Category Archives: Uncategorized

DOL Announces Effective Date of Final Rule on Nondisplacement of Qualified Workers Under Service Contracts

The Department of Labor (“DOL”) announced this week that its Final Rule implementing Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts (“Executive Order 13495” or the “Executive Order”) will apply to federal service contracts and solicitations made on or after January 18, 2013.

Executive Order 13495 applies to federal contracts covered by the Service Contract Act. Under the Executive Order, a successor contractor and its subcontractors must, with some exceptions, offer employees employed under the predecessor contract a right of first refusal for positions with the successor for which they are qualified. DOL’s Final Rule implementing Executive Order 13495 can be found at http://federalregister.gov/a/2011-21261. Continue reading

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GAO Affirms Army’s Decision to Disqualify Contractor From Bidding on Project for Missing OSHA Form

On November 20, 2012, the United States Government Accountability Office (“GAO”) upheld a decision of the United States Department of the Army, Corps of Engineers (“Army”) to reject a bid from a contractor for failing to provide forms required by the Occupational Safety and Health Administration (“OSHA”).  Johnson Controls, Inc. protested the Army’s decision to eliminate it from competing for an energy-efficient construction project worth up to $600 million based on Johnson Controls’ omission of required OSHA forms showing its history of work-related injuries and accident rates.  Johnson Controls argued that “Army irrationally assigned the deficiency to its proposal” because the “OSHA forms at issue were not required by the solicitation” and Johnson Controls “included information equivalent” to the OSHA forms “that demonstrated its superior safety records.”

The GAO, however, found that Johnson Controls’ submission did not include the required level of detail showing the severity of each work-related injury and corrective steps taken after each incident as required by OSHA’s regulations.  The GOA found that:

[t]he omission of the details of the firm’s history of work-related illnesses and injuries also left the [Army] without the type of verification of an offeror’s incidence rates that those details–found on the OSHA forms or otherwise–can provide. Accordingly, we have no basis to question the agency’s determination that the protester’s omission of the required OSHA safety information, under a factor to be evaluated by the terms of the RFP pertaining to a matter of paramount concern, rendered Johnson Control’s proposal unacceptable.

This case serves as an important reminder that contractors should make certain that they submit fully compliant materials when bidding on federal contracts.

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DOL Rejects OFCCP Jurisdiction Over Florida Hospital Participating in Military Health Program

On October 19, 2012, the U.S. Department of Labor’s Administrative Review Board (“ARB”) dismissed a complaint brought by the OFCCP against the Florida Hospital of Orlando (“Florida Hospital”), a TRICARE provider. The ARB ruled that the Florida Hospital’s subcontract with Humana Military Healthcare Services is not a covered subcontract for purposes of the affirmative action and other compliance obligations imposed by OFCCP. OFCCP v. Florida Hospital of Orlando, ARB Case No. 11-011. Continue reading

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Government Files Complaint Against For-profit Chain of Schools for False Claims Act Violations

On August 30, the United States Department of Justice (“DOJ”) intervened in a whistleblower complaint originally filed in federal court in Texas under the False Claims Act (“FCA”) against ATI Enterprises Inc. (“ATI”).  ATI is a Texas-based company that operates private-sector colleges in Texas, Florida, Oklahoma and New Mexico.  The government alleges that from 2007 until 2010, ATI knowingly misrepresented its job placement statistics in order to preserve its state licensure and eligibility for federal financial aid.  According to DOJ, because only accredited state schools are eligible for federal financial aid funding, the alleged misrepresentations to the State of Texas constitute false claims to federal education programs in violation of the FCA.

The government also claims in its complaint that ATI employees (1) knowingly enrolled students who were ineligible because they did not have high school diplomas or recognized equivalents; (2) falsified high school diplomas; (3) fraudulently kept students enrolled even though they had poor grades or attendance; and (4) made knowing misrepresentations to students about their future employment prospects.  These misrepresentations included advising prospective students that criminal records would not prevent them from obtaining jobs in their desired disciplines.  It is the government’s contention that ATI engaged in these practices in order to induce more students to enroll and thereby increase its take of federal dollars at the expense of its students, who incurred significant debt to attend the school, and taxpayers.

The suit against ATI is the most recent in a series of high profile FCA lawsuits in which the federal government has intervened to confront what it perceives as growing problems in the higher education arena, including US ex rel. Oberg v. Kentucky Higher Educ., Civ. No. 10-2320 (4th Cir. Jun. 18, 2012) (considering whether corporate entities created by states to provide higher education financing, accused of making false claims to DOE, were “persons” subject to FCA liability) and Cuccinelli v. University of Va., Record No. 102359 (Va. Sup. Ct. Mar. 4, 2012) (holding that the University of Virginia was not a “person” or “corporation” under the Virginia state-equivalent FCA).  Under the FCA, if the United States successfully proves that ATI knowingly submitted false claims, it will be entitled to recover three times the damages that resulted, in addition to penalties ranging from $5,500 to $11,000 per claim.  The six whistleblowers who originally filed the suit stand to recover between 15% and 30% of any final judgment or settlement.

DOJ’s press release regarding this lawsuit is available at: http://www.justice.gov/opa/pr/2012/August/12-civ-1068.html.

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OFCCP Sanctions Contractor for Pre-Employment Test that Adversely Impacted Minorities

On July 19, 2012, the Office of Federal Contract Compliance Programs (“OFCCP”) issued a press release announcing it entered a consent decree with Leprino Foods, Inc. (“Leprino”) relating to use of a pre-employment test that it determined had an adverse impact on minority job-applicants at the company’s Lemoore West facility. The positions for which Leprino was using the test were entry-level, on-call labor positions called WorkKeys. The OFCCP found that the test, which examined applicants’ abilities in mathematics and in locating information, was not job-related because these skills were not critical to the applicants’ job duties, which included inspecting products, monitoring equipment and maintaining sanitation at the facility. In the press release, Director Patricia Shiu warned that contractors “cannot create artificial barriers to employment that unfairly block any individual from competing for good jobs.”

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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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Final Rule on Personal Conflicts of Interests for Contractors

On November 2, 2011, the Department of Defense (“DoD”), General Services Administration (“GSA”), and the National Aeronautics and Space Administration (“NASA”) issued a final rule that holds federal contractors and subcontractors that perform acquisition functions closely associated with inherently governmental functions liable for their employees’ personal conflicts of interests.  As we previously reported, these agencies issued a proposed rule on November 13, 2009, which contemplated requiring each contractor with employees performing qualifying acquisition functions to identify and prevent personal conflicts of interest for such employees.  The final rule adopts, without change, many of the requirements of the final rule, including requirements that contractors:

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