Billions in U.S. contracts go to labor law violators GAO says $23 billion went to 80 companies; 2 based in Maryland; Procurement


WASHINGTON -- The government is doing billions of dollars' worth of business with companies that fire workers for union activism, intimidate employees and commit other labor violations.

The General Accounting Office, the investigative arm of Congress, says 80 companies won a total of $23 billion from the government in 1993 despite having broken federal labor law. The list includes two Maryland companies -- Westinghouse Electric Corp.'s Electronic Systems division in Linthicum and Caterair International Inc. in Bethesda -- and several companies that operate in the state but are not based here.

The report, the first of its kind, demonstrates how companies can benefit from two wrinkles in the law: It is legal for government agencies to award contracts to labor-law violators. And agencies have no systematic way of knowing whether a company has broken labor law.

Labor experts say these companies capitalize on a government-procurement system that rewards businesses that can curb costs by flouting the law.

"If you have achieved the lowest bid by running a sweatshop, then there is a moral question about the role of the violation in enabling the company to produce that bid," said Patrick Hardin, who has represented management as a lawyer and worked for the National Labor Relations Board and now is a law professor at the University of Tennessee.

"It's basically a moral or political principle that the government ought to at least see that the companies which it does business with obey the law," said Clyde Summers, a law professor at the University of Pennsylvania.

The businesses listed, according to the NLRB in Washington, broke the civil law that guarantees the right to unionize and to bargain collectively. Unless appealed through the federal courts, NLRB decisions are final.

The NLRB cannot impose criminal penalties or punitive damages. The reinstatement of workers with back pay is considered the NLRB's most severe punishment.

Westinghouse, according to the report, failed to bargain with a union about a decision to lay off four workers while transferring operations to another site. The NLRB ordered the company to negotiate in good faith and to reinstate the workers with back pay. The company won $4.9 billion in contracts in 1993.

Westinghouse responded to the report by saying the charges had been "satisfactorily resolved," and "we consider the matter closed."

Northrop Grumman Corp. announced Jan. 3 that it would buy Electronic Systems from Westinghouse for $3.6 billion.

The GAO classified 15 companies as "more serious" violators. One was Caterair International, which caters food for airlines. The company permanently replaced 289 workers during a strike in California in 1991, refused to bargain with the union and tried to decertify it. The NLRB ordered Caterair to reinstate the workers with back pay. The company won $133,000 in contracts from the Army in 1993.

Bob Dunn, a vice president at Caterair, says he supports punishment for repeat violators (Caterair was not one). Disqualifications, he suggested, should be determined on a case-by-case basis, "depending on how pervasive the violations are."

One of the most egregious violators in the GAO report is the Richmond, Va.-based Overnite Transportation Co., which operates terminals in in Baltimore, Landover, Federalsburg, Hagerstown and Cumberland. Since its first NLRB punishment in 1982, the shipping company and its associates have won $70 million in federal contracts.

Overnite's recent troubles with the NLRB included incidents at two Maryland terminals. The NLRB's Baltimore regional director, Louis D'Amico, issued a complaint against Overnite for threatening a Baltimore worker, John Titus, over union activity.

Unless the case is settled, an NLRB trial in Baltimore will consider Mr. Titus' claim, one of roughly 60 complaints against Overnight across the country. Afterward, the NLRB in Washington will determine whether to sanction the company for the fourth time in 14 years.

A spokesman for Overnite, Jeff Jordan, declined to comment on the problems at the Maryland terminals, but said "the vast majority of the cases are specious."

Officials at many government agencies say they have no way of knowing which companies have a history of breaking labor law. According to the report, the NLRB does not share such information with other agencies.

The agencies note that contracting officials are free to disqualify labor-law violators from government contracts -- if they know about the violations.

Tana Adde, a spokeswoman for the NLRB, says the board will consider further action on the GAO's findings. But the board has expressed no opinion on whether repeat offenders should be barred from competing for contracts.

The GAO report is unlikely to have any effect unless Congress forces a change. Sen. Paul Simon, the Illinois Democrat who commissioned the GAO report, has requested that the chairwoman of the Senate Labor and Human Resources Committee, Sen. Nancy L. Kassebaum, hold hearings. Mr. Simon has also introduced legislation to bar for three years companies with a "clear pattern and practice of labor violations."

A spokesman for Mr. Simon, David Carle, said Mr. Simon and Ms. Kassebaum, a Kansas Republican, have "a general understanding" that there will be hearings.

Paul Weiler, a Harvard Law School professor who has chaired a Clinton administration commission on labor relations, notes that labor violators enjoy a competitive edge over those that follow the law. Because they can keep labor costs down, violators often offer the best deal for the government.

"You're sending mixed messages," he said, "and setting up a nonlevel playing field which favors the people who disobey the law when it should be the opposite."

Firms in GAO report operating in Md.

In the GAO report, the violations committed by 15 companies were classified as "more serious." Five of those companies operate in Maryland, although they are not based here.

* Bartlett Nuclear Inc., based in Plymouth, Mass. The company is working with Baltimore Gas and Electric Co. in Calvert Cliffs. The company ended the jobs of 23 striking workers at a California facility and then put the workers on probation for a year.

* Beverly Enterprises, based in Fort Smith, Ark., a repeat violator according to the GAO, runs 1,000 nursing homes, including five rTC in Maryland -- in Frederick, Hagerstown, Westminster and two in Cumberland. The violations listed occurred at 23 facilities, none in Maryland. They included threatening workers with discharge if they voted for a union.

* Lane Construction Co., based in Meriden, Conn., now working on the Washington-area Metro train station in Glenmont. The NLRB found that the company interfered with the holding of a fair and free election at a site in Richmond, Va.

* Overnite Transportation Co., based in Richmond. The company was classified as having a history of labor problems. The violations cited in the GAO report occurred in Lexington, Ky. The company is accused of labor violations in Maryland and elsewhere.

* Waste Management Inc., based in Oak Brook, Ill., manages six offices and centers of operations in Maryland. The GAO report, which classifies the company as a repeat violator, outlines offenses committed in West Jordan, Utah, including discharging an employee for union activity and threatening workers with loss of wages and benefits if they voted the union into power.

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