NRCA's comments the suspension of the blacklisting regulations, May 2001
On May 9, NRCA submitted comments to the General Services Administration, the federal
agency that creates and enforces procurement policies for federal agencies, regarding
the revocation of the blacklisting rule. The administration opened a comment period
in April when the regulation was proposed.
NRCA's comments follow.
May 9, 2001
Ms. Laurie Duarte
General Services Administration
FAR Secretariat (MVR)
1800 F Street, NW, Room 4035
Washington, D.C. 20405
Re: FAR case 1999-010 (stay), FAR case 2001-014
Dear Ms. Duarte:
On Nov. 2, 1999 and on Aug. 29, 2000, the National Roofing Contractors Association
(NRCA) submitted comments opposing changes to the Federal Acquisition Regulation
(FAR) as proposed in FAR Case 99-010. Much to our dismay, former President Clinton
published the proposal as a final rule in the Federal Register on Dec. 20,
2000. The contractor responsibility (or blacklisting) rule became effective during
President Clinton's final day in office, Jan. 19.
FAR case 1999-011 (stay):
In the April 3 Federal Register, the Bush administration announced its suspension
of the blacklisting rule. The rule is suspended for 270 days or until the rule is
repealed, whichever is sooner, replacing it with an interim rule that is, in fact,
the procedure by which the federal government determined contractor responsibility
before implementation of the blacklisting rule. NRCA supports suspending the rule
for 270 days and, as explained in comments addressing FAR case 2001-014, its revocation.
Fully implementing the blacklisting rule would dramatically disrupt the reinstated
system of federal procurement and government contracting by denying contract awards
on the basis of factors unrelated to the prospective contractor's ability to perform
The suspended regulations were developed to empower agency contracting officers
to blacklist (temporarily or permanently debar) federal contractors based on alleged
"unsatisfactory" business practices regarding labor and employment laws, including
the National Labor Relations Act, the Occupational Safety and Health Act, and those
statutes governing wage- and hour-requirements and employment discrimination. The
regulations also factored in "unsatisfactory" business practices regarding environment,
tax, antitrust and other consumer protections as categories to determine if the
bidder is a responsible contractor.
FAR case 2001-014:
Blacklisting would disproportionately affect the small-business community.
NRCA is an association of roofing, roof deck and waterproofing contractors. Founded
in 1886, it is one of the oldest associations in the construction industry and has
5,000 members throughout the United States. NRCA contractors are small, privately
held companies; the average NRCA member employs 35 people in peak season, with sales
of just over $3 million per year. Small businesses would be one of the most severely
injured by the blacklisting rule.
Unlike major corporations, many small businesses depend entirely on the revenues
from current and future government contracts for continued growth. If a small business
were to be debarred (blacklisted) from federal contracts because of some alleged
offense created by subjective interpretations, it could be put out of business.
These changes to the FAR would deny fair competition for many small-business owners
The subjective nature of the blacklisting standards would make it impossible for
contractors to comply.
Under the rule, federal contracting officers would individually decide the criteria
for which a contracting company could be debarred. While general guidelines could
be devised, this still introduces an inordinate amount of subjectivity into the
process. Essentially, this creates an unfair environment subject to changing standards
for each and every bid submission and intolerable aggravation and expense. The new
rule exposes employers to unfair denial of federal contracts based on any violation
without consideration as to the type, severity or number of violations over the
three years preceding the contract. It would be impossible for contractors to determine
how individual government contracting agents would apply these standards. Furthermore,
denials would be based on a government contracting officer's untrained interpretation
of technical provisions of labor and employment, environmental, antitrust, tax and/or
consumer protection laws.
This rule would significantly complicate and burden the administration of current
Current regulations already allow federal agencies to debar contractors found guilty
of defrauding the government, rendering the new blacklisting regulations redundant
and unnecessary. In fact, identifying and debarring contractors is already a time-consuming
and labor-intensive task for federal agency contracting officials and will be all
the more so if they are to ensure that every potential contractor have satisfactory
compliance with federal laws, including tax, labor and employment, environment,
antitrust and consumer protections laws. Sen. Tom Harkin (D-Iowa) admitted that
this rule would unduly burden federal agencies saying, "we don't have the resources
to do something like that (blacklisting)."
Blacklisting regulations have not complied with the Small Business Regulatory Enforcement
Fairness Act as required by law.
NRCA worked with other small-business associations in the 104th Congress to help
pass the Small Business Regulatory Enforcement Fairness Act (SBREFA) enacted in
1996. SBREFA provided judicial review to the 1980 Regulatory Flexibility Act, which
requires that federal agencies study the potential adverse consequences of proposed
regulations on small businesses. There can be no doubt that the proposed blacklisting
rule would impact the small-business community given that small businesses, including
NRCA members, were awarded federal government procurements with a value of $33 billion
However, in the July 9, 1999, Federal Register notice soliciting comments,
General Services Administration (GSA), Department of Defense (DoD) and NASA certified,
"This proposed rule is not expected to have a significant economic impact on a substantial
number of small entities within the meaning of the Regulatory Flexibility Act, 5
U.S.C. 601, et seq., because most contracts awarded to small entities do not involve
use of formal responsibility surveys." This erroneous conclusion was slightly remedied
with the reissued proposed blacklisting regulation published in Federal Register
on June 30, 2000, which stated that the FAR Council concedes that the rule will
affect at least 171, 000 small entities.
The rule is too broad and would hold small businesses accountable for alleged violations,
potentially putting them out of business, and no consideration has been given to
the net effect of these rules on subcontractors. It would appear that GSA, DoD,
NASA and the Office of Federal Procurement Policy have not complied with requirements
under SBREFA and the Regulatory Flexibility Act insofar as the blacklisting rule
will likely have a significant impact on a substantial number of small businesses.
Under the FAR blacklisting rule that is currently suspended until next January or
until the rule is revoked, all current and future federal contractors, regardless
of company or contract size, could be blacklisted. The federal procurement system,
which awards approximately $200 billion in federal contracts per year, would be
subject to coercive whims and become highly politicized. This puts in jeopardy the
process of full, fair and open competition heretofore stipulated by the U.S. government
as one of the most important ingredients of the federal procurement process. Procurement
officials would have subjective power, akin to being judge and jury, which is at
odds with the U.S. legal system. These regulations would distort the federal procurement
process through vague and subjective findings of unsatisfactory business practices
aimed against both union and open-shop contractors.
The potential for mischief under such regulations against all federal contractors
would be limitless and would especially impact small businesses because many depend
entirely on revenues from government contracts for growth. In sum, this rule provides
a recipe for disaster. NRCA supports the revocation of the Contractor Responsibility,
Labor Relations Cost, and Costs Relating to Legal and Other Proceeds rule, the blacklisting
rule, as published in the Federal Register on December 20, 2000.
Director of federal affairs
Click here to read NRCA's Nov. 1999 or Aug. 2000 comments regarding proposed blacklisting regulations.