President Barack Obama will likely use Tuesday’s State of the Union address to promote a number of reforms essential to the well-being of working families in the United States—from universal preschool, to raising the minimum wage, to paid leave. But the president should also mention reforms that ensure only companies that respect federal workplace laws are able to receive government contracts. Such reforms have received considerably less attention than others in recent years, but they can nonetheless help give millions of Americans the opportunity to reach the middle class. The president has the authority to achieve this reform with a stroke of his pen and avoid the congressional gridlock that has prevented many of his other priorities from advancing.
The federal government spends hundreds of billions of dollars each year contracting out everything from janitorial services to the design and manufacture of sophisticated weapons systems. All totaled, approximately 22 percent of American workers are employed by companies that receive government contracts, according to Department of Labor estimates.
Yet the review process to ensure that only responsible companies receive these contracts is very weak, and too often, the contracting out of government functions resembles a race to the bottom—one that supports bad jobs and poor value for taxpayers, as companies with long track records of violating workplace laws continue to receive contracts.
A new report from Sen. Tom Harkin (D-IA) finds that government contractors are often among the worst violators of workplace safety and wage laws: Almost 30 percent of the top violators between fiscal years 2007 and 2012 have current federal contracts. During this same time period, 42 American workers died as a result of safety violations by companies holding government contracts.
Moreover, new analysis from the Center for American Progress Action Fund shows that contracting with companies that have egregious records of workplace violations frequently results in poor contract performance. Twenty-five percent of the companies that committed the top workplace violations from FY 2005 to FY 2009 and later received federal contracts had significant performance problems. These problems ranged from contractors submitting fraudulent billing statements to the federal government; to cost overruns, performance problems, and schedule delays during the development of a major weapons system that cost taxpayers billions of dollars; to contractors falsifying firearms safety test results for federal courthouse security guards; to an oil rig explosion that spilled millions of barrels of oil into the Gulf of Mexico.
The government is supposed to ensure that contractors have a satisfactory record of performance, integrity, and business ethics. As these recent reports demonstrate, however, existing tools to make sure this actually happens are woefully inadequate.
President Obama can adopt responsible contracting reforms through executive action to ensure that only responsible, law-abiding companies are able to receive government contracts; improve the quality of services provided to the government; and prevent waste of taxpayer dollars. Although an announcement of these potential reforms in Tuesday’s State of the Union may not receive ongoing attention from the mainstream media, it would make a considerable and immediate difference for the more than one in five American workers currently employed by federal contractors.
Karla Walter is Associate Director of the American Worker Project at the Center for American Progress Action Fund. David Madland is Director of the American Worker Project.