The Federal Government Can and Should Demand More from Its Contractors

Because of the most obstructionist congress in history, President Obama has often been forced to turn to executive action to create any meaningful policy change.

And though the president has issued the fewest executive orders of any president since Grover Cleveland, many of his have had a substantive impact, positioning the executive branch as a leader on issues such as climate change, jobs, and gun control. 

One such order was the “Fair Pay and Safe Workplaces Executive Order”, which prevents companies with the most egregious or repeated violations of health, safety, and labor laws from receiving federal government contracts. The order was cheered by many labor organizations and think tanks, including Demos, as a part of our policy package to reform federal contracting. The Chamber of Commerce, somewhat predictably, called it “double jeopardy” for companies already penalized for health, safety, or labor law violations.

To understand the scope and effect of the ‘Safe Workplaces’ executive order, we investigated just how widespread such violations were among federal contractors by merging federal contracting data from USAspending.gov with OSHA and Wage and Hour violations data from the Department of Labor.

We found large and widespread violations among a large swath of the contracting universe. Specifically, we found:

• Contractors were fined nearly $722 million for serious violations of health, safety, and labor laws, accounting for 12 percent of all such fines. 
• Contractors with violations employed approximately 6.2 million workers, 5.4% of the entire private sector workforce.
• Contractors with at least one health, safety, or wage violation in the past 15 years received $175 billion in federal contracting dollars in 2013, 40% of all contracting dollars.

We also found that non-union contractors were responsible the majority of these violations, and committed violations in disproportionate numbers:

• Non-union contractors were responsible for nearly three-quarters of all health, safety, and labor law fines and penalties: almost $535 million.
• However, non-union contractors accounted for less than 60 percent of the employment at firms with violations on their record, meaning that non-union contractors are responsible for a disproportionate share of such violations.

That nearly half of all contracting dollars are awarded to firms with violations is a clear signal that the current contracting process is failing workers.

The federal government can do better. Right now, contracting employees are on strike in DC, demanding better wages and workplace conditions. Instead of awarding contracts to the lowest bidder while disqualifying the worst actors from bidding on contracts, as directed by the “Safe Workplaces” executive order, we need to turn the contracting process on its head, and instead give preference to firms who are responsible employers: who pay fair wages and offer decent benefits, protect workers’ safety and health and respect their right to organize.

The existing executive orders were a good first step, but only through implementing such a comprehensive “good jobs” contracting policy, as we outline in our report, will the federal government truly incentivize employers to offer the kind of jobs necessary to sustain the American middle class.

The infographic below shows the full scope of the problem.