Federal Contracting Requirements Add Momentum to `Responsible Contractor' Drive; `Record of Compliance With the Law' Relevant to `Responsibility' Determination

Business Wire,  Dec 22, 2000  

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Business/News Editors

PUEBLO, Colo.--(BUSINESS WIRE)--Dec. 22, 2000

Recently issued amendments to federal regulations strengthen the case against the Rocky Mountain Steel Mills (RMSM) subsidiary of Oregon Steel Mills, Inc. (NYSE:OS) and other companies with long histories of noncompliance with labor, health and safety, and environmental laws, according to the United Steelworkers of America (USWA). Federal law has long required agencies to award bids to responsible contractors with a satisfactory record of integrity and business ethics. But the new amendments, which further clarify the kinds of activities which indicate a lack of integrity and business ethics, add momentum to efforts to hold businesses vying for public contracts to existing standards of responsibility. The new federal contracting rules may also help clarify separate responsible contractor policies already in place in U.S. Department of Transportation regulations.

Many states have separate responsible contractor laws similar to the federal requirements, and a number of local transit agencies have adopted resolutions which clarify that a company's record of compliance with labor, environmental, and health and safety laws is relevant to the "responsibility" determination. The federal government's move to expressly acknowledge the importance of compliance with laws to the responsibility determination demonstrates the growing consensus that a company's respect for law is critical to a determination of whether it is a reliable partner on public contracts.

The new federal amendments emphasize that examining a prospective contractor's "record of compliance with the law" is central to a determination of whether the contractor has a "satisfactory record of integrity and business ethics." This is because a "satisfactory record of compliance with the law indicates that the prospective contractor possesses basic honesty, integrity, and trustworthiness, and that the Government can trust or rely on the contractor to perform the contract in a timely manner." Contracting officers "must consider all relevant credible information." Among other things, "evidence of repeated, pervasive, or significant violations of the law" and "failure to comply with the terms of an administrative agreement" may suggest that a company has an unsatisfactory record of integrity and business ethics.

Notably, Rocky Mountain Steel Mills' record includes the following:

-- In August 2000, the federal Occupational Safety and Health Administration
(OSHA) proposed a fine of $487,000 for more than 1,000 instances of violations
of over 100 workplace safety and health standards at the Rocky Mountain Steel
Mill in Pueblo, Colorado. The regional OSHA director said it was the largest
number of violation instances ever found in a single Colorado facility. The
citations followed a rare, two-month comprehensive "wall-to-wall" inspection
that started in March 2000, after a second death in ten months at the mill.

-- In July 1999, Rocky Mountain Steel Mills ("RMSM") agreed to pay a $400,000
fine for numerous health and safety violations, the second largest OSHA penalty
in Colorado history.

-- In May 2000, a federal administrative law judge found RMSM guilty of massive
violations of federal labor law at the Pueblo mill and ordered the company to
reinstate and make back-pay restitution to former striking members of the
United Steelworkers of America.

-- In January 2000, the Colorado Department of Public Health and Environment
sued RMSM for continuing violations of federal air quality standards, some of
which the company was first ordered to correct in June, 1997. The State of
Colorado is seeking an injunction to require compliance with the law and
penalties of $15,000 per day per violation.

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