The Obama administration issued the "Fair Pay and Safe Workplaces" executive order in July 2014, requiring contractors to disclose any labor law violations within the last three years. Federal agencies are also required to evaluate those violations when deciding to award future contracts valued at more than $500,000.
Related: Read the guidance
The DOL issued the new guidance to help the Federal Acquisition Regulatory Council and other agencies implement the order, after receiving comment from industry.
The Profession Services Council spoke out about what it perceived as the unwieldiness of the order in February 2015, saying it didn’t differentiate enough between contractor mistakes and bona fide law violations when it came to enforcement.
"Companies with pervasive, willful, and repeated violations of law should not be awarded federal contracts," said then-PSC CEO Stan Soloway. "However, as constructed, this E.O. is fundamentally unfair, vague, complex and in-executable. It will be costly, burdensome and is simply unnecessary."
The new guidance includes summaries of more than 7,900 comments received from industry about the order, as well as responses and amendments made by DOL as a result.
"In the final guidance, the Department has made several significant adjustments to accurately describe the modifications that the FAR Council made to its rule," the guidance said.
"In addition, in response to the comments about topics specifically tasked to the Department, the Department has clarified various definitions of terms used in the Order and included a more detailed narrative of the process for disclosing, categorizing, and weighing labor law violations."
But Scott McCaleb, a leading partner specializing in procurement at law firm Wiley Rein, said that the rule still places undesirably restrictive requirements on contractors to be compliant.
"I think at the end of the day, we’re still in the same situation," he said. "We still have a costly and burdensome situation in search of a problem."
The guidance and final FAR rule are scheduled to be published in the Federal Register on Aug. 25 and will go into effect two months later, though it will be phased in gradually so the violations that contractors will have to disclose won’t be before Oct. 25, 2015.
Prime contractors will have to file violation disclosures for contracts valued $50 million or more until April 24, 2017, when the $500,000-contract threshold kicks in. Subcontractor disclosures will begin on Oct. 25, 2017.
But McCaleb noted that the rule has still yet to specify the state law violations that have to be disclosed as part of the rule, and despite the gradual phase-in, the cost impacts will be real for contractors.
"Even the FAR Council’s calculation itself for Year One—even after they’ve taken measures that they think should ease the burden on contractors—is still $500 million," he said. "So we are talking about the imposition of major costs and recordkeeping disclosure obligations. While there is a phase-in period for some, for many, the phase-in period needs to begin immediately."
The rule will be fully implemented on Oct. 25, 2018.
