The Obama administration has finalized a rule implementing the Fair Pay and Safe Workplaces Executive Order 13673, which business and industry groups contend will increase costs for taxpayers and hamstring the federal procurement process with needless uncertainty, delays and litigation.

Under the new “blacklisting” rule, effective Oct. 25, federal contractors and subcontractors are required to disclose any violations of 14 federal labor laws and OSHA-approved state plans to an Agency Labor Compliance Advisor (ALCA). ALCA will perform an assessment of the violations and make a recommendation to the contracting officer about whether a federal contractor is responsible enough to be awarded a contract covered by this rule. Information submitted to contracting agencies will be publicly disseminated. 

The rule will be phased in over the next year, and prime contractors pursuing solicitations for federal contracts exceeding $50 million issued after Oct. 25 will be the first group required to comply. For solicitations issued after April 25, 2017, the prime contract threshold decreases to $500,000. Subcontractors pursuing federal contracts of more than $500,000 issued after Oct. 25, 2017, must disclose violations directly to the Department of Labor (DOL), which in turn will provide a review of the subcontractor’s record. Prime contractors can then rely on the DOL’s review to decide if the firm is qualified for a subcontract award.

The DOL plans to issue subsequent guidance addressing which equivalent state labor laws will be covered; it will be phased in at a later date via a new rulemaking.