Government Contracting Policies Should Emphasize Safe Workplaces

Public contract money continues to flow to some corporations that have repeatedly put their own workers at excessive risk, even to companies where workers have died on the job, according to a report issued last week by the Senate’s Health, Education, Labor, and Pensions (HELP) Committee. The report found that the federal government does not have adequate tools, but also rarely uses the ones it currently has to ensure public money is not going to companies that put their workers at excessive physical danger.

Just as activists have pushed (and are still pushing) corporations like Apple, Walmart, and Taco Bell to require and enforce human and labor rights in their supply chains, the government could use its buying power to improve workplace safety and health standards at the companies that contract with it. These companies collectively employ about 22 percent of the U.S. workforce, some 26 million people. Although some of these contractors are office-based, white collar-oriented companies where workplace dangers are relatively low, many others are involved in construction, manufacturing, chemical refining, disposal and other arenas where hazards are prevalent.

But despite the power the federal government has as the single biggest buyer in the U.S. economy, it doesn’t use its influence enough to protect workers.

Consider this: Of eight contractors that were cited for Occupational Safety and Health Administration (OSHA) violations for worker deaths from 2007 through 2012, only one—BP—has been suspended or debarred from winning new contracts (it still holds its current contracts). BP was suspended at the beginning of fiscal year 2013 (at the end of November 2012). That suspension was not due to an OSHA violation, however. Instead the Environmental Protection Agency suspended BP due to the 2010 Deep Water Horizon leak and explosion that caused an environmental catastrophe in the Gulf of Mexico as well as killing 11 workers (OSHA did not have jurisdiction).

But this suspension came after a string of repeated worker safety episodes and was long overdue.

In 2005, an explosion at BP’s Texas City refinery, which killed 15 and injured 170, led to a $21.3 million penalty and an agreement with OSHA to pursue improvements in safety. But OSHA’s 2009 re-inspection found that BP’s employees still faced numerous hazards and OSHA fined them another $81.7 million. In addition, OSHA found similar problems at a BP refinery in Ohio in 2006 and 2009 and fined BP $2.4 million and $3 million.

Although the fines levied against BP described above total $108.4 million over these years, it never lost its ability to win contracts until the November 2012 suspension. In 2006, BP won $1.2 billion in new contracts, in 2007 nearly $1 billion, in 2008 $1.7 billion, in 2009 $2.2 billion, another $1 billion in 2010, $1.1 billion in 2011 after the Deep Water Horizon disaster, and finally $2 billion in 2012. The fines were a drop in the bucket compared to the contract awards the government kept granting to BP. Even if a suspension would have occurred solely in 2009, the up to $2.2 billion in lost revenue that year alone likely would have grabbed BP’s attention more than just the $84.7 million in fines that hit the company that year.

Something could have been done earlier if the Department of Labor—which houses OSHA—had invoked its discretionary suspension or debarment authority, which can be used when an agency chief finds enough evidence that there is a “cause of so serious or compelling  a nature it affects the present responsibility of a contractor,” according to the Federal Acquisition Regulation. But the Senate HELP Committee found that “it does not appear that the Department of Labor has ever suspended or debarred a contractor as a result of a discretionary finding that a federal contractor has a record of non-compliance with wage or safety and health laws.”

Suspension and debarment are not the only tools agencies have to keep public dollars from flowing to risky contractors. Before contracts are awarded, government contracting officers are supposed to examine three different databases—such as the Federal Awardee Performance & Integrity Information System (FAPIIS)—to assess a company’s track record of responsibility. However, limitations on what data is required, missing data, erroneous data, and other holes make these databases less useful than they could be.

For instance, in FAPIIS, violations only need to be reported “if that violation occurred in the performance of a state or federal contract,” according to the HELP report. Thus, “in perhaps the astonishing failure of FAPIIS, BP, despite the deaths, injuries, and massive environmental damage, as well as the billion dollar settlements resulting from the Deep Water Horizon incident, and despite the deaths, injuries and fines resulting from the Texas City refinery explosion, and despite holding $2 billion in contracts in 2012, has no misconduct entries in FAPIIS.”

The HELP Committee report contains a number of recommendations—including creating unique identifiers for contractors that aggregates all corporate subsidiaries under one number in order to provide a “full and accurate picture of labor law violations by federal contractors.”

As if rewarding contractors that put workers in danger was bad enough, the Center for American Progress also released this month a report that “shows that contracting with companies with egregious records of workplace violations also frequently results in poor performance of government contracts.”

These recent reports build off of earlier reports by watchdogs such as the Government Accountability Office and U.S. Chemical Safety Board that have drawn attention to how federal contracting policy can and should create safer workplaces for millions of Americans.

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