[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]

                       THE BLACKLISTING EXECUTIVE
                        ORDER: REWRITING FEDERAL
                         LABOR POLICIES THROUGH
                             EXECUTIVE FIAT


                             JOINT HEARING

                               before the


                                and the

                          LABOR, AND PENSIONS

                                 of the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES


                             FIRST SESSION




                            Serial No. 114-3


  Printed for the use of the Committee on Education and the Workforce

      Available via the World Wide Web: www.gpo.gov/fdsys/browse/
            Committee address: http://edworkforce.house.gov

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                    JOHN KLINE, Minnesota, Chairman

Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Duncan Hunter, California              Ranking Member
David P. Roe, Tennessee              Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania         Susan A. Davis, California
Tim Walberg, Michigan                Raul M. Grijalva, Arizona
Matt Salmon, Arizona                 Joe Courtney, Connecticut
Brett Guthrie, Kentucky              Marcia L. Fudge, Ohio
Todd Rokita, Indiana                 Jared Polis, Colorado
Lou Barletta, Pennsylvania           Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada                 Northern Mariana Islands
Luke Messer, Indiana                 Frederica S. Wilson, Florida
Bradley Byrne, Alabama               Suzanne Bonamici, Oregon
David Brat, Virginia                 Mark Pocan, Wisconsin
Buddy Carter, Georgia                Mark Takano, California
Michael D. Bishop, Michigan          Hakeem S. Jeffries, New York
Glenn Grothman, Wisconsin            Katherine M. Clark, Massachusetts
Steve Russell, Oklahoma              Alma S. Adams, North Carolina
Carlos Curbelo, Florida              Mark DeSaulnier, California
Elise Stefanik, New York
Rick Allen, Georgia

                    Juliane Sullivan, Staff Director
                 Denise Forte, Minority Staff Director


                    TIM WALBERG, Michigan, Chairman

Duncan Hunter, California            Frederica S. Wilson, Florida,
Glenn Thompson, Pennsylvania           Ranking Member
Todd Rokita, Indiana                 Mark Pocan, Wisconsin
Dave Bratt, Virginia                 Katherine M. Clark, Massachusetts
Michael D. Bishop, Michigan          Alma S. Adams, North Carolina
Steve Russell, Oklahoma              Mark DeSaulnier, California
Elise Stefanik, New York             Marcia L. Fudge, Ohio

                   DAVID P. ROE, Tennessee, Chairman

Joe Wilson, South Carolina           Jared Polis, Colorado,
Virginia Foxx, North Carolina          Ranking Member
Tim Walberg, Michigan                Joe Courtney, Connecticut
Matt Salmon, Arizona                 Mark Pocan, Wisconsin
Brett Guthrie, Kentucky              Ruben Hinojosa, Texas
Lou Barletta, Pennsylvania           Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada                 Northern Mariana Islands
Luke Messer, Indiana                 Frederica S. Wilson, Florida
Bradley Byrne, Alabama               Suzanne Bonamici, Oregon
Buddy Carter, Georgia                Mark Takano, California
Glenn Grothman, Wisconsin            Hakeem S. Jefferies, New York
Rick Allen, Georgia

                            C O N T E N T S


Hearing held on February 26, 2015................................     1

Statement of Members:
    Byrne, Hon. Bradley, a Representative in Congress from the 
      State of Alabama...........................................     7
        Prepared statement of....................................     8
    Polis, Hon. Jared, Ranking Member, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     9
        Prepared statement of....................................    15
    Walberg, Hon. Tim, Chairman, Subcommittee on Workforce 
      Protections................................................     1
        Prepared statement of....................................     3
    Wilson, Hon. Frederica, S., Ranking Member, Subcommittee on 
      Workforce Protections......................................     3
        Prepared statement of....................................     5

Statement of Witnesses:
    Goldsmith, Mr. Willis, Partner, Jones Day, U.S. Chamber of 
      Commerce, New York, NY, Inc................................    23
        Prepared statement of....................................    26
    Styles, Ms. Angela, Partner, Crowell and Moring, LLP, 
      Washington, DC.............................................    45
        Prepared statement of....................................    47
    Walter, Ms. Karla, Associate Director, American Worker 
      Project, Center for American Progress, U.S. Department of 
      Education, Arlington, VA...................................    61
        Prepared statement of....................................    64
    Soloway, Mr. Stan, President and CEO, Professional Services 
      Council, Washington, DC....................................    73
        Prepared statement of....................................    75

Additional Submissions:
    Foxx, Hon. Virginia, a Representative in Congress from the 
      State of North Carolina:
        Report by the Interagency Suspension and Debarment 
          Committee..............................................    96
    Mr. Polis:
        Letter dated February 23, 2015, Fair Pay and Safe 
          Workplaces Executive Order.............................    11
    Chairman Walberg:
        Letter dated November 6, 2014, Concerns with the Fair Pay 
          and Safe Workplaces Executive Order (E.O. 13673).......    18
        Letter dated February 25, 2015, 2014, from Associated 
          Builders and Contractors, Inc..........................    21
        Letter dated March 6, 2015 from, The Associated General 
          Contractors of America.................................   266
        Mr. Goldsmith response to questions submitted for the 
          record.................................................   264
    Ms. Walter:
        Letter from Integrity National Corporation...............   270
        Letter dated July 18, 2014, from Allen G. Sander, Chief, 
          Operating Officer, Olympus Building Services, Inc......   271
        Letter dated May 5, 2014, from Victor Moran, President, 
          CEO, Total Quality.....................................   272
        Response to questions submitted for record...............   277
    Ms. Wilson:
        Fair Pay and Safe Workplaces.............................   136
        Letter dated February 25, 2015, from The Leadership 
          Conference on Civil and Human Rights...................   143
        Campaign for Quality Construction........................   145
        Center for American Progress Action Fund.................   153
        Report dated September 2010, Government Accountability 
          Office, Federal Contracting............................   174
        Report dated December 11, 2013, United States Senate, 
          Acting Responsibly.....................................   196
        For Florida companies that play by rules, success is 
          tough as nails.........................................   255
        Questions submitted for the record.......................   274



                         THROUGH EXECUTIVE FIAT


                      Thursday, February 26, 2015

                        House of Representatives

                 Subcommittee on Workforce Protections

                               joint with

        Subcommittee on Health, Employment, Labor, and Pensions

                Committee on Education and the Workforce

                            Washington, D.C.


    The subcommittees met, pursuant to call, at 10:07 a.m., in 
room 2175, Rayburn House Office Building, Hon. Tim Walberg 
[Chairman of the Workforce Protections subcommittee] presiding.
    Present from the Subcommittee on Workforce Protections: 
Representatives Walberg, Thompson, Brat, Bishop, Russell, 
Wilson, Pocan, and Clark.
    Present from the Subcommittee on Health, Employment, Labor, 
and Pensions: Foxx, Walberg, Byrne, Allen, Polis, Courtney, 
Pocan, Wilson, Bonamici, Takano, and Scott.
    Also present: Representatives Kline, Grijalva, and Ellison.
    Staff present: Janelle Belland, Coalitions and Members 
Services Coordinator; Ed Gilroy, Director of Workforce Policy; 
Christie Herman, Professional Staff Member; Marvin Kaplan, 
Workforce Policy Counsel; Nancy Locke, Chief Clerk; Zachary 
McHenry, Legislative Assistant; Daniel Murner, Deputy Press 
Secretary; Brian Newell, Communications Director; Krisann 
Pearce, General Counsel; Molly McLaughlin Salmi, Deputy 
Director of Workforce Policy; Alissa Strawcutter, Deputy Clerk; 
Loren Sweatt, Senior Policy Advisor; Alexa Turner, Legislative 
Assistant; Joseph Wheeler, Professional Staff Member; Tylease 
Alli, Minority Clerk/Intern and Fellow Coordinator; Barbera 
Austin, Minority Staff Assistant; Amy Cocuzza, Minority Labor 
Detailee; Denise Forte, Minority Staff Director; Melissa 
Greenberg, Minority Labor Policy Associate; Carolyn Hughes, 
Minority Senior Labor Policy Advisor; Eunice Ikene, Minority 
Labor Policy Associate; Brian Kennedy, Minority General 
Counsel; Brian Levin, Minority Press Secretary; Richard Miller, 
Minority Senior Labor Policy Advisor; Amy Peake, Minority Labor 
Policy Advisor; Veronique Pluviose, Minority Civil Rights 
Counsel; and Rayna Reid, Minority Labor Policy Counsel.
    Chairman Walberg. The subcommittee will come to order. 
Today, we will have opening statements from the chairmen and 
the ranking members of the two subcommittees.
    With that, I recognize myself for my opening statement.
    Good morning, and I would like to welcome our guests and 
thank our witnesses for joining us.
    I would also like to welcome our colleagues from the 
Health, Employment, Labor, and Pensions Subcommittee. Given the 
breadth of the issues we will discuss this morning, we felt it 
was appropriate to hold a joint hearing.
    Federal contractors are essential to government operations. 
Most employers provide quality, cost-effective services while 
complying with labor and employment law.
    Unfortunately, there are a few bad actors. We can all agree 
bad actors who deny workers basic protections, including wage 
and overtime protections, should not be awarded federal 
contracts funded with taxpayer dollars.
    For that reason, the federal government has had a system in 
place for decades which, if used effectively, would deny 
federal contracts to bad actors. In the event that a contractor 
fails to maintain a satisfactory record of integrity and 
business ethics, the contracting agency can suspend or debar 
the contractor, disqualifying the employer from contracts 
    Rather than dealing with these contractors directly under 
an existing system, on July 31, 2014 President Obama signed an 
executive order adding a burdensome, redundant, and 
unnecessarily punitive layer onto the federal procurement 
    The executive order will require employers to report 
instances in which they or their subcontractors have violated 
or allegedly violated various federal labor laws and equivalent 
state laws for a preceding three year period. Prior to awarding 
a contract, these agencies' contracting officer and a newly 
created labor compliance advisor will review this information 
and decide whether the employer's actions demonstrate a lack of 
integrity or business ethics.
    While the new reporting requirements are significantly 
burdensome, particularly for some small employers, the 
subjectivity of the decision-making process and deprivation of 
due process are deeply troubling.
    The labor compliance advisor will advise the contracting 
officer as to whether an employer's record amounts to a lack of 
business integrity. However, this subjective determination will 
include alleged violations, creating a new, dangerous precedent 
that employers are guilty until proven innocent.
    Ultimately, the employer could be blacklisted based on 
alleged violations that are later found to have no merit, 
putting some good employers on the brink of going out of 
business and impacting their workforce.
    We all share the same goal however, rather than implement 
another layer of bureaucracy, the administration should work 
with Congress and stakeholders to use the existing system to 
crack down on bad actors and ensure the rights of America's 
workers are protected.
    With that, I now yield to my distinguished colleague from 
Florida, Congresswoman Wilson, the ranking member on Workforce 
Protections Subcommittee, for opening remarks.
    And welcome.
    [The statement of Chairman Walberg follows:]

   Prepared Statement of Hon. Tim Walberg, Chairman, Subcommittee on 
                         Workforce Protections

    Federal contractors are essential to government operations. Most 
employers provide quality, cost effective services while complying with 
labor and employment law. Unfortunately, there are a few bad actors. We 
can all agree bad actors who deny workers basic protections, including 
wage and overtime protections, should not be awarded federal contracts 
funded with taxpayer dollars.
    For that very reason, the federal government has had a system in 
place for decades which, if used effectively, would deny federal 
contracts to bad actors. In the event that a contractor fails to 
maintain a satisfactory record of integrity and business ethics, the 
contracting agency can suspend or debar the contractor, disqualifying 
the employer from contracts government wide.
    Rather than dealing with these contractors directly under the 
existing system, on July 31, 2014, President Obama signed an executive 
order adding a burdensome, redundant, and unnecessarily punitive layer 
onto the federal procurement system.
    The executive order will require employers to report instances in 
which they, or their subcontractors, have violated or allegedly 
violated various federal labor laws and equivalent state laws during a 
proceeding three year period. Prior to awarding a contract, each 
agency's contracting officer and a newly created Labor Compliance 
Advisor will review this information and decide whether the employer's 
actions demonstrate a lack of integrity or business ethics.
    While the new reporting requirements are significantly burdensome, 
particularly for small employers, the subjectivity of the decision 
making process and deprivation of due process are deeply troubling. The 
Labor Compliance Advisor will advise the contracting officer as to 
whether an employer's record amounts to a lack of business integrity.
    However, this subjective determination will include alleged 
violations, creating a new, dangerous precedent that employers are 
guilty until proven innocent. Ultimately, the employer could be 
blacklisted based on alleged violations that are later found to have no 
merit, putting some good employers on the brink of going out of 
    We all share the same goal, however, rather than implement another 
layer of bureaucracy, the administration should work with Congress and 
stakeholders to use the existing system to crack down on bad actors and 
ensure the rights of America's workers are protected.
    With that, I will now the ranking member of the subcommittee, 
Representative Wilson, for her opening remarks.
    Ms. Wilson of Florida. Thank you, Mr. Chair.
    Mr. Chairman, today is our first Workforce Protection 
Subcommittee hearing of the 114th Congress, and I can barely 
talk. I look forward to working with you and our colleagues to 
address the needs of America's working class, which is the 
backbone of our country.
    Today we are discussing the President's executive order on 
fair pay and safe workplaces, aimed at improving the federal 
contracting process by ensuring that government agencies have 
access to data and can evaluate each bidder's compliance 
history with 14 basic workplace laws. Simply put, this 
executive order builds on the expectation that companies who 
are seeking federal contracts must obey federal laws.
    Annually, the U.S. government issues approximately $500 
billion in contracts--that is with a ``b.'' According to two 
recent reports, one-third of those companies who received the 
largest sanctions for violations of federal wage and health and 
safety laws went on to receive a government contract.
    I am certain that we can all agree that taxpayer dollars 
should not be used to award contracts to unscrupulous companies 
that have a pervasive practice of engaging in wage theft, 
cheating workers out of overtime, or putting workers' safety in 
    In the audience today we have Ms. Karla Quezada, a food 
court worker at the Reagan Building, which is owned by the U.S. 
General Services Administration and home to several federal 
agencies. Despite regularly working more than 40 hours a week, 
Karla never received a dime in overtime pay.
    And she reported to the Department of Labor that her 
employer used a fraudulent scheme to cover up the wage theft. 
Although she is still working there, her hours have been more 
than halved.
    Karla was named a ``champion of change'' by the President 
for her advocacy to raise the minimum wage for government 
contract workers to $10.10 per hour.
    Karla, thank you so much for being here today and for your 
    Ms. Wilson of Florida. Finally, Mr. Chairman, we have 
received written testimony supporting this executive order from 
the Campaign for Quality Construction, comprised of the FCA 
International; the International Council of Employers of 
Bricklayers and Allied Craftworkers; the Mechanical Contractors 
Association of America; the National Electrical Contractors 
Association; the Sheet Metal and Air Conditioning Contractors' 
National Association; and the Association of Union 
    It is their view that this executive order will help ensure 
that responsible contractors are not put at an unfair 
disadvantage by those who cut corners and treat violations of 
labor law as the cost of doing business.
    I thank the witnesses for being here today and I look 
forward to their testimony.
    I now yield to the ranking member on the Health 
Subcommittee, the gentleman from Colorado--
    [The statement of Ms. Wilson follows:]
    Chairman Walberg. I thank the gentlelady.
    Ms. Wilson of Florida. Okay.
    Chairman Walberg. At this time I will now yield to my 
distinguished colleague from Alabama, Congressman Byrne, for 
his opening remarks.
    Mr. Byrne. Thank you, Mr. Chairman.
    As a journeyman labor and employment attorney, I have grave 
concerns over the executive order we are examining today. It 
unfairly shifts the regulatory burden to employers while 
removing the burden of proof from labor violation claims. It 
reverses the historic Anglo-Saxon notion that you are innocent 
until you are proven guilty--which results, by the way, in a 
much less efficient system of government acquisition for the 
taxpayers of the United States.
    Furthermore, the executive order's ban on pre-dispute 
arbitration is a direct violation of the Federal Arbitration 
Act, which ensures the validity and enforcement of arbitration 
agreements, a practice that the United States Supreme Court has 
repeatedly reaffirmed. The President has exceeded his authority 
to make such a change and is in direct violation of that law.
    What is worse, through its new reporting requirements the 
executive order shifts an incredible regulatory burden to 
contractors themselves by requiring prime contractors, some of 
whom have thousands of subcontractors, to collect information 
on their subcontractors related to 14 different federal labor 
and employment laws and over 500 different state laws.
    This will have a major effect on these subcontractors, many 
of them small businesses with limited resources to handle such 
an undertaking. Many will be forced to divert resources to 
handle this new administrative task that will not have to be 
completed just once, but every six months.
    These aggressive new regulations are going to unreasonably 
block responsible parties from participating in federal 
government contracts while seriously affecting the willingness 
of new employers to even seek federal contracts in the first 
place. The result of this new process will be a significantly 
delayed contracting process that limits both healthy 
competition and the efficient delivery of goods to the U.S. 
government at a reasonable price to the taxpayers.
    Instead of helping employers comply with complicated 
regulatory requirements, the administration has added yet more 
red tape to the federal procurement system that has the 
potential of blacklisting responsible employers when there is 
already a system in place for weeding out truly bad actors.
    To make matters worse, contracts will be put in jeopardy by 
alleged violations--not confirmed or convicted violations, 
alleged violations. This could be particularly devastating for 
employers that are the target of union corporate campaigns or 
competitors who simply want a competitive edge against their 
competition. This highly elevates the risk of frivolous 
complaints and the loss of business.
    This executive order represents an overstep of authority by 
the President at the expense of employers and workers and the 
    Rather than impose additional layers of bureaucracy, the 
administration would be better served working with Congress and 
stakeholders to ensure the rules and regulations implementing 
our laws are modernized and streamlined. Then, the 
administration can work with good employers to ensure 
compliance rather than punishing them after the damage is done.

Prepared Statement of Byrne, Hon. Bradley, a Representative in Congress 
                       from the State of Alabama

    The vast majority of federal contractors are responsible employers 
who obey the law and do right by their employees.
    There will always be, as the Chairman noted, bad actors who deny 
workers basic protections and we can all agree they should not receive 
taxpayer dollars for work on federal contracts.
    However, even the most responsible employer can occasionally run 
afoul of labor and employment laws, or simply be accused of doing so.
    The Executive Order we're examining today unfairly shifts the 
regulatory burden to employers while removing the burden of proof from 
labor violation claims, resulting in a much less efficient system of 
government acquisition for both taxpayers and those seeking government 
    Furthermore, the Executive Order's ban on pre-dispute arbitration 
clauses is a direct violation of the Federal Arbitration Act, which 
ensures the validity and enforcement of arbitration agreements - a 
practice that the United States Supreme Court has repeatedly 
    The President has exceeded his authority to make such a change and 
is in direct violation of the law.
    What's worse - through its new reporting requirements, this 
Executive Order shifts an incredible regulatory burden to contractors 
themselves by requiring prime contractors, some of which have thousands 
of subcontractors, to collect information on their subcontractors 
related to 14 different federal labor and employment laws and over 500 
different state laws.
    For example, the Fair Labor Standards Act is the cornerstone of 
worker wage and hour protection. However, the regulations implementing 
that law are flawed and outdated.
    Even the Department of Labor, which enforces the Fair Labor 
Standards Act, has run afoul of the law's requirements from time to 
    This will have a major effect on these sub-contractors, many of 
them small businesses with limited resources to handle such an 
    Many will be forced to divert resources to handle this new 
administrative task that will not have to be completed just once, but 
every six months.
    These aggressive new regulations are going to unreasonably block 
responsible parties from participating in federal government contracts 
while seriously affecting the willingness of new employers to even seek 
federal contracts in the first place.
    The result of this new process will be a significantly delayed 
contracting process that limits both healthy competition and the 
efficient delivery of goods to the U.S. government at a reasonable 
price to taxpayers.
    Instead of helping employers comply with complicated regulatory 
requirements, the administration has added yet more red tape to the 
federal procurement system that has the potential of blacklisting 
responsible employers when there is already a system in place for 
weeding out truly bad actors.
    To make matters worse, contracts will be put in jeopardy by alleged 
    This could be particularly devastating for employers that are the 
target of union corporate campaigns or competitors who simply want a 
competitive edge against their competition.
    This highly elevates the risk of frivolous complaints and the loss 
of business.
    This executive order represents an overstep of authority by the 
President at the expense of employers and workers.
    Rather than impose additional layers of bureaucracy the 
administration would be better served working with Congress and 
stakeholders to ensure the rules and regulations implementing our laws 
are modernized and streamlined.
    Then the administration can work with good employers to ensure 
compliance rather than punishing them after the damage is done.
    I thank you, Mr. Chairman, and I yield back.
    Chairman Walberg. I thank the gentleman.
    And I will take a point of personal privilege here to make 
mention to the two subcommittees that Chairman Roe, who would 
normally be sitting in the spot where Mr. Byrne is filling 
today as vice chairman, has been home for an extended period of 
time with his wife, who is going through some extremely 
challenging health situations. And so we wish our colleague and 
friend the best, and I would ask us all to keep Phil and Pam in 
prayer at this time.
    Having said that, now I yield to my distinguished colleague 
from Colorado, Congressman Polis, the ranking member on the 
Health, Employment, Labor, and Pensions Subcommittee, for his 
opening remarks.
    Mr. Polis. Thank you, Mr. Chairman.
    This is a joint subcommittee hearing. I appreciate the 
opportunity of the HELP Subcommittee to ask questions and 
provide input on this important issue of how we can better 
serve taxpayers and improve the efficiency of federal 
    I was pleased to see in the Chairman's opening remarks he 
stated that bad actors should not be awarded contracts and that 
we should deny federal contracts to bad actors. That is really 
what this rule and hearing are about here today, how we can 
better reach that goal.
    Frankly, if that were the case, we wouldn't need to be 
here, we wouldn't need to be discussing the rule.
    Unfortunately, there is a pervasive problem among federal 
contractors. A recent GAO report showed--investigating--that 
looked at 15 contractors, showed that the federal government 
awarded these 15 contractors over $6 billion in government 
contract obligations in one year alone. Clearly there is a 
problem that requires additional steps to address with regard 
to the following of our labor laws of our federal contractors.
    The President is doing his job in this regard. He is 
charged in U.S. Code--40 USC 121--with, ``The President may 
prescribe policies and directives that the President considers 
necessary to carry out this subtitle,'' referring to federal 
    And he is simply taking a step that will, as the Campaign 
for Quality Construction put it, which is a group of 
contractors who strongly support this rule, believe that this 
hearing should be entitled and that this rule will serve the 
taxpayers well with improved federal contract economy, 
efficiency, and performance with more discerning and uniform 
federal prime contractor and subcontractor selection 
    I hope that these rules are enough--the proposed rules are 
enough to address this pervasive problem.
    To put a human face on the problem, we have an individual 
with us today who has been impacted directly by these issues. 
Edilcia, a single mother of three, who worked at the food court 
at Ronald Reagan Federal Building for three years.
    [Speaking foreign language.]
    I met her before this hearing and she is with us here 
    Even though she worked 10 hours a day--
    [Speaking foreign language.]
    Ten hours a day, seven days a week, she never received a 
dime of overtime pay.
    How could that happen? She has filed for over $30,000 in 
back wages and damages because what her employer did is they 
forced her to clock in and out of two different businesses 
within the Reagan Building, both owned by the same person.
    Is this the kind of behavior of a federal contractor that 
we want to reward with more contracts? Or, is this the type of 
behavior that we want to make sure that contractors rectify and 
what happened to Edilcia does not happen to other employees?
    So even though Edilcia worked in some cases more than 70 
hours a week, she didn't receive a dime of overtime. She 
started to speak up, and when the government shut down in 2013 
her employer fired her.
    And companies like this need to be put on a remedial path 
towards acting responsibly, which is what these rules are all 
about. I have a letter expressing the support of 70 
organizations dedicated to eradicating discrimination in the 
workplace and promoting good jobs, and they agree that this 
executive order is an important step towards this goal.
    Mr. Chairman, I ask permission to submit the letter?
    [The information follows:]
    Chairman Walberg. Without any objection.
    Mr. Polis. Thank you.
    I also want to mention another example of a federal 
contractor, Tyson Foods, that received half a billion dollars 
in federal contracts in 2012 alone, but they had almost $7.2 
million in penalties and assessments for workplace safety 
violations and back pay for overtime or other violations.
    Companies cannot just try to see these costs and fees as a 
cost of doing business. They need to know that when they 
violate our labor laws, which we take very seriously as a 
country, that there are ramifications to their business and to 
their future potential to be a contractor of the federal 
    I find it interesting that this hearing is also being held 
solely on speculation since we haven't even seen the 
regulations and guidance from DOL or OMB. The contractors who 
are concerned that their record of violations may be 
problematic aren't even aware of the details of how this will 
be implemented because it simply hasn't been presented yet.
    But it is a really simple concept: If you are consistently 
breaking the law with regard to your workers, taxpayers, or the 
community, you should not receive millions of dollars of 
taxpayer contracts. Companies that are cutting corners on 
safety, not paying their workers on time, not paying overtime, 
or in dozens of other areas, shouldn't be allowed to compete 
against good actors who follow our law.
    Everyone needs to start from a level playing field. It is 
simply not fair if one company is paying people below the 
minimum wage or withholding salaries from their workers. They 
don't have an actual economic ability to bid at a lower cost, 
but because they violate our labor laws they, in fact, might 
take out the excess profits or bid at a lower cost.
    Unfortunately, unscrupulous actors who pervasively ignore 
the law are allowed to compete with those who follow our labor 
laws. And right now there are some bad actors receiving 
billions of dollars in federal contracts. I hope that this rule 
will address that.
    I look forward to the information that our expert witnesses 
will be providing before us today, and I yield back the balance 
of my time.
    [The statement of Mr. Polis follows:]
    Chairman Walberg. I thank the gentleman.
    Pursuant to committee rule 7(c), all subcommittee members 
will be permitted to submit written statements to be included 
in the permanent hearing record. And without objection, the 
hearing record will remain open for 14 days to allow 
statements, questions for the record, and other extraneous 
materials referenced during the hearing to be submitted in the 
official hearing record.
    At this time, let me also enter, if there is no objection, 
two letters--one coming from a group of employers who are 
concerned with fair pay and safe workplaces and the executive 
order--to be submitted to the record; as well as a letter from 
the Associated Builders and Contractors on their concerns, as 
    [The information follows:]
    Chairman Walberg. Hearing no objection, they will be 
submitted for the record.
    It is now my pleasure to introduce our distinguished panel 
of witnesses.
    First, Willis Goldsmith is a partner with Jones Day in New 
York. Mr. Goldsmith represents management in labor and 
employment law matters.
    Angela Styles is a partner with Crowell & Moring LLP in 
Washington, D.C. Ms. Styles was a former administrator for 
federal procurement policy at the Office of Management and 
    Karla Walter is the associate director of the American 
Worker Project at the Center for American Progress in 
Washington, D.C. Ms. Walter's work focuses primarily on 
increasing workers' wages and benefits, promoting workplace 
protections, and advancing workers' rights.
    And finally, Stan Soloway is the president and CEO of the 
Professional Services Council in Arlington, Virginia. The 
Professional Services Council is the principal national trade 
association representing the government professional and 
technical services industry.
    I will now ask our panel of witnesses to stand and raise 
your right hand for being sworn in.
    [Witnesses sworn.]
    Let the record reflect the witnesses answered in the 
    You may be seated.
    Before I recognize you to provide your testimony, let me 
briefly remind you of the lighting system and encourage you to 
keep attention to that, at least with one eye, as you give your 
testimony. We don't want to become a hindrance to your 
testimony, but we do have time issues and we will have plenty 
of questions to ask you, as well.
    The green light begins the process. You will have four 
minutes with that light on.
    Then the yellow light will come on for the final minute. We 
would encourage you to wrap up as soon as possible within the 
context of your sentence or short paragraph when the red light 
comes on.
    The same will be true for our members on the panel as we 
ask our questions, and we will keep to that five minute 
sequence also.
    So with that, let me recognize Mr. Goldsmith for your five 
minutes of testimony.


    Mr. Goldsmith. Thank you.
    Chairman Walberg, Ranking Member Polis, Ranking Member 
Wilson, and members of the subcommittees, thank you for 
inviting me here to testify today. By way of background, I am a 
partner with Jones Day, resident in our firm's New York City 
office. I have practiced labor and employment law for over 40 
    Since 1974 I have advised employers regarding compliance 
with seven of the 14 federal statutes and regulations that are 
encompassed by the executive order. I have tried cases and 
argued appeals, including in six United States courts of 
appeals and in the United States Supreme Court, arising under 
various of those or related laws.
    I am pleased to be here today on behalf of the United 
States Chamber of Commerce. As you know, the Chamber is the 
world's largest business federation, representing more than 3 
million businesses of all sizes, industry sectors, and 
geographic regions. The President's Fair Pay and Safe 
Workplaces Executive Order will significantly and adversely 
impact many of these entities.
    First, let me provide a brief overview of the executive 
order. The order requires contractors and subcontractors to 
self-report supposed violations of federal and state labor 
laws. Based on these reports, contracting officers must 
determine whether an entity is, ``a responsible source that has 
a satisfactory record of integrity and business ethics.''
    In making that determination, the contracting officer 
consults with the agency's labor compliance advisor, an 
entirely new position created by the order. Contractors are 
likewise required to make responsibility determinations for the 
    The most fundamental problem with the executive order is 
that it oversteps the President's authority. Congress has 
already enacted detailed enforcement and penalty mechanisms for 
federal labor laws. The order improperly alters those 
regulatory schemes.
    The order is also invalid because it encroaches on 
employers' rights under the Federal Arbitration Act. For 
contracts and subcontracts exceeding $1 million, the order 
prohibits employers from enforcing advance agreements to 
arbitrate certain claims. This prohibition impermissibly 
conflicts with employers' rights under the Federal Arbitration 
    As if these problems weren't enough, the order is riddled 
with uncertainties that make it entirely unworkable. It is 
absolutely impossible to predict how it will work in the real 
world, except to say that it is certain to create chaos among 
contractors, subcontractors, and within agencies.
    For example, the order requires entities to report any 
administrative merits determination, arbitral award or 
decision, or civil judgment. Leaving aside whatever those words 
mean--and they are not defined--even when an agency finds a 
violation through its administrative process, it is not at all 
uncommon for that decision to be reversed by a court.
    That process can take many years, often due to agency 
inaction. It would be manifestly unfair to disqualify 
businesses from federal contracts simply based on violations 
that years later prove to be entirely baseless.
    In addition, contractors are left simply to guess as to 
whether they must report all violations regarding all of their 
activities or whether they must report only violations 
involving the performance of a federal contract. A reporting 
requirement that extends to all activities of a large corporate 
entity would flood agencies with information that may be 
entirely irrelevant to the contract at issue.
    The order is likewise silent on which state law violations 
trigger the reporting requirement. The order applies to 14 
federal labor laws, executive orders, and ``equivalent state 
    Depending on how equivalence is defined, contracting 
officers and labor compliance advisors may have to master 
literally hundreds of state laws. That simply cannot be done, 
    Finally, agencies must consider whether a violation is 
sufficiently serious--I am quoting--``serious, repeated, 
willful, or pervasive''--to warrant remedial action. Many of 
the included federal labor laws are themselves exceedingly 
    Even the best-intentioned employers have run afoul of these 
laws in isolated circumstances or in situations where the rules 
are ill-defined. An employer that is ultimately found guilty of 
violating these laws is not necessarily a bad or unethical 
    Finally, even courts struggle to interpret such terms as 
``repeated, willful, and pervasive.'' There is certainly no 
reason to believe that agencies are better equipped to do so. 
These terms will inevitably be applied inconsistently, further 
shrinking the pool of eligible contracts.
    Moreover, as a practical matter the order is impossible to 
implement. As to contracting officers, it requires contracting 
officers to master a complex web of hundreds of interrelated 
and constantly evolving state and federal laws. I have been 
doing this for over 40 years and I know to a certainty I would 
not be able to do this, nor would any lawyer I have ever known 
be able to do so.
    Then the order floods the contracting offices with 
information regarding violations, most of which will bear 
little relationship to an entity's integrity or business 
ethics. The contracting officers then are supposed to sift 
through this deluge of statutes and data, consult with a labor 
compliance advisor, and make a responsibility determination.
    Then they have to do this every 6 months. This is just not 
achievable in the real world. There are comparable burdens 
imposed on contractors and subcontractors and may drive 
businesses from the contracting world--perhaps especially small 
businesses, including those run my minority--
    Chairman Walberg. Mr. Goldsmith, we have to ask you to wrap 
up your time--
    Mr. Goldsmith. Thank you.
    Chairman Walberg.--and--
    Mr. Goldsmith. The order is so deeply flawed in so many 
ways that it is simply beyond redemption. There is no way it 
could be modified or tweaked into something workable.
    Thank you, Mr. Chairman.
    [The testimony of Mr. Goldsmith follows:]
    Chairman Walberg. Thank you.
    Ms. Styles, we recognize you for your five minutes.

                        WASHINGTON, D.C.

    Ms. Styles. Thank you.
    Chairman Walberg, Congresswoman Wilson, Congressman Polis, 
and members of both subcommittees. I appreciate the opportunity 
to appear before you today to discuss the Fair Pay and Safe 
Workplaces Executive Order. As a former administrator for 
federal procurement policy at OMB, as a government contracts 
practitioner, and as a taxpayer, I can tell you that I care a 
great deal about the effective and efficient functioning of our 
federal procurement system.
    While I can't say that I was surprised that this executive 
order was issued, the concept of imposing greater sanctions on 
federal contractors for purportedly unacceptable labor 
practices has been around for at least two decades. I was, 
however, astonished when I started contemplating the practical 
effects of how this administration planned to go about 
subjectively sanctioning companies for actual and alleged labor 
    The potential negative impact of this executive order 
cannot be overstated. The potential disruption and damage is 
particularly troubling because adequate mechanisms exist in our 
current procurement system to exclude companies with 
unacceptable labor practices.
    To put it simply, if a pipe breaks at your house you hire a 
plumber to fix it; you don't go build a new house.
    If this administration truly believes that companies with 
unacceptable labor practices are not being properly excluded 
from federal contracting, why aren't they using or bolstering 
the current, well-established, objective, and fair processes to 
do just that? Why instead are they building a new house; a new 
house with vast, complex, and highly subjective processes for 
sanctioning companies?
    My written testimony goes into great detail about the 
processes being created and the ridiculous administrative 
burden it will place on our federal contracting officers and 
the new contemplated labor compliance advisors. Our federal 
contracting officers simply do not have the bandwidth to review 
extensive volumes of labor information, consult with labor 
compliance advisors, determine the appropriate remedial action, 
and consult with prime contractors regarding the labor 
practices of hundreds of thousands of subcontractors.
    There are not enough hours in the day or enough employees 
in the federal government to implement this executive order as 
written. The federal government will be either unable to 
purchase essential goods and services or forced to create a 
system that unfairly targets contractors for special attention.
    What I must highlight, however, is the devastating impact 
of this executive order on small businesses. While it should be 
relatively simple for a small business--and I think 
inexpensive--for a small business to collect and report on 
their own labor violations, it will be impossible and cost-
prohibitive for a small business to try to collect information 
regarding their subcontractors and make responsibility 
determinations regarding their subcontractors.
    The reality is that today small businesses rely on other 
businesses, including many, many large businesses, to perform 
substantial portions of their federal contracts. So they 
receive a federal contract and they award subcontracts to other 
businesses, including large businesses. So these small 
businesses that receive a prime contract will be faced with the 
overwhelming task of trying to collect and understand labor 
violations made by some of the largest businesses in the world 
and make a responsibility determination based upon that 
    So if, for example, a small business in Virginia wins a $5 
million information technology contract at the Department of 
Defense but needs to subcontract $500,000 of that work to a 
multibillion dollar, multinational information technology 
company to actually successfully complete the work, the small 
business will be tasked with collecting and understanding all 
federal labor laws, the labor laws of all 50 states, as well as 
determining whether this large, multinational company has taken 
sufficient remedial steps to improve their labor practices. So 
even if the federal contracting officer and the labor 
compliance advisor or the Department of Labor answers the phone 
to help this small business make a decision, it is a monumental 
task that the small business will not be capable of performing.
    Ultimately, small businesses will be left in the difficult 
decision of willfully failing to meet the terms and conditions 
of their prime contract with the federal government--requiring 
them to collect and assess this labor information--or they will 
not be able to do business as a prime contractor with the 
federal government.
    As a bottom line, the articulated rationale for this E.O. 
fails objective scrutiny. The suspension and debarment process 
was created and operates with the purpose of fairly and 
objectively excluding companies that are not responsible from 
doing business with the federal government. Through the 
suspension and debarment process, the federal government makes 
a single, unified decision based upon all available evidence 
and affords contractors an appropriate level of due process.
    This concludes my prepared remarks, but I am happy to 
answer any questions you may have. Thank you.
    [The testimony of Ms. Styles follows:]
    Chairman Walberg. Ms. Styles, thank you.
    Ms. Walter, it is now your time for five minutes of 
testimony. Thank you.


    Ms. Walter. Thank you.
    Thank you, Chairman Walberg, Ranking Members Wilson and 
Polis, for this opportunity to present in support of the Fair 
Pay and Safe Workplaces Executive Order. I would also like to 
thank the workers who may be personally affected by the 
executive order for being here today.
    My name is Karla Walter. I am associate director of the 
American Worker Project at the Center for American Progress 
Action Fund.
    In my testimony today I will make three main points. First, 
far too often companies with long and egregious records of 
violating workplace laws continue to receive federal contracts. 
This not only harms workers, but also taxpayers and law-abiding 
    Second, the contractor review process is supposed to 
prevent this from happening by ensuring that only responsible 
companies receive federal contracts, but the system is broken. 
Third, President Obama's Fair Pay and Safe Workplaces Executive 
Order strives to help fix this broken system and ensure that 
law-breaking contractors come into compliance.
    The federal government spends hundreds of billions of 
dollars each year contracting out everything from janitorial 
services to the design and manufacture of sophisticated weapon 
systems. Indeed, one in five American workers are actually 
employed by a company that contracts with the government.
    The government is supposed to contract only with companies 
that have a satisfactory record of performance, integrity, and 
business ethics. But the contracting system does not 
effectively review the responsibility records of companies 
before awarding contracts, nor does it adequately impose 
conditions that encourage them to reform their practices.
    Instead, the federal government all too often awards 
contracts to workplace violators with no strings attached. As a 
result, contractors that violate workplace laws have little 
incentive to improve their practices.
    For example, a 2013 report by the Senate HELP Committee 
found that government contractors are often among the worst 
violators of workplace laws. Nearly 30 percent of top 
violations were received by companies that continued to receive 
government contracts.
    Workers at these companies were shortchanged by $82 
million, and at least 42 people died from workplace accidents 
at these companies. The victims ranged from a 46-year-old 
father of four who was killed while trying to clear a clothes 
jam in an industrial dryer, to 13 workers killed at a sugar 
refinery explosion sparked by combustible dust, to workers at 
two separate companies killed in oil refinery explosions.
    When governments continue to contract with these law-
breaking companies, it also frequently results in poor contract 
performance, wasting taxpayer dollars, and delivering low-
quality services. Analysis from my organization shows that one 
in four companies that committed the worst workplace violations 
and later received federal contracts had significant 
performance problems. These ranged from contractors submitting 
fraudulent billing statements, to cost overruns and scheduling 
delays during the development of major weapons systems, to 
contractors falsifying firearm safety test results for 
courthouse security guards, to an explosion in the Gulf of 
Mexico that spilled millions of barrels of oil.
    Finally, the current system puts law-abiding companies that 
respect their workers at a competitive disadvantage against bad 
actors that lower costs by paying below what they are legally 
required and cutting corners in workplace safety.
    The federal government could have prevented many of these 
problems and promoted an efficient procurement process by 
reviewing companies' records of workplace violations before 
awarding a government contract. Unfortunately, the existing 
tools to ensure that this actually happens are inadequate. The 
database tracking contractor responsibility fails to include 
many serious violations, enforcement agencies provide no 
analyses of contractors' legal records, and contracting 
officers receive little guidance from existing regulations on 
how to evaluate records.
    The executive order strives to ensure that contractors' 
records of workplace violations will be taken into account in 
determining whether or not they have a satisfactory record. It 
aims to create a fair, efficient, and consistent process by 
which the federal government can ensure all federal contractors 
are responsible and that law-breakers come into compliance.
    The order is informed by best practices from the state and 
local governments and, in limited instances, federal agencies. 
Even in the private sector, it is becoming increasingly common 
for companies to factor in a bidder's record of safety in 
contracting decisions.
    President Obama's order strives to ensure that companies 
that respect their workers are not put at a competitive 
disadvantage compared to law-breaking companies. Indeed, that 
is why six contractor associations are submitting for the 
record today their joint statement in support of the order.
    While opponents have argued that these sorts of policies 
can bar or even blacklist companies with minor violations from 
receiving any federal contracts, improved responsibility 
guidance and a thorough investigation process promises to allow 
the government to identify only persistent violators and 
provide them an opportunity to clean up their acts. Moreover, 
the administration has indicated that this new system will 
simply require law-abiding companies to check a box to certify 
legal compliance, a process similar to how firms currently 
report on tax delinquency and contract fraud.
    States and localities have found that adopting these laws 
to raise workplace standards actually has increased competition 
among contractors. For example, after Maryland implemented a 
contractor living standard, the average number of bids for 
contracts in the state increased by 27 percent.
    Congress has the opportunity to support implementation of 
the order and thereby strive to ensure that companies with 
egregious records of violating workplace laws come into 
compliance. This will make a difference for millions of working 
Americans, ensuring that law-abiding companies can compete on 
an even playing field, and prevent the waste of taxpayer 
    Thank you.
    [The testimony of Ms. Walter follows:]
    Chairman Walberg. Thank you.
    And now we turn to Mr. Soloway for your five minutes of 


    Mr. Soloway. Thank you, Mr. Chairman, members of the 
subcommittees. I appreciate the opportunity to be here.
    In the interest of avoiding being overly redundant with my 
colleagues on the panel, I would like to just make a couple of 
core points to lead into the discussion and your questions as 
we go forward.
    First, let me also mention my own personal involvement with 
this issue. The Fair Pay and Safe Workplaces Executive Order is 
actually the stepchild of a Clinton-era executive order called 
the Contractor Responsibility Rule, which was known in those 
days as the ``blacklisting rule.'' I was the lead official at 
the Clinton administration Department of Defense dealing with 
the writing and development of that rule at the time.
    And, as with this rule, that rule was poorly constructed, 
it was poorly thought out, and it was rushed through the system 
without any consideration of the unintended consequences it 
could create despite the fact that it was based on a perfectly 
reasonable and appropriate tenet. In fact, I would fully 
associate myself with the comments of everybody on the 
Committee who has spoken thus far, including Mr. Polis and 
others, who have talked about the need to avoid giving 
contracts to bad actors.
    This executive order does not make policy in that regard. 
It is well-established in federal law and federal procurement 
practice that bad actors can be and should be denied federal 
    The real issue at stake here with regard to that particular 
point is the degree to which current information systems in the 
government adequately interface with each other and provide 
collective information to the parties that appropriately need 
it to make reasoned, expert decisions--particularly suspension 
and debarment officials and others. Instead of fixing the 
information system, this order creates a broad, sweeping 
regulatory regime that, as others have already said, raises 
significant questions of executability and of due process.
    Second, the executive order and many of the reports and 
statistics already cited in this hearing, including the Senate 
HELP report, ignore the fact that a substantial if not majority 
of the cases involved and reported are tied directly to either 
the government's failure to appropriately exercise its 
responsibilities or the sheer complexity of implementing the 
Service Contract Act, the Davis-Bacon Act, and other prevailing 
wage laws.
    This is not to suggest that we argue in favor of getting 
rid of them, but it is to suggest if you look at the record and 
you talk to officials in the Wage and Hour Division at DOL and 
elsewhere, they will fully acknowledge that it is absolutely 
routine for companies who are trying to do business under the 
rules established by Davis-Bacon and Service Contract Act to 
have violations, many of which are technical in nature, many of 
which involve the complexity of trying to determine how to 
match a job to a given wage and benefits rate as prescribed by 
the Department of Labor.
    And even in the reports that have come out of the Senate, 
something like half of the cases of violations of these laws 
resulted from the government's failure to include in the 
contract the appropriate clauses to tell the contractor, ``You 
are subject to these particular laws.'' So this is a really 
complex implementation challenge on the--both government and 
contractor side, which I think this proposed executive order 
and many of the reports that deal with some of these issues 
tend to overlook dramatically.
    Third, this executive order kind of upends a very important 
concept that Ms. Styles addressed a moment ago, or alluded to, 
and that is this whole concept of present responsibility.
    Every institution experiences wrongdoing. I think we all 
agree with that. And often it is said that the best measure of 
an institution is how it responds to that wrongdoing and 
adjusts going forward.
    This rule does not open up the door to that kind of a--it 
completely changes that. Allegations, settlements without 
finding of--on either party's side automatically considered 
violations that are to be considered.
    What would you do if you were a government contractor? You 
wouldn't go to the trouble of trying to figure out all the 
details of every case on every--of every bidder that is coming 
in the door; you are going to just say, ``I can't deal with 
this,'' and any allegation, any situation that raises any red 
flags, you are simply going to walk away.
    That is the way the system will work because it is the 
safest way to protect yourself. That is fundamentally unfair.
    Finally, just one comment with regard to some previous 
testimony--the idea that this is simply a checking of the box, 
like we do for tax responsibility. I would urge you to go back 
to the record of discussion and debate over tax--over the 
legislation that led to that simple box-checking, because the 
same issues were at stake there that are at stake here.
    Fully adjudicated tax violations we all agreed to--not 
allegations, not tax liens that were not yet fully adjudicated. 
There was a whole process of defining what I was--what I would 
be certifying to if I checked that box.
    That process has not been gone through with regard to this 
executive order.
    [The testimony of Mr. Soloway follows:]
    Chairman Walberg. I thank the gentleman.
    I thank all of the panel for your testimony and look 
forward now to questions that can bring further clarification 
to this issue. Again, the whole effort of this panel is to find 
a means by which we, indeed, can make sure that our contracting 
system produces the right things for the employers, for the 
government, and for the taxpayer, and that the systems in place 
are usable and used effectively to make sure that that happens.
    I now recognize myself for five minutes of questioning.
    Mr. Soloway, it is evident that there are no contractors on 
this panel. And again, that is not because we haven't had 
contractors submit a lot of concern about this proposed 
executive order, but it is a concern that they feel, right or 
wrong, potential retaliation for being here. So you are the guy 
in the hot seat to answer some of the questions, I trust.
    Can you explain some of the frustrations your members have 
with this executive order and how they feel about being targets 
of excessive administrative action over the past year?
    Mr. Soloway. That is a large question, but this is about 
the fifth or sixth executive order in the labor realm that we 
have seen over the last few years from this administration, not 
just the last year. By and large, the earlier executive orders 
were not nearly as controversial, though implementation and 
execution was a challenge, but we all agreed with, again, the 
intent there.
    This is by far the most sweeping that we have seen, and it 
raises a number of concerns, because the fundamental policy 
question that drove this issue back in the 1990s in the Clinton 
administration was whether you could actually deny a contract 
to a company for something they did in work that was unrelated 
to the work for the government. For example, the BP oil spill--
would that have been a reason to deny BP a government contract 
since the oil spill was not a government contract?
    That issue has been long since decided, and the answer is 
yes you can, and we do it routinely today.
    So from our perspective, from the company's perspective, 
they know that they are responsible to adhere to federal law. 
They have extensive compliance systems in place. But the 
concern is that we are continually shifting responsibility for 
massive compliance regimes on the companies rather than 
focusing on the much smarter and more effective method of 
saying--of, as I said, collecting information once and using it 
multiple times.
    Why would I do this every six months? Why does the 
government not use the Office of Federal Contract Compliance, 
DOL Wage and Hour Division, all the other elements of 
government that have responsibility for labor law 
implementation and have records of who has violated what when 
and where?
    Why are those information systems not centrally feeding 
into an area where people can use it? Why do I, as a company, 
need to go through that detail? And the regulatory compliance 
burdens here are enormous.
    Second, it is a certification. You are not just saying, ``I 
think I am responsible''; you are saying as a company that, 
``We have no violations that would be reportable.''
    If I am wrong and I don't know about something that a field 
office in Texas or elsewhere did, I am liable--I will leave it 
to my legal colleagues, but I am liable under the False 
Statements Act for some very, very severe penalties.
    And third, there is already mammoth exercise of oversight 
by the Department of Labor. The Department of Labor itself has 
talked about adding I think it is over 1,000 investigators over 
the last six years on Service Contract Act.
    Companies are routinely dinged. And even when the fault is 
with the government, the company often has to make the employee 
    So I think it really--the concern on our part is this just 
really ignores the massive complexity of the system and is 
just--it is a blunt instrument that is unnecessary.
    Chairman Walberg. Okay.
    Ms. Styles, the executive order unfairly slants the federal 
contracting competition against contractors with minor 
infractions that may have no bearing on the employer's 
integrity or business ethics. Could you explain how requiring 
contractors to disclose this information affects the 
relationship between prime contractors and subcontractors?
    Ms. Styles. Well, it completely changed the dynamic between 
prime contractors and subcontractors. So right now under the 
law, the dynamic is largely one of an arms-length transaction 
for good reason. So you want your prime contractors going to 
the marketplace and competing the subcontract work and having 
an arms-length transaction between them.
    This causes the prime contractor to become very involved in 
the subcontractor's business, which is not the way that it 
operates right now. The prime contractor is going to have to 
ask for this list, they are going to have to understand it, 
they are going to have to go back and consult with the 
Department of Labor and the labor compliance advisors and 
determine whether the remedial action is appropriate.
    And what happens when it turns around and you are their 
subcontractor? Because even the largest of companies are prime 
contractors and subcontractors, and they team together, and 
they are primes to each other and subcontractors to each other. 
So you are sharing what is, you know, very sensitive 
information and giving the prime contractor an extraordinary 
ability to try to negotiate some deal related to labor issues.
    Chairman Walberg. Is there a concern also about disclosing 
trade secrets in this process?
    Ms. Styles. Absolutely. So, you know, and then what happens 
when it changes around and they are the prime and you are the 
sub in another situation and you have just disclosed trade 
secrets, or they are competing against you in another 
    Chairman Walberg. I see my time is about expired so I will 
not violate my own rules.
    And so I will now recognize the distinguished lady from 
Florida, Ranking Member Ms. Wilson.
    Ms. Wilson of Florida. Thank you, Mr. Chairman. Some of the 
people you see in the audience are from Good Jobs Nation.
    And, Ms. Walter, these workers are actually wearing 
stickers on their sweatshirts with the amount stolen from them 
in wages--actual money from these workers. So as I listened, 
one witness testified that there is no evidence of willful, 
pervasive, or repeated violation of federal contractors that 
would merit adopting this executive order.
    Do you agree with this conclusion? Could you please give us 
some specific examples of pervasive or repeated violations? I 
would appreciate it.
    Ms. Walter. Certainly. And I should say, I had said in my 
opening remarks that the HELP Committee's report found that 
there were $82 million in wage theft violations found at these 
companies that they--that were severe violators of federal 
contracts that continue--or severe violators of wage theft laws 
that continued to receive federal contracts.
    This included paying workers at chemical weapon storage 
facilities for time spent--not paying workers at chemical 
weapon storage facilities for time spent donning safety gear. I 
mean, these were workers who were protecting us as Americans, 
and they were owed in 18 instances $6 million in--or they were 
owed--there were 18 instances of back pay, but yet they 
continued to receive federal contracts. And this affected 1,300 
    There are issues of workers being--failing to pay more than 
25,000 workers at call centers for overtime, and this was--this 
involved Cingular Wireless, and yet AT&T continued to receive 
$620 million in federal contracts.
    And work--instances of mis-classing workers responsible for 
helping recently released prisoners reenter society and find 
work, owing these workers $1.7 million in back wages, and yet 
the company continued to receive $28.8 million in federal 
    Ms. Wilson of Florida. Thank you.
    In Florida there is a construction company called Concrete 
Plus. They went after contracts for 20 jobs with state or 
federal funding--mainly projects to build or improve low-income 
housing. It won just seven, well below the company's usual rate 
of success.
    Concrete Plus was constantly underbid by companies that 
were cheating by misclassifying employees. Is misclassification 
of employees a way for contractors to shift costs to workers or 
leave them without basic protections, such as workers' 
compensation, and thus underbid a job?
    Ms. Walter?
    Ms. Walter. Certainly it is.
    From that story from McClatchy that uncovered the issue of 
Concrete Plus and the American Recovery and Reinvestment Act 
funds we found that they documented the real story of one 
company trying to do well by their workers and being underbid 
over and over again on these--the Recovery Act funds. And this 
definitely transferred to companies throughout the Recovery Act 
and throughout the contracting system in general.
    And what we see is that at the state level there have been 
lots of states who have undertaken this question of how do we 
ensure that our contractors are responsible by and ensure that 
it is efficient contracting process? And some of the states 
have specifically looked at misclassification of independent 
contractors as an issue.
    Minnesota is one of the most recent examples that passed a 
law that became effective in 2015 that takes a closer look at 
the misclassification issue.
    Ms. Wilson of Florida. Thank you.
    This question is for Mr. Soloway and Ms. Styles: Five trade 
associations for general contractors--especially trades 
covering sheet metal, mechanical, electrical, finishing, 
bricklayers--submitted a statement today applauding the 
executive order as sound public administration propriety 
    Operating under the banner of Campaign for Quality 
Construction, they said that the E.O. will promote high 
workforce standards for the benefit of the public project 
owner--that is the taxpayer. It will raise the bar in the 
market for federal construction, and they contend it will 
enhance due process rights for contractors in the procurement 
process, compared to the status quo.
    While these contracting groups have suggestions to make the 
executive order workable through the rulemaking process, is 
there something that these five trade associations, which 
represent thousands of construction workers, failed to 
appreciate regarding the implication of this executive order?
    Why don't these companies see the E.O. as harmful to their 
economic self-interest, as you seem to suggest it will be for 
the companies you represent? Do these companies want to uphold 
a higher standard than the companies you represent?
    Chairman Walberg. The gentlelady's time is expired, but for 
the record, let's get a brief answer.
    Mr. Soloway. I will just be very brief and say no, I don't 
think it suggests that they want to be held to a higher 
standard. I don't know enough about the construction side of 
the business and so forth to understand and--nor would I 
comment on what other organizations are saying or doing.
    I would be very careful, however, when we hear things like 
``wage theft'' terms, because it does occur and it needs to be 
punished and it needs to be dealt with. But it needs to be 
determined to have been intentional and willful.
    ``Misclassification'' is also a very tricky term, and it 
takes a--we don't have time today to go into how it actually 
works when you are under the Service Contract Act and you are 
classifying a position. Misclassification can be done by the 
Department of Labor, it can be done by a contracting officer, 
it can be done by a company, and it can be all across the 
    So I would be just very careful at sort of accepting at 
face value that all these things amount to unethical lowballing 
of government contract prices in the workforce, because I don't 
think that is the case.
    Chairman Walberg. Thank you.
    I now recognize my colleague from Alabama, Mr. Bradley 
    Mr. Byrne. Thank you.
    Ms. Walter asserted that there was a problem with the 
present process.
    I would like to ask you, Mr. Goldsmith, given your 40 years 
of experience, do you see any deficiency in the present process 
to determine if we have got a bad actor in a government 
    Mr. Goldsmith. I don't, Mr. Byrne. As has been pointed out 
by other witnesses, the government has had in place for many, 
many years systems to deal with bad actors and the like.
    I would add that saying an entity is a bad actor is a 
question of definition. It doesn't necessarily suggest that an 
employer is a bad actor for having, for example, had a charge 
filed with the NLRB or the EEOC or, for that matter, the 
Department of Labor under the FLSA, and had decided, for 
whatever reasons, to resolve that charge. And that doesn't make 
that entity a bad actor or an entity that doesn't act with 
    I think part of the problem with this entire executive 
order is that words are used without really much care for what 
they mean and how they have been interpreted even by the 
courts. And to use, frankly, words like ``bad actor,'' 
``pervasive,'' ``longstanding,'' and other words, ``law-
breaking'' is just--simplifies something that is not at all 
    Mr. Byrne. I appreciate that.
    Ms. Styles, given your substantial experience, do you find 
the present process that we have insufficient in any way?
    Ms. Styles. Not at all. It is a very robust process for 
suspension and debarment.
    Companies that have had integrity issues, that have had 
labor issues, are considered by the suspension and debarment 
officers at the various federal agencies. Some federal agencies 
are better at it than others; I think there are some ways to 
make some of them more robust in terms of how they consider 
particular issues, be they labor issues or be they other 
integrity issues.
    But the system is there. The system is robust. It is fair, 
it has an appropriate level of due process.
    And many of the examples that I have heard here today, you 
know, my question is why weren't they sent to the suspension 
and debarment officer at the various agencies? I mean, if there 
is a problem then it needs to go to them so they can fairly 
consider whether that business should be doing business with 
the federal government anymore.
    Mr. Byrne. Mr. Soloway, same question to you, given your 
substantial experience.
    Mr. Soloway. I don't think it is a process issue, sir. I 
think it is a question of the appropriate, efficient collection 
of information and sharing of the appropriate information 
across the system, because there are so many tentacles to the 
compliance regime.
    And I think to Ms. Styles' points, if you look even at the 
Senate HELP Committee report, there were numerous cases in 
there where the contracting officer didn't even look at the 
excluded parties list, which is designed to list all of these 
companies that are not appropriate recipients--didn't even look 
to see if they were on there. So yes, they got a contract.
    So I think it is not the process; I think it is the sharing 
and gathering of information by the government internally, for 
its own uses, not putting this burden on the private sector.
    Mr. Byrne. Ms. Walter, I want to give you an opportunity to 
respond to that. Tell me what, from your experience and your 
expertise, leads you to the conclusion--which is contrary to 
what these three people with substantial experience have--what, 
in your experience, your background and expertise, leads you to 
your conclusion where you disagree with them?
    Ms. Walter. Certainly. I think the Harkin report is a great 
example, and that is not the first report to find that--
    Mr. Byrne. But that is a report. I am asking what is your 
experience, based--they stated their experience. What is your 
experience here before the Committee today that leads you to 
that conclusion? Not a report--
    Ms. Walter. Oh, well, I can tell you about my experience 
talking with business owners who say that that is a problem. We 
have heard from business owners who have, at the District of 
Columbia level, have said, ``Before they passed the responsible 
bidder provision I couldn't compete. It wasn't worth it. Now 
that there is a responsible bidder provision in place, I can 
compete. There is a fair playing field.''
    Mr. Byrne. Do you have a list of those businesses you 
talked to?
    Ms. Walter. Certainly.
    Mr. Byrne. Would you submit that to the Committee.
    Ms. Walter. I can submit some letters and--some more 
information. I am happy--
    Mr. Byrne. Okay. Other than reading a report and talking to 
some businesses, what experience do you have to lead you to 
that conclusion?
    Ms. Walter. Well, I am a researcher at the Center for 
American Progress, so I can talk to you a little bit about the 
research we have done about these problems translating to poor 
quality for taxpayers, as well. You know, we found that one in 
four companies with these sorts of violations also had 
significant performance problems.
    This included contractors KBR being assessed $1.1 million 
in back wages for violations of the Davis-Bacon Act. 
Contractors then--the company continued to receive significant 
federal funds--$11.4 billion over five years.
    In the end, there were performance problems: contractors 
submitting fraudulent billing statements to the federal 
government, failing to meet a performance level--
    Mr. Byrne. My time is going to run out, so I am making 
sure--you have talked to some businesses, got some research--
    Ms. Walter. We certainly do. We certainly do.
    Mr. Byrne.--and that is what you are bringing to bear to 
make the conclusions you have made.
    Thank you, Mr. Chairman. I yield back.
    Chairman Walberg. Thank the gentleman.
    Before I recognize the next colleague I want to welcome our 
friend and colleague from Minnesota, Mr. Keith Ellison, to join 
us at the dais here.
    I know you have a strong interest in this issue. We are 
glad to have you join us.
    Without objection? Hearing none.
    I now recognize the gentleman from Colorado, Mr. Polis.
    Mr. Polis. Thank you, Mr. Chairman.
    Ms. Styles, I--you have a rather ominous prediction that 
you have given us of what will occur if the E.O. is 
implemented. To be specific, you said if the E.O. is 
implemented, ``purchases by the federal government will grind 
to a halt.''
    Does that mean that if the E.O. is implemented there will 
not be any purchases by the federal government--there cannot be 
any purchases by the federal government?
    Ms. Styles. No. That is not at all what I mean. I just 
think that the process that is put into place by the executive 
order is so--such an overwhelming administrative burden in 
terms of the number of steps they have to go through--
    Mr. Polis. So what does ``grind to a halt'' mean if it 
doesn't mean ``stop''? Because usually ``halt'' means ``stop,'' 
so if it is--if they are not going to stop federal purchases, 
what do you define ``grind to a halt'' as?
    Ms. Styles. They will be really slow. Only the most 
important ones will be able to--
    Mr. Polis. So grind to a slower pace perhaps, not grind to 
a halt?
    Ms. Styles. Significantly slower pace, yes.
    Mr. Polis. Would you like to change your testimony, as 
opposed to grind--or do you want to keep it as ``grind to a 
    Ms. Styles. I will keep it as ``grind to a halt.''
    Mr. Polis. So then how do you define ``halt''?
    Ms. Styles. Some of the most important purchases that we 
need to make aren't going to happen--
    Mr. Polis. Okay, well--reclaiming my time--``halt'' means 
``stop.'' So you are saying federal purchases will stop. I 
again offer you an opportunity to modify your testimony if you 
would like.
    Ms. Styles. I am not going to modify my testimony--
    Mr. Polis. So again, you are--now you are contradicting 
yourself. You told us, this Committee, that federal purchases 
would halt, which means stop, if this E.O. went through. I just 
asked you, ``Would federal purchases stop if this E.O. went 
through,'' and your answer is again--I will give you another 
opportunity to answer that?
    Ms. Styles. I think many will.
    Mr. Polis. Some will, and others will go through under this 
    Ms. Styles. I am sure some will go through, yes.
    Mr. Polis. Okay. So again, your testimony to us is that if 
the E.O. is implemented purchases by the federal government 
will grind to a halt. You didn't provide any conditions to that 
statement. So again, if you are saying federal purchases will 
slow--but you did not agree to make that change--
    Ms. Styles. I can say ``generally grind to a halt,'' if 
that would be better.
    Mr. Polis. Okay, will ``some''--how about ``some purchases 
by the federal government--"
    Ms. Styles. I will say ``generally grind to a halt.''
    Mr. Polis. Okay. Again, if you are saying that some might 
grind to a halt, perhaps the ones that would stop would be the 
ones from pervasive violators of our labor law.
    I would like to go to Ms. Walter on that.
    Now, there have been several states, including New York, 
Minnesota, and Massachusetts, that have required labor 
compliance reviews, similar to those under this E.O. I would 
like to ask you if federal purchases have generally halted in 
New York?
    Ms. Walter. No, they haven't.
    Mr. Polis. Have federal purchases generally halted in 
    Ms. Walter. No, they haven't.
    Mr. Polis. Have federal purchases generally halted in 
    Ms. Walter. No.
    Mr. Polis. Can you answer why they might not halt in those 
states if we are given this testimony that somehow they are 
going to halt in the country--generally halt?
    Ms. Walter. I can't say why Ms. Styles is--Ms. Styles is 
predicting that. What I can say is that they are using these 
programs successfully. They have been able to efficiently use 
systems such as prequalification to get contractors--take a 
closer look at contractors and still uphold high standards.
    Mr. Polis. Has there been any noticeable or observable 
slow-down in the efficiency of contracting in New York, 
Massachusetts, or Minnesota?
    Ms. Walter. No. And I would say that other sorts of 
contracting standards, such as the contracting living standard 
that was implemented in Maryland, actually increased 
    Mr. Polis. Now, so getting back to kind of why we are here 
today, do you think that under current rule there are adequate 
mechanisms to exclude companies with unacceptable labor 
    Ms. Walter. No. The current regulations have a--well, and 
let me be clear here: Responsibility review is not about 
suspension and debarment.
    This is about upholding higher standards, taking a closer 
look at companies with problems, and when there is a problem, 
resolving those problems so that that company can come back 
into the fold and bid in a responsible manner that isn't going 
to shortchange its workers and put them in harm's way.
    Mr. Polis. And to be clear, in this proposed executive 
order, is there any black list?
    Ms. Walter. No. No. That is--
    Mr. Polis. And the same label, as you know, was applied to 
the 2008 legislation, which created a federal database that 
includes certain federal contractors. It seems that it is 
common every time there is more contractor accountability added 
opponents seem to label it ``blacklisting.''
    There is no, again, for the record, the expert testified 
there is no blacklist in this, nor has there been a general 
halt to contracting in the states that have moved forward in 
this regard. I also am confident that there would not be any 
form of general halt of contracting here at the federal level.
    Really we are discussing the inadequacy of current 
mechanisms of enforcement of labor practices among federal 
contractors. There are gaps to be filled. The E.O. goes some of 
the way towards doing that.
    But certainly companies need to be held accountable if 
workers aren't being paid, if they are engaged in 
discriminatory behavior, and I think that this E.O. represents 
the first step toward implementing the congressional intent 
with regard to applying the law to federal contractors.
    And I yield back the balance of my time.
    Chairman Walberg. I thank the gentleman.
    I now recognize the gentlelady from North Carolina, Dr. 
    Mrs. Foxx. Thank you, Mr. Chairman.
    I want to just make a point for the record, there have been 
some statements made about suspensions and disbarments, and it 
is my understanding that during fiscal year 2012 and 2013, DOL 
registered no suspensions or disbarments of federal 
contractors, and I will give the source of this for the record, 
if I might do that later on.
    [The information follows:]
    Chairman Walberg. Without objection.
    Mrs. Foxx. Thank you.
    I wonder, Ms. Styles, if you could answer a question for 
me? Can you describe the current process for contractor 
responsibility determinations?
    What types of violations or allegations are taken into 
account when a contracting officer makes a responsibility 
determination? Can a contractor contest an adverse 
    Ms. Styles. Absolutely.
    So there is a part of the Federal Acquisition Regulation, 
it is called Part 9, and a contracting officer, before they 
actually execute a contract with a company, has to go through a 
number of articulated steps to determine if the company is 
responsible. It includes everything from financial 
responsibility, to their past performance in particular jobs, 
to their integrity as a business. Labor violations absolutely 
can be taken into consideration, in terms of the integrity of a 
business, so in many ways this is already existing, in terms of 
the ability of a contracting officer to consider it.
    If that decision is made--adverse to a contractor--by an 
individual contracting officer, it actually can be appealed 
through the protest process currently, but it is a pretty 
arduous process for appeal.
    Mrs. Foxx. Thank you very much. Mr. Goldsmith, federal 
labor laws already contain remedies to address violations. How 
does this executive order, which introduces new remedies, 
effectively rewrite U.S. labor laws and run afoul of 
congressional intent?
    Mr. Goldsmith. Well, it does precisely that. It augments 
existing remedies in a way that would not only put at risk 
contractors who currently have contracts with the federal 
government, but as a result of that, it really is 
    It is not the prerogative of the President to decide to 
rewrite the laws to augment remedies. For example, under the 
NLRA the law has been longstanding that a--the government 
cannot--the executive branch cannot simply add to remedies, nor 
can the states, for that matter. It is a case called Gould that 
has been around for many years.
    So this executive order does precisely that and it is 
    Mrs. Foxx. You know, this is a recurring pattern with this 
administration, it seems to me. There are 57 oversight hearings 
going on this week in the House of Representatives, and I just 
wonder how many of those hearings are focusing on 
unconstitutional actions taken by this administration.
    It simply is mindboggling that every day we learn of more 
and more of these unconstitutional actions being taken by an 
administration doing its best to write laws or rewrite laws, 
and we really need to start keeping long lists of these, 
because I don't think the American people are aware of all of 
the violations that have occurred.
    Mr. Chairman, I am going to do something very unusual. I am 
going to yield back the balance of my time.
    Ms. Walter. Representative Foxx, could I make just one 
point on that?
    Chairman Walberg. No question was asked. Appreciate you can 
maybe work that into an answer of the next question you get.
    I now recognize Mr. Scott for his five minutes of 
    Mr. Scott. Thank you, Mr. Chairman. And I would point out 
the fact that a oversight hearing was held does not--is not 
evidence that a--conclusive evidence that any violation has 
occurred. There are oversight hearings all the time.
    Ms. Walter, you wanted to respond?
    Ms. Walter. Certainly. Thank you for giving me the time.
    I just wanted to make clear that, first of all, the purpose 
of a responsibility determination is not to penalize a federal 
contractor but to promote an efficient procurement process. And 
the Federal Property and Administrative Services Act authorizes 
the President to create processes to ensure that contractors 
are responsible.
    And the courts have actually upheld this right several 
times. They have upheld it under previous administrations, if 
you--including E-Verify proposals, the right to post notices 
for workers that--informing of their rights not to join unions; 
and it has been upheld during this administration with the 
Project Labor Agreements Executive Order.
    Mr. Scott. Thank you.
    Can you explain how this process is significantly different 
than the present process?
    Ms. Walter. Certainly. Right now there is a contractor 
responsibility database. However, significant number of labor 
law violations are not included in it, and there is no guidance 
for contracting officers on how they should implement these--if 
a contracting officer finds out about a legal violation there 
is no guidance on how they should consider it or how much of a 
warning sign this is.
    What the order does is it allows, through a process that 
will include advice from labor compliance advisors, from the 
Department of Labor, it will provide contracting officers the 
information they need to make an informed decision. It is not 
requiring contracting officers to find a contractor not 
responsible because of anything that they report, but the 
reporting mechanism throws up a warning signal that contracting 
officers should take a closer look.
    Mr. Scott. Ms. Walters, can persons with unresolved issues 
be punished?
    Ms. Walter. Again, it is not a punishment process. This--
    Mr. Scott. Well, can people with unresolved issues have 
contracts withheld or not be awarded contracts because of 
allegations that haven't been resolved?
    Ms. Walter. So I am not a member of the administration, so 
I can't tell you exactly what the administrative merits 
determinations are going to include, but what I can say is 
that, again, this is about throwing up a warning signal, taking 
a closer look, figuring out what is going on in those instances 
and whether or not that would jeopardize taxpayer dollars to 
contract with that organization before they take remedial 
    Mr. Soloway. Mr. Scott, can I offer a comment briefly on 
that? I don't want to take your time.
    The answer to your question is absolutely yes, and this is 
one of the issues that has been missed in this discussion. Yes, 
we do not have the regulations yet to know exactly how they 
will be implemented, but the executive order sets the construct 
for those regulations and it very clearly references situations 
where there is no finding of intent or willful violation. 
Allegations are included, and so forth, so the answer to your 
question is yes.
    Mr. Scott. Well, you kind of fuzzified that intent. You 
could have a violation--
    Mr. Soloway. Correct. Correct. And there are multiple 
levels at which there are questions. One is on the allegations.
    As you said a moment ago, the holding of a hearing is not 
necessarily proof of wrongdoing. We apply that same standard to 
the executive order.
    Mr. Scott. Okay, well, let me follow through. If you have a 
contractor who is systematically underpaying, not paying 
overtime, and otherwise essentially cheating, what effect does 
that have on the competition?
    Mr. Soloway. Are you asking me, sir?
    Mr. Scott. Yes.
    Mr. Soloway. Absolutely, that contractor shouldn't be 
considered if, in fact, that contractor has a repeated, willful 
history. There are a whole slew of opportunities for the 
government to deny that contractor the right to bid, and so I 
think that we have to be very careful here that we don't mix 
    In the case here, we are not changing policy about whether 
companies can or cannot get contracts because they are law-
violators. What we are doing is creating a broad new regulatory 
regime, and even mixing issues.
    When we talk about what is going on in Massachusetts or New 
York or Minnesota, there are other standards that are far more 
prominent in those responsibility determinations, like do they 
pay a living wage? Well, the living wage debate is a very 
different debate. Contractors pay what the government tells 
them they have to pay job by job under the Service Contract Act 
or Davis-Bacon Act----
    Mr. Scott. Well, is it true that people with chronic 
underpayments and chronic violations are getting contracts?
    Mr. Soloway. There absolutely may be cases of that, and 
that doesn't mean it is right. We are not defending that. There 
is nothing--
    Mr. Scott. So we should do everything we can to prohibit 
people who are chronic violators of labor laws and fair wage 
laws from getting contracts.
    Mr. Soloway. And we have all the mechanisms to do it, as I 
said before.
    I believe that fundamentally it is - A.) you have to deal 
with what is the violation, as you said. Has it been proven or 
is it just an allegation? And then the second question is, why 
are we not focusing on technology and information-sharing as 
the answer, which is what the logical answer is, rather than 
this massive burdensome regime that raises far more questions 
than it answers?
    Mr. Scott. Time is up.
    Chairman Walberg. Thank the gentleman. Time is expired.
    I now recognize Mr. Russell, the gentleman from Oklahoma.
    Mr. Russell. Thank you, Mr. Chairman.
    And, panelists, thank you for your testimony today, thank 
you for your extensive work and experience and bringing light 
to this issue.
    Mr. Goldsmith, given the enormous burden of reporting and 
compliance requirements that the executive order calls for, 
what, in your opinion, is the net effect of now having timely 
contracts and having the best companies provide government 
    Mr. Goldsmith. I think it is going to be a huge burden. I 
think it is going to take some companies that would otherwise 
be federal contractors out of that business. It is going to add 
to a reporting burden that exists for not just major employers, 
many of whom can deal with it on one level or another, but 
especially for small businesses who have enormous difficulties 
complying with the existing burdens.
    So now when you talk about a subcontractor to a large 
contractor, as Ms. Styles was talking about in her testimony, 
it just adds more of a burden, more of a problem, more of a 
cost, and it is going to drive-- especially small business, as 
I said in my testimony, including especially perhaps those 
owned and run by minorities and women-- out of the federal 
contracting arena. It is a bad idea.
    Mr. Russell. I appreciate that.
    And, Ms. Styles, given that, if contracts fail to meet cost 
and timeliness due to the burdens of the executive order, would 
that be a halt in efficiency and a failure of the best laws to 
    Ms. Styles. Absolutely. You know, if you stop getting the 
performance that you need, there are mechanisms in place to 
take that contractor out of the whole procurement system.
    Mr. Russell. In your view, if that is the case, what is the 
motivation behind the executive order, if we already have laws, 
as many of you have testified, to meet this? In your view, what 
is the motivation behind the executive order if it is not to 
fix something that is not broken?
    Ms. Styles. I would only be speculating as to the 
motivation, although I have to say, when I look at the 
executive order and how it is implemented--so if you have a 
problem and you want to fix it, like I said, you bring in the 
plumber to fix the pipe.
    If there is a problem here and there isn't enough 
information going to the suspension and debarment officials, 
there is a way within the current system to fix it. So I am 
mystified why you would create a vast bureaucracy to fix 
something that you already have a well-functioning system to 
take care of.
    Mr. Russell. And, Mr. Soloway, especially with your defense 
background, given the vital role that contracts play in the 
defense of our nation, and having been on the receiving end of 
contracts, or the lack of timely delivery of them while 
fighting in the field, what impact does the executive order 
have on our constitutional requirement to provide for the 
common defense?
    Mr. Soloway. Sir, I am going to take a slightly different 
view on that than Ms. Styles, not to disagree substantively at 
all, because we share a view on this. And this goes back to Mr. 
Polis' question about a grinding halt.
    I think the biggest danger here is exactly the reverse, is 
that we are going to have--you have multiple bidders for 
contracts, as the President himself said, the vast majority of 
whom are ethical performers, and a red flag, such as Ms. Walter 
said, comes up on one company, an allegation, something 
completely unproven, something completely undocumented but just 
an allegation or several allegations, or one contract which 
could have, you know 1,000 violations just because of one 
mistake, and the contracting officer is going to say--excuse 
me--contracting officer will say, ``I don't have time to deal 
with this. I am going over here.''
    That is as much as a danger to the system as the grinding 
halt, and that is a rush to judgment because there is so much 
of a pressure to get things done. I think the--what we are 
missing in this discussion is that the context and the 
framework set up by the executive order does not require that 
it be proven to have been, at that moment, a bad actor. It 
simply looks at, quote, as Ms. Walter put it, ``red flags.'' 
Well, there are a lot of red flags on this.
    Mr. Russell. Well, do you believe, then, you know, given 
the amount of contracts that our military relies upon for the 
delivery of their systems, their weaponry, their, in many 
cases, services--many things, what impact would this executive 
order have on providing for our common defense?
    Mr. Soloway. The biggest impact, according to the experts I 
have talked to--and I would be glad to get the report for the 
Committee for the record, because there has been some analysis 
done on this--is one colleague of mine at a major firm who is--
not a defense firm--has analyzed this suggests that this 
executive order in and of itself could raise the cost of 
compliance by 20 percent.
    In other words, there is now, at most estimates, compliance 
with federal regulations, they are somewhere in the 20 to 25 
percent of every dollar, and in their estimate this could raise 
it to 30 cents on the dollar. So it could well be a cost impact 
at a time we are trying to reduce expenses.
    Now, that is not to say if it were to achieve its intended 
outcome that that is not worthwhile. Our view is it won't 
achieve the intended outcome, so why would we do this?
    Mr. Russell. Well, I appreciate that, and hopefully we can 
get this overturned with the powers of Congress.
    And thank you, Mr. Chairman. I yield back my time.
    Chairman Walberg. I thank the gentleman.
    Now I recognize the gentlelady from Oregon, Ms. Bonamici.
    Ms. Bonamici. Thank you very much, Mr. Chairman.
    And thank you, to our panel of witnesses, for their 
testimony. This has been a very thought-provoking discussion 
about an important issue.
    My constituents back home in Oregon would be very glad to 
hear that we are having a hearing to address unfair labor 
practices by federal contractors. The federal government pays 
billions of dollars out in federal contracts, and it sounds 
like we all agree that we should have good policies that hold 
our contractors accountable for labor standards.
    And as members of Congress we should be good stewards of 
taxpayer dollars, and that means that we need to work together 
to protect those dollars and protect American workers. And the 
executive order seeks to do just that, and I look forward to 
seeing the regulations, as we have all acknowledged do not 
exist yet.
    I want to ask you, Ms. Walter, I am concerned to learn that 
with the current state of federal contracting, in addition to 
potentially rewarding companies that have violated labor laws, 
we might actually be costing the federal government even more. 
And you talk about the link between labor law violations and 
poor contract performance. So if violators are not good 
business partners we shouldn't keep rewarding them with 
taxpayer dollars.
    So could you elaborate on the connection between labor 
violations and poor contracting performance and talk about how 
this executive order could save the government money in the 
long run? And I do want to save time for one more question.
    Ms. Walter. Certainly. Our report took a look at the 
universe of contractors that have had the worst labor law 
violations and said, so what happened to those federal 
contracts? And what we found is that when contractors continued 
to receive contracts after they had had these serious 
violations, there was poor performance. One in four had 
performance problems.
    So, you know, this was a report that looked at a small 
universe of companies, but if the number of companies is 
anywhere near that, this should raise a red flag not just in 
the terms of workers and in terms of law-abiding businesses, 
but also in terms of taxpayers and taxpayer value.
    Ms. Bonamici. Terrific. Thank you very much.
    And I want to follow up on the conversation that Ranking 
Member Scott was having with you and Mr. Soloway, because it 
sounded like you acknowledge that there are some current 
federal contractors, or have been federal contractors, with 
labor law violations. But then I also hear people saying we 
have a system that works and so we don't need this executive 
    So do you want to explain, if there are federal contractors 
with labor law violations, how that is consistent with 
witnesses saying, ``We have a system; we don't need the 
executive order?''
    Mr. Soloway. Of course there are contractors with 
violations. There are contractors with violations from five 
years ago or 10 years ago. There are contractors with 
violations driven by the fact that the government forgot to put 
the contract clause in to tell them what--that they were 
subject to the Service Contract Act or the Davis-Bacon Act.
    When you say ``violation,'' this is one of the fundamental 
problems with the executive order. We are taking the fact of a 
violation and equating it to intent, whether it is nefarious or 
    It is widely accepted in both government and industry--and 
I am talking about the Department of Labor when I talk, the 
Wage and Hour Division. We do training on the Service Contract 
Act with the Department of Labor three times a year, and it is 
widely accepted that there are administrative errors made all 
the time on both sides. But every one of those errors equates 
to a violation, so it would be listed as a violation.
    So we are using terminology here a little too freely.
    Ms. Bonamici. Understood. I want to ask one more question.
    There is some testimony about how a number of states--New 
York, Minnesota, Massachusetts--have required labor compliance 
reviews, and there--in fact, it has increased competition in 
some of those states.
    Can you, Mr. Soloway, and then I want to ask Ms. Styles 
also, how do those differ from the executive order?
    Mr. Soloway. I am not familiar with each of the states, but 
I can tell you that a number of states that have looked at this 
kind of an approach don't have prevailing wage laws to begin 
with. Some do, some don't.
    Ms. Bonamici. Ms. Styles?
    Ms. Styles. I think it is an issue of the number of laws 
that they are reviewing and making certifications to. So you 
take what we have in the federal government, which is almost 
100,000 contract actions over $500,000 every year, then you 
take what it looks like the executive order is saying with 
regards to the number of labor violations, the potential 
violations, and you multiply that by 50.
    And so I think it may be that it is simply easier to 
administer and they have created an easier-to-administer system 
at the state level.
    Ms. Bonamici. I just want to say, if there is a model for 
labor compliance reviews that is working and that is increasing 
competition, that has the potential to make sure that 
contractors with labor law violations do not get federal 
contracts, we should be doing that. It is important to preserve 
taxpayer dollars and make sure that the contractors have a good 
record on labor laws.
    So I look forward to working on this Committee to make sure 
that we implement the executive order.
    And I have a few seconds left. Ms. Walter--
    Ms. Walter. One quick point: Most of these state laws, they 
are looking at federal law compliance and state law compliance. 
So they are looking at a myriad of laws.
    Ms. Bonamici. Terrific. Thank you.
    Sounds like we have the same goal on mind. I think we can 
get there.
    Thank you, Mr. Chairman. I yield back.
    Chairman Walberg. Thank the gentlelady.
    Now I recognize the gentleman from Georgia, Mr. Allen.
    Mr. Allen. Thank you, Mr. Chairman.
    And I feel like I should be down giving testimony. I have 
been in the contracting business for 37 years and I have to 
say, we did one job for the federal government and promised our 
people that we would never do that again. And the reason for it 
is because of the compliance requirements that I felt like were 
a total waste of taxpayer money.
    Now, how we can continue to add compliance to contracts 
when--and save taxpayers money, I don't know how that works, 
but I can tell you, I am a witness to see, you know, some of 
the things were just maddening, particularly when it comes to 
the thing about even contractors in the private sector--which 
we were in business 37 years and, you know, we paid overtime 
because--not because the law required it, but because it was 
the right thing to do, for crying out loud.
    And I can't imagine a contractor out there who is not 
paying lawfully overtime. I mean, it just--because there are so 
many complying agencies that require that reporting, and the 
opportunities for folks to go and get relief from that sort of 
    But anyway, since--Mr. Goldsmith, you know, the federal 
agencies have been found to violate federal labor law, and can 
you talk about how onerous and expensive compliance regulations 
imposed by executive order would drive many employers away from 
contracting and how this will hurt the taxpayer, as well as the 
employees who work for them?
    Mr. Goldsmith. Well, I don't think that there is any 
question but that the executive order would add significant 
compliance burdens on potential federal contractors, and as a 
result, significant cost. And much as you did in your business, 
I don't doubt that there would be any number of otherwise 
highly qualified contractors that would choose to exit the 
federal contracting business because it is just not worth it, 
on top of every other federal and state and local obligation 
that they have to meet.
    And with respect to overtime, there has been a lot of talk 
about overtime and the Fair Labor Standards Act. I would just 
like the record to reflect that the Fair Labor Standards Act 
has been around since the mid-1930s and it is the statute that 
now is the subject of more litigation probably than any other 
in the labor and employment field because people just don't 
understand it.
    So not paying overtime does not in any way suggest that 
there is an intent not to pay overtime. It suggests that there 
is a complexity in a workplace with respect to hours of work 
and how those hours of work are calculated.
    And I think part of the problem with this discussion this 
morning is that there has been an extraordinary amount of kind 
of loose talk, in my judgment--that is to say, talking about 
reports and linkages and severity and willful-- without any 
appreciation of the underlying facts, which actually count in 
these assessments, as to how that might affect the performance 
of a contractor.
    And so far as I am concerned, there is absolutely no 
linkage that I am aware of. I have never read a report or a 
study that is at all credible that suggests that there is a 
linkage of any sort between a contractor's failure to, in the 
eyes of a Department of Labor investigator, to not pay overtime 
properly and that contractor's performance.
    It is easy to say; it is not so easy to prove. And I think 
that is the problem.
    We are talking about words, we are talking about 
contractors, we are talking about facts, and you can't just 
pull all of this out of context and assume that just because 
you say it is so, it is so. I don't know what report Ms. Walter 
was talking about that suggests that there is linkage. I would 
like to know.
    Thank you.
    Mr. Allen. Thank you, Mr. Goldsmith.
    Ms. Styles, your testimony outlines seven new steps that 
must occur before a contracting officer can award a contract 
under this new scheme. You also note the new burdensome 
reporting requirements for both prime and subcontractors. Can 
you estimate the cost on federal contractors to gather and 
maintain this information?
    Ms. Styles. I cannot estimate the cost, although it has got 
to be substantial, particularly in the context of trying to 
determine if your subcontractor is responsible. I mean, that 
just is an extraordinary requirement to add to a prime 
contractor to do that with all of their subcontracts over 
    Mr. Allen. How about the cost imposed on the government to 
ensure contracting officers are reviewing all this information 
and delays this will cause in the procurement system?
    Ms. Styles. Well, I certainly can't estimate that. It seems 
like an extraordinary thing to ask our already overburdened 
contracting officers to go through all these steps, and to put 
new labor compliance advisors in place to go through all these 
steps as well.
    Mr. Allen. Plus the fact they are arbitrary.
    Ms. Styles. Yes. They are very subjective. I will say, they 
are very subjective.
    Mr. Allen. Yes.
    Mr. Chairman, I yield back my time.
    Chairman Walberg. I thank the gentleman.
    Now I recognize the gentleman from Wisconsin, Mr. Pocan.
    Mr. Pocan. Thank you very much, Mr. Chairman.
    Mr. Allen, you have nine years on me in business. I am 28 
years in May, so congratulations to you.
    And, you know, I come here as a member of actually three 
local chambers back home, and I got to tell you, I personally 
see it very different from a business perspective. I see it 
from the perspective of what we are actually finding in real 
application in places like Maryland.
    I am more likely to bid on something knowing that I am 
doing a fair bid, that I am bidding at the same level playing 
field--not someone who is cutting the corners, not someone who 
is doing something else. And I do bids with local and state 
government. Obviously I can't do federal ones because of my 
job, but we do a lot of local and state.
    So I kind of--when I listen to some of the words that have 
been used about the process--that it is chaos, aggressive 
regulations, vast bureaucracy, it is going to divert resources, 
this is a robust process--and when I look at as I understand 
the process, if I have no labor violations--and by the way, Mr. 
Chairman, I would have loved to have on this panel--we are 
lawyered up today, which is great, but I would have loved to 
have seen some contractors here, perhaps, that--especially 
contractors maybe that have a violation and not paying 
overtime, because I would love them to discuss that and why 
they think they should get another contract of our taxpayer 
dollars while they are in violation of federal law. I--
    Chairman Walberg. If the gentleman will yield, I would 
answer that.
    Mr. Pocan. Or in a future hearing would be fine, too--
    Chairman Walberg. Well, we mentioned that we would love to 
have them here, but they were afraid to be in front of the 
    Mr. Pocan. And, you know, that is a problem, Mr. Chairman, 
isn't it, right? That alone speaks volumes, that the very 
contractors who violate the law don't want to come before a 
Committee to actually speak the truth.
    Chairman Walberg. These were contractors in general who 
feared retribution.
    Mr. Pocan. Well, I am watching all the contractor 
associations today that came out in support of this because 
they have got members, hopefully like my business and the 
people who I belong to at my local chambers who are law-abiding 
businesses, who want to compete for contracts fairly but we 
don't want to compete unfairly when it comes to that.
    So my first question, Ms. Walter, what exactly is the 
process for someone like me? If I have no labor violations and 
I am competing in this, what does the chaos, aggressive 
regulations, and diverting of resources I am going to be 
involved with on a putting something in if I was a federal 
    Ms. Walter. You will check a box.
    Mr. Pocan. Let me just try that.
    That was the compliance right there?
    Ms. Walter. Yes.
    Mr. Pocan. All right. I am going to do it for another 
    Yes. I just did it for two businesses who follow the law, 
    Okay, then if I do have something that I can't check the 
box, does that mean I am automatically banned from being able 
to be a federal contractor?
    Ms. Walter. Certainly not. It means that the federal 
government will take a closer look.
    Mr. Pocan. And a closer look, so it is not automatic. 
Instead, it is allowing them to enter a process, if I 
understand, to perhaps improve the law.
    And if they really are a business who just has something 
that ran a little astray and they are trying to get back in 
compliance, doesn't this set up a process for them?
    Ms. Walter. There will be a process for that, and there 
will be a process for contracting officers who are not expert 
in every single law to look to experts to get some guidance.
    Mr. Pocan. And let me just, if I can for a second--Mr. 
Goldsmith talked about that you had the linkage on the last 
question. Would you mind addressing that?
    Yes, Ms. Walter.
    Ms. Walter. Say it again?
    Mr. Pocan. Mr. Goldsmith mentioned that you didn't refer to 
the linkage. You had it but you didn't--
    Ms. Walter. Oh, I am sorry. The report.
    Mr. Pocan. Yes.
    Ms. Walter. The report finds that one in four contractors 
with these problems also have performance problems. We cannot 
establish a causal relationship; that would be very difficult.
    And we would love to see better data coming out from the 
government so we could look at a larger universe, but that 
simply--you know, Mr. Soloway has pointed out that there are 
opportunities for better data. We fundamentally agree.
    Mr. Pocan. Sure. Wasn't there also a New York study, the 
Fiscal Policy Institute? Could you just talk about that for a 
    Ms. Walter. Certainly. They found that contractors were--
with labor law violations were five times more likely to have 
performance problems.
    And 30 years ago the HUD inspector general actually came to 
similar results looking at HUD projects, finding that there was 
an increased performance problems in companies that had 
workplace law violations. So we were not the first to find this 
    Mr. Pocan. Well, and again, Mr. Chairman, that is part of 
it. As a business owner I want to have a level playing field. I 
want every business to have that level playing field.
    But it becomes an unlevel playing field when someone who 
can violate the law and, by violating the law, cut some 
corners, get a better bid, and this is something that I see as 
pro-small business. And I--certainly I disagree with the lawyer 
for the Chamber, but as a small business owner, since I had 
hair, you know, 23 years old starting up a business, that is 
exactly what I want in place. And that is probably why these 
contracting organizations want this in place.
    And, Mr. Chairman, I hope that if we have another hearing 
on this if there is a way to compel some of these contractors 
who have violated the law, I--it would be great to have them in 
front of us to explain why they think they should still be 
eligible for federal contracts while they are in violation of 
safety and labor practices.
    I yield back.
    Chairman Walberg. Would the gentleman yield?
    Appreciate the time.
    Let me just--Mr. Soloway, respond to that if you would, 
please, because you are the only contractor, as it were, here 
    Mr. Soloway. Mr. Pocan, we are the largest organization of 
government contractors, professional services, technology 
firms--large, small, medium-sized--and our members are 
universally opposed to this not for the reasons you think. They 
are opposed to it because of the regime it creates and the 
unfairness it structures.
    You are confusing violation with administrative errors, 
complexity of implementation. So I--it is a much longer 
conversation, but I think that there is a universal concern 
amongst our membership.
    Chairman Walberg. I thank the gentleman.
    Now I recognize the gentlelady from Massachusetts, Ms. 
    Ms. Clark. Thank you, Mr. Chairman.
    And thank you, to all the panelists, for being here today.
    My first question is for Ms. Walter. We know that two-
thirds of low-wage workers, who are the most vulnerable to poor 
labor practices, are women. And we know that, according to some 
estimates, firms that contract with the federal government hire 
approximately 22 percent of the entire American workforce.
    So if we are able, through this executive order, to raise 
our labor standards, what do you think the effect would be on 
working women in this country?
    Ms. Walter. Well, I think that, you know, there are plenty 
of working women here who can tell you their personal stories 
of what the effect would be to know that they are going to take 
home a higher paycheck because it is the wages they have 
earned. Not because we are requiring contractors to raise 
wages, but because they have worked hard and they are getting 
the wages they have earned. They have the powerful stories 
here, and I think that this is the reason why we are here.
    Ms. Clark. And do you think this would have a net effect on 
pay equity across the country for women?
    Ms. Walter. I would certainly hope so.
    Ms. Clark. Yes.
    Mr. Goldsmith, I was caught by part of your written 
testimony when you were talking about Section 6 of this 
executive order that bans for, in certain circumstances, 
compulsory arbitration, pre-dispute arbitration clauses, for 
sexual assault and sexual harassment. You wrote in your 
testimony that this encroaches on employers' rights.
    I just want to be sure I understand your position and that 
of the U.S. Chamber. Is it your position that the executive 
order's prohibition on contracting with companies who require 
compulsory pre-dispute arbitration of sexual assault and sexual 
harassment claims should be overturned?
    Mr. Goldsmith. It is my position that the courts have 
uniformly permitted employers to require arbitration in 
connection with all manner of employment disputes, whether it 
is sex harassment, whether it is race discrimination, whether 
it is age discrimination, whether it is disability 
discrimination, whether it is anything else.
    That regime has been in place for a long time. It has 
existed certainly with the sanction of the support of the 
Supreme Court in the Gilmer Case in 1991, and it continues to 
exist today.
    So to the extent that this executive order suggests that 
with a contract of over $1 million you cannot have any kind of 
arbitration process to resolve the employment disputes, it 
simply flies in the face of volumes and volumes of cases in 
all--basically all of the circuits. So it is wrong, and it 
seeks to overturn that.
    Ms. Clark. In basically all of the circuits. There is a 5th 
Circuit case, right, that has--the Jones versus Halliburton--
that did not allow arbitration to cover sexual assault. Is that 
    Mr. Goldsmith. I don't know that case. I believe I read it 
when it came out. I would be happy to read it again and tell 
you if I agree or not with your assessment of it.
    Ms. Clark. So basically, your position is that pre-dispute 
arbitration, no matter what the incident, whatever kind of 
intentional tort may occur in the workplace, is a work-related 
incident that should be covered under arbitration. Is that 
    Mr. Goldsmith. Well, that begs the question of intentional 
tort. It is absolutely common throughout businesses large and 
small in the United States to have a regime in place where 
there is an arbitration process to resolve all manner of 
workplace disputes.
    If there is an intentional tort--I am not sure exactly what 
you mean by that, but if there is an intentional tort, you 
know, the punitive plaintiff may have other opportunities and 
there may be ways in which that punitive plaintiff can 
circumvent the arbitration clause. But as a general 
proposition, there is no question in my mind--none--that this 
provision in the executive order that seeks to preclude 
employers from having pre-dispute arbitration to resolve 
employment disputes for those contracting in excess of $1 
million flies in the face of the overwhelming majority of 
courts'--district courts, courts of appeals, and the United 
States Supreme Court--decisions.
    Ms. Clark. Can you think of an example where a sexual 
assault in the workplace would not be an intentional tort?
    Mr. Goldsmith. I don't know what--this is why I say facts 
matter. I don't know what you mean by ``sexual assault.'' You 
know, there are plaintiff's lawyers who have all manner of 
theories about what is and isn't sexual harassment, sex 
discrimination, sexual assault.
    If you give me the facts, I will be happy to take a--I will 
be happy to give you my thoughts. But I don't know what you 
mean by ``sexual assault.''
    Ms. Clark. I see my time has expired.
    Chairman Walberg. I thank the gentlelady.
    Now I recognize the gentleman from California, Mr. 
    Mr. DeSaulnier. Thank you--
    Chairman Walberg. Did I get close to that?
    Mr. DeSaulnier. I get asked that every time a chair--
    Chairman Walberg. That was my first opportunity to say it.
    Mr. DeSaulnier. Anything close, with a name like mine, I 
will respond.
    I want to associate my comments with both Mr. Allen and Mr. 
Pocan, as somebody who spent somewhere around the same period 
of time owning businesses and is still responsible for 
    Mr. Soloway, you said in your testimony--I am reading from 
it: Logically, it is unfair for contractors with repeated, 
willful, and pervasive violations of labor laws to gain 
competitive advantage over the vast majority of contractors who 
are acting diligently and responsibly to comply with complex 
web of labor requirements.
    So in my previous elected office in California we did a lot 
of work around the underground economy and found that the 
contractors and the employers who violated labor laws were also 
violating health and human service--health and safety laws. So 
my question to you is--and we also found that some of the 
things that you suggested and Mr. Goldsmith suggested from our 
chamber was true, that for a small business, which I was one, 
although never dealt very much with the government directly on 
contracts, that they needed more help getting through it.
    So two-part question: I am assuming that all of us want to 
get rid of the bad actors, the ones that, in my perspective, 
sometimes take a fairly sophisticated risk management approach 
to whether they are going to get caught or not, and then also 
sort of take the fines as a cost of doing business.
    So knowing that your members, most of them, are doing the 
right thing, what are you doing first to educate smaller 
members so they don't get those administrative violations? And 
secondly, what are you doing to make sure that most of your 
members--I think you would have a political problem if you 
weren't being aggressive to those people were repeatingly, as 
you suggest, have an unfair competition?
    Mr. Soloway. We spend a great deal of time internally on 
this. As I said earlier, three times a year we conduct major 
training on the Service Contract Act, which is the principal of 
the prevailing wage laws, I mean, that affect our membership, 
because we are on the services and technology side.
    We do training in partnership with the Department of Labor 
Wage and Hour Division on the Service Contract Act. We sell out 
every single course, and it is an enormous mix of small, 
medium, and large companies because everybody faces the same 
    We have done numerous programs on government ethics 
requirements, government compliance requirements. If I went 
through for you the list of compliance requirements that a 
government--a federal government contractor would have to face, 
I could be fairly certain that there would be very few states 
in the country that would match the list, although California 
has some fairly--has recently put in place some new laws.
    But the second thing I would say--and I just want to urge 
the committee to keep this in mind: When we talk about the 
biggest violators of these laws--and one example that was used 
was KBR as a--one of the major violators, at $1 million in 
either misclassified or wage theft or whatever term you want to 
use, that is against the baseline of billions, literally, with 
a ``b,'' in salaries they were paying over that period of time.
    So I am not excusing the $1 million. I don't know if it was 
intentional, if it was a technical error or an administrative 
error, but does that make it a pervasive problem just because 
the number sounds big? You could have a small business that has 
10 people that it underpaid and it might be half their 
    So you have to be really careful. These numbers are being 
thrown around today that are--that really--the 
interconnectivity is not at all clear.
    But to answer your question, we spend an inordinate amount 
of time as an organization, and I think it is fair to say Ms. 
Styles and Mr. Goldsmith and their firms spend an inordinate 
amount of time with their clients trying to coach them through 
what is an incredible complex thicket.
    Mr. DeSaulnier. Have you found clients that had a pattern 
of avoiding labor laws that you no longer--you refuse to--
    Mr. Soloway. The ones that I am aware of that have actually 
had a pattern of willful abuse of labor--or other laws, by the 
way--have been suspended or debarred, and many of them have 
gone out of business. And some of them, of course, come back 
because they have taken remedial action.
    Mr. DeSaulnier. Have you ever found any of your clients--
    Mr. Soloway. I am sorry?
    Mr. DeSaulnier. Have you ever found any of your clients to 
do that, and have you taken action to--
    Mr. Soloway. I don't have a legal authority to take action. 
I am not quite sure what I would--
    Mr. DeSaulnier. Well, just, if you think there is a law 
being violated do you have a legal obligation to tell the 
authorities? Have you ever had occasion to do that?
    Mr. Soloway. I wouldn't have that kind of knowledge, 
    Mr. DeSaulnier. Okay.
    Mr. Goldsmith, similar, the Chamber we found in California 
that a lot of it was actually education, so the Chamber and 
NFIB actually spent money trying to help people. Have you done 
the same thing?
    Mr. Goldsmith. Absolutely. Our clients, especially our 
larger clients--have large and highly skilled human resources 
staffs who spend virtually all of their time in training their 
direct reports, and their direct reports training--
    Mr. DeSaulnier. Mr. Goldsmith, I am going to take that as a 
yes. I appreciate it.
    Ms. Walter, we have talked about overreach. Do you have any 
opinions on under-reach by previous administrations when it 
comes to enforcement of compliance laws?
    Ms. Walter. Well, I think our--currently we are under-
reaching. We have responsibility compliance laws.
    I think the other panelists have focused on, well, we have 
suspension and debarment. Well, we also in our regulations have 
responsibility provisions because we want to uphold high 
standards, we want to protect taxpayer dollars.
    Companies are already required to report into a database. 
They are already required to update that information every six 
months. They are already responsible for their subcontractors.
    But the system is not working. It is not working because 
they are not reporting what is important. And the system is not 
working because contracting offices don't have analysis about 
what is important, and they don't have guidance, and they don't 
have the technical expertise they need that this new order will 
help institute.
    Mr. DeSaulnier. Thank you.
    Chairman Walberg. Thank you. Time is expired.
    I recognize the gentleman from New York, Mr. Jeffries.
    Mr. Jeffries. Thank you, Mr. Chair.
    And I want to thank the witnesses for their presence and 
testimony here today.
    Think I will begin, Mr. Goldsmith, by just picking up on 
the previous line of questioning from my colleague, 
Representative Clark. I think you indicated that you are 
concerned with the inclusion of the pre-dispute arbitration 
category as a criteria, correct?
    Mr. Goldsmith. That is correct.
    Mr. Jeffries. And you have indicated, I believe, that 
courts have concluded in large parts of the country, although 
there is some dispute as to the 5th Circuit's perspective on 
this, that pre-arbitration clauses are permissible. True?
    Mr. Goldsmith. Correct.
    Mr. Jeffries. But I think that there is a distinction 
between what is permissible and what there is a right to do. 
And is it your position that employers and contractors have an 
absolute right to mandate that their employees sign off on a 
pre-dispute arbitration clause?
    Mr. Goldsmith. I am not sure I understand the distinction 
between an absolute right and a right, but it is certainly 
well-established in the law that employers can insist upon, if 
you will, a pre-dispute arbitration provision.
    Mr. Jeffries. Right. The dispute is not between--
    Mr. Goldsmith. It has been the law for a long time.
    Mr. Jeffries. The dispute is not between an absolute right 
and a right. The dispute is between the opportunity to do 
something that is lawful and whether you have an absolute right 
    You have an absolute right not to be discriminated against, 
but you don't necessarily have an absolute right to secure 
certain contracting opportunities from the federal government, 
    Mr. Goldsmith. And I think that is true. I agree with that.
    Mr. Jeffries. So then it is not clear to me how you can 
take issue in the context of a duly elected President's 
administration, elected twice, coming to the public policy 
conclusion that it is not necessarily appropriate in certain 
instances to mandate that employers require pre-dispute 
    Let me turn to--
    Mr. Goldsmith. May I respond to that?
    Mr. Jeffries. Yes, certainly.
    Mr. Goldsmith. I mean, the problem with that is that it is 
not the President's call; it is Congress' call. And it is 
especially the case when you are talking about well-established 
legal precedent.
    And I would also suggest that to the extent that a 
provision like that exists in this executive order, which, as I 
said, you know, can't be tweaked to be saved, that is going to 
discourage employers--large employers--from the federal 
contracting space, which can't be a good thing for the country 
or the taxpayers.
    Mr. Jeffries. Is there any evidence, Ms. Walter, to suggest 
that the interest in federal contracting opportunities, which 
can be pretty lucrative in this country--we are talking about 
hundreds of billions of dollars, presumably, each and every 
year, if not more--is there any evidence to suggest that the 
interest or the lines will dry up because of this executive 
order that has been put in place?
    Ms. Walter. None that I have seen. I have addressed the 
state examples of states instituting these sorts of provisions. 
I am not familiar and I am not as familiar with the pre-
arbitration requirements being instituted at the state level, 
but efforts at the state level to uphold higher responsibility 
levels among contractors have been met with either what we have 
seen as no change or actually increasing levels of competition.
    Mr. Jeffries. And it seems to me that this executive order 
is designed to promote at least three values that I think 
should be important to the Congress and to the American 
people--you know, protect employees from harmful conditions at 
the workplace, protect taxpayers from the integrity of these 
contracting opportunities to ensure that those that receive the 
opportunity to contract with the federal government are 
deserving within the framework of law and statute that already 
exists, and then, of course, just to make sure that any 
business benefitting from taxpayer dollars are, in fact, law-
    I mean, does this strike you as the intent and the goal of 
the executive order, and are these worthy goals?
    Ms. Walter. Certainly. And it is continuing further down 
the path of what Congress did when it enacted the contractor 
responsibility database, where it is trying to uphold higher 
standards among contractors to protect taxpayers.
    Mr. Jeffries. Are you aware of anything in law, statute, 
common law, Supreme Court jurisprudence, the Constitution, that 
provides an absolute right to contractors in America to federal 
contracting opportunities? Is it a right or is it just an 
opportunity within the parameters of what is established by the 
Congress, the administration, or both?
    Ms. Walter. What has been established by Congress is that 
you have to be considered responsible in order to receive a 
federal contract. There hasn't been good definitions about what 
that means, in terms of business integrity, to date.
    All this does is add to that definition so that contracting 
officers can make an informed decision.
    Mr. Jeffries. Thank you, Mr. Chair. I yield back.
    Chairman Walberg. I thank the gentleman.
    And now I recognize a member who is not a member of this 
subcommittee but has a interest in it, and we are delighted to 
have him here, the gentleman from Arizona, Mr. Grijalva.
    Mr. Grijalva. Thank you very much, Mr. Chairman, and for 
your courtesy in allowing me to participate in this meeting.
    And thank you, to the witnesses.
    We have talked a lot about the impact of the executive 
order on the function of business and the function of federal 
contractors. There is a concurent effect as well, and that is 
the effect on workers that have been affected by wage theft and 
have been affected by a process currently in the Department of 
Labor where the authority doesn't exist for disbarment or for 
the compliance issues that the executive order is bringing up.
    Antonio Banejas, from my district, who is not here in D.C., 
came in 2010 and worked until May 2013 at the Reagan Building 
at a fast-food establishment. He did everything--cooked, 
cleaned, handled the register. And he was working over 60 hours 
a week and not being paid overtime.
    Antonio and others stood up to complain and to use their 
collective voice to say, ``We need fair labor practices here 
and we need to be paid for what we work.'' The consequence of 
that is Antonio was then turned over to Immigration by the 
business; he was detained for four days, released, and now two 
years later that wage theft complaint is still waiting to be 
resolved. The executive order means to expedite that.
    And I should--my friend, Mr. Ellison, left, and through his 
leadership, on four separate occasions Congress approved an 
amendment either by voice or by roll call that essentially has 
the outlines of the content of the executive order on wage 
theft and what--and disbarring businesses who do that. Four 
times, including--all appropriations bills, and including the 
appropriations for the Department of Defense, where those are 
the big contractors.
    Department of Labor is a smaller player, other departments 
smaller player. The Departments of Defense and Homeland 
Security are the big contracting players, and I mention that 
because if I may, Mr. Soloway, ask you a question--Raytheon-
Abouie, through their subcontractors you have a bad actor in 
violation of current law, wage law, in violation of other 
    That big actor that gets hundreds and hundreds of millions 
of dollars of contract work--essential work for the Department 
of Defense--their responsibility without this executive order 
to police, for lack of a better word, and assure that their 
subs are treating their employees in a fair way, consistent 
with the current law, how does that happen if there is no 
accountability to the big contractor to essentially make sure 
that none all the way down the hundreds of millions of workers 
are not being shortchanged or abused in the workplace?
    Mr. Soloway. They can have, under current law, tremendous 
responsibility for that. I have to go back to the premise of 
the statement, sir, because I think several of you--
    Mr. Grijalva. Well, but--
    Mr. Soloway. I am going to answer your question. I 
understand. But--
    Mr. Grijalva. Chairman was courteous enough to give me a 
few minutes.
    Mr. Soloway. I think the answer is that this rule, or this 
proposed executive order and the proposed rule that will 
implement it, doesn't change current policy.
    But you made the comment that you--that the Department of 
Labor doesn't currently have the authority. It has all the 
authorities it needs. The length of time to adjudicate whatever 
is happening at the Reagan Center, which has not yet been 
adjudicated, which is indefensible, that length of time, 
doesn't get changed and expedited by this executive order.
    What this executive order does is open the door to 
expedition by saying, ``Okay, well if you have been alleged or 
you have had several violations you are bad.'' That is a whole 
different standard.
    Mr. Grijalva. Ms. Walter, to the point that the gentleman 
is making, if there is such a mechanism--a functioning 
mechanism to disbar and suspend contractors, why is this whole 
executive order needed then?
    Ms. Walter. Well, I mean, I think the executive order is 
about present responsibility. So we are talking about is the 
contractor responsible in the present tense?
    And so if there are warning signals that they are--they may 
not be responsible, it is something that the government should 
take a closer look at.
    Mr. Grijalva. Thank you. And I think you have made that 
point over and over again. I think the executive order does 
that--shed light, and in the present tense--and thank you for 
that phrase--to begin to create some balance between the 
interests of the workers and the interests of the contractor.
    With that, Mr. Chairman, again, thank you for your 
courtesy, and I yield back.
    Chairman Walberg. I thank the gentleman.
    And now I recognize the Ranking Member, Ms. Wilson from 
Florida, for closing statements.
    Ms. Wilson of Florida. Thank you, Mr. Chair.
    I would like to thank all of our witnesses for testifying 
and answering our questions today.
    And I want to thank the workers for attending this hearing 
and for your attention, and we appreciate all that you do and 
appreciate that you are here with us.
    President Obama's Fair Pay and Safe Workplaces Executive 
Order has widespread support in the public and private sectors. 
The executive order lays out ways that the Department of Labor 
can provide compliance assistance or remedial measures to 
contractors who are struggling to adhere to labor laws.
    I personally believe that this is more than fair. Our 
nation's children can fail, according to federal standards, 
after a single assessment. They call it high stakes. Yet 
government contractors are given chance after chance to receive 
multimillion dollar contracts while continuing to blatantly 
abuse labor laws.
    Last year the Miami Herald and McClatchy newspapers 
conducted a year-long investigation in Florida and 27 other 
states and found that unethical contractors worked on taxpayer-
funded building projects even as they ignored labor laws and 
avoided paying state and federal taxes. This is a no-brainer.
    If you want to do business with the federal government, you 
must obey federal laws. It is critical that we support law-
abiding companies, that we support our workforce, and that we 
eliminate inefficiency and waste in government. This will lead 
to a stronger, healthier, and more productive nation.
    This executive order will improve the lives of millions of 
workers, helping to ensure they have access to fair pay, 
benefits, and safe working conditions. For those who suggest 
that this process will be too burdensome, there is a simple 
solution: Comply with the law. Comply with the law.
    If you comply with the law you can check the box indicating 
that there are no violations and that your company wants to 
uphold high standards.
    I would like to enter the following documents into the 
record under unanimous consent: the President's Executive Order 
on Fair Pay and Safe Workplaces; letters from 68 women's 
organizations; the Leadership Conference on Civil and Human 
Rights; and the Campaign for Quality Construction in support of 
the Fair Pay and Safe Workplaces Executive Order; Center for 
American Progress--``At Our Expense: Federal Contractors that 
Harm Workers Also Shortchange Taxpayers;'' Government 
Accountability Office--``Assessments and Citations of Federal 
Labor Law Violations by Selected Federal Contractors;'' and 
Senate HELP Committee report--``Acting Responsibly? Federal 
Contractors Frequently Put Workers' Lives and Livelihoods at 
Risk;'' McClatchy newspapers--``For Florida Companies That Play 
By the Rules, Success is as Tough as Nails.''
    [The information follows:]
    Ms. Wilson of Florida. Thank you, Mr. Speaker--Mr. Chair.
    Chairman Walberg. I thank the gentlelady, and I would 
appreciate not being given that title.
    I too want to thank the members--witnesses who are here 
today. I appreciate your time and attention from all sides of 
the issue, to speak to us, to listen to our questions and 
concerns, and to sit there and wish that we asked some other 
questions, as well, to get the nub of it. We will have that 
opportunity. We would appreciate your response.
    The letter that I received from multiple business 
organizations--H.R. Policy Association, U.S. Chamber of 
Commerce, Professional Services Council, American Hotel and 
Lodging Association, Trucking Association, contractors, et 
cetera, et cetera--expressed the concerns of this entire 
Committee, that definitely we want to make sure that bad actors 
in the contracting field don't remain as bad actors in the 
contracting field--that they are removed or they benefit from 
the training and the resourcing that can be given using present 
law that is in place, using the capabilities that ought to be 
there with our agencies to instruct them in very difficult--
very difficult law that is in place to protect employees, the 
workplace, as well as the employers.
    We have heard testimony that there are associations and 
client bases that are being trained, but that ought to come 
from our government level, as well. And I think that is where 
my concern comes with this executive order.
    It is based upon the fact--and I think I would quote what 
the President said in his executive order, that he said that 
the vast majority of federal contractors play by the rules. But 
he also said that they would not--they would likely not be 
impacted by it. I disagree with that.
    I agree with the fact that the vast majority of our 
contractors do play by the rules. And even those that sometimes 
find themselves in violation of rules simply because they 
weren't told the rule or they weren't instructed in the rule, 
yet want to play by the rules.
    But these who are good actors and play by the rules will be 
impacted by this executive order. There is no way that they 
    And so my concerns, as we take up this order, are several, 
and I will just sift them down into just a few.
    I am concerned about the lack of due process protections 
under the executive order, that we will have a situation where 
self-reporting requirement to go back, at great risk of not 
knowing every single incidence that a subcontractor, for 
instance, might have run amuck of some rule or some policy, in 
many cases through no fault of their own, just not being aware 
of it. All of a sudden we have due process concerns that 
innocent--that our--these contractors are considered guilty 
until proven innocent. I have got a concern about that.
    I have a concern about burdensome reporting requirements 
added on top. And if we are concerned about employees having 
their jobs and having the security of their jobs, if we are 
concerned about minority and women-owned businesses, for 
example, of being able to continue to contract, and yet in 
general, in most cases, being small entities without the 
ability to have vast resources of legal backup and background 
to ferret them through the process of the contracting with this 
executive order and the great burden that that puts on, 
specifically in the area of making a mistake through no fault 
or no effort of their own, and now running amuck of this 
executive order and the new provisions. I have a concern with 
    But I think I also have a concern with the fact that this 
is an administrative order that very likely has illegal 
ramifications. And I stand here as--or sit here as a member of 
Congress, very concerned that, Democrat or Republican, that we 
continue to uphold the primacy of the People's House, the 
People's Congress, the Article 1 of our Constitution, with 
significant responsibilities for all of these laws that we 
protect the people we represent and we don't give over that 
authority to Article 3, the executive office, without the 
authority being given by the Constitution to the President.
    I know that can be battled in the court of law, and I am 
afraid that if this executive order is implemented there will 
be plenty of court battles, indicating that, in fact, this 
administration overstepped their bounds of authority.
    The unprecedented level of subjectivity introduced into the 
responsibility determination process of this executive order 
and the possible consideration of non-final adjudications 
establishes the executive order as an anti-competitive 
administration initiative that I believe will greatly impede 
government contracting. And that is my concern, and that is why 
I am glad we had this hearing today.
    This isn't the end. And I can say for employer and employee 
alike, we want to get down to the problem to make sure that we 
use the present law effectively to protect all concerned, but 
also make sure that we don't allow impediments to come in with 
good intentions that will hurt all aforementioned.
    So, having stated my piece right now and having heard the 
questions and the responses and the testimonies, with no 
further business to come before the subcommittee, it is 
    [Additional submissions by Mr. Walberg follow:]
    [Additional submission by Ms. Walter follows:]
    [Questions submitted for the record:]
    [Response to questions submitted for the record:]
    [Whereupon, at 12:15 p.m., the subcommittees were