Federal contractors, their workforces and taxpayers should be worried about President Obama’s Fair Pay and Safe Workplaces Executive Order 13673. It will discourage small businesses from pursuing federal contracts, threaten the livelihood of millions of Americans and increase costs to taxpayers; plus, it could prevent some federal contractors from winning future federal contracts.

Executive Order 13673 is the latest of several recent heavy-handed executive actions flowing from the White House that circumvent congressional authority and enact sweeping changes to the $500 billion-a-year federal contracting marketplace.

Like some of the previous measures targeting federal contractors issued during the Obama administration’s “Year of Action” campaign, this executive order will affect 24,000 small and large businesses employing 28 million workers, including many experienced federal contractors.

Members of Associated Builders and Contractors (ABC)—which were awarded 60 percent of large-scale federal construction contracts exceeding $25 million from 2009 to 2013—are committed to delivering high-quality work safely, ethically and at the best price. Furthermore, ABC strongly believes that contractors found guilty of breaking wage and safety laws should be punished appropriately.

However, the new executive order could result in some of the best firms being arbitrarily blacklisted from winning future federal contracts for committing even minor violations of a rapidly growing and constantly changing labyrinth of workplace laws and regulations, including 14 federal statutes and equivalent state laws. By seeking to impose new penalties on contractors beyond those specified by Congress, the president is exceeding his office’s constitutional authority and undermining the carefully balanced contracting provisions that already exist.

While the Obama administration seeks to impose these new compliance burdens and penalties on federal contractors, it is apparently unconcerned about violations of these same laws by its own federal agencies. For example, OSHA’s Office of Federal Agency Programs reported in 2012 that less than 30 percent of federal agencies were in full compliance with federal safety standards. The Equal Employment Opportunity Commission reported earlier this fall that more than 15,000 complaints were filed against the federal government by its own employees in 2012. In addition, the U.S. Court of Federal Claims recently ruled in favor of 2,000 worker plaintiffs who accused their employer, the federal government, of violating the Fair Labor Standards Act in 2013. Considering these and other reports, President Obama seems to be holding private businesses to a higher standard than that of his own administration.

Shining a spotlight on this “do as I say, not as I do” approach to governing does not excuse repeat violations by federal contractors, but these examples are a reminder that well-intentioned employers can get tripped up by ever-expanding and needlessly complicated laws.

While the full effect of the executive order won’t be known until more detailed regulations are finalized, there is concern that the livelihoods of federal contractors and their employees could be jeopardized based on the subjective decisions of a team of unelected bureaucrats who will be charged with judging federal contractors’ compliance records.

According to one federal contractor: “Getting blacklisted is like the death penalty. It means no new federal contracts, which will impact the company’s ability to win private contracts. In short, blacklisted firms won’t be in business very long.”

Many have expressed concern that this executive order could be used to reward political allies with contracts while blacklisting political foes. Such high stakes open the door to corruption and favoritism in the procurement process, allow trial lawyers to extort larger settlements from firms, enable bureaucratic agencies to extract costly settlements for conduct that may have been legal, and give labor unions leverage to get businesses to capitulate to their demands.

Taxpayers, contractors and their employees deserve a fair and transparent process that will award contracts based on merit to firms that can deliver the highest quality product at the best price. Instead, the president’s executive order adds uncertainty and subjectivity to the government contracting process and likely will increase the frequency and cost of labor and employment disputes.


Ben Brubeck is director of federal procurement and labor affairs for Associated Builders and Contractors. For more information, email brubeck@abc.org or visit www.abc.org to learn how to participate in the forthcoming rulemaking process and comply with new rules once Executive Order 13673 is in effect.