InspectionsThe Federal Acquisition Regulatory Council and the Department of Labor published a final rule, implementing the Fair Pay and Safe Workplaces Executive Order (also known as the “blacklisting” Executive Order), on August 24, 2016.  The Executive Order, implemented by the final rule, requires federal prime contractors and subcontractors – including federal construction contractors – under covered procurements (i.e., ones where the estimated value exceeds $500,000) to disclose to the government certain labor violations.

Among the labor laws listed in the Executive Order and the final rule, violations of which must be reported, are: (1) the Davis-Bacon Act; (2) the Service Contract Act; (3) the Fair Labor Standards Act; (4) the Occupational Safety and Health Act of 1970; (5) the Migrant and Seasonal Agricultural Worker Protection Act; and (6) the National Labor Relations Act.  While prime contractors are to disclose labor law violations in their bids or proposals, the final rule provides that subcontractors generally are to “disclose details regarding labor law decisions rendered against them . . . directly to [the Department of Labor] for review and assessment instead of to the prime contractor.”

The final rule – which is over 500 pages long including comments – contains an effective date of October 25, 2016, but also includes various “phase-in process[es]” for certain prime contractors and subcontractors.  For instance, the “reporting disclosure period” for prime contractors initially is limited to one year and will gradually increase to three years by October 25, 2018.

The penalties for non-compliance are not entirely clear, but they may range from being found “nonresponsible,” to losing a bid protest, and/or to being accused of failing to comply with various federal laws requiring truthful statements to the government. Given the fast-approaching effective date, federal prime contractors and subcontractors would be well-advised to familiarize themselves with the content of the new rule and to do so promptly.

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