[Congressional Record (Bound Edition), Volume 145 (1999), Part 9]
[Extensions of Remarks]
[Pages 13500-13502]
[From the U.S. Government Publishing Office, www.gpo.gov]



THERE THEY GO AGAIN: CLINTON-GORE ``BLACKLISTING'' U.S. TAXPAYERS, JOBS 
                AND EMPLOYERS AS PAYBACK TO THE AFL-CIO

                                 ______
                                 

                     HON. RANDY ``DUKE'' CUNNINGHAM

                             of california

                    in the house of representatives

                        Thursday, June 17, 1999

  Mr. CUNNINGHAM. Mr. Speaker, I want to bring to my colleagues' 
attention an old Clinton-Gore Administration initiative to endanger 
American jobs, and raise the government's cost of doing business. This 
initiative is known as the Blacklisting Regulation. This old proposal 
has new life because a presidential election is coming, and Vice 
President Gore is paying back the AFL-CIO.
  In short, this proposed addition to the Federal Acquisition 
Regulations (FAR) would ``blacklist'' employers deemed to have 
insufficient ``responsibility'' in relations with workers from being 
able to do business with the Federal Government. It does not make goods 
and services less costly to the taxpayers. It does not improve the 
quality of goods and services provided to the government. It does not 
streamline or improve the procurement process.
  No, what the Clinton-Gore Blacklisting Regulation would do is hand 
the union bosses the sword of Damocles over every employer in America--
and over every one of their workers. For under this dangerous proposal, 
an employer and its workers may be in full compliance with the labor 
laws and regulations, in full compliance with workplace safety laws, 
and in full compliance with all other laws and regulations relating to 
procurement, but in danger of a politically-driven and costly contract 
cutoff.
  Here is how the Clinton-Gore Blacklisting Regulation would work. Say 
a union is waging economic terrorism on an employer, filing frivolous 
complaints with the Occupational Safety and Health Administration, the 
Wage and Hour Division and the Office of Fair Employment Practices. 
Then that pile of complaints--not convictions, not findings of 
wrongdoing, but complaints--may identify the targeted employer as 
insufficiently ``responsible.'' Federal procurement officials would ban 
the government from doing business with that employer. And workers 
would lose their jobs. They would be unemployed. Unless, of course, 
they knuckled under to the union bosses' economic terrorism.
  As Americans, we are united in support of safe workplaces, fair 
treatment of employees, the right of employees to bargain collectively 
according to the law, and a day's pay for a

[[Page 13501]]

day's work. Perhaps this Administration is not aware that America 
already has labor laws, and penalties for violating them. Perhaps this 
Administration is not aware that America has laws that prohibit 
contractor fraud, and penalties for violating them. These laws and our 
Constitution provide every American equal protection under the law.
  So what is the purpose of this regulation, if it will not provide 
taxpayers any more value? I would rather not characterize this Clinton-
Gore Blacklisting Regulation as driven by the Administration's payback 
of an old political debt to the AFL-CIO, or by the Vice President's 
moribund campaign for the White House. But let quote from the June 12, 
1999, edition of National Journal, an article titled ``Gore's Contract 
with Labor,'' by Alexis Simendinger:

       Vice President Al Gore is on the verge of fulfilling a 
     powerful promise he made to organized labor more than two 
     years ago.
       The business community views the language as nothing more 
     than a well-timed gift from Gore to labor--a constituency the 
     Vice President hopes to mobilize in full force on his behalf 
     in the presidential race next year . . . some union 
     presidents are reluctant to endorse Gore, because of 
     differences with the Administration over trade. The Vice 
     President is expected to meet with the holdouts before the 
     AFL-CIO's Executive Council meets in Chicago in August.
       The proposal is ``not an analytically good thing to do, 
     with clear benefits to the procurement system that will buy 
     more for the public, or that will have any good government 
     logic it,'' said one Administration official.
       AFL-CIO President John J. Sweeney, in an eight-page memo 
     distributed to national and international union presidents in 
     March 1997, initiated a fact-finding effort to gather the 
     kind of specifics that would justify the rule change that 
     Sweeney sought and that Gore promised. In his memo, Sweency 
     said the AFL-CIO needed data ``to withstand Republican and 
     business community opposition in Congress and the courts.''

  This Clinton-Gore Blacklisting Regulation is wrong, Mr. Speaker. It 
is anti-taxpayer, anti-worker, anti-business and anti-American. It 
unbalances 60 years of labor laws enacted by Congress. And in the 
interest of every worker in America, unionized or not, whose livelihood 
providing goods and services to the U.S. Government is now endangered 
by the Clinton-Gore Blacklisting Regulation, we must work together to 
stop it.
  For my colleagues and the public, I include a copy of this proposal 
in the Congressional Record.  In addition, I want my colleagues to know 
that the AFL-CIO President John Sweeney memo referenced above was 
entered into the Record of April 15, 1997, page E-661, in a speech 
titled ``There They Go Again: The Big Labor Bosses Versus American 
Taxpayers, Employers and Jobs.''

                         Department of Defense

                    General Services Administration

             National Aeronautics and Space Administration

     48 CFR Parts 9 and 31

     Federal Acquisition Regulation; Contractor Responsibility; 
     Labor Relations Costs and Costs Relating to Legal and Other 
     Proceedings

       Agencies: Department of Defense (DOD), General Services 
     Administration (GSA), and National Aeronautics and Space 
     Administration (NASA).
       Action: Notice of proposed rulemaking.
       Summary: The Federal Acquisition Regulatory Council 
     proposes to amend FAR Parts 9 and 31 to clarify coverage and 
     give examples of suitable contractor responsibility 
     considerations; as well as to make unallowable the costs of 
     1) attempting to influence employee decisions respecting 
     unionization, and 2) make unallowable those legal expenses 
     related to defense of judicial or administrative proceedings 
     brought by the Federal Government when a contractor is found 
     to have violated a law or regulation, or where the proceeding 
     is settled by consent or compromise.
       Dates: Comments should be submitted to the FAR Secretariat 
     at the address shown below on or before [insert date 120 days 
     after Federal Register publication date] to be considered in 
     the formulation of the final rule.
       Address: Interested parties should submit written comments 
     to: General Services Administration, FAR Secretariat (MVRS), 
     18th and F Streets, NW, Room 4035, Attn: Ms. Beverly Fayson, 
     Washington, DC 20405.
       Please cite FAR case 99-  , in all correspondence related 
     to this case.
       For further information contact:            at            
     in reference to this FAR case. For general information, 
     contact the FAR Secretariat, Room 4035, GS Building, 
     Washington, DC 20405 (202) 501-4755. Please cite FAR case 99-  
     .
       Supplementary information:


                             A. Background

                      FAR Responsibility Criteria

       The Federal Acquisition Regulatory Council is proposing to 
     amend FAR Part 9 to clarify coverage concerning contractor 
     responsibility considerations, by adding examples of what 
     falls within the existing definition of an ``unsatisfactory 
     record of integrity and business ethics.'' The proposed 
     amendment will provide Contracting Officers with guidance 
     concerning general standards of contractor compliance with 
     applicable laws when making pre-award responsibility 
     determinations. Accordingly, language has been proposed for 
     addition to FAR Subsection 9.104-1(d) and (e).
       A prospective contractor's record of compliance with laws 
     and regulations promulgated by the Federal Government are a 
     relevant and important part of the overall responsibility 
     determination. This proposed FAR amendment clarifies the 
     existing rule by providing several examples of what 
     constitutes an unsatisfactory record of compliance with laws 
     and regulations. These examples are premised on the existing 
     principle that the Federal Government should not enter into 
     contracts with law breakers. For example, some Contracting 
     Officers have inquired as to whether a prospective 
     contractor's failure to comply with applicable tax laws may 
     be considered in making a responsibility determination. The 
     proposed rule clarifies that such a circumstance may be 
     considered by the Contracting Officer. Similarly, inquiries 
     have been made concerning contractors with a record of 
     employment discrimination, and whether this circumstance 
     should factor into the overall responsibility determination. 
     Again, the proposed rule attempts to clarify the fact that an 
     established record of employment discrimination would be a 
     relevant part of the Contracting Officer's determination 
     because such a record or pattern is a strong indication of a 
     contractor's overall willingness or capability to comply with 
     applicable laws.
       Inquiry has also been made as to whether responsibility 
     determinations must rest upon a final adjudication. Normally, 
     adverse responsibility determinations involving violations of 
     law or regulation should be based upon a final adjudication 
     by a competent authority concerning the underlying charge. 
     However, in some circumstances, it may be appropriate for 
     the Contracting Officer to base an adverse responsibility 
     determination upon persuasive evidence of substantial non-
     compliance with a law or regulation, (i.e., not isolated 
     or trivial), but repeated and substantial violations 
     establishing a pattern or practice by a prospective 
     contractor. The facts and circumstances in each such case 
     will require close scrutiny and examination).
       An efficient, economical and well-functioning procurement 
     system requires the award of contracts to organizations that 
     meet high standards of integrity and business ethics and have 
     the necessary workplace practices to assure a skilled, stable 
     and productive workforce. This proposal seeks to further the 
     Government's use of best commercial practices by ensuring the 
     Government does business only with high-performing and 
     successful companies that work to maintain a good record of 
     compliance with applicable laws.

                         Cost Principle Changes

       The Council is also proposing to amend the cost principle 
     at FAR 31.205-21 to make unallowable those costs relating to 
     attempts to influence employee decisions respecting 
     unionization. This cost principle change is in furtherance of 
     the Government's long-standing policy to remain neutral with 
     respect to employer-employee labor disputes (see FAR Part 
     22). It has come to the Council's attention that some 
     contractors are claiming, as an allowable cost, those 
     activities designed to influence employees with respect to 
     unionization decisions. Inasmuch as a number of cost-based 
     Federal programs have long made these types of costs 
     unallowable as a matter of public policy (e.g., see 29 U.S.C. 
     1553(c) (1), 42 U.S.C. 1395x(v)(1) (N), 42 U.S.C. 9839(e), 
     and 42 U.S.C. 12634(b)(1)), equity dictates that this same 
     principle be extended to Government contracts, as well.
       Finally, the Council is proposing to amend FAR 31.205-47 to 
     make clear that costs relating to legal and other proceedings 
     are unallowable where the outcome is a finding that a 
     contractor has violated a law or regulation, or where the 
     proceeding was settled by consent or compromise (except that 
     such costs may be made allowable to the extent specifically 
     provided as a part of a settlement agreement). At present, 
     the relevant cost principle generally makes unallowable legal 
     and other proceeding costs where, for example, in a criminal 
     proceeding, there is a conviction, or where, for example, in 
     a civil proceeding, there is a monetary penalty imposed. It 
     has been brought to the Council's attention that there are a 
     number of civil proceedings brought by the Federal Government 
     each year that do not result in imposition of a monetary 
     penalty (e.g., NLRB or EEOC proceedings), but which do 
     involve a finding or adjudication that a contractor has 
     violated a law or regulation, and where appropriate remedies 
     are then ordered.
       Under the proposed rule, the allowability of legal and 
     other proceedings costs would depend on whether or not a 
     contractor is found to have violated a law or regulation 
     rather than on the nature of the remedy imposed. Taxpayers 
     should not have to pay the legal defense costs associated 
     with adverse decisions against contractors, especially where 
     the proceeding is brought by an agency of the Federal 
     Government.

[[Page 13502]]



                        Additional Consideration

       In order to give greater effect to the FAR responsibility 
     clarifications being proposed, the Council would appreciate 
     receiving comments and suggestions concerning whether the 
     provision appearing at FAR 52.209-5--``Certification 
     Regarding Debarment, Suspension, Proposed Debarment, and 
     Other Responsibility Matters,'' should be amended to provide 
     for enhanced responsibility disclosure relative to this 
     proposal.


                     B. Regulatory Flexibility Act

       This proposed rule is not expected to have a significant 
     impact on a substantial number of small entities within the 
     meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et 
     seq., because most contracts awarded to small entities do not 
     involve use of formal responsibility surveys. In addition, 
     most contracts awarded to small entities use simplified 
     acquisition procedures or are awarded on a competitive fixed-
     price basis and do not require the submission of cost or 
     pricing data or information other than cost or pricing 
     data, and thus do not require application of the FAR cost 
     principles. An Initial Regulatory Flexibility Analysis 
     has, therefore, not been performed. Comments are invited 
     from small business and other interested parties. Comments 
     from small entities concerning the affected FAR parts also 
     will be considered in accordance with 5 U.S.C. 601. Such 
     comments must be submitted separately and cite 5 U.S.C. 
     601, et seq. (FAR case 99-  ), in correspondence.


                       c. Paperwork Reduction Act

       The Paperwork Reduction Act does not apply because the 
     proposed FAR changes do not impose recordkeeping or 
     information collection requirements, or collection of 
     information from offerors, contractors, or members of the 
     public which require the approval of the Office of Management 
     and Budget under 44 U.S.C. 3501, et seq.
       List of Subjects in 48 CFR Parts 9 and 31: Government 
     procurement.
       Dated:

                                                   Edward C. Loeb,
                    Director, Federal Acquisition Policy Division.

       Therefore, 48 CFR Parts 9 and 31 are proposed to be amended 
     as set forth below:

                   PART 9--CONTRACTOR QUALIFICATIONS

       1. The authority citation for 48 CFR Part 9 continues to 
     read as follows:
       Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
     U.S.C. 2473(c).
       2. Subsection 9.104-1 is proposed to be amended by revising 
     paragraphs (d) and (e) to read as follows:

     9.104-1  General standards.

     

                           *   *   *   *   *
       (d) Have a satisfactory record of integrity and business 
     ethics (examples of an unsatisfactory record would include 
     persuasive evidence of the prospective contractor's lack of 
     compliance with tax laws, or substantial noncompliance with 
     labor and employment laws, environmental laws, anti-trust 
     laws and other consumer protections);
       (e) Have the necessary organization, experience, accounting 
     and operational controls, and technical skills, or the 
     ability to obtain them (including, as appropriate, such 
     elements as production control procedures, property control 
     systems, quality assurance measures, and safety programs 
     applicable to materials to be produced or services to be 
     performed by the prospective contractor and subcontractors) 
     (see 9.104-3(a)), and the necessary workplace practices 
     addressing matters such as training, worker retention, and 
     legal compliance to assure a skilled, stable and productive 
     workforce;

                           *   *   *   *   *


            PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

       3. The authority citation for 48 CFR Part 31 continues to 
     read as follows:
       Authority: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 
     U.S.C. 2473(c).
       4. Subsection 31.205-21 is proposed to be amended by 
     redesignating the current text as paragraph ``(a)'' and 
     adding a paragraph (b) to read as follows:

     31.205-21  Labor relations costs.

       (a) Costs incurred in maintaining satisfactory relations 
     between the contractor and its employees, including costs of 
     shop stewards, labor management committees, employee 
     publications, and other related activities, are allowable.
       (b) Costs incurred for activities related to influencing 
     employees respecting unionization are unallowable.
       5. Subsection 31.205-47 is proposed to be amended by adding 
     a new subparagraph (f)(9) to read as follows:

     31.205-47  Costs related to legal and other proceedings.

     

                           *   *   *   *   *
       (f) * * *
       (9) Defense of judicial or administrative proceedings 
     brought by the Federal Government for violation of, or 
     failure to comply with, law or regulation by the contractor 
     (including its agents or employees), where (i) the contractor 
     was found to have violated a law or regulation or (ii) the 
     proceeding was settled, except that costs not otherwise 
     unallowable may be allowed to the extent specifically 
     provided as part of a settlement agreement between the 
     contractor and the Federal Government resolving the 
     proceeding by consent or compromise.

     

                          ____________________