What GAO Found
The federal government awarded contracts to companies that previously had been cited for violating wage regulations enforced by WHD and health and safety regulations enforced by OSHA.
GAO investigated 15 federal contractors cited for violating federal labor laws enforced by WHD, OSHA, and NLRB. The federal government awarded these 15 federal contractors over $6 billion in government contract obligations during fiscal year 2009. Several of these companies also had other types of violations, such as hiring undocumented workers, violating environmental standards, and fraudulently billing Medicare and Medicaid.
GAO did not evaluate whether federal agencies considered or should have considered these violations in the awarding of federal contracts, thus no conclusions on that topic can be drawn from this analysis.
Of the 50 largest WHD wage assessments during fiscal years 2005 through 2009, 25 wage assessments were made against 20 companies that received federal contracts in fiscal year 2009. From GAO’s analysis of OSHA data, GAO also found that 8 of the 50 largest workplace health and safety penalties assessed during the same time frame of fiscal years 2005 through 2009 were assessed against 7 other companies that received federal contracts in fiscal year 2009.
Because OSHA and WHD databases do not contain Data Universal Numbering System numbers, GAO’s analysis was limited to the 50 largest WHD assessments and OSHA penalties, which GAO manually searched. Because of this, the full extent of the federal government’s contracts awarded to companies cited for labor violations is not known.
Failing to Protect Your Employees? Here’s Your Federal Contract.
A new GAO report shows that the government awarded contracts to firms after they were cited for violations or fined by the Occupational Safety and Health Administration (OSHA) and the Wage and Hour Division (WHD), the federal agency responsible for worker rights issues like back wages and child labor.
Some of the contractors GAO reviewed are receiving the big bucks. In FY 2009 alone, the USDA, Pentagon, and Department of Justice awarded about $500 million to a food supplier that had been cited by OSHA more than 100 times since 2005. WHD and a federal jury found that the same supplier had failed to properly pay its workers.
The report reveals the perils of poor information sharing within government. You have some labor law violation data over here and contractor award data over there, but agencies are not making the proper connections – and that leaves, in this case, workers at risk. (The GAO report also showed that some of the scofflaw contractors violated other laws, including environmental laws.) Nor can the public use available data to link contractors to their labor or environmental records.
Even GAO, the government’s official auditor, ran into trouble: “GAO’s analysis was limited to the 50 largest [Wage and Hour Division] assessments and OSHA penalties, which GAO manually searched. Because of this, the full extent of the federal government’s contracts awarded to companies cited for labor violations is not known.”
The White House is aware that unscrupulous employers are making off with mountains of taxpayer dollars, and Vice President Biden appears to be developing a so-called High Road contracting policy. Thus far, the White House has focused its ire on employers who don’t pay fair wages and don’t provide adequate benefits.
But, as the Center for American Progress and others have argued, a High Road contracting policy also ought to limit, or even ban, contracting dollars for occupational safety and health violators, polluters in violation of environmental laws, food facilities or product manufacturers that put consumers at risk, and tax cheats. Bottom line: Taxpayer dollars shouldn’t be used to subsidize illegal behavior, especially behavior that puts those same taxpayers in harm’s way.
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