Government contractors should take note: federal agencies have been instructed to remove many of the new Fair Pay and Safe Workplaces requirements from their solicitations. As Venable reported previously, in August 2016 the Department of Labor (DOL) and the FAR Councils published final regulations to implement Executive Order (EO) 13673 on Fair Pay and Safe Workplaces. Commonly referred to as the "blacklisting" rules, the regulations require, among other things, that contractors disclose labor law decisions and violations of 14 federal workplace laws and state equivalents that agencies must consider in determining whether to award contracts or subcontracts valued at $500,000 or more.

District Court Injunction

On October 24, 2016, a day before the regulations' effective date, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction to prevent certain provisions of the regulations from taking effect. The district court enjoined implementation of "any portion of the FAR Rule or DOL Guidance relating to the new reporting and disclosure requirements regarding labor law violations as described in Executive Order 13673 and implemented in the FAR Rule and DOL Guidance," as well as the restriction on pre-dispute arbitration agreements. The district court's order does not enjoin the provision relating to the regulations' paycheck transparency requirements.

OFPP Guidance to Agencies

On October 25, 2016, the Office of Federal Procurement Policy (OFPP) within the Office of Management and Budget (OMB) issued a memorandum to all federal chief acquisition officers and senior procurement executives directing agencies to "take all steps necessary to ensure the enjoined sections, provisions, and clauses of the final rule are not implemented until further notice" in order to ensure compliance with the district court's order. The OFPP prescribed the following minimum steps:

  1. Ensure that new solicitations do not include representations or clauses that the enjoined rule would have required. Those include:
    1. representations at FAR 52.222-57 and its commercial items version at paragraph (s) of 52.212-3 and 52.222-58 and the clause at 52.222-59, to direct disclosure of labor law violation decisions by offerors or contractors, or
    2. FAR 52.222-61, requiring an offeror or contractor to agree to restrict use of mandatory pre-decision arbitration agreements.
  2. Amend solicitations that have already been issued with representations or clauses listed above; amendments should remove those representations and clauses.
    1. Importantly, agencies are directed not to take any action on information, if any, submitted in response to the representations and clauses.
  3. Refrain from implementing assessments of contractor and subcontractor pre- and post-award labor law violations under FAR 22.2004-2, 22.2004-3, and 22.2004-4 (or associated changes in FAR Parts 9 and 42).

As the district court only addressed implementation of the final rule, OFPP instructed agencies to continue conducting evaluations and making responsibility determinations in accordance with the regulations in place before the final rule was to come into effect.

Tips for Contractors

In light of this directive from OFPP, contractors and subcontractors should be on the lookout for provisions in newly or recently issued solicitations requiring them to disclose labor law decisions and violations or to refrain from using pre-dispute arbitration agreements pursuant to EO 13673 or the final regulations. If the solicitations require either action, contractors and/or subcontractors should notify the agency immediately and seek an amendment to the solicitation that removes any such requirements.