Magazine article National Defense

Executive Orders Require Vendors' Attention

Magazine article National Defense

Executive Orders Require Vendors' Attention

Article excerpt

Executive orders have been getting a lot of attention lately, and for good reason. The administration has expressed a willingness to use executive power expansively and recent experience shows it is doing just that.

As the government contracting community is keenly aware, many recent executive orders have been aimed squarely at government contractors and demonstrate the president's ability to use federal procurement to implement social and economic policies that go well beyond the contracting process. Therefore, while the use of executive orders and the federal procurement process to implement non-procurement policy are not new phenomena, contractors should consider these issues with renewed focus.

There are some basic questions about executive orders and how contractors should account for them in their ethics and compliance programs. Contractors and others can attempt to shape the policy changes these orders set in motion. The recent Executive Order 13673, "Fair Pay and Safe Workplaces," also known as the "Labor Reporting Order" issued July 31 illustrates a number of points.

The order establishes a new self-disclosure requirement for contractors and subcontractors. Companies will have to report whether, within the preceding three-year period, there have been "any administrative merits determination, arbitral award or decision, or civil judgment" involving the violation of 15 categories of labor and health and safety laws. The order also requires contractors to provide "transparent" paychecks to workers covered by the Fair Labor Standards Act, Davis Bacon Act, Service Contract Act, and equivalent state laws. Finally, the order prohibits contractors and subcontractors with contracts for noncommercial items of more than $1 million from imposing pre-dispute arbitration agreements for claims under Title VII of the Civil Rights Act or for sexual harassment or assault.

So what is an executive order and how is it implemented? They are directives signed by the president and have the force and effect of law. They can be effective by their own terms and they often state they are effective immediately. However, as a legal and practical matter, additional steps are usually necessary before they are frilly effective. In some cases, executive orders direct the government to promulgate regulations to implement the order's terms. Their requirements often do not become applicable to government contracts until they are formally added to a contract's terms and conditions either through modification of an existing contract or through a solicitation for a new contracts. In most cases, the government also must take additional practical steps to facilitate the implementation of the order.

Each of these features is present in the Labor Reporting Order. First, it directs that regulations, including changes to the Federal Acquisition Regulation, be promulgated. This creates the opportunity for input by the contracting community.

Next, many of the aspects of the Labor Reporting Order will require contract modifications before new terms and conditions become effective on government contractors. In most cases these would not issue until a FAR rule-making has concluded. However, there is some precedent for the use of temporary, interim FAR clauses prior to receipt of public comment on the rule, and contractors should be on the lookout for them.

Finally, practical issues must be addressed. The order creates a new labor advisor position within contracting agencies, and government reporting sites must also be modified to accommodate the new reports mandated by the order. …

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