Contractors behaving badly: Report exposes labor law violations by IT vendors

GAO says government has awarded contracts to several companies with large labor, wage regulatory violations

The government awarded billions of dollars in contracts in fiscal 2009 to companies that violated wage, labor, and safety regulations, according to a new report.

Government Accountability Office auditors found that one-half of the 50 largest assessments handed out by the Labor Department’s Wage and Hour Division between fiscal 2005 and 2009 were charged to 20 federal contractors. WHD, which enforces federal minimum wage, overtime pay and child labor requirements, assessed these contractors for more than $80 million in back wages, according to GAO.

And in fiscal 2009, the government awarded those 20 companies more than $9 billion in contracts. None were suspended or debarred as a result of their actions.

GAO also investigated 15 federal contractors cited for violating federal labor laws enforced by WHD, as well as regulations from the Occupational Safety and Health Administration (OSHA) and the National Labor Relations Board. The federal government awarded these 15 federal contractors more than $6 billion in contract obligations during fiscal 2009, the report states.

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There are more instances of contractors that have violated wage, labor and safety regulations receiving federal contracts, although GAO could not get a full picture.

Because OSHA and WHD databases do not contain Data Universal Numbering System figures that identify contractors, GAO’s analysis was limited to the 50 largest WHD assessments and OSHA penalties.

The Federal Acquisition Regulation requires contracting officers to choose responsible companies for federal work. But GAO auditors said they did know the extent to which contracting officers considered OSHA fines in awarding federal contracts.

GAO also added that most private-sector firms abide by these regulations.

Some members of Congress have expressed concerns that government contractors are not adhering to federal labor and wage regulations, which are meant to ensure that employees receive proper pay and notice of work-site hazards and also the right to bargain collectively. That concern prompted GAO’s investigation.


About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Thu, Jul 7, 2011

Employees are at a great disadvantage. Complain about not getting paid the proper fringe benefit amount for over three years and the case is settled with no penalties. The violating company pays us our back pay and then rips apart our collective bargaining agreement and lowers our pay to the minimums. So in essence they are rewarded for their behavior. They got free use of our dollars (interest and tax free) and get to pay us a lower salary in the future. And to boot the Gov. probably increased the contract dollars for the extensions!

Thu, Dec 30, 2010 renee

my husband is a contractor for Intel and has worked for many Intel contractors. Intels machine must run 24/7/365 and sometimes he is the only one who can troubleshoot. We live in constant fear that if doesn't say "how high?" when Intel says jump , he will loose his job. He is underpaid and overworked. Sometimes working 24 hours or more. Yes, I can actually call inside the FAB and he is there.

Thu, Oct 14, 2010 Buddy CA

Violators of these labor laws are knowingly conducting their business in a manner that violates labor laws so they can win contracts in a very competitive environment. The laws are easy to read. When the SCA wage determination says pay 3.50 H&W per hour, that is the law. None the less many, many contractors purposely violate this law to win the contract. Contracting officers do nothing to stop this practice, in part because nothing prohibits a vendor from bidding excessively low (buying in), so long as they pay the employee the proper wage required by law. The facts are that they do not pay the proper wage and don’t complain because they are just happy to have a job. It's a screwed up mess for sure. Who wins in this situation---the bad guys.

Wed, Oct 6, 2010 -gary Atlanta

I'd love to see their Reps and Certs.

Wed, Oct 6, 2010 Mark Silver Spring

Seems to me the applicability of the law is not clear even to experts and the prevailing interpretation changes every 18 months or so. Our federal aquisition law is such an awful twisted thicket, anyone guided by them is probably in violation frequently. Are thes contractors behaving badly? Or are they just operating in an environment that the feds have made a mess of.

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