Uncle Sam’s Hiring Practices

Bruce Vail December 12, 2013

Image from a U.S. Army recruiting poster designed by James Montgomery Flagg.

A pair of reports released this week show that the fed­er­al gov­ern­ment rou­tine­ly ignores work­er safe­ty and labor law vio­la­tions when award­ing con­tracts to pri­vate com­pa­nies — and that Amer­i­can tax­pay­ers are cheat­ed in the process.

The first comes from the staff of the Sen­ate Health, Edu­ca­tion, Labor, and Pen­sion (HELP) Com­mit­tee, which con­duct­ed a year­long inves­ti­ga­tion of fed­er­al con­tract­ing records. Unveiled Wednes­day by HELP Chair­man Sen. Tom Harkin (D‑Iowa), the report pro­vides a long list of spe­cif­ic com­pa­nies that break safe­ty and labor laws yet con­tin­ue to receive big gov­ern­ment con­tracts. In par­tic­u­lar, it names 49 law-break­ing con­trac­tors that got more than $81 bil­lion from Uncle Sam in 2012 alone — includ­ing AT&T, Home Depot and GM.

The HELP report was paired with one from the Cen­ter For Amer­i­can Progress (CAP) Action Fund, a Demo­c­ra­t­ic Par­ty advo­ca­cy group, which exam­ined whether gov­ern­ment con­trac­tors are actu­al­ly ful­fill­ing their con­tracts. The CAP report found that a num­ber of com­pa­nies short­change tax­pay­ers through poor per­for­mance, and names spe­cif­ic com­pa­nies that stand out in this respect, includ­ing Lock­heed Mar­tin and KBR. Some of these scofflaw com­pa­nies, such as inter­na­tion­al oil giant BP, over­lapped with the HELP report lists.

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The CAP report was pre­sent­ed Wednes­day by Chair­man John Podes­ta in a joint appear­ance with Harkin at CAP’s Wash­ing­ton D.C. headquarters.

Both Harkin and Podes­ta trace the ori­gin of their respec­tive reports to a 2010 study by the U.S. Gov­ern­ment Account­abil­i­ty Office (GAO) that ana­lyzed offi­cial data on safe­ty and labor law vio­la­tions by gov­ern­ment con­trac­tors. That GAO report found that known vio­la­tors rou­tine­ly received new gov­ern­ment con­tracts. It failed to name the spe­cif­ic con­trac­tor com­pa­nies guilty of vio­la­tions, how­ev­er, and the HELP report was designed to pro­vide the pub­lic with those names, as well as to bring the infor­ma­tion up to date through 2012, accord­ing to Harkin. CAP report co-author David Mad­land says his effort pro­vides a nice com­ple­ment” to the HELP analy­sis by high­light­ing that the con­tract­ing prob­lem is not sole­ly a labor issue, but also one of good gov­ern­ment admin­is­tra­tion and the con­cern of tax­pay­ers over waste­ful spending.

The names of fed­er­al con­trac­tors guilty of fatal work­er safe­ty vio­la­tions will be famil­iar to most Work­ing In These Times read­ers. Harkin began his pre­sen­ta­tion by point­ing to the work­place deaths of 10 employ­ees in three sep­a­rate inci­dents at the facil­i­ties of laun­dry oper­a­tor Cin­tas Corp., ship­builder ST Engi­neer­ing Ltd. and oil refin­er Tesoro Corp. Despite these deaths, all three com­pa­nies received fed­er­al con­tracts in 2012, with Tesoro alone get­ting $463 mil­lion last year, the report states. A length­i­er list of safe­ty vio­la­tors (some fatal, some non-fatal) includes inter­na­tion­al oil giant BP, com­modi­ties con­glom­er­ate Louis Drey­fus Group, beef and chick­en proces­sor Tyson Foods, auto man­u­fac­tur­ers Gen­er­al Motors and Chrysler, and defense con­trac­tor Gen­er­al Dynam­ics. Eigh­teen such com­pa­nies received almost $23 bil­lion in fed­er­al con­tracts between 2006 and 2013, the report details.

Harkin point­ed out that of 18 com­pa­nies with ter­ri­ble safe­ty records, only one, BP, had ever been barred from fed­er­al con­tracts — and that sus­pen­sion from new con­tracts was spurred by the envi­ron­men­tal dam­age from the 2010 Deep Water Hori­zon oil rig explo­sion, not from the safe­ty vio­la­tions (although 10 work­ers were killed). Fed­er­al con­tract­ing offi­cers rou­tine­ly ignore the bad work­er safe­ty records of com­pa­nies com­pet­ing for gov­ern­ment busi­ness, he added, and reforms are need­ed to cor­rect the problem.

Sim­i­lar issues are raised when ana­lyz­ing the records on wage-and-hour law vio­la­tions, accord­ing to both HELP and CAP. Again the HELP report unearths many house­hold names from the Depart­ment of Labor records of com­pa­nies oblig­ed to make back wage pay­ments to work­ers for legal vio­la­tions. Among them are Hewlett-Packard Co., AT&T, Gen­er­al Dynam­ics, Nes­tle S.A., Lock­heed Mar­tin Corp., Cer­berus Cap­i­tal Man­age­ment, and Home Depot Inc. A group of the 32 worst offend­ers received $73.1 bil­lion from the fed­er­al gov­ern­ment between 2007 and 2012, the HELP report says.

Harkin con­ced­ed that not all vio­la­tions are so seri­ous that con­trac­tors should be pun­ished by exclu­sion from gov­ern­ment busi­ness. Some vio­la­tions appar­ent­ly arise from sim­ple errors, unavoid­able acci­dents or oth­er benign sources, he said. How­ev­er, when the Labor Depart­ment finds will­ful and repeat­ed vio­la­tions, it can assess civ­il penal­ties. Harkin sug­gest­ed that the con­trac­tors penal­ized in this way should receive spe­cial scruti­ny before any new con­tracts are award­ed. HELP researchers came up with the names of Sprint Nex­tel Corp, Unit­ed­Health Group, Mar­riott Inter­na­tion­al, C&S Whole­salers Inc., Acos­ta Inc. and Uni­ver­si­ty of Pitts­burgh Med­ical Cen­ter as exam­ples of con­trac­tors already assessed for severe and repeat­ed” vio­la­tions of labor law. Togeth­er, those six com­pa­nies received about $470 mil­lion in fed­er­al con­tracts in 2012 alone, the report said.

Like the safe­ty vio­la­tors, none of the wage-and-hour labor-law vio­la­tors have been barred from the fur­ther gov­ern­ment con­tracts, Harkin empha­sized. There is an exist­ing legal require­ment (that con­trac­tors obey labor law) but it’s clear to me that com­pli­ance is not being con­sid­ered” when new con­tracts are award­ed, he said.

CAP came up with some of the same names when it sep­a­rate­ly ana­lyzed the gov­ern­ment data and found that the com­pa­nies with the worst records of harm­ing work­ers were also guilty of short­chang­ing tax­pay­ers through poor per­for­mance on gov­ern­ment con­tracts and sim­i­lar busi­ness agree­ments in ways that defraud the gov­ern­ment and oth­er­wise pro­vide a bad val­ue for taxpayers.”

Cit­ed in this regard were:

  • KBR, a con­struc­tion and defense con­trac­tor notable for its work in Iraq and Afghanistan, which received $11.4 bil­lion in con­tracts between 2009 and 2013
  • BP, the inter­na­tion­al oil giant, which received $4.6 bil­lion in con­tracts (plus $433 mil­lion in off­shore oil and gas leas­es) 2009 – 20013
  • Cor­rec­tions Cor­po­ra­tion of Amer­i­ca or CCA, the nation’s largest oper­a­tor of pri­vate pris­ons, which got $2.3 bil­lion in gov­ern­ment con­tracts 2009 – 2013
  • Akai Secu­ri­ty, notable for its agree­ments to pro­vide pri­vate secu­ri­ty at Depart­ment of Jus­tice facil­i­ties nation­wide, which got $3.6 bil­lion on gov­ern­ment con­tracts 2009 – 2013
  • Wack­en­hut Ser­vices, whose sub­sidiary Armor­Group of North Amer­i­ca pro­vides pri­vate secu­ri­ty guards at U.S. embassies over­seas, which got $1.7 bil­lion 2009 – 2012
  • Lock­heed Mar­tin, a diver­si­fied mil­i­tary con­trac­tor, which got $170 bil­lion 2009 – 2013
  • Group Health Coop­er­a­tive, a health main­te­nance orga­ni­za­tion (HMO), which got $20.2 mil­lion 2009 – 2012

Both Harkin and Podes­ta were full of right­eous indig­na­tion about this state of affairs at their joint appear­ance Wednes­day, but nei­ther offered any sweep­ing new pro­pos­als to fix the prob­lem. The HELP report states that exist­ing law allows fed­er­al con­tract admin­is­tra­tors to exclude offend­ing com­pa­nies and sug­gests that improved report­ing and data­base man­age­ment by the Labor Depart­ment could make it eas­i­er to bar scofflaw com­pa­nies. It also pro­pos­es that Pres­i­dent Barack Oba­ma issue sev­er­al small-scale exec­u­tive orders that would stream­line the process of legal­ly exclud­ing some com­pa­nies. The CAP con­clu­sion was even less ambi­tious, mere­ly blam­ing weak guid­ance and lax enforce­ment of the reg­u­la­tions” for the chron­ic con­tract­ing problems.

It’s pos­si­ble that in ignor­ing the pos­si­bil­i­ty of stronger fed­er­al laws, both reports implic­it­ly rec­og­nized the imprac­ti­cal­i­ty of any new leg­isla­tive ini­tia­tive in Washington’s cur­rent polit­i­cal environment.

CAP’s Mad­land tells Work­ing In These Times that the new reports rep­re­sent a con­tin­u­ing effort by Democ­rats to wres­tle with the con­tract­ing issue. Reform pro­pos­als ear­ly in the Oba­ma admin­is­tra­tion known as high road” con­tract­ing were aban­doned in the face of polit­i­cal oppo­si­tion, he says, but the need to make reforms to the con­tract process remains. Work­ers are being killed because com­pa­nies cut cor­ners. …The sys­tem is bro­ken and needs to be reformed.”

Bruce Vail is a Bal­ti­more-based free­lance writer with decades of expe­ri­ence cov­er­ing labor and busi­ness sto­ries for news­pa­pers, mag­a­zines and new media. He was a reporter for Bloomberg BNA’s Dai­ly Labor Report, cov­er­ing col­lec­tive bar­gain­ing issues in a wide range of indus­tries, and a mar­itime indus­try reporter and edi­tor for the Jour­nal of Com­merce, serv­ing both in the newspaper’s New York City head­quar­ters and in the Wash­ing­ton, D.C. bureau.
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