Loyal readers of this blog are well aware of the Fair Pay and Safe Workplaces Executive Order and corresponding regulations which go into effect next month. Those looking to learn more about the topic can access our recent webinar and blog post on the "Blacklisting" regulations and what contractors should be doing now to prepare for this new reality in government contracting.
The new Blacklisting regulations require contractors submitting bids for government contracts worth $500,000 or more to disclose violations of 14 federal labor laws (and in the future will be required to disclose violations of these laws' state equivalents). These disclosures will be reviewed by Labor Compliance Advisors ("LCAs") to assess whether the contractor is a responsible entity that the federal government should engage. In connection with this new assessment process, the Department of Labor ("DOL") this week announced a new "Preassessment" program.
As announced by the DOL, the new program permits companies to contact the DOL, independent of a specific bid, to request "an assessment of their record of labor law compliance." To participate, contractors and prospective contractors ("Contractors") may fill out a form online providing some basic information. After the form is submitted, the DOL will follow up to request additional information about the Contractor's labor law violation history. Following the receipt of the additional information, the DOL will conduct a responsibility determination which it will share with the Contractor.
The DOL touts the Preassessment Program as having a number of benefits. First, it will provide Contractors with the opportunity to be assessed on their labor law violation history in advance of an actual bid. This will permit the Contractor to know whether it has any labor law violations the DOL views as serious, repeated, willful or pervasive that could harm its ability to win future contract bids.
Second, the DOL notes that if problems are found, the program will provide the Contractor an opportunity to develop a "compliance agreement" with the DOL and "start taking steps to mitigate issues before there is a specific acquisition." Finally, a preassessment that finds a satisfactory record of labor law compliance can be considered by the LCA when the Contractor submits a future bid (provided the Contractor has not had any additional violations since the preassessment).
This program is available now and will continue to be an option for Contractors, even after the Blacklisting rules go into effect.
The new Blacklisting rules have created a lot of uncertainty for federal contractors. It is unclear how the labor law assessment process will work in practice, particularly given that LCAs are provided only three days to make their responsibility determinations (unless granted an extension by the Contracting Officer). The Preassessment Program may be a useful tool for contractors and prospective contractors to get a better sense of how their labor law compliance history will be viewed by LCAs. For large contractors that are likely to have at least some reportable violations, the Preassessment Program may provide the opportunity to obtain a satisfactory compliance record determination in a process with less intense deadlines. One can foresee a circumstance where because the LCA has only three days to make a determination, the advisor fails to appreciate the fact that while the prospective contractor has some violations, given its size those violations do not reflect a poor labor law compliance record. The Preassessment Program could provide a better opportunity to work with DOL to explain such factors and increase the opportunity of obtaining a satisfactory assessment that can be used in future bids.
Conversely, the Preassessment Program can also provide an early warning of labor law violations that could harm a Contractor's chances of obtaining a large government contract. Identifying such issues and working with the DOL to address them could help Contractors overcome such problems. However, because we do not know about how the program will work in practice, it is also possible the DOL will use the Preassessment Program to push compliance agreements that may be burdensome and unnecessary.
Another possible benefit of the Preassessment Program is that it provides a way for prime contractors to vet their subcontractors in advance of bids. Some prime contractors are concerned that their bids may be rejected not because of their own labor law history, but because of the labor law history of the subcontractors they include in their bids. Thus, prime contractors may want to consider asking their key subcontractors to participate in the Preassessment Program to determine whether including them in future bids could cost the prime contractor the contract. Prime contractors would be able to tout in future bids that they have included only subcontractors who have received a stamp of approval from the Preassessment Program (provided the subcontractors have no new violations to report).
In short, the Preassessment Program may provide some benefits to Contractors. However, because the Preassesment Program, like everything related to the Blacklisting regulations, is new and untested, it is unclear what pitfalls may lurk in the program. For this reason, government Contractors should think carefully about whether to utilize the program and consult with counsel to weigh the pros and cons of doing so.
Department Of Labor Announces "Preassessment" Program For Government Contractors
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