Under the regulations, corporations that repeatedly or seriously transgress
worker rights, health, safety, environmental, tax or antitrust laws would be
deemed ineligible for federal government contracts.
Big business is up in arms about the proposal -- a sign that it may be of
consequence. The U.S. Chamber of Commerce along with an alphabet-soup full of
business trade associations have organized the National Alliance Against
Blacklisting to block the proposal.
The Alliance is planning a full-blown campaign against the regulations. It is
revving up arguments about how the regulations would bestow on procurement
officers the power to act arbitrarily, how corporations could be unfairly
penalized for failing to comply with confusing and technical federal rules,
and how the regulations improperly side the federal government with labor in
labor-management disputes.
The business groups are right about one thing: the Clinton administration has
hit upon a potentially powerful tool to discipline large corporations.
The federal government spends approximately $200 billion a year on
procurement, buying goods and services from firms that employ approximately 20
percent of the U.S. workforce. Government contracts make up a significant
revenue stream for many firms, including many of the largest companies in the
country. In refusing to contract with polluting, consumer-cheating, racially
or sexually discriminating, tax-avoiding, clearcutting, price-fixing and other
miscreant companies, the government can leverage its buying power to promote
more responsible corporate
behavior.
Consider the issues of worker rights and worker safety. A 1995 study by the
General Accounting Office (GAO), the congressional research agency, found that
80 federal contractors, receiving more than $23 billion in federal government
business in fiscal year 1993, had violated the National Labor Relations Act.
Six contractors -- McDonnell Douglas, Westinghouse, Raytheon, United
Technologies, AT&T and Fluor -- received almost 90 percent of the $23
billion.
A 1996 GAO study found that 261 federal contractors, receiving more than $38
billion in federal government business in fiscal year 1994, received penalties
of at least $15,000 for violating Occupational Safety and Health Act
regulations. The biggest of these contractors included General Electric,
Lockheed Martin, Westinghouse, United Technologies, General Motors, Boeing and
Textron.
The current U.S. labor law regime imposes virtually no meaningful penalties on
businesses that violate worker rights. The standard sanction imposed against a
company that fires a worker for supporting a union is an order to reinstate
the worker with back pay -- there are no punitive damages available. Serious
violators of workplace health and safety regulations typically walk away with
small fines.
By contrast, the threat of losing major government contracts is a much more
serious and costly penalty. The proposed procurement regulations would make
federal contractors much more wary of recklessly disregarding worker rights
and worker safety.
Given the generally weak penalties for corporate law-breaking in the United
States, the same holds in other spheres. Too frequently, corporations are able
to brush off fines and sanctions for law-breaking.
When corporations calculate, overtly or implicitly, whether they should
respect the law, they consider the odds of getting caught and the size of the
likely penalty if they are caught. Other factors go into such decisions of
course -- potential civil liability, the social pressure to comply with the
law or simple respect for the law -- but no one seriously doubts that
enforcement vigor and the size of sanctions affect corporate
adherence to the law.
If the regulation, really a very modest step, is enacted, the answer to the
question, "Do corporate law breakers lose any privileges or rights?"
will finally be, "Yes."
(c) Russell Mokhiber and Robert Weissman
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor. They are co-authors of
Corporate Predators: The Hunt
for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage
Press, 1999,
http://www.corporatepredators.com).
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