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DOD Interim Ruling on Award Fee Reduction

December 02, 2010
Federal Contracts Report
 Interim Rule Outlines Instances DOD Is to Consider Reducing, Denying Award Fees
 The Defense Department is scheduled to issue an interim rule Nov. 12 that includes a clause detailing when contracting officers should consider reducing or denying award fees if a contractor or subcontractor jeopardizes the health or safety of government personnel.
 The interim rule, which will be effective immediately, implements section 823 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. No. 111-84), which gave DOD the authority to reduce or deny award fees (92 FCR 347, 11/17/09).
 The interim rule requires COs to include, in the evaluation of award fee plans, reviews of contractor actions that jeopardized the health and safety of government personnel.
 The clause that is detailed in the interim rule defines a covered incident as one in which a contractor, through a criminal, civil, or administrative proceeding, is determined to have caused—or is determined to be liable for a subcontractor's actions that caused—serious bodily injury or death to government civilian or military personnel through gross negligence or with reckless disregard for safety.  In addition, the clause says a covered incident involves a criminal, civil, or administrative proceeding that results in:
• a conviction in a criminal proceeding;
• a finding of fault or liability resulting in a monetary fine, penalty, reimbursement, restitution, or damage of at least $5,000 in a civil proceeding;
• a finding of fault and liability resulting in a monetary fine or penalty of at least $5,000, or reimbursement, restitution, or damages of at least $100,000 in an administrative proceeding; or
• a disposition by consent or compromise with the contractor's acknowledgement of fault if the proceeding could have resulted in one of the above outcomes for a criminal, civil, or administrative proceeding.
 In the clause, serious bodily injury is defined as “grievous physical harm that results in a permanent disability.”
 The clause also specifies that the government may reduce or deny an award fee for the period in which the covered incident occurred if, in performing a contract, a contractor's or subcontractor's actions caused serious bodily injury or death of government personnel.
 In addition, the clause specifies recovery is possible for all or part of award fees paid in previous periods in which a covered incident occurred.
 The clause is to be used in all solicitations and contracts with award fee provisions.
 The rule writers said DOD does not expect the interim rule to have an effect on small businesses because those companies typically do not receive award fee contracts.
 The department said it will consider comments as it prepares a final rule, and comments are due 60 days from publication in the Federal Register.
 FY 2011 Authorization Bill
 Section 843 of the Senate version of the fiscal year 2011 defense authorization bill (S. 3454), which has not yet passed the full Senate, would amend the FY 2010 authorization law to enhance DOD's authority to reduce or deny award fees if a contractor jeopardizes the health or safety of government personnel.
 Specifically, DOD would be authorized to make a final determination on whether the contractor caused serious bodily injury or death through gross negligence or with reckless disregard for safety.
In comments July 27, the Acquisition Reform Working Group opposed the provision, saying current law “already adequately addresses circumstances in which contracts using award fees provide for the consideration of any relevant, proven incident in evaluations of contractor performance for award fees” (94 FCR 148, 8/10/10).
 The interim rule is available at: http://www.ofr.gov/OFRUpload/OFRData/2010-28494_PI.pdf.

90 Day Extension - OSHA Noise Interpretation Comment Period

December 01, 2010

The following has been received from the Shipbuilders Council of America. This is an important issue for our industry and will have significant impact.  Your comments are encouraged.

November 19th - This morning at a Small Business Meeting Office of Advocacy meeting, the Department of Labor’s Office of the Solicitor of Labor announced that they intend to extend the comment period for re-interpretation of the OSHA noise abatement requirement comment by 90 days. The original comment deadline was scheduled for December 20th. We expect the new deadline to be sometime in late March, 2011. This extension is particularly important, allowing ample time to fully assess the impact of the interpretation, which we estimate to be massive. As we work to compile an economic analysis and comments, I will update the committee.

As previously reported, OSHA has proposed a new interpretation of “economic feasibility” as it would relate to engineering and administrative controls under the noise reduction standard. In short, they are saying that anything which does not threaten the viability of the business will now be considered economically feasible; employers will no longer be able assume that they can protect employees from excess exposure to noise through the use of PPE, i.e. ear plugs and headphones. Obviously, this has the potential to be extraordinarily disruptive and outrageously expensive: any employer who has employees wearing any hearing protection should expect to be affected by this new interpretation. While engineering controls may not be available for all workplaces, administrative controls (controlling exposure through rotating employees) will always be available and will likely be less costly than required to threaten the viability of the business.

The Federal Redister - OSHA Noise Interpretation notice.  SCA has submitted a letter that requested an extension of the comment period which closes on December 20. By not following a regular rulemaking process, OSHA is exercising unusual authority and is able to bypass any economic impact analysis by SBA or OMB. It is therefore vital that we challenge this interpretation in force and have ample time to do so.

SCA is working with the Coalition for Workplace Safety (CWS), a broad industry group of which SCA is a member, to develop an economic impact analysis and comments - SCA will also file individual comments. As these progress I will update the committee. CWS is also considering a legal challenge. 

OSHA’S PROPOSED CHANGES TO NOISE CONTROL STANDARDS - Issue Overview

Summary
The Occupational Safety and Health Administration (OSHA) issued a notice on October 19, 2010 announcing its intention to change its official interpretation of workplace noise exposure standards and enforcement. This notice is not a proposed rulemaking.

Currently, OSHA regulates the acceptable levels of noise to which employees are exposed in the workplace. To protect employees against hearing loss, the Agency has maintained a decades-old policy that allows employers to provide “personal protective equipment” such as ear plugs and ear muffs as well as engineering controls like noise-dampening equipment and muffling systems to effectively supplement their operating practices. OSHA’s common-sense approach held that it was permissible for employers to adopt these practices when they were effective.

However, OSHA now plans to abandon this practice. In its notice, the Agency announces a goal of requiring employers to implement all “feasible” controls – with “feasible” meaning “capable of being done”– regardless of the costs or effectiveness of currently-used personal protective equipment. According to the notice, these changes must be adopted regardless of the costs unless an employer can prove that making such changes will “put them out of business” or severely threaten the company’s “viability.” In addition, the only justification for the changes provided by the OSHA notification was the realignment of the Agency’s policy of effective noise abatement based on certain legal interpretations.

To be clear, this proposal is not a proposed regulation or standard and it does not lower the threshold for employee noise exposure. However, this proposal is a change to a long-held OSHA policy. The Agency has requested public comments on the proposal before December 20, 2010.

Impact
If the Agency implements the proposal, employers that have not made every systematic change “capable of being done” will have to make sweeping changes to their workplaces, including:

    • Developing new workplace practices, procedures and work schedules;
    • Installing new equipment such as baffles and other sound containment devices; and
    • Retrofitting machines and production systems with often expensive noise-dampening controls.

These changes would be required even if effective mechanisms are already in place to protect employees from loud noises. Unfortunately, this proposal will force manufacturers to divert additional resources away from job creation, investment and expansion.

OSHA has indicated that it intends to enforce this new interpretation by issuing citations for employers found in non-compliance. Unless employers can prove to OSHA inspection officers that the changes will be economically devastating or are impossible to make, businesses will be forced to implement them, which will be particularly costly and burdensome for smaller-sized manufacturers.

OSHA Updates Shipyard PPE DIrective

December 01, 2010

OSHA updates Shipyard PPE directive to include PPE Payment

This month OSHA updated its Enforcement Guidance for Personal Protective Equipment in Shipyard Employment.

Recall, OSHA previously issued a directive on personal protective equipment that includes employer requirements to pay - that is, provide at no cost to the worker - for certain PPE. Steel-toed rubber boots, goggles, hard hats, hearing protection and respirators are some of the protective items employers must provide free of charge. This revised Web-based directive also describes equipment that employers do not have to pay for, such as ordinary clothing used as protection from weather, non-specialty prescription safety eyewear, and PPE that a worker already owns and is allowed to use instead of the employer-provided PPE.

The Directive abstract states its purpose is “To provide guidance concerning the application of current enforcement policy and procedures for personal protective equipment (PPE) in shipyard employment. Also, to ensure consistent enforcement of 29 CFR Part 1915, Subpart I, PPE including PPE payment for shipyard employment activities.”

This revised shipyard PPE guidance also recognizes consensus standards updates in OSHA’s September 2009 final rule, Updating OSHA Standards Based on National Consensus Standards; Personal Protective Equipment. It sets forth enforcement policies that OSHA inspectors should use when citing employers for failing to provide the necessary PPE to their workers.

Maritime Cabotage News

November 02, 2010
The Maritime Minute
 
News From The Maritime Cabotage Task Force 

LATEST NEWS:  The AP reports that the U.S. Navy opposes legislation in Congress that would scrap the 90-year old Jones Act. The Act requires vessels transporting goods between states to have been built in the United States, be crewed and owned by U.S. citizens, and to fly the U.S. flag. The Navy says repealing the act would erode the U.S. shipbuilding industry and hamper its ability to meet strategic ocean transport requirements and Navy shipbuilding. Click here to read MCTF release.

MCTF STATEMENT ON ADMIRAL THAD ALLEN’S RETIREMENT:  “We are grateful for the service of Admiral Thad Allen throughout his career, and particularly for his leadership during the BP oil spill. Admiral Allen handled the spill response with calm professionalism. Working in collaboration with experts in industry and government, Admiral Allen helped lead the largest maritime mobilization since D-Day… When some played politics with the crisis and accused the Jones Act of hindering the clean-up effort, Admiral Allen rejected such falsehoods based on the facts as he knew them to be.” Click here to read the full statement.  

CROWLEY MARITIME TO CONSTRUCT TWO BARGES:  Crowley Maritime announced plans to construct two double-hulled, combination deck cargo and tank barges for service in Alaska. The barges are to be delivered in April and May of 2011, and will be home ported in Nome, Alaska. The double-hull barges will be used for shallow-draft operations and beach landings for the delivery of fuel and cargo to the remote communities of western Alaska.

DID YOU KNOW?  The domestic shipping operations of the American merchant marine provide essential services to 41 states reaching 90 percent of the national population. Domestic waterborne transportation contributes $7.7 billion to the gross domestic product annually in the form of freight revenue.
 FOLLOW THE MCTF:  You can now follow the Maritime Cabotage Task Force on Twitter, visit http://twitter.com/MCTF_JonesAct.

The MCTF is the most broad-based coalition the U.S. maritime industry has ever assembled to promote the cabotage laws. Its 400-plus members span the United States and its territories and represent vessel owners and operators, shipboard and shoreside labor groups, shipbuilders and repair yards, marine equipment manufacturers and vendors, trade associations, dredging and marine construction contractors, pro-defense groups and companies in other modes of domestic transportation. These diverse but allied interests share a common goal: to promote the long-standing U.S. maritime cabotage laws. Upon a foundation of U.S. ownership, construction and crews, the United States has built an unsubsidized domestic fleet that is the world leader in efficiency, innovation and safety.

 

Article on OSHA's Propossed Changes to Noise Standards

October 29, 2010

OSHA: An Astonishingly Representative Tale of the Regulatory Surreal
posted at 8:41 pm on October 28, 2010 by J.E. Dyer
A reader forwarded me the link to this post by the law firm Nixon Peabody on a recent OSHA decision to change its basis for enforcing the standards on hearing protection in the workplace.

The summary of the OSHA move is as follows: since 1983, OSHA has accepted the use of personal hearing protection as an adequate means of reducing noise exposure, in situations where personal protective equipment (PPE) is, in fact, adequate (that is, it meets the federal standard for protection against noise exposure). An alternative means of reducing noise exposure is to reduce the noise itself, through equipment retooling, sound dampening, etc. OSHA has generally declined to fine employers who did not take such noise-reduction measures, as long as the use of PPE in their workplaces provided adequate protection for workers.

But OSHA has filed notice in the Federal Register that it will no longer operate on that basis. It will instead begin assuming that what employers should be doing is reducing noise in the workplace in preference to relying on PPE for workers. It will consider cost to the employer as a mitigating factor only if, in its judgment, the cost would compromise an employer’s ability to remain in business.

Nixon Peabody points out that this is likely to cost a lot of businesses a lot of money – and furthermore, that it is unclear from the get-go what standard OSHA will use to determine the “feasibility” of taking material noise-reduction measures. Cost aside, how will the standard be defined? By industry associations? By the practices of the largest and wealthiest companies? Will OSHA just make something up?

But I’m still stuck back on that thing about PPE providing adequate hearing protection. I urge everyone (seriously) to read the statement in OSHA’s Federal Register filing, dense and painful though it may be, because it acknowledges in passing, half a dozen times, that the use of PPE has been providing adequate protection. Just to be clear, that means workers have not been exposed to noise exceeding federal standards, when PPE is their employers’ main method of protecting them. To be even clearer, it means there is nothing bad happening here. Workers are protected. Hearing loss is not epidemic. There is no problem.

But in an obviously tortured – one might almost say angst-filled – bureaucratic decision process, OSHA has in effect decided that it’s high time to shift the basis for enforcement from protecting workers’ hearing to reducing noise absolutely. The way OSHA puts the case is that it was wrong for the hearing-protection basis for enforcement to have been implemented in 1983, because that basis takes into account cost-benefit analyses from the employer’s standpoint. The upshot has been that the employer is allowed, in effect, to choose the lower-cost of the alternatives that will protect his workers’ hearing (that is, in most cases, PPE).

OSHA’s highly abstract point – the tenet on which it bases its whole decision – is that nothing in the original law can be construed to give employers that option. Cost-benefit, in OSHA’s view, was not intended by the law’s language to be a factor, and therefore it shouldn’t be a consideration in regulatory execution.

OSHA doesn’t go on to explicitly argue that what the law intended was for the standard for enforcement to be absolute noise reduction. That’s the result its new enforcement plan will produce – but OSHA’s argument is, narrowly, that the original law’s language is not a basis for considering an employer’s cost-benefit calculus in enforcement.

This is the sum-total of OSHA’s justification for shifting its basis of enforcement. Again, no problem related to hearing protection is cited as the motivation here. Are we all getting this? There is no problem. A regulatory agency has merely decided that the way it looks at enforcement has been wrong, in terms of an abstract principle, for the last 27 years, and has decided to make a change. After the change, there will be no improvement in hearing protection for American workers. There will be a significant increase in compliance costs for many businesses. It’s more than conceivable – it is likely – that if Congress doesn’t intervene to provide employers some relief, the new enforcement regime will discourage investment and expansion and hurt employee retention.

This is a beautiful illustration of the hazards of government by regulatory fiat. The many court cases and regulatory decisions cited in the OSHA filing ought to be eye-opening for Americans who haven’t been paying attention, or have never had responsible positions in business. This is how the rules that govern us are made today: through endless narrow citations toted up by bureaucrats who argue that Law A “didn’t say exactly ‘B’, and therefore I’m going to do ‘C’.”

Doing “C” in this case amounts to changing the purpose of the law, from protecting workers’ hearing to reducing the absolute amount of noise. It does this not by stating the new purpose but by enforcing the law as if that’s the purpose, on a premise any six-year-old could drive a truck through: that the law doesn’t specify taking a tangential factor into consideration. No justification related to worker health or safety is offered for proceeding in this manner. We the people might think the purpose of the Occupational Safety and Health Act was to protect workers, and that the measure of effectiveness for it would be whether workers’ safety and health were being protected. But we’re not federal bureaucrats.

J.E. Dyer blogs at The Green Room, Commentary’s “contentions” and as The Optimistic Conservative. She writes a weekly column for Patheos.

OSHA Outreach Training Program Changes

October 27, 2010

WASHINGTON – OSHA recently revised its policy for all Outreach Training Programs to address the number of hours each day a student may spend in OSHA 10- and 30-hour classes. OSHA revised the length of daily classroom instruction to prevent workers from being saturated with so much information that they may miss content that could prevent injuries, illnesses and death.

Revised program policy now requires OSHA trainers to limit worker training classes to a maximum of 7½ hours per day. Before OSHA made this change, there were no limitations on how long these classes could last each day. With 10 hours of training, along with necessary breaks and lunch, students could sit in classes for up to 13 hours a day. OSHA became concerned that long, mentally-fatiguing class days might cause students to miss essential safety and health training.

Another concern was that, in some cases, one- and three-day training classes were not meeting 10- and 30-hour program time requirements. This concern became evident after OSHA conducted random records audits and unannounced monitoring visits.

To address these issues, the agency now requires OSHA outreach trainers to conduct 10-hour courses over a minimum of two days and 30-hour courses over at least four days. The agency also set up an outreach fraud hotline at 847-725-7810 to which the public can call to file complaints about program fraud and abuse.
“Limiting daily class hours will help ensure that workers receive and retain quality safety training,” said Assistant Secretary of Labor for OSHA David Michaels.

This policy change is effective immediately and will be reflected in the next revision of the Outreach Training Program Guidelines. OSHA will not recognize training classes that exceed 7½ hours per day or do not meet all program content requirements. In such cases trainers will not receive completion cards to distribute to students. Trainers may, however, submit written requests for exceptions to limiting training days to 7½ hours based on extenuating circumstances.

The Outreach Training Program, a voluntary participation information resource, is part of OSHA’s Directorate of Training and Education, comprises a national network of more than 17,000 independent, trainers who teach workers and employers about OSHA, workers’ rights and how to identify, avoid and prevent workplace hazards. There are 10- and 30-hour outreach classes for construction, general industry and maritime and 16-hour classes for disaster site workers. Students who successfully complete classes receive completion cards.

Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA’s role is to assure these conditions for America’s working men and women by setting and enforcing standards, and providing training, education and assistance. For more information, visit http://www.osha.gov.  

OSHA Proposes Noise Standard Change

October 27, 2010

Late last week, OSHA issued a notice in the Federal Register  requesting feedback on changes to the Agency's noise exposure standards. In their recent OSHA Trade Release , the Agency announced that it is seeking to change its official interpretation of “feasible administrative or engineering controls” for construction and general industry standards. This is an odd publication as it is not a proposed regulation, merely a proposed interpretation.  As such it is not governed by any of the requirements for analyses or response that would attach to a proposed regulation under the APA or OSHA’s rulemaking provisions. Nevertheless, OSHA is receiving comments until December 20, 2010.

Currently, employers must use feasible administrative or engineering controls to reduce noise to acceptable levels. Personal protective equipment (PPE), such as ear plugs and ear muffs, must be used only as supplements when administrative or engineering controls are not completely effective. However, the Agency has been issuing citations to employers that fail to use engineering and administrative controls only when they cost less than a hearing conservation program or if such equipment is ineffective.

Under this new proposal, employers MUST make any “feasible” changes to administrative or engineering controls that are “capable of being done,” regardless of the costs. The Agency cites a 1981 Supreme Court ruling upholding the term “feasible” to mean “capable of being done”, regardless of costs or benefits. The Agency has stipulated that employers will not be required to make such changes if they can prove the changes would “threaten the employers’ ability to remain in business.” Additionally, employers will need to make these wide-sweeping changes unless they can prove the capability does not exist to make administrative changes (intermittent use of machinery, time of exposure, etc.) or engineering controls (such environmental changes and noise dampening equipment) to reduce noise exposure. This burden

This new proposal clearly states that PPE should only be a supplement to administrative or engineering controls to reduce employees’ exposure to noise. I have attached both the Agency’s press release and announcement in the federal register. SCA will comment, and is exploring a potential legal challenge through the Coalition for Workplace Safety, of which SCA is a member.

Again, if implemented, this change will have a substantial economic impact on shipbuilding and repair facilities. Please provide any feedback to me ASAP and I will keep the Committee updated as comments are developed.

Crane Safety Training for Contractors

October 10, 2010

As all of us work to ensure that our environment is safe and productive, the latest Crane Safety Memorandum from the Department of the Navy (4330/Ser400SR/199) is a reminder that our industry is one where safety diligence is paramount. We encourage all of our members to be familiar with the directives of the memorandum, specifically training to the requirements of COMNAVREGMIDANTINST 11262.1 and NAVSEA Standard Item 009-40, with conflicts in requirements resolved by control of requirement COMNAVREGMIDANTINSTF 11262.1

We are here for the benfit of our member companies and welcome any input on how we can better ensure our industry holds the highest standard of safety for our workforce and for our companies.

Northrop Grumman to Build Offshore Wind Turbines

October 08, 2010
Thursday, October 07, 2010
According to an October 6 report from the Daily Press, Northrop Grumman Corp.'s Newport News shipyard and Spanish energy firm Gamesa said they have formed a new partnership to produce offshore wind turbines. Northrop and Gamesa said they are assembling a team of up to 40 engineers in Hampton Roads over the next month to begin preliminary work on the project. Neither company would say where in the region the new venture will be located.
(Source: The Daily Press)

OSHA's New Directions Announced

October 01, 2010

On July 19th, David Michaels, Assistant Secretary of the Department of Labor and OSHA Director, issued an enlightening and important document as the agency entered its 40th year in existence.  This is important reading for all members of the ship repair industry.

OSHA at Forth: New Challenges and New Directions