Government contractors take federal dollars for needed services with one hand, while some commit workplace abuses with the other.
“Despite protections to ensure that federal contractors pay decent wages, provide safe workplaces, and respect workers’ rights on the job, the government frequently contracts with companies with long records of workplace violations,” says the report from the liberal-leaning Center for American Progress Action Fund. On top of that, it added, “contracting with companies that break workplace laws also frequently results in poor performance of federal contracts and waste of public resources.”
Federal contracting is huge, worth $665 billion in fiscal 2020, according to the Government Accountability Office (GAO). The trillion-dollar infrastructure program approved in November will add much more to that big pot, meaning lots of business for companies, jobs for employees — and opportunities for workplace mischief like safety hazards, shorting wages and whistleblower retaliation.
The think tank’s researchers examined 49 contractors identified as labor law culprits in a 2013 Senate Health, Education, Labor, and Pensions Committee report. The Center’s analysis determined that a considerable sample of the “worst violations of federal labor laws,” 29 percent, also “had significant performance problems on subsequent government contracts.” The report uses data stretching from at least 2005 through 2020 in reports from the Labor Department, GAO, court filings, government databases, news accounts and the Senate committee.
“Contractors that don’t respect federal workplace standards are too often also going to play fast and loose with government investments — making them a bad use of public dollars. The implication, of course, is that a track record of labor law violations can be an indicator that the contractor “would have serious problems in other areas,” Karla Walter, senior director of the organization’s American Worker Project and one of the report’s authors, said.
Walter did not claim a direct correlation between workplace violations and poor contract performance, but added that 29 percent of labor law violators who had other performance issues “should be a signal to the government that there are problems here.”
Especially with Biden’s promise of good jobs flowing from the infrastructure bill, “voters should be assured that public investments are going to contractors who uphold labor laws,” Walter said, “but also that they aren’t engaged in other nefarious or wasteful practices that would ultimately blow much-needed infrastructure dollars.”
Among the companies cited in the report, the authors said:
• Lockheed Martin and its Sandia Corp. subsidiary were assessed $723,686 in back pay in 2009 and $2 million in back pay 2008, respectively. In recent years, Lockheed’s F-35 stealth combat aircraft contract has had “ongoing problems” including spare part shortages that resulted in many planes not being “mission ready.” The company entered a $4.4 million settlement in 2018 related to defective communications gear on Coast Guard cutters. In 2015, Sandia agreed to pay almost $4.8 million over allegations it improperly used government money to lobby federal agencies and Congress. That same year, Sandia was hit with a $577,500 penalty for “multiple violations of classified information security requirements.”
Lockheed’s emailed response to The Washington Post said the company’s “ratings are consistently higher than industry averages” and its core values, “Do What’s Right, Respect Others and Perform with Excellence — are fundamental to every action the company takes and drive our performance and customer focus.”
• URS Corp. had to pay $1.58 million in back wages in 2008. It agreed to pay $57.5 million in 2016 over allegations it charged the Energy Department “for deficient goods and services … to treat dangerous radioactive waste.” In 2017, the company agreed to a $900,000 settlement related to overbilling charges to Amtrak.
URS was owned by AECOM at the time of the Energy and Amtrak cases, but in a statement, AECOM declined to comment on the report “because the group that executed that work is no longer a part of our business.”
• Wackenhut Services Inc., then owned by G4S, was assessed $2.54 million for back wages in 2007. Its successor company, Centerra Services International, agreed to a $7.4 million settlement in 2016 over Wackenhut’s alleged overbilling of labor costs on a U.S. Army contract for fire protection services in Iraq.
Allied Universal, which acquired G4S last year, said it “is committed to compliance with all applicable federal and state employment wage laws and uses various systems, policies and procedures to ensure the accurate payment of employee wages.”
The Professional Services Council, which represents contracting companies, said its members “are committed to full compliance with federal contractor workforce requirements” and noted that many examples in the report cover “settlements that neither admit nor acknowledge violations.”
As the administration funds projects from the infrastructure legislation, the report urges Biden to push reforms “to prevent lawbreaking before it begins” and to encourage workers to report workplace violations. The suggested reforms include requiring companies to provide labor cost estimates on projects so officials can determine if those charges are sufficient to provide employment without cheating on labor laws.
Biden’s Office of Management and Budget pointed to several initiatives taken by the White House to benefit contract workers, including increasing the hourly minimum wage for contract workers to $15, prioritizing “high labor standards” for infrastructure act jobs and requiring companies that take over a government contract to offer employment to those who worked for the previous firms.
The report also calls for the Biden administration to “reassert the government’s role in enforcing legal standards” and “undo the damage of the Trump administration, which weakened government oversight of contractors even while ramping up procurement spending.”
Strengthening that role could help the many “law abiding contractors who are in fact, put at a competitive disadvantage,” Walter said, “because they comply with regulations that are on the books,” when the cheaters don’t.
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