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Labor Law Violations by Selected Federal Contractors' which was 
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Report to Congressional Requesters: 

United States Government Accountability Office: 
GAO: 

September 2010: 

Federal Contracting: 

Assessments and Citations of Federal Labor Law Violations by Selected 
Federal Contractors: 

GAO-10-1033: 

GAO Highlights: 

Highlights of GAO-10-1033, a report to congressional requesters. 

Why GAO Did This Study: 

In fiscal year 2009, the federal government obligated over $500 
billion on government contracts. Some in Congress are concerned that 
private companies may be awarded federal contracts even though they 
had been cited for violating federal laws that are meant to ensure 
that employees receive proper wages, have the right to bargain 
collectively, and are not subject to work-site hazards. 

GAO was asked to (1) investigate the extent to which companies that 
received federal contracts during fiscal year 2009 had been assessed 
the 50 largest monetary penalties for closed inspections of 
occupational safety, health, and wage regulations for fiscal years 
2005 through 2009, and (2) develop case studies of federal contractors 
that have been assessed occupational safety, health, wage, and 
collective bargaining penalties. To perform this work, GAO obtained 
and analyzed concluded wage and health and safety inspections from the 
Department of Labor’s Wage and Hour Division (WHD) and Occupational 
Safety and Health Administration (OSHA) for fiscal years 2005 to 2009. 
GAO also obtained labor union organization and bargaining violations 
from the National Labor Relations Board (NLRB). To determine the value 
of contracts awarded to GAO’s case-study companies, GAO analyzed 
Federal Procurement Data System–Next Generation (FPDS-NG) data for 
fiscal year 2009. 

What GAO Found: 

The federal government awarded contracts to companies that previously 
had been cited for violating wage regulations enforced by WHD and 
health and safety regulations enforced by OSHA. GAO did not evaluate 
whether federal agencies considered or should have considered these 
violations in the awarding of federal contracts, thus no conclusions 
on that topic can be drawn from this analysis. Of the 50 largest WHD 
wage assessments during fiscal years 2005 through 2009, 25 wage 
assessments were made against 20 companies that received federal 
contracts in fiscal year 2009. From GAO’s analysis of OSHA data, GAO 
also found that 8 of the 50 largest workplace health and safety 
penalties assessed during the same time frame of fiscal years 2005 
through 2009 were assessed against 7 other companies that received 
federal contracts in fiscal year 2009. Because OSHA and WHD databases 
do not contain Data Universal Numbering System numbers, GAO’s analysis 
was limited to the 50 largest WHD assessments and OSHA penalties, 
which GAO manually searched. Because of this, the full extent of the 
federal government’s contracts awarded to companies cited for labor 
violations is not known. 

GAO investigated 15 federal contractors cited for violating federal 
labor laws enforced by WHD, OSHA, and NLRB. The federal government 
awarded these 15 federal contractors over $6 billion in government 
contract obligations during fiscal year 2009. Several of these 
companies also had other types of violations, such as hiring 
undocumented workers, violating environmental standards, and 
fraudulently billing Medicare and Medicaid. 

Table: Examples of Federal Contractors That Were Cited for Violating 
Federal Labor Laws: 

Type of service provided: Food supplier; 
Contracting agencies/fiscal year 2009 contract amounts: Departments of 
Defense, Agriculture, and Justice ($500 million); 
Description of citations: OSHA cited company for over 100 health and 
safety violations. For example, OSHA fined company after an employee 
was fatally asphyxiated after falling into a pit containing poultry 
debris. In 2009, federal court also ordered the company to properly 
compensate about 3,000 workers. 

Type of service provided: Security services; 
Contracting agencies/fiscal year 2009 contract amounts: Departments of 
Defense and Homeland Security, and others ($200 million); 
Description of citations: NLRB found that the company violated fair 
labor laws when it coerced employees and, in a separate incident, 
refused to rehire an applicant based on prior union involvement. WHD 
assessed $4.4 million in back wages for over 2,100 employees since 
fiscal year 2005. Company recently agreed to pay about $290,000 in 
back wages to over 400 African-Americans for a discrimination suit. 

Type of service provided: Electrical motors; 
Contracting agencies/fiscal year 2009 contract amounts: Departments of 
Defense and Homeland Security ($200,000); 
Description of citations: In 2007, an employee was killed by machinery 
that was lacking proper safety devices. OSHA investigators observed 
machinery without safety devices 1 month after the fatality. OSHA had 
previously cited the company for not ensuring that machinery had 
proper safety devices in 1998. 

Sources: OSHA, WHD, and FPDS-NG. 

[End of table] 

View GAO-10-1033 or key components. For more information, contact Greg 
Kutz at (202) 512-6722 or kutzg@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Federal Government Awards Contracts to Companies with Wage Assessments 
and Health and Safety Citations: 

Examples of Federal Contractors That Were Cited for Violating Federal 
Labor Laws: 

Agency Comments: 

Tables: 

Table 1: Types of OSHA Violations: 

Table 2: Examples of Federal Contractors with Labor Law Citations: 

Abbreviations: 

Agriculture: Department of Agriculture: 

CBA: Collective Bargaining Agreement: 

CIGIE: Council of Inspectors General on Integrity and Efficiency: 

DBA: Davis-Bacon Act: 

DHS: Department of Homeland Security: 

DOD: Department of Defense: 

DOJ: Department of Justice: 

DOL: Department of Labor: 

DUNS: Data Universal Numbering System: 

Energy: Department of Energy: 

EPLS: excluded parties list system: 

FAR: Federal Acquisition Regulation: 

FLSA: Fair Labor Standards Act: 

FPDS-NG: Federal Procurement Data System-Next Generation: 

GSA: General Services Administration: 

HHS: Department of Health and Human Services: 

Interior: Department of the Interior: 

Labor: Department of Labor: 

NASA: National Aeronautics and Space Administration: 

NLRA: National Labor Relations Act: 

NLRB: National Labor Relations Board: 

OIG: Office of Inspector General: 

OSHA: Occupational Safety and Health Administration: 

SCA: Service Contract Act: 

SSA: Social Security Administration: 

Transportation: Department of Transportation: 

Treasury: Department of the Treasury: 

ULP: Unfair Labor Practice: 

VA: Department of Veterans Affairs: 

WHD: Wage and Hour Division: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

September 17, 2010: 

The Honorable Robert E. Andrews: 
Chairman: 
Subcommittee on Health, Employment, Labor, and Pensions: 
Committee on Education and Labor: 
House of Representatives: 

The Honorable Patrick J. Murphy: 
House of Representatives: 

In fiscal year 2009, the federal government obligated over $500 
billion on government contracts. Some in Congress are concerned that 
private companies may be awarded federal contracts even though they 
have violated federal laws that are meant to ensure that employees 
receive proper wages, have the right to bargain collectively, and are 
not subject to work-site hazards that could result in physical injury 
or death. 

On the basis of your concerns regarding the federal government 
awarding contracts to companies with past large labor penalties and 
assessments, as requested we (1) investigated the extent to which 
companies that received federal contracts during fiscal year 2009 had 
been assessed the 50 largest monetary penalties for closed inspections 
of occupational safety, health, and wage regulations for fiscal years 
2005 through 2009, and (2) developed case studies of federal 
contractors that have been assessed occupational safety, health, wage, 
and collective-bargaining penalties. As part of your request, we also 
determined whether these case-study firms provide health insurance to 
their employees. 

To determine the number of large penalties involving citations for 
violating occupational safety and health regulations that had been 
assessed in fiscal years 2005 through 2009 against federal contractors 
that received contracts during fiscal year 2009, we obtained from the 
Department of Labor (Labor) a listing of all occupational safety and 
health penalties that had been assessed and closed by the Occupational 
Safety and Health Administration (OSHA) for fiscal years 2005 through 
2009. We also obtained from Labor a listing of all wage assessments 
made by Labor's Wage and Hour Division (WHD) for this same period 
[Footnote 1]. For each of these listings, we identified the 50 largest 
monetary penalty assessments made by OSHA and the 50 highest monetary 
back-wage assessments made by WHD. The National Labor Relations Board 
(NLRB) does not issue fines or assessments against companies that 
violate collective bargaining laws. As such, we could not perform this 
analysis on the largest violations of collective bargaining laws. To 
determine whether those companies with violations received federal 
contracts during fiscal year 2009, we searched the contract data using 
the company's name from the Federal Procurement Data System-Next 
Generation (FPDS-NG) to determine whether those companies received 
federal contracts. However, the name-matching process was sometimes 
imprecise because contractor names can vary widely due to such factors 
as name combinations and parent/subsidiary relationships. 
Nevertheless, this was generally the only viable method available for 
identifying contractors involved in these cases because Data Universal 
Numbering System (DUNs)[Footnote 2] numbers were not available. 
Therefore, due to name variations, we likely did not identify all of 
the contractors involved in the cases in the databases maintained by 
WHD and OSHA. To ensure that the federal contracts were significant, 
we excluded companies that received obligations of $100,000 or less 
during fiscal year 2009. 

For our case studies, we identified 15 cases that represent the types 
of labor-law violation citations that occur in various industries. To 
develop case studies, we analyzed fiscal year 2005 through fiscal year 
2009 wage, health, and safety data from Labor and also obtained labor 
union organization and bargaining violations data from NLRB. We 
restricted our analysis to those cases that have been settled or 
adjudicated and where the company had received over $100,000 in 
federal contract obligations during fiscal year 2009. In addition, we 
restricted our analysis to those WHD assessments of at least $100,000 
and OSHA fines of at least $25,000. For our nine cases that have OSHA 
settlement agreements, because there was no adjudication and because 
these agreements generally contain language whereby the company denies 
violating labor standards, there is no adjudicated violation. For each 
case study, we reviewed inspections, settlement agreements, and other 
relevant documents that are related to the cited violations. We also 
searched public records and other sources to determine whether there 
have been any other citations for potential criminal or civil 
activities. We also interviewed management officials from those 
companies to determine the extent to which employees receive health 
insurance. We did not make inquiries with contracting officers to 
determine the extent to which labor law violation citations were 
considered or should have been considered in the award of federal 
contracts because it was beyond the scope of this investigation. 

Our analysis and investigations did not include companies with labor 
citations that had not been closed by OSHA, WHD, or NLRB through 
fiscal year 2009. For example, OSHA had proposed fines of over $55 
million for a large petroleum company for cases opened between fiscal 
years 2005 and 2009. A large portion of the fines were assessed as a 
result of OSHA's safety and health inspections in 2005 after a massive 
refinery explosion where there were 15 deaths and almost 200 injuries. 
The firm's parent company received over $2 billion in federal contract 
obligations during fiscal year 2009. In addition, OSHA had also 
proposed fines of about $8.7 million as a result of inspections at a 
sugar refining company that were opened in fiscal year 2008. Five 
million dollars of these fines are related to a refinery factory 
explosion where there were 14 deaths and injuries to dozens of other 
workers. The federal government obligated about $6.5 million on 
federal contracts with this firm during fiscal year 2009. 

We analyzed OSHA and WHD databases and determined they were 
sufficiently reliable for purposes of our audit and investigative 
work. To determine the reliability of the databases, we analyzed 
selected case-file information to ensure that specific data elements 
matched those found in the databases. We also performed electronic 
testing to determine the reasonableness of specific data elements in 
the databases that we used to perform our work. We also determined 
that the FPDS-NG was sufficiently reliable for this review by 
confirming the companies had federal contracts with selected company 
officials and other sources.[Footnote 3] 

We conducted the work for this investigation from April 2010 through 
September 2010 in accordance with the standards prescribed by the 
Council of Inspectors General on Integrity and Efficiency (CIGIE). 

Background: 

The Department of Labor and the National Labor Relations Board (NLRB) 
are responsible for enforcing many of the country's most comprehensive 
federal labor laws ranging from occupational health and safety to 
minimum wage, overtime pay, and the rights of employees to bargain 
collectively with their employers. 

Most private sector firms--regardless of whether they are federal 
contractors--must comply with safety and health standards issued under 
the Occupational Safety and Health Act.[Footnote 4] The act was meant 
"to assure safe and healthful working conditions for working men and 
women." The Secretary of Labor established OSHA in 1970 to carry out a 
number of responsibilities under the act, including developing and 
enforcing safety and health standards, educating workers and employers 
about workplace hazards, and establishing responsibilities and rights 
for both employers and employees for the achievement of better safety 
and health conditions.[Footnote 5] OSHA is authorized to conduct 
workplace inspections to determine whether employers are complying 
with safety and health standards, and to issue citations and assess 
penalties when an employer is not in compliance. OSHA characterizes 
violations as serious, willful, repeat, and other-than-serious, with 
civil penalties in specified amounts for these various types of 
violations. Table 1 describes the different violations and their 
associated penalties. 

Table 1: Types of OSHA Violations: 

Type of violation: Serious; 
Definition: Substantial probability that death or serious physical 
harm could result, and the employer knew or should have known of the 
hazard; 
Penalty amount: Up to $7,000. 

Type of violation: Willful; 
Definition: Employer knowingly commits a violation or commits a 
violation with plain indifference to the law; 
Penalty amount: $5,000 to $70,000. If an employee dies and the 
employer is convicted in a criminal proceeding, the court may fine up 
to $250,000 for an individual or $500,000 for a corporation, or 
sentence imprisonment up to 6 months, or both. 

Type of violation: Repeat; 
Definition: Violation found in current inspection is substantially 
similar to one found in a prior inspection. The inspection was 
conducted within 3 years of the final order or abatement date of the 
previous citation, whichever is later; 
Penalty amount: $5,000 to $70,000. 

Type of violation: Other-than-serious; 
Definition: Direct and immediate relationship to worker safety and 
health, even though hazardous condition cannot reasonably be predicted 
to cause death or physical harm; 
Penalty amount: May be assessed up to $7,000. 

Type of violation: Unclassified; 
Definition: Typically a violation that was initially classified as 
willful or repeat. In exchange for significant concessions, a company 
may accept unclassified violations, perhaps to avoid losing coverage 
under state workers' compensation programs or to minimize adverse 
publicity attached to the violations as originally classified; 
Penalty amount: Pays all or almost all of proposed penalty for initial 
violation classification. 

Source: OSHA. 

[End of table] 

WHD works to enhance the welfare and protect the rights of the 
nation's workers through enforcement of the federal minimum wage, 
overtime pay, record keeping, and child labor requirements of the Fair 
Labor Standards Act; the Family and Medical Leave Act; and employment 
standards and worker protections provided in certain other laws. 
Additionally, WHD administers and enforces the prevailing wage 
requirements of the Davis-Bacon Act (DBA),[Footnote 6] the Service 
Contract Act (SCA),[Footnote 7] and other statutes applicable to 
federal contracts for construction and for the provision of goods and 
services. 

When WHD finds violations during enforcement actions, it computes and 
attempts to collect and distribute back wages owed to workers and, 
where permitted by law, also imposes penalties and other remedies. 
[Footnote 8] If employers refuse to pay the back wages and any 
penalties assessed, WHD officials, with the assistance of attorneys 
from Labor's Office of the Solicitor, may pursue the cases in court. 
When WHD finds violations under the Government Contract statutes, 
which includes the SCA, DBA, and Contract Work Hours and Safety 
Standards Act, the agency may pursue administrative action to recover 
wage and benefit payments and to debar the contractor from future 
federal contracts. WHD may also request that the federal agency 
withhold contract payments to protect the back wages and benefits and 
may request that the federal agency terminate a contract. 

The National Labor Relations Act (NLRA) is the primary federal law 
governing relations between labor unions and employers in the private 
sector and is administered by the NLRB. Under Section 8 of the act, 
[Footnote 9] it is illegal for employers to interfere with workers' 
right to organize or bargain collectively or for employers to 
discriminate in hiring, tenure, or condition of employment in order to 
discourage membership in any labor organization, and such behavior is 
defined as an unfair labor practice.[Footnote 10] After concluding 
that a violation has been committed, the board typically requires 
firms to cease and desist the specific conduct for which an unfair 
labor practice is found. The board may order a variety of remedies, 
including requiring the firm to reinstate unlawfully fired workers or 
restore wages and benefits to the bargaining unit. In some cases, the 
board will also issue a broad cease and desist order prohibiting the 
firm from engaging in a range of unlawful conduct. If an employer to 
whom the federal government owes money (such as a federal contractor) 
has failed to comply with an order by the board to restore wages or 
benefits, the government has the option of withholding from any amount 
owed to that employer (including payments under a federal contract) 
any equal or lesser amount that the contractor owes under the board 
order. 

By statute, federal agencies are required to award contracts only to 
"responsible" sources. This statutory requirement has been implemented 
in the Federal Acquisition Regulation (FAR). The FAR establishes "a 
satisfactory record of integrity and business ethics" as one of the 
general standards a prospective contractor must meet to be 
responsible.[Footnote 11] Also, contracting officers are required to 
query the excluded parties list system (EPLS) to determine whether the 
prospective contractor has been debarred or suspended from federal 
contracts.[Footnote 12] 

Federal Government Awards Contracts to Companies with Wage Assessments 
and Health and Safety Citations: 

The federal government has awarded contracts to companies that had 
been cited for large back-wage liabilities by Labor. Restricting our 
analysis to the 50 largest WHD assessments from fiscal year 2005 
through fiscal year 2009, we found that over 60 percent of these 
assessments were made against companies that subsequently received 
contracts in fiscal year 2009. Specifically, we found that 25 out of 
the 50 largest WHD assessments were charged to 20 federal contractors. 
WHD assessed these 20 federal contractors for over $80 million in back 
wages. According to FPDS-NG, the federal government awarded over $9 
billion in federal contract obligations to these 20 contractors during 
fiscal year 2009. None of the 20 federal contractors had been debarred 
or suspended from federal contracts. Further, we do not know the 
extent, if any, that contracting officers considered WHD assessments 
in the awarding of the federal contracts. 

The federal government has also awarded contracts to companies that 
Labor has assessed large fines against for violating health and safety 
regulations. From our analysis of the 50 largest OSHA fines for health 
and safety violations for closed investigations from fiscal year 2005 
through fiscal year 2009, we found that almost 40 percent of these 
fines were made against companies that subsequently received federal 
contracts in fiscal year 2009. Specifically, we found that 8 of the 50 
largest OSHA fines were made against 7 other federal contractors for 
safety violations. Further, these 7 companies accounted for about $3.7 
million in OSHA fines. According to FPDS-NG, the federal government 
obligated approximately $180 million in federal contracts to these 
contractors during fiscal year 2009. None of the 7 federal contractors 
had been debarred or suspended from federal contracts. Further, we do 
not know the extent, if any, that contracting officers considered OSHA 
fines in the awarding of the federal contracts. 

Currently, the inspection databases maintained by OSHA, WHD, and NLRB 
do not contain DUNS numbers for all their cases. The OSHA and WHD data 
primarily identify companies by their names and, for WHD, employer 
identification numbers, when they were available. These firms may 
incur violation citations under multiple names due to the existence of 
multiple subsidiaries and corporate mergers. As such, the full extent 
of the federal government's contracts awarded to companies with wage, 
health and safety, and collective bargaining violations is unknown. 

Examples of Federal Contractors That Were Cited for Violating Federal 
Labor Laws: 

Each of the 15 companies we reviewed were cited for failing to follow 
wage, health and safety, or collective bargaining laws enforced by 
WHD, OSHA, and NLRB, respectively. Seven of these companies also had 
other types of violations, such as hiring undocumented workers, 
violating environmental standards, fraudulently billing Medicare and 
Medicaid, and billing for services not rendered. Most of these 15 
federal contractors had contracts with the Department of Defense 
(DOD), the largest contracting agency. Other federal agencies that 
contracted with these companies include the Departments of 
Agriculture, Homeland Security, and Justice; General Services 
Administration (GSA); and National Aeronautics and Space 
Administration (NASA). According to FPDS-NG, these 15 companies 
received over $6 billion in federal contract obligations in fiscal 
year 2009. See table 2 below for detailed information on our 15 cases. 

Table 2: Examples of Federal Contractors with Labor Law Citations: 

Case: 1; 
Product or service provided: Food supplier; 
Contracting agencies: Department of Agriculture (Agriculture), DOD, 
Department of Justice (DOJ); 
Details: 
* Federal agencies awarded about $500 million in federal contracts to 
the company during fiscal year 2009; 
* Over 100 OSHA health and safety violations, including 1 willful 
violation, since fiscal year 2005 totaling $200,000 in fines; 
* OSHA cited the company for one serious violation and a $7,000 fine 
when employee who fell into a wastewater pit containing poultry debris 
was fatally asphyxiated when the debris lodged into his throat in 2004; 
* 13 WHD investigations resulted in $30,000 in assessments for back 
wages since fiscal year 2005. The firm agreed to pay these assessments; 
* WHD determined that multiple employees were wrongfully terminated 
and denied thousands of dollars of pay between 2006 and 2008 for 
taking lawful family medical leave, including caring for a 
hospitalized spouse; 
* In 2009, a federal jury determined that the company was in violation 
of the Fair Labor Standards Act for failing to properly pay 
approximately 3,000 workers $250,000. In this case, Labor had sought 
$8 million; 
* Company officials report that the company offers health insurance to 
its employees. 

Case: 2; 
Product or service provided: Healthcare services; 
Contracting agencies: DOD, DOJ, Department of Health and Human 
Services (HHS), Department of Veterans Affairs (VA); 
Details: 
* Federal agencies awarded about $48 million in federal contracts to 
the company during fiscal year 2009; 
* WHD assessed $1.3 million in back wages for about 500 employees 
since fiscal year 2005. The firm agreed to pay these assessments; 
* In 2007, WHD computed approximately $250,000 in back wages when the 
company failed to pay overtime to hourly employees from 2004 to 2006. 
Although the firm agreed to pay these assessments, WHD documentation 
notes that the firm had a history of and was continuing attempts to 
avoid reporting all employees who were due back wages; 
* Company officials report that health benefits are offered to 
employees that work at least 30 hours per week. 

Case: 3; 
Product or service provided: Security guard services; 
Contracting agencies: Department of Homeland Security (DHS), DOJ, 
General Services Administration (GSA), Department of Transportation 
(Transportation), Department of the Treasury (Treasury); 
Details: 
* Federal agencies awarded about $300 million to the company in 
federal contracts during fiscal year 2009; 
* WHD assessed over $3.7 million in back wages for over 2,500 
employees since fiscal year 2005. The firm has agreed to pay these 
assessments; 
* WHD investigators noted that the company had a lack of regard for 
the Collective Bargaining Agreement (CBA) and considered debarment for 
the firm's history of violations; 
however, the firm was never debarred; 
* Company agreed to pay $18 million in a settlement to the U.S. 
government in 2007 for allegedly violating contract requirements, such 
as weapons qualifications, for civilian guards at eight U.S. Army 
bases; 
* Company officials report that health benefits are negotiated in the 
CBA and vary for each contract. 

Case: 4; 
Product or service provided: Security guard services; 
Contracting agencies: Agriculture, DHS, DOD, Department of Energy, 
GSA, NASA, Nuclear Regulatory Commission, VA; 
Details: 
* Federal agencies awarded about $200 million in federal contracts to 
the company during fiscal year 2009; 
* WHD assessed $4.4 million in back wages for over 2,100 employees 
since fiscal year 2005. The firm has agreed to pay these assessments; 
* OSHA has cited the company for seven cases of health and safety 
violations and assessed $9,000 in penalties since fiscal year 2005; 
* In 2005, the NLRB ruled that the company violated the NLRA by 
threatening employees with the loss of the company's government 
contract and loss of their jobs if they formed a union; 
* The NLRB also ruled in 2006 that the company violated the NLRA for 
refusing to rehire an applicant due to his prior union activities; 
* The company engaged in hiring discrimination against African-
Americans from January 2002 through December 2003, according to Labor. 
In 2010, the company agreed to pay $290,000 in back pay and interest 
to 446 rejected African-American job applicants; 
* In a 2007 testimony before a congressional committee, an inspector 
general discussed concerns about the firm's contract performance, 
including unguarded entrances, lack of training on handling toxic 
substances, 24-hour shifts with dozing guards, unsecured firearms and 
ammunition, and other problems; 
* The company billed a Florida county $6 million for phantom services, 
according to a county manager's 2008 audit report; 
* Company officials report that health benefits are negotiated in the 
CBA and vary for each contract. 

Case: 5; 
Product or service provided: Petroleum-base liquid propellants and 
fuels; 
Contracting agencies: DOD; 
Details: 
* DOD awarded about $100 million in federal contracts to the company 
during fiscal year 2009; 
* OSHA has cited the company for 18 health and safety violations, 
including 17 serious violations, resulting in $60,000 in fines since 
fiscal year 2005; 
* A 2008 OSHA inspection revealed that oil refinery employees were 
exposed to explosions and other hazards that could result in severe 
burns and death. In a related OSHA press release, an OSHA official 
stated that company management was "gambling with employees' safety" 
by operating unsafe equipment. In the agreement, the company denied 
that it violated the safety standards but settled to avoid the expense 
of litigation; 
* In 2007 the company agreed to a settlement of $400,000 in civil 
penalties and to spend more than $48.5 million for new and upgraded 
pollution controls at three refineries to resolve alleged violations 
of the Clean Air Act; 
* Company official reports that health insurance benefits are offered 
to all full-time employees. 

Case: 6; 
Product or service provided: Guard services; 
courier and messenger services; 
Contracting agencies: Agriculture, DHS, DOD, NASA; 
Details: 
* Federal agencies awarded about $50 million in federal contracts to 
the company during fiscal year 2009; 
* WHD has assessed over $2 million in back wages to over 1,000 
employees since fiscal year 2005. The firm agreed to pay these 
assessments. In one case, WHD investigators found that 43 security 
guards working on a DHS contract were "grossly being underpaid."; 
* The company settled a civil complaint for $8,000 in 2009 for 
allegedly refusing to reemploy a service-disabled veteran, a violation 
of the Uniformed Services Employment and Reemployment Rights Act of 
1994; 
* Company officials refused to respond to our requests for health 
insurance information. 

Case: 7; 
Product or service provided: IT services, equipment maintenance and 
repair, logistics support, and other professional services; 
Contracting agencies: DOD, NASA; 
Details: 
* Federal agencies awarded about $4 billion in federal contracts to 
the company during fiscal year 2009; 
* WHD has assessed $1.6 million in back wages for over 250 employees 
since fiscal year 2005 for not paying proper prevailing wages, 
holiday, vacation, and sick pay. The firm has agreed to pay these 
assessments; 
* A 2006 OSHA inspection found that employees were working in a trench 
over 10 feet deep without proper protection against cave-ins. OSHA 
documentation states that the company's leadman was aware but did not 
follow the excavation requirements. The firm entered into an informal 
agreement with OSHA and agreed to pay $40,000 in penalties. As part of 
the agreement, the firm did not admit to violating OSHA regulations; 
* Company official stated that health insurance is offered to 99 of 
full-time employees. 

Case: 8; 
Product or service provided: Industrial and information technology 
manufacturing, construction and engineering; 
Contracting agencies: DHS, DOD; 
Details: 
* Federal agencies awarded about $200,000 in federal contracts to the 
company during fiscal year 2009; 
* OSHA has cited the company for 17 serious violations and assessed 
about $95,000 in penalties since fiscal year 2005; 
* In 2007, an employee was killed by machinery lacking safety devices. 
A similar incident occurred at the same facility in 1984, but no one 
was injured. Company was also cited in two different 1998 inspections 
for not ensuring that machinery had proper safety devices. One month 
after the fatality, OSHA inspectors observed machinery without safety 
devices, risking employee injury or death. According to OSHA records, 
company management informed OSHA they did not know why the safety 
device was removed; 
* In settlement, OSHA cited the company for 18 violations, including 
potential for falling from heights, lack of adequate protective gear, 
improper storage of combustible equipment, and employee exposure to 
electric shock and combustible materials from improper maintenance. As 
part of the agreement, the company made no admission to violating OSHA 
regulations; 
* Company officials informed us that health insurance is offered to 
full-time employees that have completed 30 days of employment. 

Case: 9; 
Product or service provided: Electronic display and imaging 
technologies; 
Contracting agencies: DOD, Transportation; 
Details: 
* Federal agencies awarded about $1.4 million in federal contracts to 
the company during fiscal year 2009; 
* OSHA has cited the company for 30 health and safety violations, 
including 2 willful and 24 serious, and $100,000 in fines since fiscal 
year 2005. These included a lack of eye and face protection for 
employees working with various acids, improper storage of combustible 
materials, unguarded moving machine parts, several electrical hazards, 
and lack of adequate first-aid supplies. In the settlement agreement 
related to these violations, the company did not admit to OSHA's 
allegations and citations; 
* Company had a series of chemical burn accidents and hydrofluoric 
acid exposure from 1999 to 2007 that led to employee hospitalization, 
including several burns to employees' face, chest, arms, and shoulders; 
* According to OSHA records, one of the plant's managers admitted that 
despite the history of accidental acid burns, corrective actions were 
not taken, citing the lack of time, personnel, and resources, despite 
knowledge of OSHA standards. Further, a plant manager informed OSHA 
that "it was not a priority" to produce a required plan that could 
prevent employee burns; 
* Company officials stated that health insurance is offered to full-
time employees working 40 hours a week with 90 days of continuous 
employment. 

Case: 10; 
Product or service provided: Industrial manufacturing, repair and 
maintenance; 
Contracting agencies: DOD; 
Details: 
* DOD awarded about $200,000 in federal contracts during fiscal year 
2009; 
* OSHA has cited the company for 30 health and safety violations, 
including 18 serious violations, and $80,000 in fines since fiscal 
year 2005. The company settled to pay the fines, but did not admit to 
the violations; 
* Machine operators were exposed to ongoing amputation and crushing 
hazards due to deficient safety devices. A 2005 accident resulted in a 
finger amputation caused by a safety device not meeting OSHA 
requirements; 
* In 2007, an employee sustained fatal injuries after falling 
approximately 12 feet from the top of an oven onto concrete floor. 
Management was aware of the fall risk as early as 2000, and purchased 
fall protection equipment for maintenance and service personnel per 
customer requirements, but lacked a mandatory policy for other 
employees, leaving use of fall protection equipment to their 
discretion; 
* OSHA observed multiple employees smoking and participating in other 
spark-producing activities, near designated nonsmoking areas 
throughout the facility, risking plant explosions, with no enforcement 
by management; 
* Company official reported that health insurance benefits are offered 
to all full-time, permanent employees with 60 days of continuous 
employment. 

Case: 11; 
Product or service provided: Medical equipment, information technology 
services, maintenance; 
Contracting agencies: Agriculture, DOD, GSA, VA; 
Details: 
* Federal agencies awarded about $4 million in federal contracts to 
the company during fiscal year 2009; 
* OSHA has cited the company for 77 health and safety violations, 
including 1 repeat and 65 serious violations, and fines of $140,000 
since fiscal year 2005; 
* In one OSHA case, citations were given for failing to provide 
protective gear from hazardous chemicals and failure to keep work 
sites free from hazards that were causing or likely to cause death or 
serious physical harm to employees. As part of a settlement agreement, 
the firm agreed to take corrective actions and pay $76,000 in 
penalties; 
* WHD has assessed over $100,000 in back wages to more than 150 
employees since fiscal year 2005. The firm agreed to pay these 
assessments; 
* In 2008, in a press release, an OSHA official accused the company of 
tolerating serious injuries, including amputations, as a cost of doing 
business; 
* In 2009, an administrative law judge ruled that the company violated 
the NLRA and engaged in unfair labor practices by removing a union 
steward from a work facility for advocating for employees; 
* U.S. Immigration and Customs Enforcement raid found nearly 600 
undocumented immigrants working for the company in 2008. A manager at 
the company pleaded guilty to conspiracy and employee verification 
fraud for knowingly encouraging and inducing undocumented immigrants 
to reside in the country and knowingly concealing, harboring, and 
shielding these individuals from detection, and routinely accepting 
false identification documents; 
* Company agreed to pay over $475,000 in fines for several violations 
of environmental regulations that took place between 2004 and 2009, 
including failing to properly label and store hazardous waste, failing 
to comply with permitted waste discharge limits and violating state 
air regulations; 
* EPA has assessed penalties to company for violations of the Clean 
Air Act, Clean Water Act, and the Resource Conservation and Recovery 
Act; 
* Company officials did not to respond to repeated requests for health 
insurance benefits information. 

Case: 12; 
Product or service provided: Automotive and industrial batteries; 
Contracting agencies: DHS, DOD, Energy, Department of the Interior, 
Social Security Administration, Transportation, Treasury, VA; 
Details: 
* Federal agencies awarded about $15 million in federal contracts to 
the company during fiscal year 2009; 
* OSHA has cited the company for 85 health and safety violations, 
including over 50 serious and 13 repeat violations since fiscal year 
2005 and assessed about $428,000 in fines; 
* According to OSHA records, the company had a number of inspections 
and fatalities and had been placed in the OSHA Enhanced Enforcement 
Program; 
* In one OSHA enforcement case, an employee, in 2005, was fatally 
injured attempting to manually clear a jammed conveyor belt when his 
arm was caught. OSHA records cite the company's lack of machinery 
safety devices as a factor. Company had previously been cited for this 
hazard at two of the company's locations, including the one involving 
a fatality. According to OSHA records, employees stated safety devices 
were not used because of the rush to meet the production quota. In a 
settlement agreement relating to this case, company agreed to pay 
$300,000 in penalties. As part of the agreement, the company did not 
admit to any of OSHA's allegations; 

* Company officials informed us that employees not covered under a 
collective bargaining agreement are eligible to participate in health 
benefit programs offered if they are regularly scheduled to work at 
least 30 hours per week following 2 full calendar months of 
employment. Eligibility for health insurance under collective 
bargaining agreements is separately negotiated. 

Case: 13; 
Product or service provided: Furniture and fixtures; 
Contracting agencies: Agriculture, DHS, DOD, Interior, Transportation, 
VA; 
Details: 
* Federal agencies awarded about $23 million in federal contracts to 
the company during fiscal year 2009; 
* OSHA has cited the company for over 25 health and safety violations, 
including 13 serious violations, and assessed about $100,000 in fines 
since fiscal year 2005. In a settlement agreement, the company stated 
that it did not admit to OSHA's citations; 
* OSHA inspectors found that management was aware of hazards that 
could lead to amputations, electrocution, lacerations, fractures, and 
burns; 
* Following a 2005 employee amputation, according to the OSHA 
inspection report, company management acknowledged to OSHA inspectors 
that machinery was not guarded to prevent employee amputations and 
stated that no guarding methods had been attempted. The company has 
been cited for this violation multiple times by OSHA inspectors. In 
fact, multiple company employees had sustained amputation injuries 
between 2003 and 2005 due to the lack of safety devices on machinery; 
* Company officials report that health insurance is offered to all 
full-time employees. 

Case: 14; 
Product or service provided: Guard services, social rehabilitation 
services; 
Contracting agencies: DHS, DOJ, Interior, GSA; 
Details: 
* Federal agencies awarded about $800 million in federal contracts to 
the company during fiscal year 2009; 
* OSHA has cited the company for five serious safety violations since 
fiscal year 2005; 
* WHD assessed about $3 million in back wages due to employees since 
fiscal year 2005. The firm agreed to pay these assessments; 
* The company violated the NLRA by unlawfully firing an employee for 
union participation, transferring another employee to a less desirable 
position because of his union activities, and unlawfully encouraging 
and coercing employees to decertify their union; 
* A complaint was filed in district court in 2008 on behalf of all 
corrections officers employed by the company alleging that employees 
were not paid for all hours worked. Company agreed to a maximum gross 
settlement amount of $7 million; 
* According to the Florida Attorney General's Office, the company 
improperly billed Medicaid for outside medical services provided to 
inmates from 2000 through 2004. In fiscal year 2006, the company 
settled with the state and agreed to pay about $300,000 in improper 
claims and penalty amounts; 
* Company officials reported that health insurance is offered to all 
full-time employees. 

Case: 15; 
Product or service provided: Medical and surgical supplies; 
Contracting agencies: Bureau of Prisoners/Federal Prison System, DOD, 
Indian Health Service, VA; 
Details: 
* Federal agencies awarded about $4 million in federal contracts to 
the company during fiscal year 2009; 
* WHD assessed approximately $600,000 in back wages due to 3,000 
employees since fiscal year 2005. The firm agreed to pay these 
assessments; 
* Company was ordered to pay $19 million in damages for violating the 
False Claims Act and for unjust enrichment after fraudulently billing 
Medicare for medical equipment between 1999 and 2005 through a sham 
company; 
* Company officials did not respond to our requests for health 
insurance benefit information. 

Source: OSHA, WHD, NRLB, FPDS-NG, and other sources. 

[End of table] 

Agency Comments: 

We provided a draft of this report to NLRB and Labor. NLRB did not 
have any comments on the draft report. We received technical comments 
from Labor, which we incorporated as appropriate. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 14 days 
from the report date. At that time, we will send copies to interested 
congressional committees, the Secretary of Labor, and the Chairman of 
the NLRB. The report also will be available at no charge on the GAO 
Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff members have any questions about this report, 
please contact me at (202) 512-6722 or kutzg@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. 

Signed by: 

Gregory D. Kutz: 
Managing Director: 
Forensic Audits and Special Investigation: 

[End of section] 

Footnotes: 

[1] From Labor's WHD database we looked at violations of the Service 
Contract Act, Fair Labor Standards Act, and Family and Medical Leave 
Act. Because GAO makes determinations on whether to suspend or debar 
companies for Davis Bacon Act violations, we did not include those 
types of violations in our review. 

[2] A DUNS number is a unique nine-character number adopted by the 
Office of Management and Budget to identify and keep track of federal 
funds dispersed to organizations. 

[3] Our previous work, as well as the work of the federal Acquisition 
Advisory Panel, has identified limitations in the accuracy and 
timeliness of data in FPDS-NG. Both GAO and the Acquisition Advisory 
Panel have reported that while FPDS-NG has been the primary 
governmentwide contracting database for capturing and reporting on 
various acquisition topics, such as agency contracting actions and 
procurement trends, it has had data quality issues over a number of 
years. While FPDS-NG data are useful for providing insight, the data 
are not always accurate at the detailed level. However, no other 
viable alternative currently exists for obtaining governmentwide data 
on federal procurements. See GAO, Federal Contracting: Observations on 
the Government's Contracting Data Systems, [hyperlink, 
http://www.gao.gov/products/GAO-09-1032T] (Washington, D.C.: Sept. 29, 
2009) and Federal Acquisition: Oversight Plan Needed to Help Implement 
Acquisition Advisory Panel Recommendations, [hyperlink, 
http://www.gao.gov/products/GAO-08-160] (Washington, D.C.: Dec. 20, 
2007). 

[4] The act (26 U.S.C. 651 et seq.) covers most private-sector 
employers and employees. Major exemptions include employees of state 
governments and their political subdivisions, and workers engaged in 
industries, such as the nuclear power industry, that are regulated by 
other federal agencies under other federal statutes. 

[5] The act also authorized states to operate, with up to 50 percent 
federal funding, their own safety and health programs. OSHA, however, 
is responsible for approving state programs and monitoring their 
performance to make sure they remain at least as effective as the 
program operated by OSHA. 

[6] 40 U.S.C. §§ 3141-3144, 3146 and 3147. 

[7] 41 U.S.C. § 351 et seq. 

[8] Penalties are fines that WHD may impose when employers violate 
certain labor laws or are found to have willfully or repeatedly 
violated certain labor laws. They are known as "civil money penalties." 

[9] 29 U.S.C. § 158(a) provides that it is a violation or an unfair 
labor practice for an employer to (1) interfere with, restrain, or 
coerce employees in the exercise of their rights to self-organize; (2) 
dominate or interfere with the formation or administration of any 
labor organization; (3) discriminate in hiring, or any term or 
condition of employment, to encourage or discourage membership in any 
labor organization; (4) discharge or otherwise discriminate against an 
employee for filing charges or giving testimony under this act; and 
(5) refuse to bargain collectively with the majority representative of 
employees. 

[10] 29 U.S.C. § 158(b) violations refers to unfair labor practices 
committed by unions. Because unions are typically not federal 
contractors, we did not include 8(b) violations in this report. 

[11] FAR 9.104-1. 

[12] To protect the government's interests, any agency can exclude, 
that is, suspend or debar, businesses or individuals from receiving 
contracts or assistance for various reasons, such as a conviction of 
or indictment for criminal or civil offense or a serious failure to 
perform to the terms of a contract. For example, under the Contract 
Work Hours and Safety Standards Act, Labor may debar contractors in 
the construction industry for "repeated willful or grossly negligent" 
violations of safety and health standards issued under the 
Occupational Safety and Health Act. A suspension is a temporary 
exclusion of a party pending the completion of an investigation, while 
a debarment is a fixed-term exclusion. Generally, the period of 
debarment does not exceed 3 years, though some are indefinite. 40 
U.S.C. 3701 et seq. 

[End of section] 

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