Us nap submission on procurement final

September 8, 2015

Via Electronic Mail The Honorable Barack H. Obama President of the United States of America The White House 1600 Pennsylvania Avenue, NW Washington, D.C. 20500 Re: Submission for U.S. National Action Plan on Responsible Business Conduct regarding Federal Procurement Policy Dear President Obama: The International Corporate Accountability Roundtable (ICAR) is a coalition of human rights, environmental, labor, and development organizations. ICAR creates, promotes, and defends legal frameworks to ensure that corporations respect human rights in their global operations. Together with Professor Robert Stumberg of the Harrison Institute at Georgetown University Law Center, we offer this submission for the U.S. National Action Plan on Responsible Business Conduct (U.S. NAP) in order to provide guidance to the U.S. government on embedding human rights protections in federal procurement policy within the existing authority of the Executive Branch.

Responding to Evident Gaps in Protection It has been almost three years since the Tazreen Fashion fire killed 112 workers in Bangladesh. After the charred remains of U.S. military insignia were found at the factory, the New York Times traced the supply chain connected to the insignia back to U.S. military exchanges that were selling licensed apparel.1 The exchanges did not know the source of their goods, and the Times published an editorial calling for transparency.2 While U.S. licensing and procurement are governed by different rules, both have significant market power and both are within the scope of the UN Guiding Principles on Business and Human Rights (UNGPs).3 After this tragedy, and the 2013 Rana Plaza collapse that killed over 1100 workers, the Marine Corps revised its policies,4 but the other U.S. military branches did not follow suit.5 Nor did any U.S. government agency move in the direction of greater supply chain transparency for imported goods, much less stronger protection for human rights.

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In light of this inertia, ICAR published Turning a Blind Eye: Respecting Human Rights in Government Purchasing.6 The report summarizes a substantial body of evidence showing that governments purchase goods and services from supply chains that have a high risk of human rights abuses. These include electronics (and related mineral extraction), logistics abroad, food, and apparel.7 This report unpacks the 2000-page Federal Acquisition Regulation (the FAR) to identify gaps at each stage of procurement, notes effective policies that should be expanded, and identifies best practices among other governments and private purchasers. It provides a menu of 15 practical responses to ensure that U.S. tax dollars do not support supply chains that abuse human rights.8 It is essential that the U.S. National Action Plan (NAP) for Responsible Business Conduct focus on responsible government purchasing.

The UN Human Rights Council has called on all Member States to develop NAPs as a means of implementing the UNGPs.9 Guiding Principle 6 provides that “States should promote respect for human rights by business enterprises with which they conduct commercial transactions.”10 The greatest opportunity to do so is through government procurement, “including [within] the terms of contracts.”11 While the NAP will not have the force of law like a statute or agency rule, it is an ideal vehicle to assert U.S. leadership in areas where Congress has already delegated authority to the Executive Branch. These include: (1) requiring transparency in government supply chains, (2) expanding the scope of protection, (3) requiring independent monitoring, and (4) harmonizing purchasing power.

Require Transparency in Government Supply Chains Without transparency, there is no accountability for procurement and human rights. Without transparency, progress on all other links in the policy chain will be for naught. That goes not only for negotiated contracts, but also for government purchase of commercial items,12 which account for a significant portion of procurement from supply chains that produce apparel and electronics.

Fortunately, the U.S. government is in a position to learn from private companies—like Levi-Strauss and Nike—that have opted to publicly disclose their direct suppliers, company-wide.13 The U.S. government can also learn from state and city governments that have built transparency into their procurement processes.14 Longstanding examples include Maine15 and Los Angeles.16 More recently, Madison, Wisconsin, recently required transparency down to the factory level at the stage of bidding on a contract.17 These governments are members of the Sweatfree Purchasing Consortium, which has created a database for supply chain transparency that is available to all of its members. 18 Outside of the United States, Swedish counties used a report from Danwatch on the electronics sector to hold suppliers accountable for a heightened standard of transparency, based on evidence of human rights violations.19 With the Federal Funding Accountability and Transparency Act (Transparency Act), Congress mandated transparency of all government “awards” (including all domestic and foreign-sourced “grants, subgrants, loans, [and] awards”). This transparency includes their “primary location of performance under the award, including the city, state, congressional district, and country,” and, after 2009, disclosure of “data regarding subawards [i.e. subcontracts] in the same manner as data regarding other Federal awards.”20 Cosponsored by Senators Obama and Coburn, the Transparency Act passed by unanimous consent in 2006.21 This Act was amended in 2008 and 2014 to increase transparency of federal spending and to expand the reporting requirements.22 However, the Office 2

of Management and Budget has limited the Act’s transparency mandate to prime contractors only.23 In some sectors, prime contractors delegate most work to subcontractors, so limiting transparency in this way undermines Congress’s intent to require supply chain transparency.24 The U.S. NAP should declare that the Executive Branch will fulfill the congressional mandate, which is full transparency of government supply chains. It can do so prudently, yet efficiently, by beginning to strengthen transparency in specific sectors—such as apparel, electronics, food, and logistics—where there is evidence of human rights violations.

Expand the Scope of Protection The Obama Administration has strengthened Clinton-era procurement policy to protect against human trafficking in government supply chains in all sectors.25 This progress creates a model for providing notice to government contractors of specific risks of human rights abuses (e.g., in the recruitment, housing, and transportation of workers) and for contract clauses that require due diligence by the contractors (including remedies to workers). Importantly, the final rule applies to commercial items (although the requirement of a compliance plan does not).26 The progress on trafficking is commendable. Yet, human rights abusers do not limit themselves to one category of abuse at a time. If a sector has a high risk of one type of abuse, such as trafficking, it also has a high risk of other abuses, such as life-threatening conditions of work, discrimination (including abusive treatment of women), illegal wages and hours (wage theft), and denial of fundamental rights (speech, association, and the right to organize and collective bargaining).27 In its trade agreements, tariff preferences, and foreign assistance programs, the United States has already expanded the scope of human rights protection to extend beyond trafficking to include internationally recognized labor standards. These have been defined to include freedom of association, the right to organize and collective bargaining, prohibition of forced labor, prohibition of child labor, prohibition of discrimination at work, and the requirement of acceptable conditions at work, including working conditions, wages, and hours. 28 U.S. procurement lags behind these policies, and, in fact, procurement will undermine those policies until it catches up with an equivalent scope of protection for human rights.29 So long as there is no conflict with an Act of Congress, the Executive Branch has broad authority to achieve policy coherence by expanding the scope of protected human rights.30 There is no such conflict here; indeed, Congress has delegated specific authority for the Executive Branch to expand the scope of human rights protections in government supply chains. The Walsh-Healy Act prohibits federal agencies from purchasing sweatshop goods31—specifically with respect to compliance in the country of production with minimum wages, maximum hours, child and convict labor, and health and safety.32 It is only because the Secretary of Labor has exempted imported goods or services (under authority delegated by Congress) that the Walsh-Healy protections do not extend to all government supply chains.33 However, the language of the Act,34 its statutory history,35 and the Department of Labor’s longstanding interpretation of the Act36 all indicate that the Act would apply to any part of a contract performed abroad, if not for the exemption.37 The U.S. NAP is an ideal vehicle to declare the intent of the Executive Branch to use the authority that it already has to achieve policy coherence and to expand the scope of protection for human rights in government supply chains. The authority exists not only for trafficking (which includes 3

forced labor), but also for prohibiting child labor, discrimination, illegal wages and hours, dangerous working conditions, and denial of freedom of association and the right to organize and bargain collectively, among others.

Require Independent Monitoring Agency contract officers have complex jobs. With shrinking resources to monitor contractors, they do not have the in-house capacity to monitor post-award contract obligations (or pre-award certification) to respect human rights. Yet, as public employees, they are the essential points of accountability at the top of U.S. government’s global supply chains. For law-abiding competition to prevail, contract officers need resources, training, and monitoring tools that are designed for supplier accountability to government—not mere auditor accountability to suppliers, which has been tested and failed.

During the George W. Bush Administration, the Environmental Protection Agency (EPA) confronted the government’s in-house capacity limits for assessing conformity with industry standards for environmental sustainability. The solution, novel in 2007, was to require agencies to purchase 95% of their computers and later televisions and imaging devices from a registry of “green” products that are certified, pre-award, as compliant with industry standards.38 The registry is known as EPEAT—the Electronic Product Environmental Assessment Tool. EPEAT charges a compliance assessment fee and oversees independent certification of compliance with the standard.39 Purchasing from the EPEAT registry generated a highly competitive market for the highestperforming products. The EPEAT registry has grown to over 1000 products, and it is used in 43 countries to verify that products meet the standard.40 EPEAT is a success story for creating an independent, non-government “assessment tool.” Yet we understand that certifying the absence of toxic materials, for example, is qualitatively different from verifying respect for core labor standards at the factory where a contract is performed. As emphasized by the International Labor Rights Forum, there is no substitute for obtaining “compliance data from workers through bottom-up reporting, not top-down certifications.”41 An effective model for human rights compliance will require EPEAT’s model for upfront assessment fees and a worker-centered approach to reporting and accountability of the auditor or certifier directly to the government.42 We also see red flags in the most recent chapter of EPEAT’s development. In March 2015, the Obama Administration issued Executive Order 13693, which revoked previous Bush and Obama executive orders that used the EPEAT registry for federal procurement.43 EO 13693 also revoked the commitment of the previous executive orders to federal procurement policy that supports the “social dimension” of sustainability.44 As elaborated in General Services Administration (GSA) publications, respect for human rights in government supply chains is a foundation of social sustainability.45 Ironically, in the same year that the Obama Administration began work on the U.S. NAP, which explicitly links procurement and human rights, it appears to have revoked a proven model for overcoming the gap in agency capacity to assess compliance with sustainability standards.

The U.S. NAP can restore social sustainability as a goal of procurement, but only if it goes beyond rhetoric to recognize that agencies need external capacity to assess compliance with human rights standards. The NAP should acknowledge that this need cannot be met if manufacturers and contractors are allowed to hire their own social auditors. Every factory that burned in Bangladesh 4

was certified as safe enough to operate, and a mounting body of literature proves that “outsourcing accountability” of subcontractors through social audits has not worked in the private sector for a number of reasons.46 The NAP needs to identify this gap in capacity and reestablish the objective of compliance assessment that is truly independent and supported by an adequate fee structure.

Again, we stress that transparency is essential for accountability. Full implementation of the Transparency Act is a prerequisite for independent monitoring of any government’s supply chains.

Harmonize Purchasing Power As the largest single purchaser in the global economy, the U.S. government’s market power is often cited as the kind of leverage it will take to set an effective standard of performance to protect human rights. The theory of change sounds like this: If the U.S. government sets a high standard for respecting human rights, other governments will follow. As other governments follow, so will global suppliers, and the procurement standard will become the standard that is followed by universities, hospitals, religious organizations, and leading business purchasers. Indeed, that is exactly what happened when the U.S. government adopted a high standard for environmental sustainability and required agencies to purchase certain products from the EPEAT registry.47 The ripple effects of procurement policy were global and sustainable.

In the United States, more than half of public procurement is at the state and local levels. As exemplified by members of the Sweatfree Purchasing Consortium, states and cities have taken the lead in U.S. procurement reform.48 Upward harmonization of federal, state, and local procurement policies to protect human rights would be a quantum leap in both scale and the quality of procurement policies in the United States.49 U.S. government policy strongly encourages agencies to harmonize their procurement with standards and conformity assessment methods of trading partners in order to facilitate global trade.50 If done only to pursue the cheapest goods, international harmonization could erect a barrier to respect for human rights. But if led by countries that have committed themselves to ethical or “socially sustainable” procurement, international harmonization would raise the bar for U.S. policy and greatly expand the common market for decent work and respect for human rights. Nordic countries have already begun to share procurement practices on human rights, and the European Union updated its procurement directive in 2014 with clear authority for social sustainability.51 The time is ripe for trans-Atlantic cooperation on procurement and human rights, toward the end of harmonizing upwards.

The UN Human Rights Council has created a forum for positive competition as governments prepare and compare their NAPs with respect to procurement. As analyzed by ICAR and the European Coalition for Social Justice, the first several NAPs completed by European governments describe existing policy, but they do not commit to stronger goals or methods for respecting human rights in procurement.52 If the United States follows this pattern, it will cast a wet blanket on the process. But if the United States submits a NAP that recognizes gaps with candor and commits to clear goals for reform, the U.S. leadership will be catalytic.

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As outlined above, the U.S. NAP is ideally suited to kick-start a process of reform that is supported by existing Executive Branch authority to: (1) Require transparency of government supply chains—the essential first step; (2) Expand the scope of protection beyond trafficking (and forced labor) to include child labor, discrimination, illegal wages and hours, unsafe working conditions, and denial of fundamental freedoms; (3) Require independent monitoring that is worker-centered and accountable to the government, not to producers who employ the social auditors; and (4) Harmonize purchasing power in order to facilitate a common market for decent work and respect for human rights.

We value this opportunity to offer recommendations to further the evolution of federal procurement policy, and we look forward to ongoing participation in the development, implementation, and review of the U.S. NAP. Should you require any additional information regarding this submission, please do not hesitate to contact us.

Sincerely,

Amol Mehra, Esq. Director International Corporate Accountability Roundtable amol@icar.ngo

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Endnotes 1

Ian Urbina, U.S. Flouts Its Own Advice in Procuring Overseas Clothing, N.Y. TIMES (Dec. 22, 2013), http://www.nytimes.com/2013/12/23/world/americas/buying-overseas-clothing-us-flouts-its-ownadvice.html?pagewanted=all&_r=0; see also Robert Kuttner, Fashioning Justice for Bangladesh, AM. PROSPECT (Aug. 13, 2013), http://prospect.org/article/fashioning-justice-bangladesh.

2

Ian Urbina, The Shopping List as Policy Tool, N.Y. TIMES (Jan. 25, 2014), http://www.nytimes.com/2014/01/26/sundayreview/the-shopping-list-as-policy-tool.html.

3

John Ruggie, Special Representative of the Sec’y-Gen. on the Issue of Human Rights & Transnational Corps. & Other Bus. Enters., Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, U.N. Doc. A/HRC/17/31, Principle 6 (June 2011) [hereinafter UN Guiding Principles], available at http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf.

4

The USMC revised its policy in two ways: (1) it generally requires licensees to certify that they comply with requirements of the Accord on Building and Fire Safety in Bangladesh, and (2) it withdraws from licensing of apparel sourced in Bangladesh. Steven Greenhouse, Marines Toughen Rules for Makers of Licensed Clothing, N.Y. TIMES (Nov. 22, 2013),

http://www.nytimes.com/2013/11/23/business/marines-toughen-rules-for-makers-of-licensed-clothing.html?_r=0; United States Marine Corps, Trademark Licensing Qualification Standards, http://www.hqmc.marines.mil/Portals/134/Docs/Trademark%20Licensing%20Qualification%20Standards%202015.pdf (last visited July 8, 2015).

5

See INT’L LABOR RIGHTS FORUM (ILRF), DANGEROUS SILENCE—WHY THE U.S. MILITARY EXCHANGES NEED TO ADDRESS UNSAFE AND ILLEGAL CONDITIONS IN THEIR SUPPLIER FACTORIES 10-11 (2014), available at

http://www.laborrights.org/sites/default/files/publications/Dangerous_Silence-Low_Resolution_for_Viewing_Online.pdf (viewed August 11, 2015).

6

ROBERT STUMBERG ET AL., ICAR, TURNING A BLIND EYE: RESPECTING HUMAN RIGHTS IN GOVERNMENT PURCHASING (2014), available at http://icar.ngo/initiatives/procurement/[hereafter, ICAR, Turning a Blind Eye)

7

Id. at 8-15.

8

Id. at 46-47.

9

Human Rights Council Res. A/HRC/26/L.1. Rep. of the Human Rights Council, 26th Sess., June 10-27, 2014 (June 27, 2014) available at http://www.norway-geneva.org/EFTA1/Statements/26th-Session-of-the-Human-Rights-Council/Item-3-Promotionand-protection-of-human-rights/Business-and-Human-Rights-Resolution-/#.U63LWGSxPgJ.

10

UN Guiding Principles, supra note 3, princ. 6.

11

Id., commentary to princ. 6.

12

See GAO, Federal Contracting: Commercial Item Test Program Beneficial, but Actions Needed to Mitigate Potential Risks, GAO-14-178 ($90 billion of commercial items in FY 2011, approximately 17% of total procurement); USAspending.gov, Overview of Awards by Fiscal Year, https://www.usaspending.gov/transparency/Pages/OverviewOfAwards.aspx.

13

See David J. Doorey, The Transparent Supply Chain: From Resistance to Implementation at Nike and Levi-Strauss, 103 J. BUS. ETHICS 587603 (2011). Levi Strauss and Nike disclose their direct suppliers and claim to be working to improve practices by companies further down the supply chain, e.g. fabric mills, yarn spinning mills, cotton producers, plastics, rubber, metals, etc. See Levi Strauss & Co., Product Suppliers, http://levistrauss.com/sustainability/production/#product-suppliers (viewed September 8, 2015); Nike Supply Chain Disclosure, http://help-en-us.nike.com/app/answers/detail/article/supply-chain/a_id/20878 (viewed September 8, 2015).

14

Sweatfree Communities, Sweatfree Purchasing Policies, Disclosure of Supplier Factories, http://www.sweatfree.org/disclosurepolicies (viewed September 7, 2015).

15

State of Maine, Database of Supply Chain Sources and Locations for “Point of Assembly,” http://www.state.me.us/purchases/reports/cocdata_12_2009.htm (viewed September 7, 2015).

16

City of Los Angeles, Department of General Services, Sweatfree Procurement, at Contractors and Subcontractors, http://gsd.lacity.org/sms/Sweat-Free_procurment.htm (viewed September 8, 2015).

17

City of Madison, Wisconsin, Uniform Management Program Request for Proposals, available at Sweatfree Purchasing Consortium, http://buysweatfree.org/uniform_management_program (viewed August 11, 2015).

18

Sweatfree Purchasing Consortium, Welcome to Sweatfree LinkUp!, http://buysweatfree.org/linkup (viewed September 7, 2015) (“Sweatfree LinkUp! is a new database of apparel factories, manufacturers, and vendors in the government procurement supply

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chain. It is a tool for increased transparency and labor rights accountability in the industry.”)

19

The county council changes the range for personal computers, VERKSAMHET (May 18, 2015), available in Swedish at http://www.sll.se/verksamhet/halsa-och-vard/nyheter-halsa-och-vard/2015/05/Landstinget-andrar-sortiment-forpersondatorer/ (viewed August 11, 2015).

20

Federal Funding Accountability and Transparency Act of 2006, Pub. L. No. 109-282, § 2(b)(1)(D), 120 Stat. 1186, 1187 (2006); Reporting Executive Compensation and First-Tier Subcontract Awards, 77 Fed. Reg. at 44052-53. There is a long history of making information about the location where the work under federal contracts is performed available to the government.

Congress has passed a number of laws recognizing the right of federal contracting agencies to inspect the facilities and records of contractors; exercising this right would not be possible without the location of the facilities. These statutes include: 10 U.S.C. § 2313 (“Examination of records of contractor,” including authorization “to inspect the plant”); 41 U.S.C. § 4706(b)(1) (“Examination of facilities and records of contractor”); 41 U.S.C. § 3905 (“Cost contracts,” recognizing a “right to inspect the plans and to audit the books and records of a prime contractor or subcontractor engaged in the performance of a cost or costplus-a-fixed-fee contract”).

21

S. 2590, 109th Cong. (2006) (enacted), https://www.govtrack.us/congress/bills/109/s2590. Republican cosponsors included (current Members of Congress in italics): Thomas Coburn, Sponsor (R-OK); John McCain III (R-AZ); Chuck Grassley (RIA); John Cornyn (R-TX); Mitch McConnell (R-KY); Rick Santorum (R-PA); James W. Demint (R-SC); John E. Sununu (R-NH); George Allen (R-VA); Johnny Isakson (R-GA); Susan Collins (R-ME); William H. Frist (R-TN); Lamar Alexander (R-TN); Norm Coleman (R-MN); Jeff Sessions III (R-AL); John Thune (R-SD); George Voinovich (R-OH); Michael Dewine (R-OH); Saxby Chambliss (R-GA); David Vitter (R-LA); Olympia Jean Snowe (R-ME); Chuck Hagel (R-NE); James Talent (R-MO); Sam Brownback (R-KS); Michael B. Enzi (R-WY); Craig Thomas (R-WY); Larry Craig (R-ID); Elizabeth Dole (R-NC); Richard M. Burr (R-NC); Jon Kyl (R-AZ). Democrat cosponsors included: Barack Obama (D-IL); Hillary Rodham Clinton (D-NY); John Kerry (D-MA); Harry Reid (D-NV); Richard Durbin (D-IL); Thomas Carper (D-DE); Evan Bayh (D-IN); Joseph Lieberman (D-CT); Barbara Boxer (D-CA); Mary L. Landrieu (D-LA); Jeff Bingaman Jr. (D-NM); Christopher Dodd (D-CT); Russell Feingold (D-WI); Robert Menendez (D-NJ); Max Baucus (D-MT); Kenneth Lee Salazar (D-CO); Maria E. Cantwell (D-WA); Bill Nelson (D-FL).

22

Government Funding Transparency Act of 2008, Pub. L. No. 110-252, § 6202(a), 122 Stat. 2323 (2008); Digital Accountability and Transparency Act of 2014 (DATA Act), Pub. L. No. 113-101, 128 Stat. 1146 (2014).

23

Federal Acquisition Regulation; FAR Case 2006-029, Federal Funding Accountability and Transparency Act (FFATA) - Reporting Requirement of Subcontractor Award Data, 72 Fed. Reg. 51306, 51309 (Sept. 6, 2007).

24

Note that Congress exclude de minimus transactions from the transparency mandate. Excluded are individual transactions of less than $25,000 (Transparency Act, § 2(a)(2)(B)) and procurement awards to businesses with annual gross revenues below $300,000 (Transparency Act, §§ 2(a)(1)(A)(viii) and (1)(B)).

25

The FAR Council explicitly found that doing so “most effectively furthers the policy [of the End Trafficking in Government Contracting Act], including economy and efficiency in procurement.” Federal Acquisition Regulation; Ending Trafficking in Persons, Final Rule, 80 Fed. Reg. 4967; 48 CFR Parts 1, 2, 9, 12, 22, 42, and 52 (January 29, 2015).

26

Federal Acquisition Regulation; Ending Trafficking in Persons, Final Rule, IV. Determinations, B. Applicability to Contracts for the Acquisition of Commercial Items, 80 Fed. Reg. 4984 (January 29, 2015).

27

ICAR, Turning a Blind Eye, supra note 6, at 8-15.

28

Id. at 25; see The Generalized System of Preferences (GSP), 19 U.S.C. § 2462-2467; Korea—United States Free Trade Agreement, Chapter 19, art. 19.2: Fundamental Labor Rights (entered into force Mar. 15, 2012) available at http://www.ustr.gov/sites/default/files/uploads/agreements/fta/korus/asset_upload_file934_12718.pdf (viewed August 11, 2015); OPIC, OPIC—Environmental and Social Policy Statement § 4.8, Appendix B, & Appendix D (Oct. 15, 2010), available at http://www.opic.gov/sites/default/files/consolidated_esps.pdf (viewed August 11, 2015).

29

ICAR, Turning a Blind Eye, supra note 6, at 25.

30

Federal Property and Administrative Services Act (FPASA), 40 U.S.C. § 121(a); 40 U.S.C. § 417; 40 U.S.C. § 481; see Vanessa K. Burrows & Kate M. Manuel, Presidential Authority to Impose Requirements on Federal Contractors, CRS 3 (June 14, 2011).

31

Walsh-Healy Act, 41 U.S.C. § 65; Pub. L. No. 74-846; 49 Stat. 2036 (1936); H.R. Rep. No. 74-2946, at 4 (1936). The House report that accompanied the Act stated specifically that “[t]he object of the bill is to require persons having contracts with the Government to conform to certain labor conditions in the performance of the contracts and thus to eliminate the practice under which the Government is compelled to deal with sweatshops.” Id. The Supreme Court has recognized that the Act’s “purpose is to use the leverage of the Government’s immense purchasing power to raise labor standards.” Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 507 (1943). Additionally, the Court has recognized that the Act’s “purpose was to impose obligations upon those favored with Government business and to obviate the possibility that any part of our tremendous national expenditures would go to forces tending to depress wages and purchasing power and offending fair social standards of employment.” Perkins v. Lukens

8

Steel Co., 310 U.S. 113, 128 (1940).

32

See 41 U.S.C. § 6502. The section states that it covers contracts “for the manufacture or furnishing of materials, supplies, articles, or equipment,” which is to be distinguished from contracts for services or construction, which are not covered by the Act. Id.

33

41 C.F.R. § 50-201.603(b). While the CFR provides Dec. 8, 1960 as the date on which the current regulation was finalized and posted in the Federal Register that is merely the date of the most recent revision of the exemption. The exemption has existed, in some form, since the very first regulations ever promulgated under the Act. See 1 Fed. Reg. 1405.

34

As enacted, the plain language of the Act stated that it was to apply to “any contract” made by an agency of the United States.

Pub. L. No. 74-846. The Act was reenacted in 2011 with altered language as part of a grammatical revision to all of Chapter 41 of the U.S. Code, which was not meant to affect the substance, meaning, or congressional intent of the provisions. See Pub. L. No. 111-350, 124 Stat. 3808 (2011). The reenactment slightly changed the language to state “A contract made by an agency of the United States.” 41 U.S.C. § 6502. However, this reenactment was meant to recodify precisely the same meaning and congressional intent as had existed before the language was altered. Therefore, the “any” before “contract made by” should continue to be read as being part of the meaning of the current Act.

35

The purpose of the Act was to take the place of two Executive Orders that were made ineffective by the Supreme Court’s ruling in A.L.A. Schechter Poultry Corp v. United States. See S. 3055: A Bill to Provide Conditions for the Purchase of Supplies and the Making of Contracts, Loans, or Grants by the United States, and for Other Purposes: Hearing Before the S. Comm. on Education And Labor, 74th Cong. 2 (1935) (statement of Stanley Reid, Solicitor General of the United States)(“The necessity for this bill arises from the setting aside of the codes of fair competition that occurred after the Schechter decision. There had been, as the committee will know, an Executive order which applied to Government contracts under the codes and covering the provisions of those codes.”); see S. Rep. No. 74-1157, at 4 (1935); S. Rep. No. 74-1193, at 4 (1935); see A.L.A. Schechter Poultry Corp v. United States, 295 U.S. 495 (1935); see Exec. Order No. 6246, available at http://www.presidency.ucsb.edu/ws/index.php?pid=14500; see Exec. Order No. 6646, available at http://www.presidency.ucsb.edu/ws/index.php?pid=14828; see Pub. L. No. 73-67. Executive Order 6246 had explicitly stated that it exempted supplies produced outside of the United States or it territories from its requirements, indicating that when Congress chose not to include such an exemption it was a purposeful choice to impose the Act on such supplies. See Exec. Order No. 6246, available at http://www.presidency.ucsb.edu/ws/index.php?pid=14500.

36

In creating the exemption in 1936—and continuing it to today—DOL, by implication, has consistently interpreted the Act as applying to contracts performed abroad; if the Act did not apply to those contracts, then there would be no need for a “full administration exemption” for all such contracts. If DOL had understood the Act as not applying to contracts performed abroad, then it could have simply made that understanding into an official interpretation of the Act and included it as such in the agency’s “Rulings & Interpretations” that it published after the Act’s passage. See Rulings and Interpretations under the Walsh-Healey Public Contracts Act (Public, No. 846, Seventy-fourth Congress, Approved June 30, 1936), 17, Rulings and Interpretations No. 1, U.S. Government Printing Office, Washington, D.C. (1937).

37

There are two other administrative impediments to Walsh-Healy coverage of imported goods and services, but these could be cured through administrative rulemaking.

The first impediment is that current DOL rules do not apply Walsh-Healy to subcontractors, in part because the Secretary of Labor has excluded foreign suppliers, as noted above. However, both DOL and federal courts have consistently interpreted the Act as being applicable to subcontractors in order to prevent circumvention of the Act through subcontracting. See Rulings and Interpretations under the Walsh-Healey Public Contracts Act (Public, No. 846, Seventy-fourth Congress, Approved June 30, 1936), 3, Rulings and Interpretations No. 1, U.S. Government Printing Office, Washington, D.C. (1937); Walsh-Healey Public Contracts Act, Rulings and Interpretations, No. 2, Superseding No. 1, 18, Sept. 29, 1939, U.S. Government Printing Office, Washington, D.C. (1939); Walsh-Healey Public Contracts Act, Rulings and Interpretations, No. 3, Superseding No. 1, and No. 2, and Supplement, 17-18, Oct. 1, 1945, U.S. Government Printing Office, Washington, D.C. (1946); U.S. Department of Labor: Wage and Hour Division, Field Operations Handbook (FOH), Chapter 13, available at http://www.dol.gov/whd/FOH/ (accessed April 3, 2015). Additionally, the courts have roundly approved of the interpretation as fulfilling the purpose of the Act by disallowing circumvention of the Act through subcontracting. See U.S. v. Davison Fuel & Dock Co., 371 F.2d 705, 710-13 (4th Cir. 1967); U.S. v. New England Coal and Coke Co., 318 F.2d 138, 147 (1st Cir. 1963); George v. Mitchell, 282 F.2d 486, 491-93 (D.C. Cir. 1960).

The second impediment is that the FAR Council has deemed commercial items to be excluded from the scope of WalshHealy protection. However, the FAR Council has applied an erroneous interpretation of the Walsh-Healy Act’s exclusion of “open market” purchases. The Department of Labor has consistently applied “open market” only to items that agencies are authorized by law to purchase without advertising for bids and as not applying broadly to items that are available to the general public (the meaning of commercial items). Walsh-Healey Public Contracts Act, Rulings and Interpretations, No. 3, Superseding No. 1, and No. 2, and Supplement, 10, Oct. 1, 1945, U.S. Government Printing Office, Washington, D.C. (1946). The D.C. Circuit Court of Appeals has upheld the DOL’s interpretation. Ruth Elkhorn Coals, Inc. v. Mitchell, 248 F.2d 635, 638-39 (D.C. Cir. 1957), cert. denied, 355 U.S. 953 (1958) (finding that DOL’s interpretation was consistent with the statute’s other provisions, consistent with the broad purposes of the Act, consistent with a comptroller general determination, consistent with Congressional appropriations for the Act, and, therefore, reasonable).

38

Exec. Order No. 13423, 72 F.R. 3919, 3920 (2007).

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39

EPEAT Market Surveillance Entity Fees, available at http://www.epeat.net/resources/for-manufacturers/#tabs-1=fees; see also EPEAT Product Registration Entities available at http://www.epeat.net/participants/pres/.

40

EPEAT History, available at http://www.epeat.net/about-epeat/history/; EPEAT Global Reach, available at

http://www.epeat.net/about-epeat/global-reach/.

41

International Labor Rights Forum, Protecting Human Rights through Government Procurement Recommendations for Responsible Supply Chain Management, Corporate Accountability, and Worker Access to Remedy in US Government Procurement (May 2015) (submitted for the U.S. National Action Plan on Business and Human Rights).

42

For example, the City of Los Angeles retains the Worker Rights Consortium to monitor contractor compliance with the city’s Sweatfree Code of Conduct. See, e.g., Worker Rights Consortium, Report on Initial Consultations re: City of Los Angeles Sweat Free Ordinance, Sweat Free Ordinance Independent Monitor Agreement (Agreement No. C-120419), available at http://gsd.lacity.org/sms/WRC/WRC%20Initial%20Consultations%20report%20for%20LA%202015.pdf; City of Los Angeles, Department of General Services, Sweat-Free Procurement, http://gsd.lacity.org/sms/Sweat-Free_procurment.htm (viewed September 8, 205). On a larger scale, the WRC also monitors factory-level compliance with the WRC code of conduct for licensing of university-related apparel. See Worker Rights Consortium, Factory Reports, Overview, http://www.workersrights.org/Freports/overview.asp (viewed September 8, 2015).

43

Exec. Order No. 13693, 80 F.R. 15871, 1580-81 (2015).

44

Id.

45

See, e.g., GENERAL SERVICES ADMINISTRATION, THE NEW SUSTAINABLE FRONTIER: PRINCIPLES OF SUSTAINABLE DEVELOPMENT, WE MUST SUPPORT THE ABILITY OF ALL PEOPLE TO LIVE WITH DIGNITY AND RESPECT 29 (September 2009).

46

See generally RICKARD M. LOCKE, THE PROMISE AND LIMITS OF PRIVATE POWER: PROMOTING LABOR STANDARDS IN A GLOBAL ECONOMY (Cambridge University Press, 2013); ILRF, DANGEROUS SILENCE 29 (2014); Declan Walsh & Steven Greenhouse, Inspectors Certified Pakistani Factory as Safe Before Disaster, N.Y. Times (Sept. 19, 2012), http://www.nytimes.com/2012/09/20/world/asia/pakistan-factory-passed-inspection-before-fire.html?pagewanted=all&_r=0; GARRET BROWN, THE RECORD OF FAILURE AND FATAL FLAWS OF CSR FACTORY MONITORING (2013), available at http://mhssn.igc.org/MHSSN_Statement_on_CSR_Monitoring-Jan2013.htm; Asia Monitor Resource Center, The Reality of Corporate Social Responsibility: Experiences from China, South Korea, India and Indonesia, http://www.amrc.org.hk/node/1220 (viewed August 19, 2015).

47

See About EPEAT: History, available at http://www.epeat.net/about-epeat/history/, and Global Reach, available at http://www.epeat.net/about-epeat/global-reach/ (viewed August 11, 2015).

48

SWEATFREE PURCHASING CONSORTIUM, ENDING PUBLIC PROCUREMENT FROM SWEATSHOPS, http://buysweatfree.org/ (viewed August 11, 2015).

49

See International Labor Rights Forum, supra note 41, at 4.

50

See, e.g., OFFICE OF MANAGEMENT AND BUDGET, PROPOSED REVISIONS TO CIRCULAR A-119: FEDERAL PARTICIPATION IN THE DEVELOPMENT AND USE OF VOLUNTARY CONSENSUS STANDARDS AND IN CONFORMITY ASSESSMENT ACTIVITIES, available at https://www.whitehouse.gov/sites/default/files/omb/inforeg/revisions-to-a-119-for-public-comments.pdf (viewed August 11, 2015).

51

Directive 2014/24/EU of The European Parliament and of The Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC, Official Journal of the European Union, L94/65 (28 March 2014); see Éric Van den Abeele, Integrating Social and Environmental Dimensions in Public Procurement: One Small Step for the Internal Market, One Giant Leap For The EU?, Working Paper 2014.8, European Trade Union Institute (2014).

52

ICAR & ECCJ, ASSESSMENTS OF EXISTING NATIONAL ACTION PLANS (NAPS) ON BUSINESS AND HUMAN RIGHTS (Nov. 2014), available at http://icar.ngo/analysis/napsassessments/ (viewed August 11, 2015).

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