Stimulus Package Alert
by Sarah L. Hinkle
The American Recovery and Reinvestment Act (ARRA), also known as the Federal Stimulus Package, is predicted to create more than 600,000 new government jobs and 3 million jobs across both the public and private sectors. Many struggling employers are eager to take part in the opportunities that will be created by the ARRA. However, employers should be cautious. While the ARRA may present new financial opportunities for businesses, it also brings with it some rather unexpected and unfamiliar workplace requirements.
What is a Federal Contractor and Why Should You Care?
Federal contractors have very specific workplace and workforce requirements in order to comply with government contracts. So who is a federal contractor? According to the Office of Federal Contract Compliance Programs (OFCCP), a federal contractor is a business that has any single federal contract or subcontract that exceeds $10,000, or any combination of federal contracts or subcontracts totaling more than $10,000 in any 12 month period.
Many businesses taking part in stimulus-funded projects will find themselves subject to the federal contract compliance requirements.
Executive Orders
There are four new major pro-labor Executive Orders that have been signed by President Obama that will affect federal contractors:
- Executive Order 13494 prohibits federal contractors from using federal funds to oppose union organizing in any way.
- Executive Order 13495 requires that federal service contractors who are replacing previous contractors offer employment to the previous contractor’s employees.
- Executive Order 13496, overturns the Bush Administration’s “Beck Rule”, which required federal contractors to post notices of employee rights to refrain from joining or paying dues to unions. This new Order overturns the “Beck Rule” and actually requires federal contractors to instead post notices of employee rights to form unions and engage in collective activity.
- Executive Order 13502 encourages federal agencies to use Project Labor Agreements (PLAs) on projects over $25 million. A PLA is a “pre-hire” labor agreement governing the terms and conditions of employment for all of the employees (whether unionized or not) on a construction project.
New Requirements Under the ARRA
- All ARRA projects are expected to require payment of a prevailing wage.
- In addition to regular recordkeeping requirements, the ARRA will further require employers to track new jobs that were created by the ARRA funds, as well as jobs that were retained as a result of the ARRA funds.
- The ARRA contains very broad whistleblower protections for employees working on ARRA projects. The whistleblower provision prohibits federal contractors from taking any negative action against an employee who reports suspected waste or mismanagement of funds, health or safety concerns on the project, or violations of laws or regulations related to the contract. Federal contractors are also required to post notices of the whistleblower protections at their worksites.
- Finally, the ARRA contains a provision which states that ARRA projects must be awarded as fixed-price contracts (as opposed to cost-reimbursement) which are subject to competitive bidding procedures. Contracts that are not awarded in this manner must be posted on a government website.
Government contracts can be an excellent source of business and the ARRA may provide that necessary source of income through rough times. Keep in mind, however, that federal contract compliance can be a complicated and time consuming process, especially considering the added requirements under the ARRA. Penalties for noncompliance can be harsh. Having sound legal advice and a “look before you leap” attitude before undertaking ARRA projects can maximize the benefits of contracting with the federal government.
This alert is a periodic publication of Steptoe & Johnson PLLC and should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The content is intended for general information purposes only, and you are urged to consult your own lawyer concerning your own situation and any specific legal questions that you may have.