Mitigating Risk in Vendor and Contractor Relationships
By Craig Reilly
Budget uncertainties and a desire to conduct city and county operations in a more businesslike manner have led to an increase in the use of contracted services, some of which have replaced what was formerly done by government employees.
One of the unforeseen consequences of this initiative has been the emergence of new risks for government purchasing, legal, financial and other departments. These risks, which fall into the categories of reputational, financial and legal, may not have been anticipated. However, they cannot be ignored, as they have an impact on the safety and wellbeing of citizens, employees and other contractors or vendors.
One area that has gained national attention relates to consideration of previous criminal behavior for contractors’ employees. Past criminal offenses can create a continuing liability and the government agency must be mindful of the assessment process used to evaluate that risk.
In the past, public and private organizations sought to simplify this issue through the use of a “Decision Matrix” to help evaluate and select contractors and job applicants. Recently, though, the U.S. Equal Employment Opportunity Commission (EEOC) found the use of these matrices to be unacceptable because they do not take into consideration the full range of circumstances related to previous crimes and/or convictions. One result was a possibly discriminatory impact based on race and/or national origin.
The EEOC ruled, though, that it is acceptable for organizations to consider risk factors that have an impact on job relevance or business necessity, with the goal of ensuring the safety and welfare of employees, citizens/clients, visitors and other contractors; as well as the organization’s reputation. Certain other factors called “Green Factors,” based on Green v. Missouri Pacific Railroad, can be considered. These take into account the nature and gravity of the offense and conduct; the time that has passed since the offense or conduct took place and/or completion of the sentence; and the nature of the job held or sought. The use of arrest records is not recommended, and EEOC guidance notes that the “the conduct, not the arrest, is relevant for employment purposes.”
What is the lesson for the government agency that is seeking to hire employees and contractors? Following is a quick guide to assist with decision making.
- Job relevance: The conviction should have a direct impact on the person’s ability to perform the job and affect the skill set required for job performance. For example, if the department is contracting for park department workers who will be driving vehicles as part of their work, an individual convicted of DUI who has lost his/her license would not be able to perform the duties being contracted for.
- Business necessity: The organization must demonstrate that the selection policy supports business necessity and is consistently applied. For example, if the parks department is contracting for children’s summer camp staff, and is thereby responsible for the safety of the campers, a registered sex offender can be justifiably eliminated from consideration.
The agency’s assessment should consider the level of access contractors or employees will have to people, information and finances, as all three have unique risk factors. These assessments should be performed on an individual basis by people trained in the analysis of risk factors. EEOC guidance also prefers that such targeted screenings will include notice to applicants, allowing them to provide additional background on the conviction.
Contractors are often overlooked in these discussions, even though risks they pose may be more worrisome than those of employees, because they operate outside the organization. Since this is a new area of concern, city and county risk managers are just now being advised of the importance of mitigating and then managing this type of risk.
Craig Reilly is CEO of PlusOne Solutions (www.plusonesolutions.net), provider of quality standards-based background screening and compliance management services. He can be reached at firstname.lastname@example.org.