NCPA - National Center for Policy Analysis

Blacklisting Federal Contractors

October 6, 2000

Proposed new rules would allow federal contract officers to bar firms accused of breaking various laws from doing business with the government. The contract officers could consider "all relevant information" tied to a firm's compliance record on employment, labor, tax, antitrust, environmental and consumer protection.

Labor unions love the initiative and businesses that have contracts with the federal government fear the consequences -- particularly high-tech companies. Microsoft, for example, is concerned that its alleged antitrust violations might allow it to be blacklisted.

Federal contracting is big business:

  • In fiscal 1999, the government bought over $185 billion in goods and services.
  • More than 300,000 contractors with more than 20 million employees do business with the federal government.
  • Lockheed Martin is the largest federal contractor with $19 billion billed last year -- followed by Boeing at $14.2 billion.
  • Colleges and universities receive about 10 percent of federal contracts.

The proposed rules would allow contract officers to blacklist firms without regard to the number, nature or severity of violations. Suspicions raised by rivals or disgruntled employees could cost firms millions, if not billions of dollars.

While unions support the new rule, the General Services Administration and the Environmental Protection Agency oppose it -- with the EPA saying existing procedures to deal with noncompliant contractors are adequate.

Source: Daniel J. Murphy, "Will New Federal Contracting Rules Lead to 'Blacklisting' of U.S. Firms?" Investor's Business Daily, October 5, 2000.


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