The Impact of Labor Disputes on Government Procurementi

• Author: By Major Dulaney L. ORaark, Jr.
• Pages: 02

This article contains an examination of the effeot of labor disputes on the administration of gosernment contracts. The author dlsewses the application of labor law to federal agencies and government contraotors, with special consideration being given to the problem of picketing at federal installations.

1. ISTRODUCTIOS

The continuing growth in volume of government procurement has brought federal agencies into more frequent contact with many of the contingencies in contracting more commonly sssoc-iated with the business risk in commercial operations. Paramount among these is the increased involvement of federal agencies in labor disputes, 88 demonstrated by the recent strikes at U.S. space research facilities. In view of this growing problem area, this article has been prepared with a two-fold purpose: First, it is intended to provide a general examination of the effect of a labor dispute on the administration of government contracts; and second, it is intended to provide an evaluation of existing labor law 88 it applies to federal agencies and government contractors.

Consideration will be gi\-en first to the effect of a labor dispute on the administration of government contracts from the standpoint of award and termination for default. Attention will then focus on an analysis of the Labor-Management Relations (Taft- *This article was adapted from B thesis presented to The Judge Advocate Genersl'Åœehaal, U.S. Army, Chariotteaville, Virginia, while the author WBI B member of the Flftesnth Advanced Course. The opinions and eaneluniann presented are those of the author and do not ~PCDSJBP~~Yrepmwnt the views of The Judge Advocate General's Sehaai 01 an? ather governmental agency.

'*JAGC, V.S. Army: Procurement Law Division, Oflee of the Judge Advocate General B.A 1858 LL B. 1860 Vniversit? ai Kentucky. admitted S practice befor; the 'KentAeky C k t df Appeals and the Unibd States C o d of Military Appeals.

Hartley) Act) and decisions which have defined the status of federal agencies and government contractors under this Act. With this analysis as a foundation, there will fallow a study in depth of the consequences of picketing at federal installations in an effort to determine the legitimate scope of such picketing and the mume8 of action available to the federal authorities in mitigating its impact.

It should be noted that the scope of this article does not en-compa~s industry-wide strikes amounting to a national emergency,: the relatively new field of federal employee unionization.l or labor standards prescribed for government contracts

11. CONTRACT ADMINISTRATION DL'RISG

A LABOR DISPUTE A. THE EFFECT OF A LABOR DISPrTE OS AWARD Federal law regulating government procurement' required that contracts be awarded only to responsible contr8ctors.l For B

contractor to qualify as responsible he must, itite, alia, be able to comply with the required or proposed delivery schedule; hare a satisfactory record of past performance,' and possess the

Stst. 136 (1947). 29 U.S C. 5 141 (1964) [hereafter eited 8s LMRAI. 'See National Labar Relations Act 5 206. 61 Stat. 155 119471. 29 U.S.C. E 176 IIQRd," .

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of an Air Force Commander in Empioyie-llonagsmeni Relations, 7 AF JAG L. REY. 5 1x0, 3, Yay-Jum 1966).'These stendaids concern the use of convict labor. child labor, hours. wages, de. See 18 U.S C. 6 436 (1964); 16 Stat 357 (1962). 40 CS.C 5 328 !1964); Damr-Bacon Act. 49 Stat 1011 !1931), 40 U S.C 5 276s-si I 19641, Walsh~ Healey Public Contract. Act. 49 Stat 2036 11936), 41 U.S.C (5 35-45 (1964) : €sir Labor Standards Act, 62 Stst. 1060 (1363). 29 U S.C 55 201-19 11964)

i Federal law concerning government pmeurement coniisti of two parallei sets of laws The body of law covering armed rerviees procurement was first centralized in the Armed Service Procurement Act of 1947 (62 Stat 21). In 1958 this Act. along with the substantive Isw gorernine armed services procurement. was made chapter 137 of title 10 (10 rS.C. j 2303(a) (19641) These laws have been further implemented by regulation in the Armed Seri,icen Procurement Regvlstian [hereafter eited BJ ASPR] and the ArmyProcurement Procedure [hereafter cited a8 APP] The Federal Property and Administrative Service% Act of 1349 (68 Stat. 1126 !1954), 40 U.S.C 5 471 (1964)

) was enacted far ~roeurement aetiiitiea of nonm>litary executive agmcier. This Act has been >mplemented by the Federal Proeurement Reguia-

,'€or B eamprehensiw examination af this subject, see Remolds, Th

Role

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necessary organization, experience, operationai controis, and technical skills, or the ability to obtain them.l0 When a contractor is known by the contracting officer to have either a patentiai or existing strike at his place of business, or is known to ha\w had a history of conflict with his employees, the question of his responsibility 88 to one or more of these factors is raised. If awarded the contract, will the contractor be able to perform an time? Will he even have an organization with which to attempt performance? What weight is to be given ta past labor difficulties in making an award? These and related questions must be answered by the contracting officer prior to making award, when the lowest bid or proposal is submitted by a contractor with either existing or potential labor probiems."

1. The Effect of a Potential 07 Existing Labor Dispute on Ability to Perform.

When a contractor is experiencing iabar difficulties at the time for award, two questions are raised concerning his responsibility. The contracting officer must first determine whether the contractor will hwe the organization to perform'? and, if so, whether he will be able to maintain sufficient output to meet the required delivery or performance s~hedule.'~

Should either of these questions be ansnered in the negative, the contracting officer could properly decline award on the basis of nonresponsibility."

'Id. 5 1-903.l(ivl.

Id. 5 1-903-2(a] (ii).

One of the more signifleant results from the standpoint of eontract adstration that could occur from an improvident award I" this situation i s an un$uceessfuI contractor might make B protest. Such protesta are usually addressed ta the contracting officer and may be received either beforeOT after award. (Sometimes protests are made directly to the Comptroller General.) Both the ASPR and the APP provide speaRc guidance for handling rueh protests and, in particular, the procedure ta fallow when a protest has been made directly to the Comptroller General. See ASPR D 2-401.9 (Rev. NO.4 6 March 1964) and APP 5 2-407.9 (Change No. 2 25 March 1966). It should be noted that protests to the Comptroller Generh have generated the only eale authority coneerning interpretation of award regulations. This is true because contractors who have been denied award have no contract with the government and, therefore. lack the required contractual basis to bring their ease before either the United States Court of Claims or the Armed Services Board of Contract Appeaie. See Standard Stet1 Works, Inc, ASBCA

March 1963. 1963 B.C.A. para. 3704: Tucker Act. 28 U.S.C. 5

See ASPR 5 1-903.2(a) (Rev. No. 11, 1 June 19651.

See id. 5 1-903,1(ii).

This conclusion IS based on Comptroller General decisions which indicate

The basic problem for the contracting officer IS evaluation of the circumstances. This is particularly difficult, because obtaining sufficient reliable information with which to make an appropriate judgment of the extent of the labor dispute and its impact an the contractor's operations is not easy As B rule, the contracting officer is limited to information volunteered by the contractor, local new8 media, his own contacts in the business communni. and the like. The chances for a full picture of the scope of the contractor's labor difficulties developing from these source? aithout considerable effort on the part of the contractmg officer are slight.

It has been suggested as a solution to this problem that all contractors making an offer for a government contract be reqmied to submit, prior to award, information concerning any strike which affects or ma)- affect hi? ability to perform.'. The advantages of such a procedure are apparent; houeier. the practicability 1s subject to question. A contractor LS reluctant to volun-teer information which could jeopardize his chances for award. As a result. he will hesitate to admit that his ability to perform has been endangered by labor difficulties. whereas the contracting officer on the Same facts might believe performance to be imnsidering this disparitr of interest. the inherent of evduiltion of the scape of the effect of a strike

LABOR DISPUTES

and the rapidly changing circumstances of most labor disputes, it is doubtful that such a requirement would result in significant additional information being furnished to the contracting officer.

It is equally inadvisable to go one step further and require contractors to disclose all labor difficulties regardless of connection with the contract under consideration. This raises the spectre of unnecessary government interference with private business and would likely bring all the attendant criticism that charges of this nature evoke. Consequently, there appears to be little in the way of assistance for the contracting officer in obtaining this information. It is incumbent upon him to marshal the facts through sources presently available with sufficient thoroughness to protect the government's interest.

Upon obtaining information concerning a contractor's labor difficulties, the contracting officer is then faced with the problem of assessing the effect of the labor dispute on the contractor's ability to perform. When a strike has resulted in a complete shutdown of operations, he c m only estimate the duration in order to determine whether the contractor might have sufficient remaining time to perform the contract. In the case of a partial shutdown, he must decide whether the contractor's reduced...