Authority of Federal Contracting Officers to Consider Labor and Employment Law Violations When Making Legally Required Responsibility Determinations

Summary

When making responsibility determinations, federal contracting officers have the authority and the obligation to consider labor and employment law violations and may base non-responsibility findings on persuasive evidence of those violations. This power stems from their broad regulatory authority to make contracting decisions and from the deference they enjoy from reviewing agencies and courts in making those decisions. Contracting officers must deny contracts to offerors they deem non-responsible.

In making a responsibility determination, contracting officers must determine if the offeror has a “satisfactory record of integrity and business ethics.”[1]  This inquiry involves consideration of whether an offeror has a record of trustworthiness and reliability such that the government can be confident of its performance in a timely, efficient, responsible fashion. Quite properly, this includes analysis of an offeror’s record of compliance with the law, on the theory that the government’s interest is best protected when it does business with companies that respect their legal obligations. It has long been understood that labor and employment law compliance is part of this inquiry and that contracting officers may base findings of non-responsibility on an offeror’s labor and employment law noncompliance.[2]  Further, federal regulations require responsibility determinations precisely because a “[low] price alone can be a false economy if there is subsequent default, late deliveries, or other unsatisfactory performance resulting in additional contractual or administrative cost.”[3] In contrast, contractors that consistently adhere to labor and employment laws are more likely to have workplace practices that enhance productivity, delivering goods and services in a timely, predictable, and satisfactory manner. [4]

Therefore, it is rational and reasonable to conclude that a violator of labor and employment laws is non-responsible. Contracting officers must decide on a case-by-case basis whether the violations are serious or pervasive enough to warrant a finding that the offeror is not responsible due to its unsatisfactory ethics or integrity. Reviewing agencies and courts will likely uphold the resulting determinations if contracting officers act on relevant information.

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[1] Federal Acquisition Regulation 9.104-1. 41 U.S.C. § 403(7)(D).

[2] Pittman Mechanical Contractors, Inc., B-242499 (May 6, 1991), 91-1 CPD P 439, 1991 WL 156287, at *1; Clyde G. Steagall, Inc. d/b/a Mid-valley Electric, B-237189 (Jan. 10, 1990), 90-1 CPD P 43, 1990 WL 277530, at *1-2; Techo Engineering & Construction, Ltd. — Reconsideration, B-233606.3 (Sept. 11, 1989), 89-2 CPD P 225, 1989 WL 241099, at *1; Harvey M. Goldstein, Esq., B-158343 (Oct. 10, 1966), 1966 WL 2093, at *1-2. Each of these involved unsatisfactory performance evaluations regarding compliance with labor and safety standards.

[3] Federal Acquisition Regulation 9.103.

[4] Karla Walter and David Madland, At Our Expense: Federal Contractors that Harm Workers Also Shortchange Taxpayers, (Washington, DC: Center for American Progress Action Fund, 2013), accessed Aug. 25, 2018, https://www.americanprogressaction.org/issues/economy/reports/2013/12/11/80799/at-our-expense/