Three Strikes and You're Rich:

Responsible Contractor Rules Revoked

What's the best way to deter criminal corporate behavior? Apparently handing out fat government contracts, according to the Bush administration.

Bush gave corporate lawbreakers a late Christmas gift when, on Dec. 27, he revoked a Clinton-passed regulation designed to prevent chronic violators of labor, environmental or other laws from being awarded federal work.

Every year, the federal government awards contracts totalling over $200 billion to private companies. Traditionally, companies with long histories of violations of safety laws, environmental crimes, illegal unionbusting, wage violations, discrimination and other law-breaking were awarded those contracts with little review.

There had been scattered rejections of companies for legal violations, particularly barring environmental agency contracts to violators of environmental laws (imagine that!), but generally, unless a company had directly defrauded the government recently (and usually not even then), corporate criminals routinely were rewarded with billions in federal funds. A company like Enron could defraud the public and screw its employees and keep receiving the millions in federal contracts it routinely enjoys.

Outrageously for worker advocates, many companies took federal funds and used it to pay for vicious illegal union-busting campaigns against their workers. A 1995 General Accounting Office (GAO) study identified 80 federal contractors, receiving more than $23 billion in federal government business in fiscal year 1993, who had violated the National Labor Relations Act. Six contractors -- McDonnell Douglas, Westinghouse, Raytheon, United Technologies, AT&T and Fluor -- received almost 90% of the $23 billion.

Union and environmental groups used such studies to push for changes. On July 9, 1999, the Clinton administration proposed new regulations to bar any company with "an unsatisfactory record of integrity and business ethics" from receiving any federal contracts. The proposed regulations also barred companies from using federal money to fight unionization. Previously, government contractors could bill the government for the cost of forcing employees to attend anti-union meetings and other union busting costs. The new rules ended that practice, as well as preventing contractors from charging the government for their legal defense costs when contractors violated the law and were prosecuted -- yep, the government actually has gotten billed for corporate criminals' failed legal campaigns.

Now, if companies wanted to campaign against unions or fight wasteful legal fights to cover up their criminal activity, they would have to do it out of shareholder profits, not on the government's dime. After a lengthy required "commentary" period, the regulations were put into effect in the last month of the Clinton administration.

However, last April the Bush administration suspended the rules and, with their complete revocation in December, the corporate criminal class is back feeding at the government trough. Corporate lobbyists hailed the decision. Stephen E. Sandherr, CEO of Associated General Contractors (AGC), says, "Federal contractors can breathe a sigh of relief."

But then, they were hardly surprised, since such corporate associations were back writing federal policy. AGC and the Association of Building Contractors, the two main contractor associations, gave over $2 million in last year's elections, all but 4% to the GOP. This was in addition to close Texas corporate friends of Bush, like Thomas Johnson, the executive director of Associated General Contractors of Texas, who personally raised an additional $100,000 for Bush as an official campaign "Pioneer" on the campaign

As a contractor's representative noted, they expected to translate the money into policy where "Bush and Congress will be responsive to the needs of our industry." Just as corporate criminals like Enron were writing the nation's energy policy, corporate contractors have been writing Bush policy to overturn a range of pro-worker rules and legislation, from ergonomics standards to requirements that government projects pay union wage levels. Allowing corporate lawbreakers to keep their billions of dollars in government funds is merely the logical endproduct of turning the White House completely over to corporate lobbyists.

Such lobbyists fear tough standards for federal work, since it would have large ripple effects in the economy. Approximately 22% of the workforce and more than 25 million workers are employed by companies with federal contracts and subcontracts. Tough public contracting rules would force corporations to clean up their private abuses of workers rights and the environment. And aside from maintaining integrity in public contractors, companies with lawbreaking records are the most prone to defraud the US government or generate the boondoggles that cost the taxpayers more over the long run.

It is just tragic hypocrisy that conservatives, who will throw a chronic street criminal in jail for life for literally stealing a pizza under a "three strikes" law, turn around and find infinite reasons to excuse chronic corporate scofflaws. We need a new crime policy in this country, one that starts with those in the corporate boardrooms who plunder our pension funds, bust our unions, pollute our water, and then get billion-dollar payoffs in federal contracts.

Three strikes and you're rich should not be the "compassionate conservatism" for corporate lobbyists. 

Nathan Newman is a longtime union and community activist, a National Vice President of the National Lawyers Guild and author of the forthcoming book Net Loss on Internet policy and economic inequality. Email or see

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