December 16, 2013 Elizabeth Grossman 3Comment

“Too often nothing happens,” said John Podesta, Center for American Progress chair and founder, introducing the Senate Health, Education, Labor, and Pension Majority Committee report released on December 11th that details federal contractors’ repeat and serious occupational safety and wage violations. “Too often the government renews agreements with companies that have a long track record of putting their workers at risk while profiting from taxpayer dollars,” said Podesta in remarks at a Center for American Progress (CAP) event.

The report, commissioned by Senator Tom Harkin (D-IA), found that nearly 30 percent of the top federal wage and safety law violators are current federal contractors. The report also found that forty-two workers were killed on the job between 2007 and 2012 at companies that held federal contracts in 2012.

In the same period the report found that 18 federal contractors received at least one of the largest 100 penalties issue by OSHA, while 32 federal contractors received some of the 100 largest back-wage assessments issued by the Department of Labor’s Wage and Hour Division. Thirty-five federal contractors violated both health and safety laws and wage laws.
Looking at this data from the contract-award perspective, the report found 49 federal contractors responsible for these large federal labor law violations were cited for 1,776 separate violations and paid $196 million in penalties and assessments. In 2012, these same companies were awarded contracts worth some $81 billion in taxpayer dollars. “There is no evidence that these violations were considered in contract awards,” said Senator Harkin presenting the report at the CAP on December 11th.
Companies named in the report include BP, Butterball Turkey Company, the Chrysler Group, Cintas, General Dynamics, General Motors, Home Depot, JBS (parent company of Pilgrim’s Pride) Kinder Morgan, Lockheed Martin, Manpower, Inc., Nestle USA, Tesoro, Tyson Foods, United HealthCare Services and Verizon Communications.

Workers die, contract dollars still roll in

Safety violations by companies receiving federal contracts include the death of a Cintas Corporation employee in Tulsa, Oklahoma who was killed after being swept into an industrial dryer in 2007. In 2011, another Cintas employee was killed after a dryer started up while he was servicing the machine in a Louisville, Kentucky facility. According to the Harkin HELP report, in fiscal 2012, Cintas received $3.4 million in federal contacts.

Also cited in the report are the deaths of seven workers at a Tesoro Corporation refinery in Anacortes, Washington in 2010. The workers were killed when a heat exchanger ruptured, releasing volatile vapor and liquid that then exploded. The welds that ruptured hadn’t been adequately inspected in 12 years, according to inspection reports. The explosion was considered the worst US refinery incident since 2005, when an explosion at BP’s Texas City, Texas plant killed 15 people and injured 180. Despite the Washington state Department of Labor and Industries fine of $2.39 million levied against Tesoro and $2.4 million in initial penalties from the federal Department of Labor, in fiscal year 2012, the report notes that Tesoro received $463 million in federal contracts.
In his remarks, Senator Harkin pointed out that the temporary bar on BP’s ability to be awarded federal contracts that was instituted following the BP/Deepwater Horizon disaster did not result from the Texas City refinery fatalities or the fatalities that occurred in the BP/Deepwater Horizon platform explosion and fire, but from the environmental damages caused by the Deepwater Horizon’s oil release. The HELP report notes that BP is the only company to be thus suspended or debarred from federal contracts.
BP, which the report says was the recipient of $2 billion in federal contracts in fiscal 2012 prior to the federal contract hiatus, has filed suit to contest this ban even though the action does not affect existing contracts. BP continued to receive federal contracts after the Texas City refinery explosion despite OSHA inspections in 2009 that found BP had failed to correct previously cited hazard violations – failures that resulted in citations for 439 new willful violations of OSHA standards. During the same time period, the report notes that OSHA also fined BP $3 million for violations at its Ohio refinery.
Between 2007 and 2012, the report notes that Tyson Foods, which supplies beef, poultry and other products to the US Department of Agriculture and Defense Department, was cited for more than $3 million in initial safety violation penalties – fines that were reduced in settlement negotiations to about $500,000. During the same time, at least 11 work-related fatalities occurred at Tyson Facilities. Since 2000, Tyson Foods has received more than $4 billion in federal contracts, according to the report.

The report’s analysis of back-wage assessments is similarly impressive, with companies receiving more than $73 million in federal contracts in fiscal 2012 responsible for more than $82 million in owed back wages. At the Center for American Progress event, a woman who worked for a company contracted to clean Walter Reed Army Medical Center examining and dialysis rooms told the audience that she was simply not paid after her original employer’s business was acquired by another company. Companies the report cites as “severe and repeat” violators of wage laws include SprintNextel, United HealthCare and C&S Wholesale Grocers whose Piggly Wiggly division was fined for child labor violations.
“Unfortunately, this report doesn’t accurately reflect our strong commitment to safety, workplace issues and compliance with regulations. That’s why important to consider and understand the detail behind the data before reaching conclusions,” said Stephen Holmes, corporate communications director for Home Depot, a company listed by the report for both safety and wage violation laws, via email.

“We don’t want anyone hurt on the job, so we’re continually promoting the importance of safety among the 115,000 people we employ,” said Gary Mickelson, Tyson Foods public relations director via email. “If there’s an accident, we examine the causes, cooperate with federal safety officials and take steps to prevent it from happening again. In each of the incidents cited, we cooperated with government safety officials and took corrective measures,” wrote Mickelson. “ In fact,” he continued, “since fiscal 2008, we’ve experienced a 26 percent decrease in our total recordable safety incident rate.”

Cintas, another federal contractor with both safety and wage violations, did not respond to a request for comment. Butterball Turkey, which received $17.4 million in federal contracts despite $1 million in assessed OSHA violations in the past five years, said via Edelman PR that no one was available to respond.

Calling for stronger oversight

This is not the first time this problem has been investigated. The US Government Accountability Office (GAO) issued a report on the issue in 2010, and it was that report that prompted Senator Harkin’s investigation. Last year the organization Public Citizen also released a report on this ongoing problem – and revealed that a subcontractor hired by NASA that was found responsible for work-related fatalities at an Xcel Energy facility in Colorado and during work on the San Francisco Bay Bridge. An additional report from the Center for American Progress underscores the finding’s of Sen. Harkin’s HELP committee report.

So what’s the remedy? Senator Harkin pointed out that while current federal contracting guidelines require that contractors have a “satisfactory record of integrity and business ethics,” the report shows that whatever due diligence is done, does not consider wage and safety records. His recommendations call for improved access to this data, regular publication by the Department of Labor of violations by federal contractors, and a Presidential Executive Order to ensure that this information is fully incorporated into the database used to scrutinize companies applying for federal contracts. He also recommends an Executive Order to ensure that workplace safety and wage violations are considered as part of contractors’ business-ethics evaluations. Speaking to the group at the Center for American Progress, Senator Harkin said legislation to address these issues might be needed as he acknowledged that Executive Orders can be undone by subsequent administrations.
While workers from fast food restaurants, Walmart and other low-wage jobs make headlines by protesting against untenable pay rates, there has been a notable uptick in Congressional attention to these problems. The past week has seen not only the release of the HELP report on federal contractors but also new pieces of legislation directed at helping US workers. Senators Tammy Baldwin (D-WI) and Jeff Merkley (D-OR) introduced the Level the Playing Field in Global Trade Act, which would “ensure that sub-standard wages, workplace safety practices, and environmental protections are properly accounted for as unfair subsidies by foreign countries when calculating American duties intended to offset cheating.” The same day saw the introduction of the Family And Medical Insurance Leave Act by Senator Kirsten Gillibrand (D-NY) and Representative Rosa DeLauro (D-CT).
How swiftly these issues will be addressed of course remains to be seen, but it is clear that these problems need to be fixed if the country’s growing income inequality and high poverty rate are to be remedied. As Senator Harkin noted in introducing the HELP committee report, compelling federal contractors to address these issues can be a powerful way to accelerate compliance with safety and wage laws that are essential to ensuring workplace and social equity.

3 thoughts on ““Putting their workers at risk while profiting from taxpayer dollars” – Senate committee report spotlights federal contractors’ labor violations

  1. You can quote some scary numbers when talking total numbers, but in all fairness, some of these federal contractors have hundreds of thousands of workers. If their company numbers are such that they still stand out as bad performers on an hour worked basis, then I agree, they should be forbidden, – or at least their record should count against them – from fed contracts for a period.

  2. In all of these cases, employers were breaking the laws — and in many cases, workers died because of it. Describing violations in rates per FTEs might give a sense of which employers are the worst of the worst, but we don’t want to suggest that it’s okay to have a few violations if you’ve got thousands of workers. It’s not okay for any employer, large or small, to break health and safety or wage and hour laws.

  3. The US CSB conducted an investigation of Donaldson Enterprises (DEI) from Hawaii in 2012-13. The results were published in DEI is a federal sub-contractor were Iraq veterans were working in dismantling fireworks. Since there were no H&S training requirements, five workers died in an explosion that was fully preventable. CSB made recommendations on H&S requirements for contractors and sub-contractors to the federal government, as well as recommendations to DEI. See complete report in the CSB website.

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