On July 31, 2014, President Obama signed the Fair Pay and Safe Workplaces Executive Order. Under the Order, offerors on procurement contracts, where the estimated value exceeds $500,000.00, will be required to disclose whether they have been found to have violated one of several labor laws enumerated in the Order within the preceding three years. If so, the offeror will be given the opportunity to disclose its efforts to correct the violation and increase compliance with labor laws. Contracting officers are required to take both the violation and increased compliance efforts into consideration in determining contractor responsibility.
In addition to the disclosure requirements, the Order also requires prime contractors to incorporate provisions into their subcontracts requiring disclosure of any such labor law violations within the preceding three years.
Finally, the Order requires prime contractors and subcontractors to update this information every six months during contract performance. Assuming a new violation is disclosed, the government may, but need not, take any of the following actions: (1) enter into an agreement requiring appropriate remedial measures; (2) provide compliance assistance; (3) decide not to exercise an option on a contract; (4) terminate the contract; and (5) refer the contractor to a suspending and debarring official.
The true impact of this Order will depend in large part on how it is implemented by the agencies and what violations are considered egregious enough to find a contractor nonresponsible. In the meantime, contractors are urged to increase their compliance efforts. If you have any questions regarding how you can increase your compliance efforts, please feel free to reach out to us directly.