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While contracting officers may reach different conclusions, steps have been taken in the context of this rulemaking that will help to promote consistency in the assessment of labor law violation information by ALCAs and the resultant advisory input to contracting officers and promote greater certainty for contractors. This collaboration should help to avoid inconsistent advice being provided to the contractor from different agencies.

See also discussion at Section III. Comment: Respondents asserted that the regulation requires State law enforcement agencies to dictate whether remediation is properly taking place. According to these respondents, this placement of power in the hands of a State for a Federal procurement is at odds with Federalism principles and improperly places contractor responsibility—a Federal determination—in the hands of a State agency, whose workplace laws may conflict with their Federal counterparts.

Under the proposed and final rules, contracting officers, not enforcement agencies, are solely empowered to make responsibility determinations. Contracting officers have broad discretion in making responsibility determinations, and in determining the amount of information needed to make that determination, including whether conduct is being remediated.

See Impresa Construzioni Geom. Domenico Garufi v. Contractors are already required to report numerous types of improper conduct, including conduct that in some cases violated State laws, and contracting officers must use this information in determining whether a contractor is a responsible source. While contracting officers and ALCAs will carefully consider information about remediation from Federal or State enforcement agencies, a contracting officer's responsibility determination is independent of the finding of an enforcement agency—whether Federal or State—regarding whether the labor law violation has been sufficiently remediated.

Comment: Respondents contended that the FAR Council and DOL, through their regulation and Guidance respectively, are effectively amending Federal labor and employment law by creating a new enforcement scheme, with different classes of violations e. They stated that agency action is pre-empted by established statutory schemes. Respondents cited the Davis-Bacon Act and the Service Contract Act, where Congress explicitly made suspension and debarment an available remedy, and did not make this remedy available under any of the other labor laws cited in the rule.

They note that labor compliance agreements are not required or authorized for labor law violations. Instead, the rule will require contractors and subcontractors to disclose decisions concerning certain violations of some of those laws so that those decisions, if any, can be taken into account to determine whether the contractor or subcontractor has a satisfactory record of integrity and business ethics.

Determining whether a contractor is a responsible source is a long-standing tenet of Federal contracting and a prerequisite to receiving a contract award. See 41 U.

Contracting officers already may consider violations of the labor laws and other laws when making responsibility determinations. Indeed, it is the very nature of the existing FAR responsibility determination to assess conduct that may be remediable or punishable under other statutes. By asking contractors to disclose past labor law decisions the Government is better able to determine if the contractor is likely to have workplace practices that enhance productivity and increase the likelihood of timely, predictable, and satisfactory delivery of goods and services to the Federal Government.

See, e. Chao, F. Moreover, contractors are already required to report numerous types of conduct—including fraud, anti-competitive conduct, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, and receiving stolen property—that is unlawful and separately punishable under existing Federal and State laws. Thus, contractors and subcontractors are not being punished twice or in any manner inconsistent with Congressional intent for any labor law decisions that they report; instead, the reported decisions, along with other reported information, will be part of the existing responsibility determination process.


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Neither the FAR Council's rule nor DOL's Guidance expand or change the availability of suspension or debarment as a statutory remedy under the labor laws. Under the existing FAR subpart 9. The rule and Guidance require contractors and subcontractors to disclose certain labor law decisions so that those decisions, if any, can be taken into account as part of responsibility determinations.

The rule has been constructed to help contractors come into compliance with labor laws, and consideration of suspension and debarment is only considered when previous attempts to secure adequate remediation by the contractor have been unsuccessful and it is necessary to protect the Government's interest. The rule provides for contracting officers to take into consideration a number of mechanisms that contractors may use to come into compliance, including labor compliance agreements, that derive from labor enforcement agencies' inherent authority to implement labor laws and to work with covered parties to meet their obligations under these laws.

Response: The FAR rule does not promulgate new labor standards, nor does it interpret labor laws or standards. The FAR rule explains when contracting officers are to consider such guidance and, more importantly, how and when contracting officers are to interact with ALCAs who will be principally responsible for using the Guidance, along with officials from DOL and enforcement agencies, to assess covered contractor violations and provide advice to contracting officers. Comment: One respondent stated that the rule would require the contractor to report violations that arose outside of the performance of a Government contract.

The respondent stated that additional consideration of these matters has no nexus with traditional contractor responsibility determinations that relate to whether a contractor is responsible for the particular procurement and the performance of a Government contract. Response: In issuing E. Labor laws are designed to promote safe, healthy, fair, and effective workplaces. Helping executive departments and agencies to identify and work with contractors with track records of compliance will reduce execution delays and avoid distractions and complications that arise from contracting with contractors with track records of noncompliance.

As explained in the preamble to the proposed FAR rule and the preliminary RIA, a growing body of research supports the conclusion that a relationship exists between labor law violations and performance problems. Under longstanding tenets reflected in FAR subpart 9. Evidence of a prospective contractor's past violations of labor laws is a basis to inquire into that contractor's potential for satisfactory labor law compliance; furthermore, how the prospective contractor has handled past violations is indicative of how it will handle future violations.

Whether or not a labor law violation arose in connection with or outside of the performance of a Government contract, the contracting officer should consider the impact of that violation and the potential that future noncompliance will have in terms of the agency resources that will be required to monitor the contractor's workplace practices during contract performance. Comment: Respondents stated that longstanding Federal procurement statutes and regulations focus contracting officers on final adjudications in determining if a contractor is in compliance with the law, as evidenced by the type of information that Congress requires for inclusion in FAPIIS.

In addition, respondents noted that in the final rule implementing FAPIIS FAR Case , 75 FR , the Councils recognized that if information regarding yet-to-be-concluded proceedings were allowed, negative perceptions could unfairly influence contracting officers to find a contractor nonresponsible, even in situations that later end with the contractor being exonerated.

These respondents pointed out that this focus helps to avoid unnecessary complexities and potential unfairness that may arise from the systematic consideration of decisions that are subject to adjudication but have not been fully adjudicated, in particular, administrative merits determinations.


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  4. Such determinations may not have been approved or supported by an adjudicative body, and in some cases, are only based on an agency's reasonable cause to believe that an unlawful practice has occurred or is occurring. Respondents believed this deviation from well-established practice undermines substantive due process because, among other things, a contractor may be unable to fully Start Printed Page explain itself during a responsibility determination if the basis of a determination is being litigated, as it would potentially require disclosure of privileged information, evidence, litigation strategy and other sensitive information to the contracting officer.

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    Also, a contractor could find itself being denied work even though the determination might be later overturned by a court. These respondents concluded that this type of unfairness could be avoided if the rule were revised to exclude disclosure and consideration of administrative merits determinations. Response: The Councils reaffirm their commitment, voiced in FAR Case , to avoid the potential perception that contracting officers might be unfairly influenced by nonfinal decisions.

    We note that the structure of the E. Specifically, the DOL Guidance 1 informs contractors of the fact that the information being nonfinal is a mitigating factor, and 2 explains that ALCAs consider that the decision is nonfinal as a mitigating factor. Additionally, contractors have the opportunity to make mitigating factors public see FAR The Councils refer respondents to DOL's Guidance, which addresses matters relating to the violations that must be disclosed and considered. In particular, attention is directed to DOL's Preamble and the discussion of administrative merits determinations, which states, in pertinent part:.

    The Department believes that the due process and related critiques of the proposed definition of administrative merits determination are unwarranted. The Order delegates to the Department the authority to define the term. The proposed definition is consistent with the Order and the authority delegated. The definition of administrative merits determination simply delineates the scope of contractors' disclosure obligations—the first stage in the Order's process. Not all disclosed violations are relevant to a recommendation regarding a contractor's integrity and business ethics.

    Only those that are serious, repeated, willful, or pervasive will be considered as part of the weighing step and will factor into the ALCA's written analysis and advice. Moreover, when disclosing Labor Laws violations, a contractor has the opportunity to submit all relevant information it deems necessary to demonstrate responsibility, including mitigating circumstances and steps taken to achieve compliance with Labor Laws.

    FAR As the Guidance provides, the information that the contractor is challenging or appealing an adverse administrative merits determination will be carefully considered.

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    The Guidance also states that Labor Law violations that have not resulted in final determinations, judgments, awards, or decisions should be given lesser weight. The Department believes that contractors' opportunity to provide all relevant information—including mitigating circumstances—and the guidance's explicit recognition that nonfinal administrative merits determinations should be given lesser weight resolve any due process concerns raised by the commenters. With respect to the specific concern that a contractor could find itself being denied work even though the determination might be later overturned by a court, DOL has noted in the Preamble to its final Guidance that a very low percentage of administrative merits determinations are later overturned or vacated.

    For example, only about two percent of all OSHA citations are later vacated. In other words, the likelihood that a contractor could find itself being denied work even though the determination is later overturned by a court is very low. See also discussions below in Section III.

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    Comment: Respondents asserted that the regulation effectively authorizes a de facto debarment of contractors by creating a system where a contractor may be found nonresponsible based on the advice of an ALCA or otherwise denied work for not agreeing to enter into a labor compliance agreement when such action is recommended by the ALCA. They further contended that the rule may produce disparate, conflicting, and redundant decisions by Federal contracting officers on the issue of contractor responsibility.

    Such decisions run the substantial risk of violating constitutional protections of due process that have been consistently applied to combat de facto suspension or debarment of contractors. Response: Evidence of a prospective contractor's past violations of labor laws is a basis to inquire into that contractor's potential for satisfactory labor law compliance; furthermore, how the prospective contractor has handled past violations is appropriately considered as being indicative of how it will handle future violations.

    These long-standing tenets also hold that determinations regarding a prospective contractor's responsibility shall be made by the particular contracting officer responsible for the procurement. Requiring that decisions be made on a case-by-case basis helps to ensure that actions are taken in proper context. While this approach may result in different decisions by different contracting officers, steps have been taken in the context of this rulemaking that will help to promote consistency in the assessment of labor law violations and relevant labor law violation information by ALCAs and the resultant advisory input to contracting officers and will result in greater certainty for contractors.

    The ALCA's recommendation to the contracting officer is advisory, and not conclusive on the subject of responsibility. The rule does not supplant or modify suspension and debarment processes, which, consistent with current regulations, is considered in certain extreme cases when previous attempts to secure adequate contractor remediation has been unsuccessful, or otherwise to protect the Government from harm. Comment: Respondents suggested that the rule relies on a construct that certain violations must be addressed through a contractor compliance plan. They remarked that this violates basic labor management law, because it prevents contractors from exercising choice of resolution, and hinders the right to negotiate mutually beneficial settlements between parties.

    The respondents further noted that through this process, DOL would have undue leverage in their enforcement of labor law violations unrelated to the scope of the responsibility determination process. Start Printed Page Response: The purpose of the E. Neither the rule nor the Guidance seeks to limit a contractor's ability to choose how it will remediate labor law violations or to negotiate settlement agreements.

    To the contrary, the rule and Guidance fully anticipate that contractors will often take action on their own, including entering into settlement agreements, to remediate their labor law violations. For this reason, the rule and Guidance both emphasize that contracting officers must carefully consider these actions in deciding if a contractor is a responsible source. In deciding if additional action is required, the E. DOL's Guidance provides that violations that have not resulted in a final judgment, determination, or order are to be given less weight in the ALCA's analysis, and therefore also in the contracting officer's consideration during the responsibility determination.

    In this way, DOL explicitly recognizes that a contractor may still be contesting the findings of an administrative merits determination.

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    And, as already discussed, ALCAs and contracting officers must consider very carefully this information as well as any other information that the contractor calls to their attention. There are no automatic triggers in the rule that compel a contracting officer to make a nonresponsibility determination, even in light of an ALCA's recommendation to do so, or to prevent a contracting officer from exercising an option; nor is there evidence that labor law enforcement actions will be abused to pressure contractors into forfeiting their rights in order to obtain favorable responsibility determinations.

    In short, it is only in a limited number of situations—where agencies have concluded that contractors have not taken sufficient steps to remediate past violations and prevent future noncompliance—that a contractor should expect to be advised of the need to enter into a labor compliance agreement. Except for unusual circumstances where the ALCA recommends and the contracting officer agrees that the prospective contractor i.

    Such agreements will accomplish the objective of mutually beneficial settlements between enforcement agencies and employers. Put another way, the labor compliance agreement is one additional tool of many, designed to help prevent situations from deteriorating to the point where exclusion becomes necessary. Thus, if an entity, at its own choosing, does not take action, through a labor compliance agreement or otherwise, it will be incumbent on the agency to determine the appropriate action in light of the noncompliance.

    A nonresponsibility determination or exclusion action would generally be considered only where previous attempts to secure adequate remediation by the contractor have been unsuccessful or otherwise it is necessary to protect the Government's interest. Comment: Several respondents stated that the proposed rule requires the contractor to report a broad range of information including final court decisions and administrative merits determinations, over a three year period during which there was no previous requirement to track.

    As these violations are now reportable, the respondents contended that the rule creates a significant risk of litigation under the False Claims Act, as 1 contractors may not have had the systems necessary to catalogue that information when the violation occurred, and 2 it may take significant time to develop systems which are capable of tracking information in the manner required by the rule.

    While knowingly misrepresenting the existence of a determination, decision, or judgment may result in adverse action against the contractor, an inadvertent omission would not result in the same action. In addition, in response to public feedback explaining the challenges that some contractors may face in getting systems in place coupled with the fact that tracking was not required when past violations occurred , the final rule provides for a phase-in of the disclosure process, initially limited to a 1-year disclosure period. Specifically, disclosure will be required no earlier than for decisions rendered on October 25, and cover to the date of the offer, or for the three years preceding the date of the offer, whichever period is shorter.