Adjudicated Violations of Certain Laws by Federal Contractors
GAO-03-163, Nov 15, 2002
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Because of its interest in this area, Congress asked that we address the following questions: (1) To what extent have federal contractors violated federal environmental, labor and employment, antitrust, consumer protection, and tax laws (the areas of law specified in the Federal Acquisition Regulation (FAR) rule)? and (2) What FAR rule implementation issues were identified in our work in response to the first question?
We identified 39 contractors among the 16,819 contractors that were awarded new federal contracts in amounts of at least $100,000 during fiscal year 2000 and that were found by a federal court or adjudicated administrative decision to have violated one or more federal environmental, labor and employment, or antitrust laws in enforcement agency cases that were closed during fiscal years 1997 through 1999. Of these 39 contractors, 7 had been convicted of a crime in federal court; 5 had a federal court judgment in a civil case brought by the federal government rendered against them, and 27 had an adverse decision by a federal Administration Law Judge, board, or commission indicating a violation of law. We did not identify any contractors that were found by a federal court or adjudicated administrative decision to have violated consumer protection or tax laws. We also identified another 3,403 contractors that were involved in enforcement agencies' cases covered by our review and closed during this 3-year period. However, most of these cases that involved alleged law violations were resolved before a decision by a court or administrative adjudicator was reached as to whether a violation of law had occurred. In most instances, these cases were resolved through some form of "administrative agreement" or "settlement" with the government in which the contractor typically did not admit--and sometimes specifically denied--the violation charged and which did not constitute a judgment or adjudicated administrative decision that a violation had actually occurred. We identified several FAR rule implementation issues through our work in determining the incidence of contractor violations in response to the first question. First, the FAR rule's contractor certification requirement focused on only certain types of law violations. As a result--on the basis of our conceptual application of the certification criteria specified in the revoked FAR rule--only 7 of the 39 contractors we identified as being found by a court or administrative decision to have violated the law would have been required to report the violations in their certifications if they were prospective contractors submitting an offer. The remaining 32 contractors with violations found by a court or administrative decision, as well the 3,403 contractors whose cases were otherwise resolved, would not have been required to report any noncompliance with the law. Further, although many cases were resolved through administrative agreements--and the FAR rule stated that contracting officers should take such information into consideration--the FAR rule did not require prospective contractors to report such agreements. Second, we found that contracting officers would face significant difficulties in verifying or obtaining contractor compliance history information. Third, the FAR rule may have required additional record keeping for some prospective contractors in order for them to track their companies' compliance with applicable laws and accurately certify as to their compliance when submitting their offers. Of the 43 federal contractors who provided us information on the issue of tracking their compliance history, 18 told us that they did not have the capability to identify or track all of the various types of enforcement actions that may have been taken against them.