- The Washington Times - Wednesday, December 20, 2000

The Clinton administration will issue new rules today to prevent companies that have violated labor, tax or other federal laws from winning government contracts.

The U.S. Chamber of Commerce plans to file a lawsuit to try to stop the rules from taking effect as planned on Jan. 19, the day before George W. Bush's inauguration.

Labor unions, however, said the rules elevate ethics to a primary concern in awarding contracts.

The rules, called the "blacklisting" rule by opponents, will cover the $200-billion-a-year market for government contracts.

The Employment Policy Foundation, a business-backed public policy foundation, said 23 of the top 25 government contractors, among them Boeing Co., Raytheon Co., General Electric Co., and Halliburton Co., could lose federal work under the new rule.

When the Office of Management and Budget (OMB) announced the final rules yesterday, the Chamber of Commerce said it would join Fortune 500 companies that belong to the Business Roundtable in a lawsuit against the government. They say the rules require contractors to monitor their own compliance with too many laws and give government agencies too much discretion in eliminating the eligibility of companies for contracts.

"Any employer can get hung up on a technical violation of the law," said Randy Johnson, vice president of labor and employee benefits policy for the U.S. Chamber of Commerce. "The federal government itself wouldn't qualify for a contract under these rules."

Business groups say it will be difficult for agencies to apply the law fairly. Each government agency has contracting officers who decide which companies win contracts.

"The main problem is businesses have no way of knowing how a contracting officer is going to apply these regulations," Mr. Johnson said. "The contracting officer has total discretion."

Bethesda-based defense contractor Lockheed Martin Corp. is taking a wait-and-see attitude. "I guess we'd have to take a look at it first. We will continue to operate within the laws and regulations of the U.S. government," spokesman Hugh Burns said.

He said any possibility Lockheed Martin or other government contractors would lose their contracts was "speculation at this point."

Boeing officials refused to comment until they have reviewed the rules thoroughly.

The rules, which OMB sent for publication in today's edition of the Federal Register, have been criticized by Republicans in Congress.

"It's unconscionable that this administration, in its last dying breath, would push through a blacklisting rule that three of its own agencies oppose," Sen. Tim Hutchinson, an Arkansas Republican, said in a written statement. He was referring to comments from the Environmental Protection Agency, the General Services Administration and the Defense Department that they oppose the regulations.

To overturn the rule, the Bush administration would have to follow a lengthy process that includes publishing its intentions and allowing time for public comment.

Opponents can seek injunctions to attempt to block the rule.

The rule fulfills promises by President Clinton and Vice President Al Gore to labor groups, such as the AFL-CIO labor federation. The Clinton administration calls the regulation the "contractor integrity" rule and says it will help the government avoid fraud and abuse in its contracts.

"The improvements to responsible contractor regulations are a welcome safeguard to discourage tax dollars from going to deadbeat companies. It's hard to believe that responsible businesses would oppose a common-sense regulation that simply says the government should look at a company's track record on complying with the law before entrusting it with a valuable government contract," AFL-CIO President John Sweeney said yesterday.

More important than the risk some large companies might lose contracts is protection of workers' rights, said Zack Matus, spokesman for the Washington-based Laborers' International Union of North America, a union representing primarily construction and environmental remediation workers.

He said the new rules "represent an important principle about how the government does business."

Under current rules, federal contractors can be denied a bid if they violate federal laws governing labor relations, employment discrimination and workplace safety. Companies can exhaust all appeals in the courts or before an agency's administrative law judges.

Under the new rules, an agency could make a company ineligible if there's "pervasive evidence" short of a formal ruling that it violated federal law.

The proposal also says agencies should take into account compliance with other areas of law, including environmental rules, tax laws, consumer protections and antitrust law.

A 1995 General Accounting Office report listed 80 companies, receiving more than $23 billion in government contracts, that violated labor laws. They represented 13 percent of all government contracts.

• This story is based in part on wire service reports.

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