In a victory for the business community, the Bush Administration announced on December 27 that it plans to revoke a highly controversial rule issued in the final hours of the Clinton Administration that links the awarding of federal contracts to a contractor’s record of "satisfactory compliance" with labor, tax, and environmental laws.
The “contractor responsibility” rule, which went into effect on January 19, 2001, had caused an uproar among businesses because it tied the awarding of government contracts to several non-procurement statutes. The U.S. Chamber of Commerce’s Business Roundtable, the National Association of Manufacturers, the Associated General Contractors of America, Inc., and the Associated Builders and Contractors, Inc., all filed suit in December 2000, seeking to overturn the final rule.
The General Services Administration (GSA) suspended the so-called “blacklisting” rule earlier this year while the Bush Administration reviewed it. The rule stated that businesses must have a satisfactory record of integrity and business ethics and must comply with tax, labor, environmental, antitrust, and consumer-protection laws in order to win federal contracts valued over $100,000. The Federal Acquisition Regulatory Council (FAR Council), which oversees government contracts, said contracting officials could use the rule to make arbitrary decisions when awarding contracts.
In the Federal Register notice published on December 27, 2001, the FAR Council acknowledged that there was a “high degree of controversy” about the merits of the contracting rule, noting “adverse comments were made by individuals within the Government itself, as well as by the public.” After reviewing the over 6,400 comments that were received, the FAR Council now believes that the rule is not in the best interests of either the Government or industry.
Even without the new rule, contracting officers will continue to have the authority and duty to make responsibility decisions, and agency debarring officials will continue to have the authority and duty to suspend and debar contractors, if appropriate. The FAR Council believes that current regulations governing suspension and debarment provide adequate protection to address serious threats of waste, fraud, abuse, poor performance, and noncompliance, and that the blacklisting rule is unnecessary.
The U.S. Chamber of Commerce applauded the move, stating in a release “this rule gave government agents blanket discretion to blacklist federal contractors based on subjective and arbitrary notions of satisfactory compliance with any federal, state, or even foreign law." Randel Johnson, Chamber vice president for labor and employee benefits, explained that, under the blacklisting rule, “mere allegations of wrong-doing could prevent a business from winning a federal contract."
