Center for American Progress Action

RELEASE: 5 Reasons President Obama Should Hold Accountable the Law-Breaking Contractors Who Harm Workers and Shortchange Taxpayers
Press Release

RELEASE: 5 Reasons President Obama Should Hold Accountable the Law-Breaking Contractors Who Harm Workers and Shortchange Taxpayers

Read the full column.

Washington, D.C. — As federal contract workers gathered today to protest unfair working conditions and wage theft by their employers, the Center for American Progress Action Fund released a column calling on President Barack Obama to sign an executive order to ensure that law-breaking companies clean up their acts and comply with federal workplace laws before they are able to receive new federal contracts.

Despite spending hundreds of billions of dollars every year on contracts, the review process to ensure that only responsible companies receive contracts is very weak. Too often, the contracting out of government functions resembles a race to the bottom—one that supports bad jobs and poor value for taxpayers, as companies with long track records of violating workplace laws continue to receive contracts.

President Obama can make a considerable difference for the more than one in five American workers currently employed by companies receiving federal contracts by using his executive authority to adopt responsible contractor reforms. The column released today outlines five key reasons why President Obama should reform the federal contracting system, including:

1. Nearly one in three companies with the worst safety and wage violations are federal contractors

Law-breaking companies that do not pay their employees the wages they are owed or that violate health and safety rules continue to receive government contracts with no strings attached. Sen. Tom Harkin’s (D-IA) 2013 report found that government contractors are often among the worst violators of workplace safety and wage laws. The report reviewed the 100 largest penalties and assessments for violations of both workplace wage and safety laws between fiscal years 2007 and 2012, finding that nearly 30 percent of the top violators continued to receive federal contracts. They were cited for 1,776 separate violations of these laws and paid $196 million in penalties and assessments during this time period.


2. Law-breaking government contractors shortchanged their workers out of $82 million

Wage theft is a pervasive problem, and tax dollars should not be spent to reward companies that do not pay their employees the wages owed to them. Federal contractors with the worst wage-law violations shortchanged their workers out of $82 million in back wages assessed between FY 2007 and FY 2012, according to Sen. Harkin’s report. Looking at only the violators that publically report on executive pay, 20 companies owed their workers $49 million during the study period, but the CEOs of these companies earned a combined $240 million in pay in FY 2012. These companies earned $52 billion in operating income that same year.


3. At least 42 workers have died at the contracting companies with the worst safety violations

Employees of federal contractors should be able to enjoy a safe workplace. But at least 42 people have died from workplace accidents and injuries at companies with the highest penalties issued between FY 2007 and FY 2012, according to Sen. Harkin’s report. The victims range from a 46-year-old father of four killed while trying to clear a clothes jam in an industrial dryer, to 13 workers killed in a sugar refinery explosion sparked by combustible dust, to workers at two separate companies killed in oil refinery explosions. Despite these fatalities, only one of these law-breaking contractors—BP Products North America, Inc.—has been suspended or debarred.

4. Law-breaking companies with the worst workplace violations received $81 billion in federal contracts in 2012

The government is supposed to ensure that contractors have a satisfactory record of performance, integrity, and business ethics. However, existing tools to make sure this actually happens are woefully inadequate. Of the nearly $518 billion in federal contracts awarded in FY 2012, $81 billion made its way to contractors with the worst records. This accounted for nearly 16 percent of all spending on federal contracts in FY 2012.


5. One in four companies that committed the worst workplace violations and later received contracts had significant performance problems

Contracting with companies that have egregious records of workplace violations also frequently results in poor contract performance—wasting taxpayer dollars and delivering low-quality services to the government—according to the 2013 CAPAF report. Twenty-five percent of the companies that committed the top workplace violations from FY 2005 to FY 2009 and later received federal contracts had significant performance problems. According to the report, “These performance problems ranged from contractors submitting fraudulent billing statements to the federal government; to cost overruns, performance problems, and delays during the development of a major weapons system that cost taxpayers billions of dollars; to contractors falsifying firearms safety test results for federal courthouse security guards; to an oil rig explosion that spilled millions of barrels of oil into the Gulf of Mexico.”

Related resources from CAPAF:

To speak with an expert on this topic, contact Katie Peters at [email protected] or 202.741.6285.