Despite Progress, Challenges Persist for Implementation of Human Rights Reforms in Federal Contracting

November 1, 2016 •

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By Amol Mehra, Esq.
Director, ICAR

The integration of human rights considerations into federal contracting has sped up drastically under the Obama Administration. By using Executive Authority to amend federal contracting regulations, President Obama has elevated human trafficking, labor rights, and discrimination, making them central concerns of the procurement process. Just this past month, his administration went one step further.

On October 26, Ambassador Susan Rice announced a new USAID initiative to prohibit contractors and subcontractors from discriminating on LGBT grounds.

Ambassador Rice noted: “the United States also needs to do more to institutionalize efforts to promote LGBT rights. As part of that commitment, I’m pleased to note that just yesterday a new rule went into effect that explicitly prohibits discrimination by USAID contractors. This rule means that any organization that contracts with USAID must ensure that all people can benefit from its federally-funded programs, regardless of race, religion, disability—or sexual orientation and gender identity. It’s a major step towards ensuring that American assistance is provided in a fair and equitable manner.”

Specifically, the final rule adds a new clause entitled ‘‘Nondiscrimination against End-Users of Supplies or Services.’’ The clause applies to all solicitations, contracts, and subcontracts at any tier, and prohibits contractors and subcontractors from “discriminating against beneficiaries or potential beneficiaries (i.e., those individuals intended to receive the benefits of the award, whether goods or services) on the basis of any characteristics not expressly stated in the award.”

Even with such advances, strong opposition to integrating human rights and labor concerns into public procurement decisions still exists, and comes largely from industry associations.

This past month, in response to a complaint filed by industry associations, a Texas court issued an injunction against the implementation of the “Fair Play and Safe Workplaces” federal rule. This rule sought to increase contractor compliance with labor law and would have required certain disclosures related to labor violations.

Among numerous grounds, the judge argued that portions of the final rule violate the First Amendment rights of corporations that bid on contracts covered by the rule. Specifically, the judge argued that the disclosure requirements constitute compelled speech, which she noted “has repeatedly been found to violate the Constitution.” The judge went on to state that in the circuit where the case was filed it is settled that government contractors have the same First Amendment rights as individual citizens.

The judge stated that the disclosure requirements constitute compelled speech because federal contractors and subcontractors are required “for the first time to report for public disclosure any ‘violations’ of the fourteen federal labor laws occurring since October 25, 2015, regardless of whether such alleged violations occurred while performing government contracts, and without regard to whether such violations have been finally adjudicated after a hearing or settled without a hearing, or even occurred at all.” She continued that this “unprecedented requirement, as implemented . . . compels contractors to engage in public speech on matters of considerable controversy adversely affecting their public reputations and thereby infringing on the contractors’ rights under the First Amendment.”

What this indicates, therefore, is that efforts to integrate human rights into procurement face significant pushback. In this case, industry associations stepped in to block implementation of the law, and have been successful, at least for now. It is clear that this decision will be appealed to a higher court for final determination, but in the interim, it would appear that powerful business interests are pushing the government to continue turning a blind eye to their labor rights performance.