USDA Proposes Rule That Would Require Contractors to Certify Compliance with Labor Laws

On December 1, 2011, the United States Department of Agriculture (“USDA”) issued a direct final rule that would require contractors holding contracts with the agency to certify that they (and their subcontractors, to the best of their knowledge) are in compliance with all applicable labor laws.  Specifically, the proposed rule would insert the following clause into all contracts with USDA over the simplified acquisition threshold (currently $150,000):

In accepting this contract award, the contractor certifies that it is in compliance with all applicable labor laws and that, to the best of its knowledge, its subcontractors of any tier, and suppliers, are also in compliance with all applicable labor laws.  The Department of Agriculture will vigorously pursue corrective action against the contractor and/or any tier subcontractor (or supplier) in the event of a violation of labor law made in the provision of supplies and/or services under this or any other government contract.  The contractor is responsible for promptly reporting to the contracting officer when formal allegations or formal findings of non-compliance of labor laws are determined.  The Department of Agriculture considers certification under this clause to be a certification for purposes of the False Claims Act.  The Department will cooperate as appropriate regarding labor laws applicable to the contract which are enforced by other agencies.

Interested parties have until January 30, 2012 to submit comments.  The rule will take effect on February 29, 2012 if no adverse comments are received.  In the event USDA receives adverse comments, the Agency would withdraw the direct final rule and address those comments in a subsequent rulemaking.

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