Study Finds Federal Contracts Given To Severe Violators Of Safety Laws


A new congressional report criticizes the federal government for awarding tens of billions of dollars in contracts to companies even though they were found to have violated safety and wage laws and paid millions in penalties. Issued on behalf of the Democratic senators on the Health, Education, Labor and Pension Committee, the report cited examples over the past six years.

For instance, Imperial Sugar had $94.8 million in federal contracts last year, even though it paid $6 million in safety penalties over a 2008 factory explosion in Georgia that killed 14 workers. The report also noted that the federal government had awarded $4.2 billion in contracts to Tyson Foods since 2000, even though Tyson has faced more than $500,000 in safety penalties since 2007 and 11 of its workers have died on the job since 1999.

The report urges the government to weigh a company’s safety and wage violations more closely as it awards contracts, which are about $500 billion a year to companies employing 26 million workers, representing 22 percent of the nation’s work force. It stops short of recommending automatic suspension of contracts or debarring contractors that were found to have violated federal laws, partly because government agencies were sometimes at fault, a committee staff member said.

“Taxpayer dollars are routinely being paid to companies that are putting the livelihoods and the lives of workers at risk,” the report said. “Many of the most flagrant violators of federal workplace safety and wage laws are also recipients of large federal contracts.”

According to the report, 18 federal contractors — including Imperial Sugar — were among the recipients of the largest 100 penalties issued by the Occupational Safety and Health Administration from 2007 to 2012. The report found that 32 federal contractors were among the leading companies in the amount of back pay assessed for wage violations between 2007 and 2012.

“Overall, the 49 federal contractors responsible for large violations of federal labor laws were cited for 1,776 separate violations of these laws and paid $196 million in penalties and assessments,” the report said. “In fiscal year 2012, these same companies were awarded $81 billion in taxpayer dollars.”

The report, commissioned by the committee’s chairman, Tom Harkin, Democrat of Iowa, recommended that the Labor Department improve the quality of information it provides about violations, and urged the agency to publish an annual list of federal contractors, showing the penalties they faced and their rate of compliance with wage and safety laws.

In addition, the report called on the president to require contracting officers to consult with the Labor Department to determine whether the contractor meets “responsibility” standards to qualify for federal contracts.

“The administration is committed to ensuring that our government is doing business only with contractors who place a premium on integrity and good business ethics,” said Steve Posner, a spokesman for the Office of Management and Budget. He added, “We have taken aggressive steps to hold contractors accountable.”

The dollar value of federal contracts for services — whether weapons development, janitorial work or health services — has tripled, to $307 billion in 2012, since 2000, according to the report.

Gary Mickelson, a spokesman for Tyson Foods, which provides poultry, meat and other products to the agriculture and defense departments, said, “We don’t want anyone hurt on the job, so we’re continually promoting the importance of safety among the 115,000 people we employ.”

The committee report described five fatal episodes since 1999 in which Tyson workers died, including one in September 2009 in which an employee was cleaning grain buildup when the ladder he was using slipped and fell. The smooth metal floor of the grain bin was covered in grain dust and debris. In December 2010, a Tyson employee died when a full corn silo collapsed, engulfing him in nine million pounds of corn.

Mr. Mickelson said: “We cooperated with government safety officials and took corrective measures. Providing a safe work environment for our team members is one of our company’s core values.”

An employee at Imperial Sugar’s headquarters in Sugar Land, Tex., referred calls to its parent company, the Louis Dreyfus Group. Officials at Louis Dreyfus did not respond to several phone messages.

The Senate committee’s staff noted that the Management and Training Corporation, a Utah-based company that runs private prisons, had $347.8 million in federal contracts last year despite having to pay $21 million in back pay because of wage violations.

Issa Arnita, a spokesman for Management and Training, said that problem arose because the federal agency, Immigration and Customs Enforcement, had failed to explain to the company that it was required to pay higher wages under federal law at a detention center in Texas.

In 2010, the Obama administration was considering a plan in which it would, when awarding contracts, have given preference to companies that provided their workers with what it deemed good wages and benefits. But that plan was sidelined.

An aide on the committee said that the Obama plan aimed to give “gold stars to high road companies,” while the new report was aimed at ensuring compliance.

The report noted that the oil company BP seemed to face no limitations on its ability to obtain federal contracts after the 2005 fatal explosion that killed 15 workers at a refinery in Texas City, Texas. BP has paid more than $20 million in fines for safety violations there.

But BP was suspended from receiving federal contracts for at least 18 months after the Deepwater Horizon explosion in April 2010, which killed 11 workers and spread oil in the Gulf of Mexico.

The report voiced dismay that a major database on federal contractors contained no allegations of misconduct about BP related to the Deepwater Horizon and Texas City explosions.

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