WASHINGTON (Bloomberg) — Three Democratic senators said it is “unwise” and “likely unlawful” for four federal agencies to delay a new rule that requires them to consider a company’s past violations of consumer, environmental, and labor laws before awarding contracts.
Senators Joe Lieberman of Connecticut, Edward Kennedy of Massachusetts, and Richard Durbin of Illinois wrote Office of Management and Budget Director Mitch Daniels urging him to reverse the agencies’ decision not to immediately enforce what business groups are calling the “blacklisting” rule.
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The rule is among dozens of last-minute regulations issued in the waning days of the Clinton administration. At issue is whether some businesses, including contractors such as Boeing Co., Raytheon Co., General Electric Co., might be disqualified from some of the $200 billion in federal contracts awarded annually.
The General Services Administration, NASA, and the departments of Transportation and Interior have suspended enforcement of the Contractor Responsibility Rule until July 16 because of lawsuits filed to overturn it.
The three senators said a study they requested by the nonpartisan Congressional Research Service found there is “substantial doubt” whether a delay is legal.
“Legalities aside, it is unfair for the administration to delay the implementation date for six months without notice or any consideration of the views of the public,” the senators wrote in their letter, which they released to the news media.
President George W. Bush has said his administration would review rules and regulations issued or finalized at the end of former President Bill Clinton’s term.
A look for ‘Pervasive Evidence’
The rule requires agencies to take into account a potential contractor’s compliance with a variety of laws in environmental, tax, consumer protections and antitrust areas. A company could be declared ineligible if there’s “pervasive evidence” that it violated federal law.
“This regulation is so broadly written that it’s impossible to know how a contracting officer would apply it,” said Randy Johnson, vice president of labor and employees at the U.S. Chamber of Commerce. The chamber and other groups already have challenged the rule in court.
The rule also disqualifies businesses that have violated any foreign law, Johnson said. To provide such evidence would be overly burdensome to monitor, he said.
The Employment Policy Foundation, a business-backed think tank, said 23 of the top 25 government contractors, among them Boeing, Raytheon, General Electric, and Halliburton Co., could lose federal work under the rule.
The AFL-CIO and other unions argue the rule bars only chronic law-breaking companies from winning contracts. They said it was issued after three years of working through the rulemaking process, including consulting businesses.
