Cameron S. Hamrick (firstname.lastname@example.org) is a partner in Mayer Brown’s Washington, D.C., office and focuses his practice on government contracts. Roger V. Abbott (email@example.com) is an associate in Mayer Brown’s Washington, D.C., office, and focuses his practice on government contracts.
On August 25, 2016, the U.S. Department of Defense, the General Services Administration, and NASA issued a final rule amending the Federal Acquisition Regulation (FAR) to implement Executive Order 13,673, Fair Pay and Safe Workplaces (E.O.), which President Obama issued on July 31, 2014.1 Also on August 25, 2016, the Department of Labor (DOL) issued its final guidance to assist the Federal Acquisition Regulatory Council (FAR Council) and contracting agencies in the implementation of the E.O.2 The final rule and guidance, which seek to ensure that federal contractors and subcontractors comply with labor laws,3 represent significant new obligations and risks for contractors and subcontractors.
This article will not provide an exhaustive discussion of the new rule and guidance, or provide compliance recommendations, as there are numerous articles, webinars, and other presentations on these topics. Instead, the purpose of this article is to identify the fundamental problems with the rule and guidance. As just one example, discussed further below, the government estimates the ten-year undiscounted cost of the rule is over four billion dollars, yet acknowledges that the vast majority of federal contractors abide by labor laws. This is an extraordinary and wasteful exercise of executive power.
We recognize that labor law violations do occur, although with relative infrequency, as indicated by the government’s acknowledgement that the vast majority of contractors abide by labor laws. We also recognize that sometimes the best of intentions — protecting workers from unlawful labor practices — can have unintended negative consequences. We certainly do not countenance noncompliance with these laws. However, we believe that several fundamental problems with the new rule and guidance deserve consideration.
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