement 

agencies, such as EPA, NLRB, OSHA, CPSC, and FTC. Although we were 

able to use some of these Web sites, few of the contracting officers 

reported that they routinely used such sites. A contracting officer would 

have to first know which agency was responsible for an enforcement area 

and then spend time locating the relevant portion of the Web site before 

attempting to locate compliance information or to perform a query.

However, even with access to enforcement agency databases and Web 

sites, contracting officers would still run into some of the same challenges 

we faced matching contractors to enforcement cases. The case information 

contained in enforcement agency databases and Web sites was not posted 

for the specific purpose of assisting contracting officers in considering 

federal contractors’ compliance records. Generally, the only common 

identifier between federal enforcement agencies and prospective 

contractors for matching purposes is the company name. The namematching process can be imprecise (described in detail in app. I) and 

requires us to perform numerous sorts/matches to test and compare 

numerous variations in the spelling or configuration of company names. 

Further, the amount of relevant enforcement case information varied 

widely and was often limited. 

There is no comprehensive and centralized resource providing contracting 

officers with compliance history information on prospective contractors 

eligible to compete for government contracts.44 While enforcement agency 

databases and Web sites may be available in some cases that can be used 

for obtaining or verifying prospective contractors’ compliance history, the 

attempted use by contracting officers of such resources (especially on a 

routine basis) could be, based on our experience, difficult and extremely 

43Contracting officers themselves also provide certain information to the Federal 

Procurement Data System, a database of federal contractors maintained by GSA that 

contains a variety of information, such as the contractor’s name and location, agency 

awarding the contract, principal place of contract performance, and dollar amount of the 

contract awarded. This database does not contain information on contractors’ compliance 

histories.

44This does not necessarily mean that contracting officers are unable to obtain relevant 

contractor compliance history information. For example, besides sources already 

mentioned, a contracting officer may become aware of such information through other 

channels, such as from other contracting officers. See U.S. General Accounting Office, 

National World War II Memorial: Construction Contractor Selection, GAO-02-247R

(Washington, D.C.: Nov. 30, 2001) at page 6.
Page 32 GAO-03-163 Adjudicated Contractor Violations

time consuming. This is because of the numerous enforcement agencies 

involved, the difficulties inherent in the matching process, the varying 

amounts of information available, and any necessary follow-up and 

analysis of compliance information from such sources that a contracting 

officer would have to make in determining a prospective contractor’s 

responsibility.

Additional Record Keeping 

by Contractors May Have 

Been Necessary 

The FAR rule would have amended the existing “Certification Regarding 

Debarment, Suspension, Proposed Debarment, and Other Responsibility 

Matters,” which covers such things as whether the prospective contractor 

or its principals are presently debarred or have had a conviction for 

contract fraud. This certification contains language informing prospective 

contractors that nothing in the certification should be construed to require 

establishment of a system of records in order to render, in good faith, the 

required certification. However, the FAR Council, in addressing the 

paperwork burden of the rule, acknowledged that implementation of the 

FAR rule would probably require most large businesses and some small 

businesses to establish a new system or to augment a current system to 

track compliance with applicable laws. Further, as described above, in later 

suspending the rule, the FAR Council stated that the rule’s effective date 

did not give prospective contractors sufficient time to establish such a 

system and keep it current in order to properly fill out the certification. In 

fact, 18 of the 43 federal contractors who responded to our attempts to 

verify their involvement in enforcement agency cases reported that they 

did not currently have the capability to identify or track the various types of 

enforcement actions taken against them. 

Agency Comments and 

Our Evaluation

We provided copies of a draft of this report to the heads of DOL, EPA, DOJ, 

FTC, CPSC, NLRB, IRS, DOD, NASA, and GSA and to the Administrator for 

Federal Procurement Policy, OMB, for their review and comments. DOJ 

(Civil Division, Civil Rights Division, Executive Office for U.S. Attorneys, 

Environment and Natural Resources Division, and Criminal Division), 

CPSC, IRS, DOD, NASA, GSA, and OMB had no comments. Program 

officials in DOL, EPA, DOJ’s Antitrust Division, FTC, and NLRB provided 

written or oral technical comments that we incorporated in this report as 

appropriate.
Page 33 GAO-03-163 Adjudicated Contractor Violations

Unless you publicly announce the contents of this report earlier, we plan no 

further distribution of its contents until 30 days from the date of this report. 

We will then send copies of this report to the Chairman and Ranking 

Minority Member, House Committee on Government Reform; Ranking 

Minority Member, Subcommittee on Technology and Procurement Policy; 

and Ranking Minority Member, Subcommittee on Government Efficiency, 

Financial Management, and Intergovernmental Relations, House 

Committee on Government Reform; Chairman and Ranking Minority 

Member, Senate Committee on Appropriations; Chairman and Ranking 

Minority Member, House Committee on Appropriations; and Chairman and 

Ranking Minority Member, Senate Committee on Governmental Affairs. 

Copies of this report will also be sent to the Director of OMB; the Secretary 

of Labor; the Administrator of EPA, the Chairman of FTC, the 

Commissioner of Internal Revenue, the Chairman of NLRB, the Chairman 

of CPSC, and the Attorney General. We are also sending copies to the 

Administrator for Federal Procurement Policy and the Secretary of 

Defense, the Administrator of NASA, and the Administrator of GSA. Copies 

will be made available to others upon request. In addition, this report will 

be available at no charge on the GAO Web site at http://www.gao.gov. If you 

have any questions, please contact me at (202) 512-2834 or 

ungarb@gao.gov. 

Major contributors to this report are acknowledged in appendix III.

Bernard L. Ungar

Director, Physical Infrastructure Issues
Page 34 GAO-03-163 Adjudicated Contractor Violations

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

As discussed in this report, the objectives of this assignment were to 

determine:

• the extent to which federal contractors had violated federal 

environmental, labor and employment, antitrust, consumer protection, 

and tax laws; and 

• issues surrounding the implementation of the now-revoked Federal 

Acquisition Regulation rule (“the FAR rule”) on contractor 

responsibility45 that we identified in response to the first objective. 

To quantify the extent to which federal contractors had violated federal 

environmental, labor and employment, antitrust, consumer protection, and 

tax laws, we did the following: 

• We focused on contractors that were awarded new federal contracts in 

amounts expected to be at least $100,000 per contract and federal 

enforcement agency cases closed during fiscal years 1997 through 199946

because these were the types of contracts and cases that would have 

been covered by the FAR rule’s contractor certification requirement if it 

had been applied beginning with fiscal year 2000, and 

• We used federal court or administrative decisions in determining 

whether a case involving a contractor resulted in an actual adjudicated 

determination of a violation of federal environmental, labor and 

employment, antitrust, consumer protection, or tax laws47 because these 

were the types of adjudicated decisions contracting officers were 

instructed by the FAR rule to give the greatest weight in making their 

responsibility determinations. 

45Federal Acquisition Regulation; Contractor Responsibility, Labor Relations Costs, and 

Costs Relating to Legal and Other Proceedings, 65 Fed. Reg. 80,256 – 80,266 (Dec. 20, 2000). 

46These were cases provided by federal enforcement agencies in response to our request for 

data on closed cases brought by these agencies to enforce or administer the laws for which 

they are responsible. We identified the pertinent enforcement agencies by referring to 

statutes and regulations in the five areas of law; consulting with agency officials; and 

reviewing the U.S. Government Manual, enforcement agency Web sites, and our past 

products.

47The laws involved are those enforced or administered by the agencies we identified and 

which provided us data on their closed cases (see previous note).
Appendix I

Objectives, Scope, and Methodology

Page 35 GAO-03-163 Adjudicated Contractor Violations

Using these criteria, we performed computerized matches between 

contractors (names or numeric identifiers where available) listed in the 

Federal Procurement Data System (FPDS) maintained by the General 

Services Administration (GSA) as having new federal contracts awarded in 

fiscal year 2000 and names or identifiers in cases closed during fiscal years 

1997, 1998, and 1999 listed in the databases maintained by seven federal 

agencies responsible for enforcing or administering federal environmental, 

labor and employment, antitrust, consumer protection, or tax laws.48

Although the FAR rule also included the consideration of certain state law 

violations, as agreed with the requestors, we included only federal law 

violations in our review based on federal court and administrative 

adjudications.

Our matching process involved three steps: (1) identifying and obtaining 

the appropriate databases and assessing the reliability of these databases, 

(2) performing computerized matches of contractors, and (3) verifying the 

accuracy of selected matches. We then reviewed a selection of cases in 

detail to provide descriptions and examples of these cases.

• Identifying and obtaining the databases: From each relevant agency or 

division, we obtained data dictionaries describing the variables 

maintained in the database or databases used to track enforcement 

cases and reviewed these dictionaries for variables relevant to the 

process of matching cases to the FPDS database of contractors. From 

this review, along with discussions with officials at each agency, we 

determined the records and types of variables needed from each 

database for fiscal years 1997 through 1999, including the following:

• variables to aid in matching names of parties in enforcement agency 

cases to the contractor database (i.e., name, address, taxpayer 

identification number (TIN) or data universal numbering system 

(DUNS) number); 

• variables to aid in identifying the particular case in question for 

further review (i.e., case identification number, court docket number, 

case opening and closing dates); and 

48The seven federal agencies are the Environmental Protection Agency (EPA), Department 

of Labor (DOL), Department of Justice (DOJ), National Labor Relations Board (NLRB), 

Federal Trade Commission (FTC), Consumer Product Safety Commission (CPSC), and 

Internal Revenue Service (IRS).
Appendix I

Objectives, Scope, and Methodology

Page 36 GAO-03-163 Adjudicated Contractor Violations

• variables to aid in describing the nature and severity of the case (i.e., 

type of alleged violation, outcome of case, penalties or fines 

assessed, any available narrative description of the alleged violation 

and case). 

We clarified any uncertainties about appropriate processing of the 

databases and interpretation of the variables through discussions with 

agency and division contacts. For agencies without appropriate electronic 

data available, we obtained case information through agency Web sites or 

from hard copies of reports. 

To assess the reliability of the data used for matching purposes in our 

report, including the FPDS, we (1) reviewed existing documentation 

related to the data sources and (2) electronically tested the data to identify 

obvious problems with completeness or accuracy. We determined that the 

data were reliable enough for the purposes of this report. GSA has stated 

that the figures produced from the FPDS are only as accurate, timely, and 

complete as the data provided by the reporting agencies.

• The matching process: In an effort to determine the number of 

contractors with adjudicated violations of federal environmental, labor, 

antitrust, consumer protection, and tax laws in fiscal years 1997 through 

1999 and that received a federal contract in fiscal year 2000, we matched 

each enforcement agency’s case data for fiscal years 1997 through 1999 

against the FPDS fiscal year 2000 contractor data. The fiscal year 2000 

FPDS data maintained by GSA consisted of 162,212 unique contracts; 

82,622 unique contractor names; 58,711 TINs and 67,275 DUNS numbers. 

From the database received, we selected new contracts awarded in 

fiscal year 2000 that had total obligations of at least $100,000 during the 

fiscal year by summing the dollar amounts for all such records having 

the same contract number. This database contained 29,032 unique 

contracts; 16,819 unique contractor names; 14,318 unique TINs; and 

16,506 unique DUNS numbers.49

49The database from IRS was matched to the FPDS database using only TINs. Unique TINs 

(13,072) used to match against IRS’ database were derived by selecting new contracts worth 

at least $100,000 and then selecting contractors that had unique TINs. The number of unique 

contractors and unique TINs differ because there could be several different contractor 

names per TIN, and any cases with invalid TINs were not used in the match. The different 

names per TIN occur from misspellings, mistakes, and subsidiaries using the parent 

company’s TIN.
Appendix I

Objectives, Scope, and Methodology

Page 37 GAO-03-163 Adjudicated Contractor Violations

Before matching, we checked agency data to ensure the case closed dates 

were within the period fiscal years 1997 through 1999 and checked the 

validity of certain fields, such as the fields containing the TINs, DUNS, or 

closed dates. We further examined the agencies’ data and had additional 

discussions with agencies’ officials to determine which variable(s) should 

be used to perform the matches and manipulated the databases as needed 

to obtain final databases with one name or identifier per record. 

When available in an agency database, we matched on numeric identifiers, 

that is, TINs, DUNS, or both. 

When matching contractors’ names, we found a wide variation in the way 

names were spelled and abbreviated across databases. To compensate for 

these variations, we developed computer programs aimed at making these 

names as standard as possible by removing words—such as “Inc.,” “Co.,”

“Company,” “Jr.,” “LTD,” etc.—at the end of a field for all databases in the 

name-matching process. Removing such words increased the chance of a 

match between FPDS and agency data. Specifically, matches resulted 

when a name in the FPDS database was spelled exactly like the name in the 

agency database. If the company name was not spelled identically in both 

databases, it would not have been identified as a match. For example, if 

one database contained the name “ABC” and another contained “A Better 

Company,” a match would not have been identified. Due to time and 

resource limitations, we could not correct inconsistencies, misspellings or 

abbreviations to improve the matching process.50

For each agency we determined the base numbers of identifiers used for 

matching: the number of unique names (i.e., companies’ names) in federal 

enforcement agency cases after our standardization process, the number of 

unique DUNS numbers, and the number of unique TINs. For agencies that 

tracked criminal, civil, and/or administrative cases separately (EPA, DOL’s 

Pension and Welfare Benefits Administration, DOJ’s Environment and 

Natural Resources Division, and the Executive Office for U.S. Attorneys), 

50We explored other options to enable us to match contractor and names in enforcement 

agency cases that were similar and possibly the same company. These procedures required 

standardization of each word in each name and, ideally, a second identifier (such as state or 

ZIP code) in addition to a name to help narrow possible matches to those more likely to be 

the same company. However, a second identifier was rarely available in these databases. We 

found that a large amount of false matches occurred in the absence of a second identifier, 

and we were unable to develop procedures to reduce the number of false matches, given the 

time and resources available.
Appendix I

Objectives, Scope, and Methodology

Page 38 GAO-03-163 Adjudicated Contractor Violations

we processed these case types separately. After the matching process, we 

determined the number of matches with a unique identifier (name or 

number) and the number of unique contractor/case matches. Databases 

often contained more than one name considered to be part of one case; in 

those instances, we determined the number of matches on the case level. 

Within the agencies or divisions that tracked criminal, civil, and/or 

administrative cases separately, we added the matches found. Therefore, 

for these agencies or divisions, there could be duplicate contractors within 

the matched cases. 

• Verifying the accuracy of selected matches: For most agency databases 

used in this analysis, there was no common numeric identifier available 

for matching federal contractors to names in enforcement agency cases. 

The matching process therefore was often limited to attempting name 

matches. Due to the imprecise nature of name matching, we know that 

we have errors, both in missing true matches that are likely in the 

database, and in calling two companies a match when in fact they are 

not the same company. This latter error can occur for a variety of 

reasons as well, such as two distinct companies actually having the 

same name, or abbreviations or misspellings of one company name 

making it look identical to another when in fact it is not. Even when we 

were able to match using numbers, such as DUNS or TIN, errors in data 

entry—for either agency or FPDS data—could lead to missing true 

matches or identifying false matches. Although there is no way to 

determine how many true matches we missed—if we could determine 

them, we would then be able to call them matches—it is possible, and 

perhaps useful, to make some kind of assessment of our “false 

positives,” that is, name matches that were in fact not the same 

company.

Although verification of a representative sample of the matches would be 

desirable, this approach was untenable, given the time and resources 

available. However, we looked at the false positive cases we found in doing 

our case file reviews (see below for methodology details of this review). 

For all cases in which it appeared that the contractor was found by an 

federal court or adjudicated administrative decision to have violated the 

law, as well as for a selection of the remaining enforcement agency cases 

(involving compliance actions) chosen on the basis of the highest dollar 

contract award amounts for fiscal year 2000, we determined whether we 

had made a valid match between contractor and enforcement agency case 

by contacting the named contractor. This match rate, however, cannot be 

viewed as an unbiased estimate because the selection of cases was not 
Appendix I

Objectives, Scope, and Methodology

Page 39 GAO-03-163 Adjudicated Contractor Violations

randomly chosen and, for most agencies, was not a large enough selection 

of cases. The rate, however, does provide some information for 

understanding how successful our matching process was. Table 7 

summarizes the number of false matches found in these case file reviews.

Table 7: Percent of False Matches for Cases Reviewed 

a

The number of cases reviewed is larger than the number of contractors matched because some 

contractors had multiple cases reviewed.

Enforcement agency/division responsible for 

enforcing federal environment, 

labor/employment, antitrust, consumer 

protection and tax laws 

Number of

contractors

matched to

enforcement

agency cases

Number of

matched

contractors’ cases

reviewed

Number of false

matches in

reviewed cases

Percent of false

matches for cases

reviewed

Department of Labor Offices:

 Safety and Health Administration 1,156 41 11 27

 Federal Contract Compliance Programs 178 24 0 0

 Wage and Hour Division 1,531 16 0 0

 Pension and Welfare Benefits Administration 1 1 0 0

 Subtotal 2,866 82 11 N/A

Department of Justice Divisions:

 Antitrust 5 5 1 20

 Environment and Natural Resources 70 18 1 6

 Civil Rights 3 3 0 0

 Executive Office of the U.S. Attorneys 

 Criminala 22 36 26 72

 Civil 40 23 4 16

Subtotal 140 85 32 N/A

Environmental Protection Agency 

 Criminala 12 27 11 41

 Civil 148 16 1 6

 Administrative 290 29 0 0

Subtotal 450 72 12 N/A

National Labor Relations Boarda 32 37 3 8

Consumer Product Safety Commission 2 2 2 100

Federal Trade Commissiona 37 38 3 8

Internal Revenue Service N/A N/A N/A N/A

Totalb 3,527 316 63 20
Appendix I

Objectives, Scope, and Methodology

Page 40 GAO-03-163 Adjudicated Contractor Violations

b

Represents the total number of times each contractor is listed in each of the agency databases; thus, 

contractors listed in more than one database will be counted more than once in this total number. As 

reported earlier in this report, we matched 3,442 unique contractor names to 6,752 cases. 

Source: GAO analysis of GSA and enforcement agency data.

• Detailed case review: For a selection of the federal contractors matched 

with enforcement agency cases during the time frame, we contacted 

matched contractors in order to verify the match, request information 

regarding the case, and gather information regarding implementation 

issues surrounding the FAR rule as it would have applied to federal 

contractors. We also requested information about the cases from each 

enforcement agency. Within the matched cases from each agency’s 

database, we reviewed (1) all cases where it appeared that the 

contractor would have been required to certify to its noncompliance 

with the law under the FAR rule and (2) a selection of at least 10 

contractor cases chosen on the basis of the highest dollar contract 

award amounts during fiscal year 2000. Contract award amounts 

reflected the total dollars obligated for a new contract awarded to a 

contractor in fiscal year 2000, based on the FPDS database. For those 

databases where there were only a small number of matches, such as in 

the case of the DOJ’s Antitrust Division, all cases were reviewed rather 

than those showing the highest total dollars obligated. 

We also attempted to verify enforcement agency case information with 

contractors and to obtain more detailed information about the case 

characteristics from them. We called the company and asked for the 

contracting and/or procurement office. In some cases, we were 

referred to the company’s legal department. After explaining our 

mission, we set up an appointment with the cognizant official from 

each company that agreed to discuss the matter with us. To prepare the 

official for the interview we faxed a list of questions, and, upon request, 

a copy of the Federal Register notice of the FAR rule. We then 

interviewed each official via telephone and in some cases received 

written responses. During the telephone interviews, we verified the 

company’s information, including its address and DUNS number, the 

contract information we had obtained from the FPDS, and the case 

information we had obtained from our respective enforcement 

agencies. When a match was determined to be correct, we used the 

case in describing the characteristics of the enforcement agency cases 

involving contractors that had been closed during fiscal years 1997 

through 1999. 
Appendix I

Objectives, Scope, and Methodology

Page 41 GAO-03-163 Adjudicated Contractor Violations

To identify issues surrounding the implementation of the FAR rule from our 

work, we compared the names in enforcement agency cases that we 

matched to the federal contractors covered by our review to the FAR rule 

certification requirement. We also considered conceptually whether the 

contractors would have been required to report the violations in the 

certifications accompanying their offers if they had been prospective 

contractors. Additionally, we discussed implementation issues regarding 

the FAR rule with (1) agency contracting officers and other officials from 

the seven federal enforcement agencies included in our review and (2) 

contractors involved in the enforcement agency cases that we selected for 

detailed review. Through these discussions, we identified access that 

contracting officers have to the compliance history of prospective 

contractors and contractor record keeping as implementing issues arising 

from the FAR rule. Finally, we discussed the results of our work with 

officials from the seven federal enforcement agencies and OMB, as well as 

with FAR Council members. We conducted our work from July 2000 

through October 2002 in accordance with generally accepted government 

auditing standards.
Page 42 GAO-03-163 Adjudicated Contractor Violations

Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision ApendxiI

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a

Environmental laws

Cases from the Environmental Protection Agency:

Criminal cases

Poultry company 1994 

to 

1995

The Environmental Protection Agency’s 

(EPA) Criminal Investigation Division 

received a complaint from the U.S. Fish 

and Wildlife Service that the company’s 

chicken manure processing plant had 

been directing its runoff toward vernal 

pools located in an adjacent national 

wildlife refuge. An investigation 

revealed that the pollution was the 

result of a broken pipe that had been 

used to convey storm water from a 

manure storage yard to farm grounds 

used to store storm water. Polluted 

water containing ammonia, nitrogen, 

and other byproducts of the chemical 

decomposition of chicken manure 

leaked through cracks in the pipe, 

flowed into vernal pools at the refuge, 

and killed tadpole shrimp and other 

aquatic life.

1998 Under the January 1998 plea 

agreement, the company pled 

guilty in U.S. District Court to a 

two-count information charging it 

with (1) negligent and unlawful 

discharge of approximately 11 

million gallons of storm water 

polluted with decomposed chicken 

manure into the wildlife refuge in 

violation of the Clean Water Act, 

and (2) the knowing and unlawful 

taking of an endangered species in 

violation of the Endangered 

Species Act (by discharging 

polluted water which eliminated a 

protected species of tadpole 

shrimp from pools on the refuge). 

The company was required to pay 

fines totaling $485,684 to the 

National Fish and Wildlife 

Foundation (to be used in 

restoration efforts) and an 

assessment of $14,315 as 

restitution for the natural resource 

damage costs incurred by the U.S. 

Fish and Wildlife Service during 

the investigation of this case. The 

company had also agreed to make 

improvements in the amount of 

$750,000 to its storm water 

retention and distribution system. 

The case was also referred to 

EPA’s Suspension and Debarment 

Division, and the company’s facility 

was declared ineligible (for about a 

year) for federal grants, loans, 

contracts or subcontracts.

Jan. 

1998

$1,630
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 43 GAO-03-163 Adjudicated Contractor Violations

Aircraft support 

and maintenance 

company

July 

1993

Company and an individual indicted in 

May 1998 for two counts each of 

violating the Clean Water Act and the 

Resource Conservation and Recovery 

Act for a discharge of paint stripping 

waste. The discharge was discovered 

during an evacuation of the company’s 

facility (located at an airport) due to a 

break in a nearby river levee. Law 

enforcement officers observed a 

fluorescent green liquid streaming from 

a transportable tanker on the tarmac. 

The officers described the odor as a 

strong paint stripper smell and 

estimated 100 gallons was on the 

tarmac surface along with more having 

already emptied into a storm drain.

May 

1998

Company pled guilty in October 

1998 in a pretrial settlement to a 

misdemeanor (one count) for 

violating the Rivers and Harbors 

Act and agreed to pay a $125,000 

penalty and received 1 year of 

probation. The U.S. Attorney 

provided the individual involved 

pretrial diversion and his 

indictment was dismissed.

Jan. 

1999

$12,618

Water-related 

services and 

products 

company

1997 Charges filed against an individual in 

February 1998 and the company in 

May 1998 for allegedly causing an 

illegal discharge of ammonium 

hydroxide into a river, killing 200 fish, 

and for failing to file the required 

notification under the Emergency 

Planning and Community Right-ToKnow Act.

Feb. 

1998

Under the October 1998 plea 

agreement, the company was 

sentenced to a fine of $25,000 and 

a special assessment of $125. 

The individual reached a plea 

agreement in October 1998 and 

was sentenced to 12 months’

probation and a $500 fine.

Oct. 

1998

$114

Ammunition 

manufacturer

Jan. 

1992

Company charged with negligently 

introducing zinc, in excess of amounts 

set forth in the federal pretreatment 

regulations, into a public sewer system, 

violating its industrial wastewater 

discharge permit under the Clean 

Water Act.

Nov. 

1995

Under the February 1996 plea 

agreement, the company was 

sentenced to a $35,000 fine and a 

special assessment of $325. 

Apr. 

1997

$1,160

Administrative cases

Electronics 

manufacturer

Jan. 

1988 

to 

Nov. 

1990

Company charged with discharging 

wastewater, which contained copper in 

excess of the amount allowed by law, 

into navigable waters, which violated 

the Clean Water Act.

Aug. 

1991

Under the March 1997 

administrative decision and order, 

the company was assessed a civil 

penalty of $125,000.

Mar. 

1997

$2,832

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 44 GAO-03-163 Adjudicated Contractor Violations

Technical services 

company

Apr. 

1992 

to Jul. 

1994

Company charged with distribution of 

an unregistered pesticide to two other 

companies in the United States and 

with exporting the pesticide to two 

companies located in a foreign country 

without a bilingual label in violation of 

the Federal Insecticide, Fungicide, and 

Rodenticide Act.

Nov. 

1994

Under the March 1998 final 

administrative order, the company 

was assessed a penalty of 

$13,000.

Mar. 

1998

$241

Cases from the Department of Justice:

Criminal cases

Safety equipment 

manufacturer

Mar. 

1993 

to 

Dec. 

1994

An investigation by the EPA’s Criminal 

Investigation Division involving the 

Federal Bureau of Investigation (FBI) 

and Defense Criminal Investigation 

Service led to a one-count charge 

against the company for the illegal 

storage of highly toxic and explosive 

chemical sludge and waste at its 

chemical division without a permit in 

violation of the Resource Conservation 

and Recovery Act (RCRA). The 

hazardous waste originated from an 

experimental high-energy fuel the 

company’s chemical division produced 

for the U.S. Air Force in the late 1950s. 

In 1985, the company repurchased 

waste fuel from the military and 

reprocessed it. After ceasing the 

reprocessing operation, the company 

stored the resulting waste at an 

unpermitted area at the chemical 

division for a period of years. Under 

RCRA, hazardous waste must be 

moved off site within 90 days or moved 

to a permitted hazardous waste facility. 

The company failed to designate the 

waste as hazardous at the time it was 

generated and did not store or dispose 

of it in a timely manner, as required. 

Apr. 

1997

In April 1997, the company pled 

“nolo contendere” (no contest) to 

the charge it illegally stored 

hazardous waste in violation of 

RCRA and was sentenced to a 

$350,000 fine.

Apr. 

1997

$6,384

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 45 GAO-03-163 Adjudicated Contractor Violations

Aircraft repair and 

refurbishment 

company

1990 

to

1993

Following an investigation by EPA’s 

Criminal Investigation Division involving 

the FBI, the company was charged with 

knowingly disposing of hazardous 

waste and causing hazardous waste to 

be disposed of on and into the ground 

at its facility without the required 

permit, in violation of RCRA. The 

company used chemical degreasers 

and strippers on engine parts in the 

cleaning process, and the hazardous 

waste generated was regulated under 

RCRA. The government alleged that 

the company disposed of hazardous 

waste chemicals through a drain in its 

engine-room floor and dumped 

ignitable hazardous waste into a septic 

tank designed to leach its contents into 

the ground.

Aug. 

1996

In October 1996, the company 

pled guilty in U.S. District Court to 

a felony charge for the illegal 

disposal of the hazardous waste 

and was sentenced to pay a 

$75,000 fine and required to 

sponsor a 1 day free seminar on 

hazardous waste laws for 

industries engaged in paint 

stripping and engine cleaning 

operations. 

1998 $316

Waste disposal 

company

1989 

to 

1992

A 4-year investigation by EPA’s 

Criminal Investigation Division and the 

FBI revealed that approximately 4,591 

truck loads (each containing about 

5,000 gallons of waste) were illegally 

disposed on approximately 1,577 days 

at municipal sewage treatment plants 

by the company. The company 

collected sludge and grease from 

customers and hauled it to four publicly 

owned treatment plants. In order to 

dispose of the waste at certain plants 

and to avoid paying higher disposal 

fees, the company directed employees 

to provide false or unrepresentative 

samples of their loads and falsely 

record the loads as raw sewage.

Nov. 

1996

Company pled guilty in December 

1996 to one count of conspiracy to 

violate the Clean Water Act, one 

count of mail fraud, and one count 

of violating the Clean Water Act 

and agreed to pay a fine of $3 

million. The company also agreed 

to make a remedial contribution of 

$1.5 million to programs/

organizations that address 

environmental concerns in the 

areas affected by the case and pay 

$642,312 in restitution to treatment 

plants affected by the crimes. 

Based on cooperation with the 

government, the employees 

involved received probationary 

sentences ranging from 1 to 2 

years and fines ranging from 

$3,000 to $25,000.

Mar. 

1998

$761

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 46 GAO-03-163 Adjudicated Contractor Violations

Civil cases

Food industry 

company

Not 

available

In a civil action seeking injunctive relief 

and assessment of civil penalties, the 

United States alleged that the company 

and two others discharged pollutants 

into navigable waters in violation of the 

Clean Water Act. 

Dec. 

1996

In August 1997, a U.S. District 

Court imposed a civil penalty of 

$12.6 million against the company 

and two others for thousands of 

violations of the Clean Water Act 

at two pork slaughtering and 

processing plants. The court had 

earlier ruled that the companies 

could be held liable for over 5,000 

violations of phosphorus limits, as 

well as 500 more violations of 

other limits on discharges from the 

plants. In addition, the court had 

entered an order holding the 

companies responsible for the 

submission of at least 15 false 

monthly reports and the 

destruction of over 2 years worth 

of records. Companies appealed 

but the appeals court affirmed 

lower court ruling that companies 

were liable and, with one 

exception, affirmed the calculation 

of the penalty. The appellate court 

remanded the case back to the 

lower court to correct the amount 

of money the companies saved by 

not installing the necessary 

pollution control equipment. After 

remand, the parties stipulated that 

the final penalty was $12,361,315, 

which the defendants paid. 

Sept. 

1997

$965

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 47 GAO-03-163 Adjudicated Contractor Violations

Dredging 

company

1993 The United States, on behalf of the 

National Oceanic and Atmospheric 

Administration, brought action for 

damages against a dredging company 

for a violation of the National Marine 

Sanctuaries Act (which imposes strict 

liability for damage or injury to any 

sanctuary resource). Tugboats from 

the dredging company and another firm 

towed rafts with 500-foot lengths of 

dredge pipe along the Florida coast. 

While proceeding through a marine 

sanctuary, one of the pipes dragged 

the sea bottom, creating a pipe scar 

about 13 miles long. The flotilla also 

went off course and one of the tugs 

went aground in 7 feet of water in the 

sanctuary. The grounding and efforts 

to extricate the boat left behind a 

channel 120 meters long, 8-10 meters 

wide, and 2 meters deep, destroying 

7,495 square meters of sea bottom 

consisting of turtle grass, manatee 

grass, and finger coral. 

Aug. 

1997

In April 1999, a federal district 

court found the dredging company 

strictly liable for the damage 

caused by the violation of the 

National Marine Sanctuaries Act 

and awarded the United States 

compensatory damages as well as 

response and assessment costs. 

The company appealed the 

judgment and the United States 

cross-appealed on the issue of 

damages. In July 2001, the 

appeals court affirmed the 

judgment against the company 

and remanded the issue of 

damages to the district court.

1999 $40,354

Administrative cases

None

Labor and employment laws

Cases from the Department of Labor:

Civil cases

Heavy equipment 

manufacturer

July 

1992

An employee was severely injured 

when he was struck in the head by a 

bolt thrown from a flywheel during 

maintenance operations; the company 

was issued citations for violating the 

Occupational Safety and Heath 

Administration (OSHA) standards 

regarding machine guarding. 

Jan. 

1993

The U.S. Court of Appeals 

affirmed the OSHA citation and 

upheld the penalty assessment of 

$49,000.

June 

1999

$21,912

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 48 GAO-03-163 Adjudicated Contractor Violations

Administrative cases

Construction 

company

Nov. 

1996

Issued two citations for not complying 

with OSHA standards regarding eye 

and face protection and scaffold 

requirements. Employees were 

observed atop wooden scaffolds, which 

did not have standard guardrails on 

either end; and an employee was 

drilling holes in metal frames without 

wearing eye protection.

 Nov. 

1996

The Occupational Safety and 

Health Review Commission 

affirmed one citation for an OSHA 

violation but reclassified the 

violation as de minimis and 

declined to assess a penalty or 

enter an abatement order. A 

second citation was vacated. 

May 

1999

$12,793

Heavy equipment 

manufacturer

Mar. 

1994

As a result of two accidents where 

employees had fingers amputated, the 

company was issued citations for 

violating OSHA standards regarding 

machine guarding by not providing a 

pneumatic press with a guard or device 

to keep the operator’s hands from the 

point of operation. 

July 

1994

Under the OSHA administrative 

law judge decision, the company 

was assessed a penalty of $9,020.

Mar. 

1999

$21,912

Heavy equipment 

manufacturer

Aug. 

1993

Company was issued citations for 

violating OSHA standards regarding 

machine guarding of five of the 

company’s hydraulic presses.

Aug. 

1993

The Occupational Safety and 

Health Review Commission 

affirmed the citation and the 

assessment of $22,000 in 

penalties.

Dec. 

1998

$21,912

Cases from the National Labor Relations Board (NLRB):

Administrative cases

Grocery store 

company

July to 

Sept. 

1995 

Complaint alleged that the company 

violated the National Labor Relations 

Act (NLRA) by (1) disparately enforcing 

its no-solicitation policy, thereby 

assisting employees in filing a 

decertification petition by permitting 

antiunion solicitation by employees in 

violation of company rules while 

prohibiting prounion solicitations and 

by (2) engaging in surveillance of 

employees’ union activities by 

confiscating prounion materials from 

employees and copying them.

Mar. 

1996

In a February 1997 decision, the 

NLRB adopted the Administrative 

Law Judge’s (ALJ) September 

1996 decision that the company 

had violated the NLRA and 

adopted the ALJ’s recommended 

order that the company (1) cease 

and desist from its unfair labor 

practices and (2) post notice of the 

order at its facility and file a sworn 

certification of a responsible 

official attesting to the steps taken 

to comply.

1997 $145

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 49 GAO-03-163 Adjudicated Contractor Violations

Electrical 

contractor 

July 

1996

Complaint alleged that contractor 

violated NLRA by refusing to hire a 

union organizer and by advising an 

employee that the contractor would not 

hire anyone who had anything to do 

with the union.

Aug. 

1996

In an April 1998 decision, the 

NLRB adopted the ALJ’s April 

1997 decision that the contractor 

had violated the NLRA and 

adopted the ALJ’s recommended 

order, as modified, that the 

company (1) cease and desist 

from its unfair labor practices and 

(2) offer the union organizer 

employment and make him whole 

for any loss of earnings and 

benefits suffered as a result of the 

discrimination, post notice of the 

order at its place of business, and 

file a sworn certification attesting 

to the steps taken to comply.

1998 $157

Propane company Apr. to 

May 

1996

Complaint alleged that, after the union 

notified the company that it was 

engaged in an organizing campaign at 

the company’s facility, the company 

violated the NLRA by reducing work 

schedules of employees who 

supported union activities, threatening 

to close the facility if the employees 

selected the union as their collective 

bargaining agent, and laying off an 

employee as retaliation for the 

selection of the union as the 

employees’ collective bargaining agent.

Apr. 

1996

In an October 1997 decision, the 

NLRB adopted the ALJ’s February 

1997 decision that the company 

had violated the NLRA and 

adopted the ALJ’s recommended 

order that the company (1) cease 

and desist from its unfair labor 

practices and (2) notify the union 

of any decision affecting the terms 

and conditions of employment, 

restore the seniority and other 

benefits of the laid off employee, 

make certain employees whole for 

any loss of earnings and benefits 

suffered as a result of the 

discrimination, post notice of the 

order, and file a sworn certification 

attesting to the steps taken to 

comply.

Oct. 

1997

$411

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 50 GAO-03-163 Adjudicated Contractor Violations

Food services and 

uniform company

Mar. 

1997

Complaint alleged that the company 

violated the NLRA by refusing the 

union’s request to bargain following the 

union’s certification as the exclusive 

collective-bargaining representative of 

the employees.

Mar. 

1997

In a June 1997 decision, the NLRB 

granted the NLRB General 

Counsel’s motion for summary 

judgment and concluded that the 

company’s refusal to bargain 

constitutes an unfair labor practice 

in violation of the NLRA and 

ordered the company to (1) cease 

and desist from refusing to bargain 

and (2) bargain with the union, 

post notice of the order at its 

facility, and file a sworn 

certification attesting to the steps 

taken to comply. 

1997 $386

Electrical 

construction 

company

Feb. 

1996

Complaint alleged that the company, in 

violation of the NLRA, terminated 

several employees when they were 

engaged in protected activities. The 

employees walked off the job in protest 

of a supervisor that they had 

complained about in earlier 

encounters.

Mar. 

1996

In a March 1997 decision, the 

NLRB affirmed the ALJ’s earlier 

decision that the termination of the 

employees for the walkout was an 

unfair labor practice in violation of 

the NLRA and adopted the ALJ’s 

recommended order that the 

company (1) cease and desist 

from discharging or disciplining 

employees for engaging in 

concerted protected activities and 

(2) reinstate the employees to their 

former jobs and make them whole 

for loss of earnings and benefits, 

remove any reference in personnel 

files to the unlawful discharges, 

post notice of the order at its 

facility, and file a sworn 

certification attesting to the steps 

taken to comply. 

1997 $116

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 51 GAO-03-163 Adjudicated Contractor Violations

Dairy products 

company

July 

1998

Complaint alleged that the company 

failed to bargain with the union as the 

exclusive collective bargaining agent in 

violation of the NLRA.

Aug. 

1998

In a September 1998 decision, the 

NLRB granted the NLRB General 

Counsel’s motion for summary 

judgment and concluded that the 

company’s refusal to bargain with 

the union was an unfair labor 

practice in violation of the NLRA 

and ordered the company to (1) 

cease and desist from refusing to 

bargain and (2) bargain with the 

union on terms and conditions of 

employment, post the order at its 

facility, and file a sworn 

certification attesting to the steps 

taken to comply. 

1998 $11,802

Telecommunications companyOct. 

1995

Complaint alleged that the company 

discontinued a paycheck-cashing 

service (that was provided to 

employees during working time) 

without first negotiating with the union 

as required under its collective 

bargaining agreement, in violation of 

the NLRA. 

Feb. 

1996

In a November 1997 decision, the 

NLRB adopted the ALJ’s July 1997 

decision that the company violated 

the NLRA (because the unilateral 

discontinuation of the checkcashing service was an unfair 

labor practice) and adopted the 

ALJ’s recommended order that the 

company (1) cease and desist 

from the practice without first 

giving the union notice and an 

opportunity to bargain and (2) 

restore the check-cashing services 

and bargain collectively with the 

union, post notice of the order, and 

file a sworn certification attesting 

to the steps taken to comply. 

1998 $67,063

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 52 GAO-03-163 Adjudicated Contractor Violations

Tire retread 

company

Mar.

1996

Complaint alleged that company 

violated the NLRA by prohibiting its 

employees from talking with other 

employees in an effort to discourage 

union activity, making unilateral 

changes to an employee selfimprovement training program without 

notifying the union and giving it an 

opportunity to bargain, and failing to 

provide certain employee-related 

information requested by the union.

May 

1996

In a May 1998 order, the NLRB 

adopted the ALJ’s February 1998 

decision that the company violated 

the NLRA by engaging in unfair 

labor practices and adopted the 

ALJ’s recommended order that the 

company (1) cease and desist 

from prohibiting its employees 

from talking in order to discourage 

union activity, from refusing to 

bargain in good faith with the union 

by unilaterally changing 

established terms and conditions 

of employment, and failing and 

refusing to furnish the union with 

the requested information and (2) 

restore certain labor practices, 

post notice of the order, and file a 

sworn certification attesting to the 

steps taken to comply. 

1998 $100

Automotive plastic 

parts 

manufacturer

Jan. 

to 

Mar. 

1996

Complaint alleged that the company 

held a union steward to a higher 

standard for disciplinary purposes by 

strictly interpreting and enforcing its 

work rules against union stewards. 

The company allegedly issued 

numerous written disciplinary warnings 

and suspended a union employee to 

discourage union activities in violation 

of the NLRA.

Apr. 

1996

In a November 1997 order, the 

NLRB adopted the ALJ’s 

September 1997 decision that the 

company violated the NLRA (by 

holding union stewards to a higher 

standard for disciplinary purposes 

and issuing numerous written 

disciplinary warnings and 

suspending the union steward 

because of his union activities in 

order to discourage union 

activities) and adopted the ALJ’s 

recommended order that the 

company (1) cease and desist 

from its unfair labor practices and 

(2) make the union steward whole 

for losses incurred as a result of 

the discrimination, remove from 

the employee’s personnel file any 

reference of the unlawful 

disciplinary action, post notice of 

the order, and file a sworn 

certification attesting to the steps 

taken to comply.

1998 $160

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 53 GAO-03-163 Adjudicated Contractor Violations

Heavy equipment 

manufacturer

Oct. 

1993

Complaint alleged that the company, in 

violation of the NLRA, unlawfully 

suspended an employee for engaging 

in a protected activity (wearing a button 

advertising his position on a matter 

relating to a labor dispute), threatened 

employees with indefinite suspension 

for exercising their lawful right to strike 

in protest, and refused to accept the 

unconditional offer of employees to 

return to work after striking to protest 

the suspension.

Not 

available

In a December 1996 decision, the 

NLRB affirmed the ALJ’s June 

1996 decision that the company 

violated the NLRA and adopted 

the ALJ’s recommended order, as 

modified, that the company (1) 

cease and desist from prohibiting 

employees from or disciplining 

them for wearing union buttons or 

insignia, threatening to indefinitely 

suspend employees for engaging 

in protected, concerted strikes, 

and refusing to accept employees’

unconditional offer to return to 

work from a strike and (2) make 

the suspended employee and 

employees who engaged in the 

strike whole for any loss in 

earnings or other benefits, remove 

any reference of the unlawful 

suspension in the personnel file of 

the suspended employee, post 

notice of the order, and file a sworn 

certification attesting to the steps 

taken to comply. The NLRB also 

agreed with the ALJ that these and 

earlier violations of the NLRA in 

other cases warranted the 

issuance of a broad remedial order 

that the company cease and desist 

from any other manner interfering 

with, restraining, or coercing 

employees in the exercise of the 

rights guaranteed them by the 

NLRA. 

1997 $21,912

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 54 GAO-03-163 Adjudicated Contractor Violations

Software 

company

Mar. 

1993

Complaint alleged that company 

violated the NLRA by interrogating 

employees of a subcontractor 

concerning their union membership 

and activities, threatening 

subcontractor employees with 

termination of the subcontract (which 

would effectively result in their 

discharge) because of union 

membership and activities, promising 

the employees certain benefits if they 

would discontinue their union 

membership and activities, and by 

warning the employees that the 

company would not recognize or 

bargain with the union and that union 

membership and activities were futile. 

June 

1993

In an August 1997 decision, the 

NLRB affirmed the ALJ’s March 

1996 decision that the company 

violated the NLRA (through 

various interrogations, promises, 

threats, and warnings related to 

union membership and activities) 

but reversed the ALJ’s separate 

finding of a violation concerning 

the discharge of several unionrepresented employees. The 

NLRB remanded the case to the 

ALJ for further action and held in 

abeyance the Board’s issuance of 

an order remedying the unfair 

labor practices pending action on 

the remand. 

1997 $44,658

Nut processing 

company

1993 Complaint alleged that company 

discriminatorily assigned a returning 

striker to a low-paying job cracking and 

inspecting nuts, rather than to a job in 

her prestrike position as a forklift driver 

because of concerns arising from her 

participation in the strike. The 

discriminatory job assignment 

continued for 2 weeks preceding a 

representation election among striking 

and replacement employees, which the 

union lost.

Not 

available

On remand from an appeals court, 

the NLRB found that the proximity 

of the discriminatory job 

assignment (which it held violated 

the NLRA) to the election 

increased the likelihood that it had 

an impact on the employees’

choice during the election. The 

NLRB set aside the election and 

ordered a new election.

1998 $4,773

Armored car 

company

May 

1998

Complaint alleged that company 

violated the NLRA by refusing the 

union’s request to bargain following the 

union’s certification as the exclusive 

collective bargaining representative of 

the employees.

June 

1998

In a September 1998, decision, the 

NRLB found that the company’s 

failure and refusal to bargain with 

the union violated the NLRA and 

ordered the company to (1) cease 

and desist from refusing to bargain 

with the union, and (2) recognize 

and bargain on request with the 

union on terms and conditions of 

employment, as well as post notice 

of the order at its facility and file a 

sworn certification to the steps 

taken to comply. 

1998 $132

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 55 GAO-03-163 Adjudicated Contractor Violations

Power company Apr. 

1995

Complaint alleged that the company 

unilaterally changed its employee 

retirement benefits without affording 

the union the opportunity to bargain 

over the changes, in violation of the 

NLRA.

May 

1995

In a March 1998 decision, the 

NLRB adopted the ALJ’s February 

1997 decision that the company 

violated the NLRA by failing to 

fulfill its bargaining obligation 

(because the future retirement 

benefits of currently active 

unionized employees are subject 

to mandatory bargaining), and 

adopted the ALJ’s recommended 

decision, as modified, that the 

company (1) cease and desist 

from making unilateral changes in 

employee retirement benefits 

without providing the union notice 

and an opportunity to bargain and 

(2) bargain on request with the 

union, restore retirement benefits 

to their previous level, post notice 

of the order, and file a sworn 

certification attesting to the steps 

taken to comply.

1998 $12,050

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 56 GAO-03-163 Adjudicated Contractor Violations

Fire protection 

systems company

Apr. 

1994

Complaint alleged that the company 

engaged in unfair labor practices by, 

among other things, laying off an 

employee because of his insistence on 

being paid subsistence pay to which he 

was entitled under the collective 

bargaining agreement, calling an 

employee a “troublemaker” and telling 

him that he would be laid off for 

pursuing a grievance, telling employees 

they would lose their jobs if they 

refused to cross a picket line, and 

refusing to meet and bargain in good 

faith with the union.

June 

1994

In a May 1999 decision, the NLRB 

affirmed the ALJ’s January 1997 

decision, with certain 

modifications, that the company 

violated the NLRA and adopted 

the ALJ’s recommended order, as 

modified, that the company (1) 

cease and desist from coercing 

employees by calling them 

“troublemakers” and telling them 

they will be laid off for pursuing 

grievances, telling employees they 

will lose their jobs if they refuse to 

cross a picket line, telling 

employees they have to resign 

from the union to continue working 

and/or promising additional 

benefits if they do, and a number 

of other unfair labor practices, and 

(2) bargain in good faith with the 

union concerning terms and 

conditions of employment, restore 

to employees the terms and 

conditions of employment 

applicable before the strike and 

make them whole for any losses 

suffered as a result of the unlawful 

unilateral changes, offer a laid-off 

employee reinstatement to his 

former job and make him whole for 

any loss of earnings and benefits, 

remove any reference to the 

unlawful layoff from the employee’s 

personnel files, post notice of the 

order, and file a sworn certification 

attesting to the steps taken to 

comply.

1999 $230

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 57 GAO-03-163 Adjudicated Contractor Violations

Telecommunications companyAug. 

1994

In 1993 the company began a testing 

procedure for a new customer service 

position. An employee applying for the 

position did not pass the structured 

interview test and the union filed a 

grievance on her behalf. Subsequently, 

the union requested specific 

information about the testing 

procedure, which the company refused 

to provide citing the possibility of 

compromising or impairing the validity 

of the interview process. Complaint 

alleged unfair labor practices under the 

NLRA.

Oct. 

1994

In a September 1999 decision, the 

NLRB affirmed the ALJ’s October 

1995 decision that the company 

violated the NLRA (by failing to 

provide the union with the 

requested testing information 

relevant to processing the 

grievance) and adopted the ALJ’s 

recommended order that the 

company (1) cease and desist 

from refusing to bargain in good 

faith with the union, and (2) 

bargain collectively in good faith 

with the union regarding the 

requested information, post notice 

of the order, and file a sworn 

certification attesting to the steps 

taken to comply.

1999 $177

Electrical 

contractor

Feb. 

1995

Complaint alleged that supervisor told 

employees that current or past 

membership in a union is a “big strike”

against employees’ chances of being 

hired and threatened to discharge 

employees if the union succeeded in 

organizing, in violation of the NLRA.

Feb. 

1995

In a June decision, the NLRB 

affirmed the ALJ’s November 1996 

decision that the company violated 

the NLRA and adopted the ALJ’s 

recommended order that the 

company (1) cease and desist 

from telling employees that union 

membership is a “big strike”

against their chances of being 

hired and from telling employees 

that referrals of applicants who are 

union members will not be pursued 

because the company does not 

want to hire union personnel and 

(2) post notice of the order and file 

a sworn certification attesting to 

the steps taken to comply.

1997 $1,696

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 58 GAO-03-163 Adjudicated Contractor Violations

Concrete 

company

Apr. to 

May

1997

Complaint alleged that company 

committed numerous unfair labor 

practices in violation of the NLRA, 

including threatening employees with 

loss of benefits and vacations, loss of 

employment, loss of jobs, unspecified 

reprisals, transfer, violence, and 

closure of the business if employees 

selected the union as their 

representative for purposes of 

collective bargaining, interrogating 

employees about their union activities, 

creating the impression of surveillance 

of employee union activities, etc.

May 

1997

In a September 1999 order, the 

NLRB adopted the ALJ’s July 1999 

decision that the company violated 

the NLRA by engaging in serious 

unfair labor practices and adopted 

the ALJ’s recommended order that 

the company (1) cease and desist 

from threatening its employees for 

engaging in union activities, 

interrogating its employees about 

union activities, creating the 

impression it is engaging in 

surveillance of employee union 

activities, threatening to sell the 

business in retaliation of employee 

support for the union, threatening 

its employees with loss of 

economic benefits to persuade 

them to reject the union, 

disparately treating employees 

who support the union and 

permitting abusive conduct against 

them, giving a larger than normal 

hourly wage increase during the 

period preceding the 

representation election to 

persuade employees to reject the 

union and (2) post notice of the 

order and file a sworn certification 

attesting to steps taken to comply. 

1999 $161

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 59 GAO-03-163 Adjudicated Contractor Violations

Telecommunications equipment 

company

Dec. 

1995 

to 

May 

1997

Complaint alleged that the company 

did not provide information requested 

by the union necessary for and relevant 

to the union’s performance of its duties 

as exclusive bargaining representative, 

namely the processing of a grievance 

regarding the recall rights of a laid-off 

employee.

May 

1997

In an April 1998 order, the NLRB 

adopted the ALJ’s March 1998 

decision that the company violated 

the NLRA and adopted the ALJ’s 

order that the company (1) cease 

and desist from failing and refusing 

to furnish, and delaying the 

furnishing of, information 

requested by the union necessary 

for and relevant to the union 

performance of its collective 

bargaining duties and (2) post 

notice of the order at its facilities 

and file a sworn certification 

attesting to steps taken to comply. 

1998 $69,257

Electrical 

contractor

Jan. 

to 

Mar. 

1995

Complaint alleged that company 

violated the NLRA by interrogating 

employees about their affiliation with 

and/or membership in the union, 

threatening denial of employment 

because of union activities, and 

isolating, transferring, and laying off 

employees because of union affiliation 

or support. 

May 

1995

In a March 1997 decision, the 

NLRB affirmed the ALJ’s October 

1996 decision that the company 

violated the NLRA, and adopted 

the ALJ’s recommended order, as 

modified, that the company (1) 

cease and desist from threatening 

employees with nonhire because 

of their union affiliation, 

terminating employees because of 

their union support or affiliation, 

and refusing to accept applications 

from employees and refusing to 

hire employees because of their 

union affiliation and (2) offer 

reinstatement to certain 

employees to their former 

positions, offer to hire certain 

applicants, make certain 

employees and applicants whole 

for any loss of earnings and other 

benefits, remove reference to the 

unlawful discrimination from 

personnel files, post notice of the 

order at its facility, and file a sworn 

certification attesting to steps 

taken to comply.

1997 $278

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 60 GAO-03-163 Adjudicated Contractor Violations

Building 

maintenance 

company

July 

1996 

to

Jan. 

1998

Complaint alleged that company 

engaged in numerous unfair labor 

practices designed to thwart union’s 

organizational efforts, including 

discharging employees, prohibiting 

employees from wearing union insignia 

while at work, and threatening 

employees because of their support for 

the union. 

Not 

available

In an August 1998 order, the 

NLRB adopted, with modifications, 

the ALJ’s May 1998 decision 

finding that the company violated 

the NLRA, and adopted the ALJ’s 

recommended order, as modified, 

that the company (1) cease and 

desist from discharging and/or not 

recommending employees for 

rehire because they engage in 

union activities, prohibiting 

employees from wearing union 

insignia at work, threatening 

employees that they will not get 

work, will be terminated, or will be 

the object of reprisals if they 

support the union, and from 

numerous other actions and (2) 

reinstate an employee to her 

former job, offer certain applicants 

employment to jobs to which they 

applied, make certain employees 

whole for any loss of earnings or 

benefits, remove any reference to 

the unlawful discharges or refusals 

to hire from personnel files, post 

notice of the order, and file a sworn 

certification attesting to the steps 

taken to comply.

1998 $566

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 61 GAO-03-163 Adjudicated Contractor Violations

Automobile parts 

painting company 

Feb. 

to Apr. 

1996

Complaint alleged that company 

engaged in unfair labor practices in 

violation of the NLRA by setting up 

surveillance to record union organizing 

activity and interfering with the right of 

employees to organize and by 

engaging in certain acts to discourage 

union membership, including the 

discharge of union supporters, from the 

date certain employees presented an 

organizing petition to the plant 

manager to the date of the election 

(which the union won) and thereafter.

Not 

available

In an October 1997 decision, the 

NLRB adopted, with modifications, 

the ALJ’s May 1997 decision that 

the company had violated the 

NLRA, and adopted the ALJ’s 

recommended order, as modified, 

that the company (1) cease and 

desist from creating the 

impression that employees’ union 

activity is under surveillance, 

prohibiting employees from 

distributing union literature in 

nonwork areas on nonwork time, 

threatening employees with 

reprisals for engaging in union 

activity, and from several other 

actions, and (2) remove from 

personnel files any reference to 

unlawful warnings given certain 

employees, post notice of the 

order at its facility, and file a sworn 

certification attesting to the steps 

taken to comply.

1998 $100

Blood services 

organization

July 

1996

Complaint alleged that the organization 

announced wage increases to 

employees the day prior to a union 

representation election in order to 

influence the outcome of the voting.

July 

1996

In an August 1997 decision, the 

NLRB affirmed the ALJ’s March 

1997 decision that the 

organization violated the NLRA (by 

announcing the wage increase the 

day prior to the election) and 

adopted the ALJ’s recommended 

order that the organization (1) 

cease and desist from announcing 

a wage increase in order to 

dissuade employees from 

selecting the union as their 

collective bargaining 

representative and (2) post copies 

of the order and file a sworn 

certification attesting to the steps 

taken to comply.

1997 $4,216

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 62 GAO-03-163 Adjudicated Contractor Violations

Security services 

company

May 

1998

Complaint alleged that the company 

refused the union’s request to bargain 

in violation of the NLRA following the 

union’s certification as employees’

exclusive collective bargaining agent.

May 

1998

In a July 1998 decision granting 

the NLRB General Counsel’s 

motion for summary judgment, the 

NLRB found that the company 

violated the NLRA and ordered it 

to (1) cease and desist from 

refusing to bargain with the union 

and (2) bargain on request with the 

union and to post notice of the 

order at its facilities and file a 

sworn certification attesting to the 

steps taken to comply. 

1998 $62,158

Energy products 

company

Mar. 

to Apr. 

1995

Complaint alleged that the company 

violated the NLRA when it permanently 

laid off the collective bargaining unit 

employees and subcontracted the work 

in order to cut costs, which was 

prohibited by the collective bargaining 

agreement. 

Apr. 

1995

In an August 1998 decision, the 

NLRB affirmed the ALJ’s August 

1996 decision finding a violation of 

the NLRA and adopted the ALJ’s 

recommended order that the 

company (1) cease and desist 

from subcontracting work of 

employees and permanently laying 

them off during the term of the 

collective bargaining agreement, 

and (2) reinstate employees to 

their former jobs, make whole the 

employees for loss of earnings and 

benefits, comply with the 

respective collective bargaining 

agreements and bargain in good 

faith and obtain the consent of the 

union before making changes in 

the terms and conditions of 

employment, post notice of the 

order at its facilities, and file a 

sworn certification attesting to 

steps taken to comply.

1998 $323,340

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 63 GAO-03-163 Adjudicated Contractor Violations

Food services and 

uniform company

May 

1997

Complaint alleged that the company 

refused to bargain with the union 

following the union’s certification as the 

exclusive bargaining representative of 

the employees, in violation of the 

NLRA.

May 

1997

In a July 1997 decision, the NLRB 

granted the NLRB General 

Counsel’s motion for summary 

judgment and concluded that the 

company’s refusal to recognize 

and bargain with the union violated 

the NLRA and ordered the 

company to (1) cease and desist 

from refusing to bargain and (2) 

bargain on request with the union, 

and to post notice of the order and 

file a sworn certification attesting 

to the steps taken to comply.

1997 $386

Tire retread 

company

Sept. 

1996

Complaint alleged that the company 

violated the NLRA by refusing to 

bargain with the union following the 

union’s certification as the exclusive 

bargaining representative of the 

employees.

Oct. 

1996

In a December 1996 decision, the 

NLRB granted the NLRB General 

Counsel’s motion for summary 

judgment and concluded that the 

company’s refusal to bargain with 

the union violated the NLRA and 

ordered the company to (1) cease 

and desist from refusing to bargain 

and (2) bargain on request with the 

union and to post notice of the 

order at its facility and file a sworn 

certification attesting to the steps 

taken to comply. 

1997 $100

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 64 GAO-03-163 Adjudicated Contractor Violations

Heavy equipment 

manufacturer

Nov. 

to 

Dec. 

1993

Complaint alleged that the company 

unfairly restricted an employee’s union 

activities and suspended and 

discharged the employee for his 

protected union activities, and 

committed various acts of threats, 

surveillance, and intimidation, in 

violation of the NLRA. 

Not 

avail.

In December 1996 decision, the 

NLRB affirmed the ALJ’s May 

1995 decision that the company 

violated the NLRA and adopted, as 

modified, the ALJ’s recommended 

order that the company (1) cease 

and desist from restricting the 

display of union materials from an 

employee’s toolbox, restricting 

employees who are union officials 

from walking around and talking 

with other employees in the work 

area, interfering with an 

employee’s right to talk to a union 

officer on nonworktime, 

threatening employees with 

discharge for having engaged in 

protected activity or for wearing 

union insignia, and suspending or 

discharging employees because of 

the protected activity and (2) 

rescind the “gag order” imposed 

on an employee, offer full 

reinstatement to the employee to 

his former position, make the 

employee whole for any loss of 

earnings or benefits, remove from 

the employee’s personnel file any 

references to the unlawful 

discharge, post notice of the order 

at its facility, and file a sworn 

certification attesting to steps 

taken to comply. 

1997 $21,912

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 65 GAO-03-163 Adjudicated Contractor Violations

Heavy equipment 

manufacturer

June 

1993

Complaint alleged that the company 

changed its grievance procedures and 

implemented an employee cash award 

program without bargaining with the 

union, in violation of the NLRA. 

Not 

available

In a January 1997 order, the NLRB 

adopted the ALJ’s October 1996 

decision that the company’s 

refusal to designate any member 

of management to meet union 

officials at certain grievance 

meetings violated the NLRA and 

adopted the ALJ’s recommended 

order that the company (1) cease 

and desist from unilaterally 

eliminating a step of the grievance 

procedure (by failing and refusing 

to designate a representative of 

management to participate) and 

from making any cash award to 

any member of the bargaining unit 

without reaching agreement or 

impasse with the union, and (2) 

post at its facility notice of the 

order and file a sworn certification 

attesting to the steps taken to 

comply.

1997 $21,912

Heavy equipment 

manufacturer

Jan. 

1994

Complaint alleged that the company 

engaged in unfair labor practices when 

it removed union notices from bulletin 

boards and walls.

June 

1994

In an August 1997 decision, the 

NLRB affirmed the ALJ’s decision 

of July 1996 that the company 

violated the NLRA and adopted, 

with modification, the ALJ’s 

recommended order that the 

company (1) cease and desist 

from removing posted union 

notices and signs advertising 

union events, and (2) post notice 

of the order at its facilities and file 

a sworn certification attesting to 

the steps taken to comply.

1997 $21,912

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 66 GAO-03-163 Adjudicated Contractor Violations

Cases from the Department of Justice:

Civil cases

Aerospace, 

munitions, & 

defense systems 

company

Not 

available

In an employment discrimination case 

brought by the U.S. Equal Employment 

Opportunity Commission (EEOC), the 

EEOC alleged that the company and 

the employee’s union failed to 

accommodate the employee’s religious 

beliefs, violating Title VII of the Civil 

Rights Act of 1964 (which makes it 

illegal for employers and labor unions 

to discriminate against any individual 

because of his religion). Specifically, a 

union security clause required 

company employees to pay “union 

fees” even if they did not join the union 

and the employee objected and 

requested his fee be paid to a charity 

instead based on religious grounds. 

The company did not agree to the 

proposed accommodation because it 

was contractually bound to collect his 

“union fees” and the union refused 

since it believed the employee’s 

objection to paying union fees was not 

recognized under current labor law.

Feb. 

1998

In September 1998, a U.S. District 

Court granted partial summary 

judgment to EEOC and the 

employee, finding that the 

company and the union failed to 

reasonably accommodate the 

employee’s religious beliefs under 

Title VII; the subsequent appeal 

was dismissed in August 1999 

after the parties stipulated in 

March 1999 to a settlement which 

gave the employee the requested 

religious accommodation and a 

payment of $20,000.

1998 $148,248

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Appendix II

Agency Cases Where a Law Violation Was 

Found by a Federal Court or Adjudicated 

Administrative Decision

Page 67 GAO-03-163 Adjudicated Contractor Violations

Note: This appendix lists criminal cases from enforcement agencies where the contractor pled guilty 

(or no contest), a plea agreement was reached, or the contractor was otherwise convicted, and civil 

and administrative cases from enforcement agencies where a violation of law was determined by a 

court or adjudicated administrative decision. 

a

Fiscal year 2000 federal contract amount is the total dollars (in thousands) obligated during fiscal year 

2000 as shown in GSA’s Federal Procurement Data System file information.

Source: GAO analysis of enforcement agency data.

Antitrust laws

Cases from the Federal Trade Commission:

Cases from the Department of Justice:

Criminal cases

Military insignia 

retailer

1990 

to 

1993

Under the one-count felony charge filed 

in U.S. District Court, the company was 

alleged to have conspired to fix prices 

and rig bids for military insignia sold to 

the Army Air Force Exchange Service 

for resale to U.S. military personnel, in 

violation of the Sherman Act, which 

prohibits conspiracies in restraint of 

trade. The company carried out the 

conspiracy by discussing with other 

companies the prospective bids for bulk 

insignia contracts, designating the 

company that would be the low bidder, 

and submitting intentionally high bids. 

The company also conspired with other 

military insignia companies by 

discussing and agreeing on the level of 

price increases on the Exchange 

Service contract that covered some 

4,000 different military insignias.

July 

1996

Pursuant to the plea agreement, 

the Antitrust Division of the 

Department of Justice and the 

company jointly recommended to 

the court, and the court imposed, a 

fine of $300,000 for the violation.

Nov. 

1996

$209

(Continued From Previous Page)

Date(s) and description of alleged incident

Type of 

company Date Description

Date 

case 

opened Resolution of case

Date 

case 

closed

Fiscal

year

2000

federal

contract

amount

($000)a
Page 68 GAO-03-163 Adjudicated Contractor Violations

Appendix III

GAO Contacts and Staff Acknowledgments ApendxiI

GAO Contacts Bernard L. Ungar (202) 512-2834

Sherrill H. Johnson (214) 777-5600

Acknowledgments In addition to those named above, Michael Rives, Tyra DiPalma-Vigil, 

Syrene Mitchell, Derrick Collins, Adam Couvillion, Ray Occhipinti, Bill 

Scott, Elwood White, Adam Vodraska, Delois Richardson, Michele Fejfar, 

Susan Wallace, and Donna Leiss made key contributions to this report.

(240419)
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