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NRCA's comments regardiing proposed "blacklisting" regulations, November 1999

On Nov. 2, 1999, NRCA submitted comments to the General Services Administration opposing changes to federal procurement regulations proposed by the Clinton Administration. The new regulations would empower federal agency contracting officers to subjectively blacklist (debar) contractors if there is "persuasive evidence" of alleged "unsatisfactory" business practices regarding labor laws, the environment, taxes, antitrust and "other consumer protections." NRCA’s comments follow.



Nov. 2, 1999

General Services Administration
FAR Secretariat (MVR)
1800 F Street, NW, Room 4035
ATTN: Laurie Duarte
Washington, DC 20405

RE: FAR Case 99-010

Dear Ms. Duarte:

The National Roofing Contractors Association (NRCA) opposes changes to the Federal Acquisition Regulations as proposed in FAR Case 99-010. The proposed regulations would give federal agency contracting officers (COs) unjustified subjective power to blacklist (debar) contractors if there is "persuasive evidence" of alleged "unsatisfactory" business practices. Such practices would relate to the National Labor Relations Act, Occupational Safety and Health Act, Fair Labor Standards Act, Civil Rights Act, and other statutes. Additional categories to qualify a "responsible contractor" would include practices regarding the environment, taxes, antitrust, and "other consumer protections." A potential contractor would also be required to have "the necessary workplace practices addressing matters such as training, worker retention, and legal compliance to assure a skilled, stable and productive workforce."

Congressional Background

In the 1970s, organized labor pushed to establish government blacklists as part of its legislative agenda. Blacklisting didn't make it through Congress then, and in the last 30 years it has failed to pass irrespective of which party was in control of Congress. In addition to rejecting blacklisting when packaged as a labor bill, Congress has rejected blacklisting in major procurement laws enacted over the years revamping nearly every aspect of federal procurement policy.

Nonetheless, Senator Richard Durbin (D-IL) and Representative Lane Evans (D-IL, 17) introduced a blacklisting bill in the 105th Congress and a bill in this Congress. NRCA opposes this blacklisting bill, but agrees with what appears to be Senator Durbin's and Representative Evan's belief that Congress is the proper forum to determine such changes to procurement policy. The Congress, not the bureaucracy, is the appropriate forum to consider, approve or deny the proposed changes contemplated in FAR Case 99-010.

SBREFA

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 more than 4,500 members in all 50 states. They employ more than 100,000 workers and perform approximately 60 percent of all roofing work in America. All NRCA contractors are small, privately held companies. The average NRCA contractor has 35 workers in peak season, with $3.5 million in sales annually.

NRCA worked with other small business associations in the 104th Congress to help pass the Small Business Regulatory Enforcement Fairness Act (SBREFA), enacted in 1995. 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 in FY98.

However, in the July 9, 1999 Federal Register notice soliciting comments, GSA, 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." GSA, DoD, NASA, and the Office of Federal Procurement Policy failed to comply with requirements under SBREFA and the Regulatory Flexibility Act in the proposed rule.

Allegations

Under the proposed regulations, government contracting officers would have the power to deny federal contracts to companies that are merely accused of violating employment and other laws. All federal contractors, regardless of company or contract size, could be blacklisted this way. COs would have subjective power akin to being judge and jury that is at odds with America's legal system. Contractors would also be subject to potential political pressure from third parties such as organized labor, for example, in collective-bargaining disputes, thus denying full, fair and open competition and due process rights.

But the blacklisting rule goes beyond labor issues. All sorts of allegations could be filed against any and all employers without their knowledge, and blacklisted employers would be unable to appeal the COs' decisions. Union and open shop, large and small, and non-profit companies would be affected. And even the best-intentioned employers can get caught in the maze of confusing and often conflicting agency rules and regulations. The Code of Federal Regulations concerning employment laws alone is over 4,000 pages in length.

Overregulation of Roofing

In 1994, the House Republican Research Committee's Task Force on Competitiveness held a special order on the House floor concerning overregulation of the roofing industry. Representative Tom DeLay (R-TX, 22) stated, "Although regulations are often well-intended, in their application too many are overly oppressive, unreasonable, and even irrational. I'd like to give you a few examples: First, last May, Competition Roofing, Inc. of Houston, TX, was visited by an OSHA inspector and was cited 23 times for a grand total of $13,200 in fines. Its violations? A cut in the outer insulation of an extension cord that had been taken out of service racked up three citations, while a bent rung on the bottom of a ladder was worth four. In addition, a $400 fine was issued for a splintered handle on a broken shovel that had been placed in the back of a truck after it had been broken." DeLay discussed several other examples during the special order, which is in the Congressional Record - House, September 22, 1994, pp. H9533 - H9536.

The examples illustrate how common sense can be eclipsed in enforcement of regulations by federal inspectors. The subjective nature of the proposed procurement rule would add more uncertainty to the regulatory process for small businesses.

Conclusion

NRCA opposes the Administration's blacklisting proposal because it would distort the federal procurement process through allegations of "unsatisfactory" business practices aimed against both union and open shop contractors. The potential for mischief under such regulations against all federal contractors or potential federal contractors would be limitless.

Sincerely,

Craig S. Brightup
Associate Executive Director, Government Relations





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