Rumor Has It Forget burden of proof. A new proposal says allegations alone should prevent businesses from receiving federal contracts.
Opinions expressed by Entrepreneur contributors are their own.
Federal procurement officials may soon be able to preventcompanies from receiving federal contracts simply because ofwhispers that a company has broken labor, occupational-safety orother federal laws. The three big federal procurement agencies (theDepartment of Defense, the General Services Administration andNASA)--who together control the Federal Acquisition Regulation(FAR)--proposed that change in July.
Currently, FAR says a federal procurement officer can keep acompany from receiving a contract only if the company has anunsatisfactory record of compliance with laws and regulations.
In theory, that means a state or federal court or a federalagency has to have found the company guilty of violating a federallaw in order to deny it a federal contract. In practice, however,contracting officers also take into account alleged violations whendeciding whether to award a contract, according to Lynn Rhinehart,associate general counsel for the AFL-CIO. In some circumstances,she says, it may be appropriate for procurement officers to basetheir decisions on alleged violations, or "persuasive evidenceof substantial [and repeated] noncompliance with a law orregulation."
Enter the procurement agencies' proposal, which formallyputs the alleged violations standard into FAR. It also enumeratesthe broad range of federal violations that are of concern, alisting that's not included in the present FAR. If the proposalbecomes final, a company could be barred from receiving a contractas a result of mere allegations that it has repeatedly violatedfederal law and established a pattern of such violations.
Rhinehart calls the proposal a clarification and affirmation ofcurrent practice. "It's not breaking any radical newground," she insists. Proponents add that the proposal willhelp ensure the federal government does business only with thosecompanies that work to maintain a clean record of compliance withfederal laws and regulations.
Others, however, see a potential danger in passing such aproposal. Felix Martinez, director of procurement and federalmarkets for the American Consulting Engineers Council, notes that aunion trying to organize a company could flood a federal regulatoryagency--be it the EPA, the Equal Employment Opportunity Commission,the National Labor Relations Board or OSHA--with unsubstantiatedcomplaints about the company. That might be enough to meet the new"persuasive evidence of substantial noncompliance"standard. Says Martinez, "Any lawyer worth his salt couldslide something in there."
Trade associations that are members of the National AllianceAgainst Blacklisting, such as Food Distributors International(FDI), have also criticized the proposal. "The creation ofsuch a sweeping blacklist of penalized or even debarred federalcontractors and subcontractors is a blatant reward to theAFL-CIO," says John Block, president of FDI. "Thepresident has given the unions the power to blackmail companiesinto accepting union-organizing and collective-bargaining demands.[These companies] face the possibility of losing all federalcontracts."
Stephen Barlas is a business reporter who covers theWashington beat for 15 magazines.
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