Federal Contractors

Federal contracts worth billions of dollars have been awarded to employers that have been found in violation of labor and worker safety laws. GAO found that the 80 firms that had violated the National Labor Relations Act during fiscal years 1993 and 1994 had received $23 billion, or about 13 percent of the total dollar value of federal contracts awarded during fiscal year 1993. GAO also identified 261 federal contractors that had work sites at which the Occupational Safety and Health Administration assessed proposed penalties of $15,000 or more for noncompliance with health and safety regulations. These firms received $38 billion in federal contracts awarded during fiscal year 1994. Both of these totals probably underestimated the number of violators and contract dollars received during both years. In both cases, most of the contract dollars were awarded to violators that were large firms--with annual sales of more than $500 million--and a majority of these firms were in manufacturing industries. About 75 percent of the dollar value of these awards came from the Defense Department, although many dollars also came from the Energy Department and NASA. Agencies can consider an employer's labor-management relations and health and safety records when awarding contracts under current procurement regulations, but agency officials have generally not taken action against contractors with safety and health or labor-relations law violations. This is, at least in part, because they lack adequate information to determine contractor noncompliance with these laws.

GAO noted that: (1) federal contracts worth many billions of dollars had been awarded to employers who had been found in violation of NLRA or the safety and health regulations issued under the OSH Act; (2) the 80 firms that had violated the NLRA during FY 1993 and FY 1994 had received $23 billion, or about 13 percent of the total dollar value of federal contracts awarded during FY 1993; (3) there were 261 federal contractors that had work sites at which OSHA had assessed proposed penalties of $15,000 or more for noncompliance with health and safety regulations; (4) these firms received $38 billion in federal contracts awarded during FY 1994; (5) both of these totals probably underestimate the number of violators and contract dollars received during both years; (6) in both cases, most of the contract dollars were awarded to violators that were large firms, and a majority of these firms were in manufacturing industries; (7) about 75 percent of the dollar value of these awards came from the Department of Defense, although many dollars also came from the Department of Energy and the National Aeronautics and Space Administration; (8) although agencies can consider employers' labor-management relations and health and safety records in the awarding of contracts under current procurement regulations, agency officials responsible for awarding contracts and debarring contractors from receiving future contracts have generally not taken actions against contractors with safety and health or labor-relations law violations; (9) this is at least partially because they do not have adequate information to determine those federal contractors in noncompliance with these laws, even when the contractors have been assessed severe penalties or remedies under the respective acts; (10) in its reports, GAO made recommendations to both NLRB and OSHA that could enhance the effectiveness of their enforcement through the use of information on federal contractors; and (11) although NLRB has taken action in implementing GAO's recommendations, OSHA has not yet done so.