Federal Contractor Abuse in a Time of Coronavirus Crisis

Someday – hopefully not too far into the future – things will return to something approaching normal.

Schools will reopen, sports will return to our TV screens, and restrictions on restaurants, bars and public gatherings will be lifted. Then, federal contractors and the agencies they serve will be left to assess the agreements they reached before COVID-19 took over the news and how to resolve missed deadlines, closed workplaces and other issues.

Most contracts allow for renegotiations, and how those go will depend somewhat on the relationship between the contractors and the agencies they work for. Let’s hope all those agencies have better relationships with those it regulates than the Office of Federal Contract Compliance Programs.

In the final days of the Obama administration, this tiny agency, which ensures contractors comply with nondiscrimination laws, filed a series of lawsuits designed to bury defendants in red tape. Those suits should be withdrawn, and this agency should be directed to clean up its act with regard to those it regulates.

There are signs the administration already is working to rein in the agency. In the past, when contractors complained about the treatment they received, agency officials would dare them to take it to the judge because “he works for us.”

But Google took the dare – it took its complaint about harassment by the agency over alleged employee discrimination to an administrative law judge who works for the agency. And the judge agreed Google was right.

Google said it turned over 740,000 pages of documents, at a cost of 2,300 man hours and $500,000, to address an inquiry by the Office of Federal Contract Compliance Programs into Google’s compensation practices. When the office came back and demanded the names of all Google employees, the company said enough.

Google sued, and an administrative judge from the Department of Labor ruled the agency had been “overbroad, intrusive on employee privacy, unduly burdensome, and insufficiently focused on obtaining the requested information.”

Google is one of the few federal contractors with the clout and wherewithal to press the case. The Office of Federal Contract Compliance Programs has the power to debar federal contractors, which prevents them from doing future business with the federal government. This can be a death sentence to many businesses, which means those of lesser means have no choice but to accept mistreatment and move on.

And there has been plenty of such mistreatment – an agency focus on high-dollar settlements with top companies to secure splashy headlines, frequent and systemic antagonistic behavior toward the firms it regulates, given to making extraordinary and overly broad demands for information then insisting near-impossible deadlines be met to produce it.

The Obama administration’s focus on high-dollar verdicts and headlines led to fines of $10 million to Goldman Sachs, $7 million to Dell Technologies and $4.2 million to Bank of America – verdicts that struck such fear into American businesses that many were reluctant to talk even anonymously to the U.S. Chamber of Commerce for a white paper it produced on the agency’s problems.

Then, in the waning days of the Obama administration, the agency filed suits against Google, Oracle and Palantir, which provides software and data analysis to the federal government.

The suit against Oracle seeks not $1 million or $10 million but $400 million that the agency alleges the firm owes to female, Asian and African-American employees. It alleges the company systemically paid Caucasian male workers more than their counterparts in the same job title and favored Asian-Americans in hiring for some technical positions.

No employees at any of these firms had complained of discrimination. The agency is attempting to prove they discriminated through statistical analysis only.

For instance, if a job requires expertise in finance, someone with a business or finance degree likely would earn more starting out than someone with a degree in history. But if these employees had the same title, the office of Federal Contract Compliance Programs would consider this discriminatory and subject to fines and sanctions.

The chamber and others say these lawsuits reflect the priorities of the previous administration, not the current one, and should be dropped. Alex Acosta, President Donald Trump’s first secretary of labor, declined to do so during his term, and it is hoped his successor, Eugene Scalia, will be more forceful on the matter.

It also is hoped by the chamber and many of its members who are federal contractors that the agency will return to its core purpose, working with contractors and subcontractors to foster true affirmative action, and reduce emphasis on punitive and seemingly politically motivated prosecutions.

Brian McNicoll is a columnist who has worked as a newspaper writer and editor, as a senior writer for The Heritage Foundation and as director of communications for the House Committee on Oversight and Government Reform.

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