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Government Contract Law Overview

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Overview of Government Contracts Law
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Equitable Adjustments, Claims and Other Performance Disputes
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This article is for your personal information only and is not intended as legal advice. This area of the law is very complex. Every case is different and the information contained herein is general. This information is not intended to be legal advice. Nor is this material intended to replace consultation with a professional. Always consult a licensed attorney for your particular case. Nothing herein shall create an attorney/client relationship.

Compliance With Socio-Economic Programs

Government contracts typically include requirements that contractors comply with various regulations that promote social policy goals. These socio-economic regulations flow down to any subcontractor working under a prime government contract.

Q. What are some of the main socio-economic regulations imposed on government contractors?

A. Major socio-economic regulations government contractors must observe in the performance of their contractors must observe in the performance of their contracts include:

  • Executive Order 11246 and its implementing regulations;
  • Section 503 of the Rehabilitation Act of 1973;
  • The Drug-Free Workplace Act of 1998;
  • The Vietnam-Era Veteran's Readjustment Assistance Act of 1974.


Executive Order 11246 - Affirmative Action Plan

All non-construction government contractors with 50+ employees and one or more contracts aggregating $50,000.00 or more per year must develop and maintain a written affirmative action program for each of its establishments. The regulations implementing the Executive Order establish different affirmative action requirements for non-construction (i.e., supply and service) contractors than for construction contractors.

Each contracting agency in the Executive Branch of government must include the equal opportunity clause in each of its nonexempt government contracts. The equal opportunity clause further requires that the contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin. American Indian or Alaskan Native, Asian or Pacific Islander, Black, and Hispanic individuals are considered minorities for purposes of the Executive Order. This clause makes equal employment opportunity and affirmative action integral elements of a contractor's agreement with the government. Failure to comply with the non-discrimination or affirmative action provisions is a violation of the contract.

The U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) enforces the Executive Order 11246 and regularly conducts EEO audits and complaint investigations of government contractors. A contractor in violation of E.O. 11246 often must pay the alleged affected "victims" substantial amounts of back pay, front pay and interest to resolved alleged violations of the Executive Order. Further, a contractor in violation may have its contracts canceled, terminated, or suspended in whole or in part, and the contractor may in extreme cases be debarred. OFCCP has established a separate set of regulations to enforce affirmative action within the construction government contracts industry, but penalties for non-compliance are the same.

The Drug-Free Workplace Act of 1998

The Drug Free Workplace Act of 1998 was passed in a national effort to control illegal drug use through the regulation of government contractors. It requires all government contractors to certify that they provide a drug-free workplace, and to publish a statement at each facility listing prohibited drug related behaviors and the actions that will be taken against violators. Contractors are further required to establish an ongoing drug-free awareness program that educates and notifies employees of the availability of counseling programs and the penalties of abuse in the workplace. As a condition of employment, employees of government contractors must notify the contractor of any criminal drug convictions occurring in the workplace, and the contractor in turn must impose a penalty for an employee convicted of a drug violation in the workplace. All violations of the above requirements must be immediately disclosed to the procuring agency. Contractors who fail to comply with the Drug-Free Workplace Act of 1998 are subject to sanction.

The Rehabilitation Act of 1973

Section 503 of the Rehabilitation Act of 1973 predates the Americans with Disabilities Act f 1990. The Act requires affirmative action and prohibits employment discrimination by federal government contractors and subcontractors with contracts of more than $10,000.00 per year. The OFCCP enforces the Rehabilitation Act and conducts periodic audits and complaint investigations of government contractors to ensure compliance. Penalties for a contractor's noncompliance are similar to those assessed for the violation of other EEO statutes.

The Vietnam-Era Veterans Readjustment Assistance Act of 1974
The law requires that employees with federal contracts or subcontracts of $25,000.00 or more provide equal opportunity and affirmative action for Vietnam-era veterans, special disabled veterans, and veterans who served on active duty during a war or in a campaign or expedition for which a campaign badge has been authorized.

A Vietnam era veteran is a person who (1) served on active duty for a period or more than 180 days, any part of which occurred between August 5, 1964 and May 7, 1975, and was discharged or released with other than a dishonorable discharge; (2) was discharged or released from active duty for a service connected disability if any part of such active duty was performed between August 5, 1964 and May 7, 1975; or (3) served on active duty for more than 180 days and served in the Republic of Vietnam between February 28, 1961 and May 7, 1975.

A special disabled veteran is a person who is entitled to compensation under laws administered by the Department of Veterans Affairs for a disability rated at 30 percent or more; or, rated 10 or 20 percent, if it has been determined that the individual has a serious employment disability; or, a person who was discharged or released from active duty because of a service-connected disability.

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