Companies have a duty to protect their employees, and the moment they fail, they become subject to the law.

In the case of a recent settlement in Morgantown, West Virginia, the law demanded a fine — to the tune of $46.5 million.

Massey Energy, purchased last summer by Alpha Natural Resources, was found accountable for 29 wrongful deaths; all stemming from a single, preventable incident.

A Preventable Accident

The explosion was said by MSHA to have been caused by Massey’s “systematic, intentional and aggressive efforts” to conceal life-threatening problems.

The problems that Massey faced were not only preventable, they could have been contained if the company had a supplier prequalification or contractor management software program in place. Massey’s desire to mask the truth; however, wound up costing the company millions.

In fact, in an effort to throw off regulators from their practices, managers maintained two sets of inspection books: a real set, and a fake one. Former Security Chief, Hughie Elbert Stover now awaits sentencing, after being convicted of lying to investigators and trying to destroy records.

The West Virginia incident sheds light on the way the law treats companies without policies in place to protect workers. As an employer, you are held responsible for the protection of both contingent workers and employees. Without a proper safety management program in place, you are liable to face criminal or civil prosecution, in the event that an incident occurs.

Supply Chain Control

As a result of the legal concerns facing modern companies, many firms have chosen to implement a contractor management software program, to better control their supply chain. With the highest risk to an employer coming from contingent workers, these contractor management software programs can help sift through improperly insured contractors, and those who have higher incident rates. Contractor management software is manages suppliers throughout the supply chain, from the identification of a bid, to the start of a project, through monitoring, and all the way up until job completion.

Recently, the trend has been for the entire contractor management software program to be outsourced to a third party. The third party then manages certification, documentation and licensing, to ensure that contractors have the health and safety training they need, to perform their jobs. Outsourcing with a contractor management software company reduces the risk that a contractor is allowed on-site without the certification or job-site knowledge to work safely.

Take the Time. Take it Seriously.

Ultimately, whether you use a third-party contractor management software program, or the company adopts its own model, the end goal is the same. Safety must be taken seriously. In today’s economy, you just can’t afford to be too cautious. Legal costs are too high and the courts clearly mean business. Risk is still a daily reality but with the right contractor management program, you can protect employees and save your company from an expensive lawsuit.

References:

[1] Source: Lawyer: Mine Company Settles Wrongful Death Cases with 29 Families in W.Va. Mine Wxplosion. Associated Press. http://www.washingtonpost.com/business/lawyer-alpha-settles-wrongful-death-cases-with-families-of-29-killed-in-wva-mine-explosion/2012/01/10/gIQAP3wsoP_story.html

Praised for their dedication to client service, TETRA Technologies, Inc. serves a diverse customer base, and is headquartered in The Woodlands, Texas. TETRA is a global company with operations on five continents, and has been recognized for their premier market positions in several niche oil and gas service market categories. For more details on the organization’s markets, please visit http://www.TetraTec.com.

“TETRA is a premier market leader and deserves a world-class prequalification program,” says John Moreland, CEO of PICS, Inc. “With PICS’ vendor management software, the company can now access vendor data in one, central location. As we start to set up DocuGUARD, PICS will help eliminate the stress of tracking down certification, and make it easy for TETRA to spend more time on their core business.”

PICS is a global contractor screening consortium committed to improving the Health, Safety and Quality of its contractor workforce. PICS’ prequalification and auditing services have become the standard in the Chemical, Oil & Gas, Power, Construction, Mining and Manufacturing industries. Access to thousands of vendors’ prequalification information is housed online at www.PICSauditing.com. Founded in 2003 as an organization dedicated to safety, PICS is the fastest-growing, full-service contractor screening company worldwide. PICS is headquartered in Irvine, California, with offices in Houston, Texas; Calgary, Canada; Abu Dhabi, UAE; Johannesburg, South Africa; Milton Keynes, U.K.; Munich, Germany; Paris, France; Rio de Janeiro, Brazil; Sydney, Australia; Singapore; Tokyo, Japan and Hong Kong, China.

We can all agree that miners work in out-of-the-box situations; as a result, the industry has often been characterized as inherently hazardous.

That threat becomes even higher when the workforce is largely contractor based, as contractors are not as familiar with the same standards, policies and procedures as employees.

Despite this fairly typical categorization, according to the Mine Safety and Health Administration (MSHA), “Mining deaths are preventable.”

A Lot to Live For

How can that statement be true? Particularly if the feedback is that the industry is dangerous? A miner’s safety, particularly one who is an independent contractor and less familiar with site-specific policies, depends largely on the precautions taken before he or she steps foot on-site. Deaths are preventable, so long as proper supply chain management procedures are taken to ensure workers are certified, qualified, and insured.

The procedures necessary to do that, all involve prequalification. Before they ever reach the work site, the miners out in the field must know and implement the safety plans put in place by management. Preparation is paramount to accident prevention. With the right supply chain management plan in place, contractors chosen for a job are prequalified before they are approved to work at a facility. That allows more workers to return home safely to their families.

A supply chain management program for the mining industry should include:

1. Regulatory Compliance

2. Insurance Management

3. Vendor and Supplier Management

4. MSHA Approved Training Verification

1. Regulatory Compliance

Under a regulatory compliant supply chain management program, employers have the ability to view sort, search and export a list of their contractors based on citation history.

Contractors, who have proved to not to be in compliance with regulations and requirements of the employing company, are not allowed on site. This helps to prevent accidents, injuries and create a safer work environment for everyone.

2. Insurance Management

If an accident does occur while a contractor is on-site, ensuring that the proper insurance certification is in place to cover damage to people and property is vital. The last thing you want to deal with after an incident is an impending lawsuit due to inadequate coverage.

Proper insurance management not only provides the documentation needed to cover all the responsible parties, it ensures the right amount of coverage is provided to handle damages.

3. Vendor and Supplier Management

The goal of a supply chain management program is to contain your contingent workforce. While it’s fairly simple to manage employees based on pre-established safety procedures and a working knowledge of company policies, contractors can be difficult.

A contractor will have different operating requirements for their staff, and will not be expecting to hold workers to the same standard that you currently hold your employees to. For that reason, it is imperative that suppliers and vendors be managed before, during and after the completion of a project to ensure items are completed according to specifications.

4. MSHA Approved Training Verification

A qualified safety professional should review all craft training, on both employees and contractors to verify that documents are in line with the job description. Craft Training and certification should then be checked for accuracy and applicability.

Following the guidelines outlined by The Department of Labor, each worker should be assessed to that the task training they have received is situation based and applicable. Finally, the safety professional should review Part 46 and/ or Part 48 training, to ensure compliance.

Globally, the mining industry has been shaped by the risks involved with the work performed. The better the industry does with implementing supply chain management procedures which allow workers to be pre-screened prior to beginning projects, the fewer accidents will occur.

In fact, in 2011 the U.S. experienced the second-best year in a century of record-keeping for work-related mining accidents, largely due to a federal focus on mine safety regulations.

These regulations should be used by companies as a guide; however, regulations alone are not enough. Mining conditions require workers to be in confined spaces, surrounded by heavy machinery. These settings create a broader based need for supply chain management, as workers actively rely on their ability to react effectively during emergency conditions.

By establishing a proactive supply chain management system, companies reduce the risk of a contingent workforce, by validating training, understanding and site-specific requirements. After all, “it takes the entire mining community to reach new milestones in health and safety. [We] can never alter our focus because, as we know, things can change in a moment,” Joseph Main, assistant labor secretary in charge of the federal Mine Safety and Health Administration.

References:

[1] Source: “Dangers to miners,” Wikipedia. http://en.wikipedia.org/wiki/Coal_mining#Dangers_to_miners

[2] Source: “Mining deaths down in 2011, with one in Utah,” The Salt Lake Tribune. http://www.sltrib.com/sltrib/money/53246427-79/mining-utah-deaths-mine.html.csp

[3] Source: “2011 Preliminary Accident Reports, Fatalgrams and Fatal Investigation Reports

Coal Mines,” MSHA.org.

Recognized as a global player, Valspar was built on providing coating intermediates to a wide variety of customers. The company has been recognized for bringing customers the latest innovations, the finest quality, and the best customer service since 1806. As a respected leader, Valspar will now rely on PICS to oversee their vendor database. Please visit www.ValsparPaint.com for more details on the organization’s technologies.

“Innovation drives everything Valspar does-from uncovering new opportunities to embracing breakthrough thinking,” said Scott Muir, Vice President of Sales and Marketing of PICS, Inc. “It is this line of thinking that brought Valspar to the next level in vendor database prequalification. PICS products DocuGUARD and InsureGUARD will assist Valspar Corporation in their commitment to delivering the best possible solutions and the ultimate customer experience, through efficient vendor screening.”

PICS is a global contractor screening consortium committed to improving the Health, Safety and Quality of its contractor workforce. PICS’ prequalification and auditing services have become the standard in the Chemical, Oil & Gas, Power, Construction, Mining and Manufacturing industries. Access to thousands of vendors’ prequalification information is housed online at www.PICSauditing.com. Founded in 2003 as an organization dedicated to safety, PICS is the fastest-growing, full-service contractor screening company worldwide. PICS is headquartered in Irvine, California, with offices in Houston, Texas; Calgary, Canada; Abu Dhabi, UAE; Johannesburg, South Africa; Milton Keynes, U.K.; Munich, Germany; Paris, France; Rio de Janeiro, Brazil; Sydney, Australia; Singapore; Tokyo, Japan and Hong Kong, China.

The first step in helping Cintas was to assign a personal account manager to implement PICS’ contractor management services. Royce Railey, Safety and Health Manager at Cintas Corporation, and the “go-to” person for implementing that program at Cintas, says of his experience with the PICS account manager, “Our Account Manager Jay Orrill’s efforts have been outstanding. I consider Jay another member of our S&H West Coast Team. Thank you for your dedication and attention to our every need.”

Once Cintas had a strong account management program in place, Cintas and PICS began to train personnel on the database. Cintas employees were given access to PICS’ online system, making it easy to share contractor information across departments. Now, from purchasing to security, Cintas can tell if a contractor has been “green flagged” to come on site, and all of their contractor data is stored in one easy-to-navigate database.

When asked about the how the PICS program is working, now six months after the initial implementation, Mr. Railey goes on to say, “Once we had our direction and our roll-out plan set, it has pretty much been on auto-pilot. We are extremely pleased with PICS and the excellent customer support we have received. This service has been invaluable to me personally. PICS has made this an easy project to manage.”

PICS is dedicated to serving the contractor management service needs for some of the largest organizations in the world. Cintas has been an exciting client for the company to work with, for more about PICS contractor management services, please visit www.PICSauditing.com for details, case studies and a full list of PICS clients.

PICS is a global contractor screening consortium committed to improving the Health, Safety and Quality of its contractor workforce. PICS’ prequalification and supplier relationship management services have become the standard in the Chemical, Oil & Gas, Power, Construction, Mining and Manufacturing industries. Access to thousands of vendors’ prequalification information is housed online at www.PICSauditing.com. Founded in 2003 as an organization dedicated to safety, PICS is the fastest-growing, full-service contractor screening company worldwide. PICS is headquartered in Irvine, California, with offices in Houston, Texas; Calgary, Canada; Abu Dhabi, UAE; Johannesburg, South Africa; Milton Keynes, U.K.; Munich, Germany; Paris, France; Rio de Janeiro, Brazil; Sydney, Australia; Singapore; Tokyo, Japan and Hong Kong, China.

You just might get burned.

Hiring contractors without pre-qualifiying them is hazardous for everyone. In the strain of a down economy, many companies are steadily increasing their contractor workforce.

As a result, contractor safety is becoming an increasingly hot topic.

You Have a Lot to Lose

In a recent lawsuit, the Department of Labor ordered two San Francisco contractors to pay $91,000 in fines and back wages. Maximum penalties were assessed after investigations revealed six deaths and serious injuries resulted from unsafe employee transportation. (Click Here to Read the Full Article) [1].

The violations? The contractors had failed to meet federal safety requirements, ensure drivers had valid licenses and obtain proper insurance coverage. These oversights in contractor safety can cost millions. In this investigation, it was determined that the company failed to provide safe transportation and illegally deducted costs from workers’ pay. They were forced to pay back wages by the Wage and Hour division.

It Doesn’t Pay to Disregard Safety

While it may seem easy to ignore safety regulations, as the lawsuit above demonstrates, contractor safety is taken very seriously by government agencies, and companies that go against regulations will be fined.

Think ahead. Require all contractors to have a safety manual. Review their manual an ensure they have the proper precautionary steps in place to deal with an emergency situation. Audit contractor safety in the field and ensure that contractors are performing their duties in a safe and effective manner. For more ways that you can improve your organization’s contractor safety, visit www.PICSauditing.com

Risk

It’s a daily reality, faced by those who rely on contingent workers. The firms without contractor management services to mitigate risk roll a dice every time they hire outside for a job.
In today’s economy, employees are an expensive proposition. As a result, many of the world’s largest organizations are leaning more heavily on their contractor workforce to get the job done.

Lawsuits

With the growing number of contractors, comes an increase in risk. Without adequate contractor management services, you leave the company open to the greatest contractor risk of all: lawsuits. Whether the suit comes from an incident or a safety oversight, you can be liable for the injuries a contractor suffers on the job. And since contractors are not covered by workers’ compensation, they can sue for damages if they are injured on the job, because of your carelessness [1].

Unfortunately, lawsuits are just the beginning of the risks you face. Make a wrong move in contractor classification or safety, and you could face audits and fines from government agencies as well. State and federal agencies like the National Labor Relations Board and the Occupational Safety and Health Administration (OSHA) have the ability to audit your business at any time.

Federal and State Intervention

At the federal level, if they believe you have misclassified independent contractors, and they are performing employee-level responsibilities, you can be audited by the IRS or the Department of Labor. At the state level, you can face an audit from your state’s tax agency. Or, if a worker you classified as a contractor goes to apply for benefits, you may attract the attention of the state’s unemployment compensation and workers’ compensation agency [1].

Contractor Management

The risks are clear. Contractor management services can help you to mitigate this risk. Implementing a contractor prequalification program allows you to select proper contractors for the job, ensuring that they have the certification you need to avoid a potential lawsuit. When incidents do happen, OSHA inspectors expect you to have ample documentation. Retaining a contractor management services firm helps to centralize your vendor data into one location, so that you can provide that documentation when it is requested, will save you time and headaches.

Don’t Take Chances

With the trend in contract workers, regulatory oversight is now in place to watch every move you make. It’s imperative that you take the time, from both a regulatory and a safety standpoint, to ensure that you have sufficient contractor management services to protect your company. While contingent workers can play an important role in helping your company to complete work on time and under budget; remember, your business is at stake. Take the necessary precautions you need, to ensure you send contractors home safe, every day. For more information on how you can protect your company, visit www.PICSauditing.com.

References:
[1] Source: “Pros and Cons of Hiring Independent Contractors.” Forbes Magazine. Article accessed: 28 December 2011. Forbes.com. < http://www.forbes.com/2006/10/10/contractor-IRS-union-ent-law-cx_nl_1011nolo.html>

“I’m looking for a solution.”

“We have too much paperwork to get a vendor qualified to work for us, and I have to constantly answer questions from co-workers about if a vendor is qualified.”

“Can you help me?”

Less Paperwork

Does this sound familiar? The question above is one that I hear all the time. It comes from safety and procurement professionals alike; frustrated with the massive amounts of paperwork they have to sift through, just to find out if Joe Contractor has been screened to come on site.

Centralization

So what is the answer? Centralized vendor information can be shared cross departmentally, but it requires a vendor management software program to do it effectively. It used to be, until about ten years ago, that vendor management software couldn’t engage directly with vendors. Now, with browser-based applications, vendor management software enables vendors to submit their own paperwork online, creating a wave of software tools to help make vendor management easier.

A Streamlined System

The new vendor management software systems streamline your supply-chain, improving the entire organization. The most powerful application of vendor management software is in qualifying vendors in the supply chain. Choosing the right software; however, can still be half the battle. They need to be sophisticated and architected by decades of industry experience. The right software system also needs to interface with everyone: the vendor, the client, and the administrator. The first step then, is to find a system that facilitates communication with each stakeholder.

Validated Data

Next, you need a system that validates data. Self-submitted, unverified data is not beneficial to the hiring company. Relying on unvalidated data to make businesses decisions reminds me of the heydays of the real estate boom in 2007. Remember when banks lent huge mortgages on stated income? It led to making worse loans then if the bankers would have just guessed the income. Granted, you can’t verify everything; just the data that the benefit outweighs the cost.

Flexible Software

Using vendor management software, the cost of validating vendor performance becomes reachable for most large organizations who use vendors. But the software needs to be flexible enough for the different services of your vendor workforce – there are 20,000 different trades listed in the NAICS, including subcategories. And your system should be smart enough to treat a vendor who services your copy machine differently than one who replaces the roof of your office building. This requires business logic and intuition. Like how Google tries to guess what you’re going to search.

Vendor Performance

To assess the risk of a vendor properly, the software should tell you how a vendor has performed over the last few years; it should report incident rates, citations, and any outstanding issues. Then more importantly, how the vendor will likely perform in the coming years –the leading indicators. Once you have data like leading and lagging indicators on performance, finance, quality, safety, you can stick to helping reduce risks to the organization—working smarter with your limited time.

It’s Worth It

Believe it or not, all of that is possible. Choosing the right vendor management software does take a little bit of effort, but as many of our clients can attest to, it’s worth it! If you’re looking for a solution to the question of how you can save time and have a world-class vendor management program, a vendor management software system will be the simplest way to save time, energy and paperwork.

About the Author:

Jared Smith is the Chief Operating Officer for PICS, the fastest-growing supplier and contractor management company in the world. Mr. Smith joined PICS in 2005, and under Jared Smith’s watchful eye, PICS has grown at least 80% each year since he joined the PICS team. Smith has a B.S. in Finance and a B.S. in Physics from Brigham Young University. To read more about how PICS answers the needs of the largest organizations in the world, visit www.PICSauditing.com.

Founded in Bridgeport, West Virginia in 1969, PDC Energy is focused on the exploration, and production of natural gas and oil, with 68% of the company focused on natural gas production in 2010. The company holds contractor safety in very high regards, and PICS was chosen as an integral part of supplier relationship management, because of their safety expertise.

“PICS will help PDC to maximize value and minimize risk,” says John Moreland, CEO at PICS. “With PICS handling supplier relationship management, PDC Energy can focus on continuously increasing growth and production. We are excited to work with PDC.”

Throughout its history, PDC Energy has demonstrated its operations knowledge and experience in the natural gas industry. The company will now rely on PICS’ safety expertise to pre-screen their contingent workforce. Please visit www.petd.com for details on PDC Energy’ operations, including its anticipated future phase of growth.

PICS is a global contractor screening consortium committed to improving the Health, Safety and Quality of its contractor workforce. PICS’ prequalification and supplier relationship management services have become the standard in the Chemical, Oil & Gas, Power, Construction, Mining and Manufacturing industries. Access to thousands of vendors’ prequalification information is housed online at www.PICSauditing.com. Founded in 2003 as an organization dedicated to safety, PICS is the fastest-growing, full-service contractor screening company worldwide. PICS is headquartered in Irvine, California, with offices in Houston, Texas; Calgary, Canada; Abu Dhabi, UAE; Johannesburg, South Africa; Milton Keynes, U.K.; Munich, Germany; Paris, France; Rio de Janeiro, Brazil; Sydney, Australia; Singapore; Tokyo, Japan and Hong Kong, China.

Recognized as a world leader in military airborne radar systems, and a front-runner in missile defense, Northrop is headquartered in the Baltimore Maryland area. The company is built on a strong foundation of American heritage, including the unique distinction and accomplishment of having transported U.S. astronauts to the moon. As a respected leader, Northrop will now rely on PICS to oversee their vendor management system. Please visit www.es.NorthropGrumman.com for more details on the organization’s technologies.

“DocuGUARD will allow Northrop to easily track and manage suppliers in their vendor management system, while AuditGUARD will provide PICS’ expertise in auditing contractors of higher risk trades,” said Jared Smith, Chief Operating Officer of PICS, Inc. “Our top priority will be to assist Northrop Grumman as they continue to be the leading manufacturer in national security, by providing a centralized view of their supply chain, and maintaining operational efficiency through effective vendor prequalification.”

PICS is a global contractor screening consortium committed to improving the Health, Safety and Quality of its contractor workforce. PICS’ prequalification and auditing services have become the standard in the Chemical, Oil & Gas, Power, Construction, Mining and Manufacturing industries. Access to thousands of vendors’ prequalification information is housed online at www.PICSauditing.com. Founded in 2003 as an organization dedicated to safety, PICS is the fastest-growing, full-service contractor screening company worldwide. PICS is headquartered in Irvine, California, with offices in Houston, Texas; Calgary, Canada; Abu Dhabi, UAE; Johannesburg, South Africa; Milton Keynes, U.K.; Munich, Germany; Paris, France; Rio de Janeiro, Brazil; Sydney, Australia; Singapore; Tokyo, Japan and Hong Kong, China.