Government Contracting: Adjudicated Violations of Certain Laws by Federal Contractors
Published: 2002-11-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Because of its interest in this area, Congress asked that we address the following questions: (1) 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 Federal Acquisition Regulation (FAR) rule)? and (2) What FAR rule implementation issues were identified in our work in response to the first question?
section_title: What GAO Found
paragraphs: 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 Administration Law Judge, board, or commission indicating a violation of law. 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 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. 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--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.

section_title: Letter
paragraphs: 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.” 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.   In accordance with  the statutory definition of “responsible source,” 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.” 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  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  $100,000 in fiscal year 2000 and federal enforcement agency cases closed  during fiscal years 1997 through 1999 (October 1996 through September  1999). 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, 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. 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  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  Policy. 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.
subsections: section_title: Background
paragraphs: 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  of integrity and business ethics.” 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, 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.
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. 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   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;  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   federal or state felony convictions;  adverse federal court judgments in civil cases brought by the United   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  certifications required to be included in solicitations where the contract  value is expected to exceed the simplified acquisition threshold ($100,000). Specifically, under the existing certification, 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 principals 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);  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. 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. 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. 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  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 suspension and debarment 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  standard. These interpretations are in the context of bid protest decisions  addressing challenges to responsibility determinations in the award of  government contracts. 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. 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  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.
section_title: Thirty-Nine Federal Contractors Had Adjudicated Violations of Federal Environmental, Labor, or Antitrust Laws
paragraphs: 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; 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. These 39  contractors had 39 different contracts of $100,000 or more totaling  approximately $855 million. 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.
In addition, we identified another 3,403 contractors involved in another  6,705 cases 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) any wrongdoing, and  sometimes the agreement actually contained language whereby the  contractor specifically denied any violation. In these cases, the parties  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.
subsections: section_title: Eleven Federal Contractors Had Adjudicated Violations of Federal Environmental Laws
paragraphs: 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. EPA may also bring civil or criminal enforcement actions, in  which case the Environment and Natural Resources Division of the DOJ or  local U.S. Attorneys handle the matter.
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.
section_title: Twenty-Seven Federal Contractors Had Adjudicated Violations of Federal Labor and Employment Laws
paragraphs: 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 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.
The mission of OSHA, as defined in its enabling legislation, the  Occupational Safety and Health Act, is to “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.
section_title: One Federal Contractor Was Convicted in Federal Court of Violating Federal Antitrust Laws
paragraphs: 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  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. This case is described  in appendix II. None of the other 31 cases—including proposed merger  reviews—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.
section_title: No Federal Contractors Had an Adjudicated Violation of Federal Consumer Protection Laws
paragraphs: 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  (CPSC), whose jurisdiction encompasses about 15,000 types of products.  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.
section_title: No Federal Contractors Had an Adjudicated Violation of Federal Tax Laws
paragraphs: 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  compromise, or await enforcement action through the judicial process.  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.
During tax periods covering fiscal years 1997 through 1999, 7,864 of 13,058  contractors 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 successor- in-interest of the taxpayer (whose assets and business had been acquired  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.
section_title: FAR Rule Implementation Issues Identified in Determining Incidence of Law Violations by Contractors
paragraphs: 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  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.
subsections: section_title: Few Certifications Would Have Indicated Law Violations
paragraphs: 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.
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  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.
section_title: Contracting Officers Would Face Significant Difficulties Verifying or Obtaining Contractor Compliance Histories
paragraphs: 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  contractors 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 contractors). 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 name- matching 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. 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  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.
section_title: Additional Record Keeping by Contractors May Have Been Necessary
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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.
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.
section_title: Objectives, Scope, and Methodology
paragraphs: 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  responsibility 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 1999  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 laws 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.
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.  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   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.
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.
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),  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  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.
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.
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.
section_title: Agency Cases Where a Law Violation Was Found by a Federal Court or Adjudicated Administrative Decision
paragraphs: Fiscal year 2000 federal contract amount ($000)
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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-To- Know Act.
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.
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.
Under the February 1996 plea  agreement, the company was  sentenced to a $35,000 fine and a  special assessment of $325.
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.
Under the March 1997  administrative decision and order,  the company was assessed a civil  penalty of $125,000.
Fiscal year 2000 federal contract amount ($000)
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.
Under the March 1998 final  administrative order, the company  was assessed a penalty of  $13,000.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
The U.S. Court of Appeals  affirmed the OSHA citation and  upheld the penalty assessment of  $49,000.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
Under the OSHA administrative  law judge decision, the company  was assessed a penalty of $9,020.
Company was issued citations for  violating OSHA standards regarding  machine guarding of five of the  company’s hydraulic presses.
The Occupational Safety and  Health Review Commission  affirmed the citation and the  assessment of $22,000 in  penalties.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
Complaint alleged that the company  failed to bargain with the union as the  exclusive collective bargaining agent in  violation of the NLRA.
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.
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.
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 check- cashing 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.
Fiscal year 2000 federal contract amount ($000)
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 self- improvement 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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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 union- represented 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.
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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
Complaint alleged that the company  engaged in unfair labor practices when  it removed union notices from bulletin  boards and walls.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
Fiscal year 2000 federal contract amount ($000)
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.
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.
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.
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