Labor, Business Square Off Over 'Blacklisting'

It's little surprise that 18- to 34-year-olds are at the heart of a nationwide increase in illegal drug use, and the manufacturing industry traditionally draws heavily from this pool of job seekers.

Regulations proposed by the Clinton administration would give the government power to deny federal contracts to businesses when there is evidence of "substantial violations" of laws protecting workers and the environment. The proposal has provoked strong support from labor unions and sharp opposition from business groups.

Calling the proposed rules "blacklisting" regulations, the U.S. Chamber of Commerce accused the White House of granting a "political payoff to big labor" and promised an all-out fight on Capitol Hill. "The administration's blacklisting regulation is not only bad public policy, it's probably illegal," said Thomas Donohue, president of the U.S. Chamber.

AFL-CIO President James Sweeney indicated his union wholeheartedly supports the new rules and will lobby members of Congress to do the same. "Taxpayers' dollars should not go to chronic lawbreakers," Sweeney said.

The stakes in the coming battle are large. According to a 1996 General Accounting Office report, the federal government spends more than $180 billion a year in contracts for goods and services, and approximately 22 percent of America's work force is employed by companies with federal contracts and subcontracts.

The proposed regulation was published this month in the Federal Register, and interested parties have 120 days to comment before the Office of Management and Budget issues final rules.

Under existing law, contracting officers must make an affirmative decision that the potential contractor has the capability to do the job and does not have an unethical record. Although the federal official is permitted to look at compliance with OSHA regulations and environmental laws, "it's not something that's been looked at routinely," said Lynn Rinehart, the AFL-CIO's associate general counsel.

From labor's perspective, the proposal is a clarification of existing regulations, but for some business groups, the rules would politicize the federal procurement process and give the administration the authority to make legislation, which is Congress' job. At the heart of industry's opposition to the proposal is the fear that organized labor may use trumped-up allegations of corporate wrongdoing as a new chip in collective bargaining negotiations.

According to Peter Eide, manager of labor law policy for the U.S. Chamber, even if the allegations are not proven, a company could find itself barred from federal contracts, with no right to appeal. "It's very subjective," Eide said. "It allows the contracting officer complete discretion to withhold a contract based on alleged violations."

Rinehart countered that industry groups are overreacting, because allegations alone are not enough. "They're making up horror stories completely unrelated to the text of these proposed rules," she said. The new rule states there must be "persuasive evidence of substantial noncompliance with a law or regulation."

Rinehart also rejected the "blacklisting" label, because all judgments made by a contracting officer would relate only to a specific contract, and if a company is barred from one, it could apply for another at any time. "We think these are common-sense reforms that clarify existing law," she said, "but they clarify it in an important way."

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