Defending Contractor Irresponsibility

The federal government’s short dalliance with a corporate responsibility screen for contractors appears to have ended.

In April, the Bush administration issued notice that it intended to rescind the contractor responsibility rule issued at the end of the Clinton administration.

The Clinton rule would have authorized government procurement officers to deny contracts to corporate bidders who had a demonstrated record of irresponsibility. The rule specified that procurement officers should look especially for repeat violations of laws and regulations related to taxation, environmental and consumer protection, antitrust and labor and employment laws [See “Controlling Corporate Scofflaws or Blacklisting?” Multinational Monitor, July/August 1999].

The Bush administration’s announcement of its intention to roll back the rule, published in the April 3, 2001 Federal Register, contends that the rules do not provide “contracting officers with sufficient guidelines to prevent arbitrary or otherwise abusive implementation,” and that the rule is not justified from a “cost benefit perspective.”

The controversial rule was first formally proposed by Vice President Al Gore in 1997, as he was jockeying with Representative Richard Gephardt, D-Missouri, for support from organized labor for the 2000 Democratic presidential nomination.

The Clinton administration failed to move on the proposal until 1999. A concerted business campaign stalled its willingness to implement the rule, which was revised after an initial notice and comment period.
The Clinton administration issued a final rule on December 19, 2000, with an implementation date of January 19, 2001.

The Bush administration suspended implementation January 20, and then extended the suspension on April 3.

In its April 3 announcement of its intent to rescind the rule altogether, the Bush administration said that the fact that the rule had been in force for such a short period meant that “there has not been time for the public to be in a position of reliance on the rule’s existence.”

Public interest proponents of the rule contend that there is no serious substantive argument against the rule. “A more careful examination of a prospective contractor’s record and an up-front determination on compliance with the law would help ensure that taxpayer money is spent responsibly,” says Gary Bass, executive director of OMB Watch, as well as chairman of Citizens for Sensible Safeguards, a broad-based coalition of hundreds of public interest organizations. “It seems clear, however, that the administration is less concerned about its obligations to taxpayers — who the president claims to care so much about — and more concerned about the powerful corporate interests that made repeal of this rule a top priority.” The corporate beneficiaries of the proposed roll back were overjoyed with the Bush announcement. “We have fought this political payback to the unions every step of the way,” says Randel Johnson, U.S. Chamber of Commerce vice president for labor policy. “This rule is completely unworkable.”

The Chamber argued that, under the rule, “government agents wold have had virtually unlimited, arbitrary power to decide who could compete for the government’s business.

The result, business groups alleged, was likely to be a new form of “blacklisting.”
Public interest supporters contended it would encourage contracting officers, properly, to take into account whether contractors could be depended on to follow the law.

“These rules stand for the simple, common sense proposition that the government should look at a company's track record of complying with the law before giving that company a federal contract worth millions of dollars,” says AFL-CIO Executive Vice President Linda Chavez-Thompson.

Many existing contractors do in fact have records of serious and/or repeated lawbreaking. A Multinational Monitor investigation found that nine of the top 100 corporate criminals of the 1990s were among the 200 largest federal government contractors in 1998, and that six of the largest 50 government contactors had been cited for “repeat” workplace safety violations.