“Blacklisting” Rule to be Finalized in August

May 25, 2016

pic-contractingOn May 19, the White House released its Spring 2016 Unified Regulatory Agenda. The agenda outlines the expected regulatory actions of the Obama Administration through January 2017. Since 1978, federal agencies have been required to publish agendas of regulatory and deregulatory activities twice a year. Traditionally one has been published in the fall and one in the spring. This spring’s agenda outlines that the “blacklisting” listing rules, for federal procurement, set in motion by President Barack Obama’s “Fair Pay and Safe Workplaces” Executive Order, are set to be finalized in August 2016.

The “blacklisting” rules were initially proposed in the Federal Register in May 2015 and the comment period closed in August 2015. The proposed regulations require additional disclosure and compliance obligations for federal government contractors with contracts valued at $500,000 or more. The regulations require contractors to disclose violations of 14 federal labor and employment laws, as well as their state counterparts, for the previous three years. Disclosures must be made during the contract bidding and renewal process. Agencies will be able to deny contacts based upon these disclosures.

The regulations have stirred controversy within the federal contracting community as many claim that they will place a significant regulatory burden on all contractors, including small businesses. On May 20, the House approved the FY 2017 National Defense Authorization Act (NDAA/H.R. 4909). This traditional federal contracting reform vehicle contained provisions which would exempt Department of Defense and National Nuclear Security Administration contracts from the requirements of the Fair Pay and Safe Workplaces Executive Order and the subsequent “blacklisting” regulations. The NDAA was ultimately approved almost purely along partisan lines in the House, in part because of controversy regarding the provisions in question. The Senate version of the legislation, S. 2943, also contains provisions limiting the “blacklisting” rules. S. 2943 would limit the applicability of the “blacklisting” regulations to only those contractors and subcontractors who have been suspended or debarred as a result of a federal labor law violation covered by the regulations.

Government contracting is another venue in which small businesses continue to bear the strain of an endless flow of new regulations. It is difficult for small businesses to keep up with all of the new requirements placed upon them, especially when many lack the resources to dedicate staff solely to regulatory compliance. NSBA supports efforts to minimize the regulatory burdens faced by small-business contractors looking to help the government meet its needs.