NCPA - National Center for Policy Analysis

Proposed Contractor Rule Scares Businesses

June 18, 1999

The White House is circulating a proposed rule, advanced by Vice President Gore, which would give bureaucrats the power to deny government contracts to companies that are merely accused of violating labor, antitrust, health, consumer or environmental laws. What has the business community so upset is that the charges wouldn't have to be proven in court -- allegations may be enough.

The federal government spends $180 billion a year on contracts with private companies.

Investor's Business Daily obtained a copy of the regulation and here are some of the provisions:

  • A contract could be denied a firm if there was "persuasive evidence" an applicant failed to comply with tax laws, or substantial noncompliance "with labor and employment laws, environmental laws, antitrust laws and other consumer protections."
  • An objection could be raised against a potential contractor by the Equal Employment Opportunity Commission, the National Labor Relations Board or the Labor Department -- and proof of wrongdoing would not be required, only enough "persuasive evidence" to sway a government bureaucrat.
  • While a company that thinks it has been unfairly denied a contract could file suit, that process is costly for both the company and taxpayers, critics point out.
  • Some experts contend the rule may be unconstitutional because the Constitution hasn't delegated this power to the White House -- and it could violate the Constitution's "due-process" provisions.

Critics say the measure could result in a "blacklist" of businesses.

Source: John Berlau, "Does Rule 'Blacklist' Business?" Investor's Business Daily, June 18, 1999.

 

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