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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


October 2015
Vol. XVI, No. 10
[pdf version]

CONTENTS


President Orders Paid Sick Leave for Employees of Federal Contractors
FAC 2005-84 Finalizes EPEAT® Expansion
Federal Minimum Wage Increased to $10.15/Hour for 2016
Women-Owned Business Sole Source Regulations Finalized
DOD Takes It Easy in September
Denied Access to NASA Facilities Clause Finalized
OFCCP Finalizes Regulations Prohibiting Pay Secrecy



President Orders Paid Sick Leave for
Employees of Federal Contractors

President Obama has issued Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, which directs federal contractors and subcontractors to provide at least one hour of sick leave for every 30 hours worked. “This order seeks to increase efficiency and cost savings in the work performed by parties that contract with the federal government by ensuring that employees on those contracts can earn up to 7 days or more of paid sick leave annually, including paid leave allowing for family care. Providing access to paid sick leave will improve the health and performance of employees of federal contractors and bring benefits packages at federal contractors in line with model employers, ensuring that they remain competitive employers in the search for dedicated and talented employees. These savings and quality improvements will lead to improved economy and efficiency in government procurement.”

The paid sick leave may be used by an employee for an absence resulting from: (1) physical or mental illness, injury, or medical condition; (2) obtaining diagnosis, care, or preventive care from a health care provider; (3) caring for a child, a parent, a spouse, a domestic partner, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship; or (4) domestic violence, sexual assault, or stalking, if the time absent from work is to obtain counseling, to seek relocation, to seek assistance from a victim services organization, or to take related legal action.

The accrued sick leave must carry over from one year to the next and must be reinstated for employees rehired by a covered contractor within 12 months after a job separation.

The use of the sick leave cannot be made contingent on the requesting employee finding a replacement to cover any work time to be missed.

A contractor may require certification issued by a health care provider for employee absences of three or more consecutive workdays, to be provided no later than 30 days from the first day of the leave.

The Department of Labor must issue implementing regulations by September 30, 2016. The Federal Acquisition Regulation (FAR) must be amended to implement the Department of Labor regulations, including a clause for inclusion in all contracts and subcontracts that specifies, as a condition of payment, that all employees, in the performance of the contract or any subcontract shall earn at least one hour of paid sick leave for every 30 hours worked.



FAC 2005-84 Finalizes EPEAT® Expansion

Federal Acquisition Circular (FAC) 2005-84 finalized, with changes, the interim rule that revised Federal Acquisition Regulation (FAR) subpart 23.7, Contracting for Environmentally Preferable Products and Services, to expand the federal requirement to procure Electronic Product Environmental Assessment Tool (EPEAT®)-registered products beyond personal computer products to cover imaging equipment (that is, copiers, digital duplicators, facsimile machines, mailing machines, multifunction devices, printers, and scanners) and televisions (for more on the interim rule, see the July 2014 Federal Contracts Perspective article “FAC 2005-75 Reduces Allowable Employee Compensation to $487,000, Expands EPEAT Products”).

One respondent submitted comments on the interim rule, but no changes were made to the rule in response to those comments. However, the final rule amends paragraph (a) of FAR 23.704, Electronic Product Environmental Assessment Tool, to reflect more clearly the requirement for agencies, when acquiring an electronic product, to meet at least 95% of those requirements with an EPEAT®-registered electronic product (the interim rule made a blanket statement that “agencies shall acquire Electronic Product Environmental Assessment Tool (EPEAT®-registered electronic products”). In addition, FAR 23.704(a) is amended to clarify that excepted products (that is, when “(i) there is no EPEAT® standard for such product; (ii) no EPEAT®-registered product meets agency requirements; or (iii) the agency head has provided an exemption”) are not included when calculating the achievement of the 95% goal.

EDITOR’S NOTE: For more on EPEAT®, see the January 2008 Federal Contracts Perspective article “95% EPEAT-Registered Electronic Products Mandated.” Also, see http://www.epeat.net/.



Federal Minimum Wage Increased to $10.15/Hour for 2016

The Department of Labor has announced that the applicable minimum wage rate to be paid to workers performing work on or in connection with federal contracts covered by Executive Order 13658, beginning January 1, 2016, is increased from $10.10 to $10.15.

Executive Order 13658, Establishing a Minimum Wage for Contractors, was signed by President Obama on February 12, 2014 (see the March 2014 Federal Contracts Perspective article “President Issues Executive Order Mandating $10.10/Hour Minimum Wage”), which raised the hourly minimum wage paid by contractors to workers performing work on covered federal contracts to $10.10 per hour, beginning January 1, 2015. Further, the executive order stated that the Department of Labor would adjust the minimum wage annually (beginning January 1, 2016) to reflect inflation during the year as reflected in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers.

The Department of Labor determined that the CPI index increased by 0.345% in 2015, and this produces a minimum wage of $10.15, which will go into effect on January 1, 2016.

The required minimum cash wage that must be paid to tipped employees performing work on or in connection with covered contracts is increased from $4.90 to $5.85/hour.



Women-Owned Business Sole Source Regulations Finalized

The Small Business Administration (SBA) has finalized, with a technical change, the rule that proposed to amend its regulations in Title 13 of the Code of Federal Regulations (CFR), Part 127, Women-Owned Small Business Federal Contract Program (13 CFR part 127), to implement Section 825 of the National Defense Authorization Act for Fiscal Year 2015 (NDAA) (Public Law 113-291), which gives contracting officers the authority to award sole source contracts to Women-Owned Small Businesses (WOSBs) and Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) (see the January 2015 Federal Contracts Perspective article “Authority to Use Simplified Procedures for Commercial Items Up to $6,500,000 Made Permanent”).

The key changes are to 13 CFR part 127.503, When is a contracting officer authorized to restrict competition or award a sole source contract or order under this part?, which now provides that: (1) if a contracting officer conducts market research in an industry where a WOSB or EDWOSB set-aside is authorized, and (2) the contracting officer cannot identify two or more WOSBs or EDWOSBs that can perform at a fair and reasonable price, but (3) the contracting officer identifies one WOSB or EDWOSB that can perform at a fair and reasonable price, then (4) the contracting officer can award the contract on a sole source basis if the value of the contract, including options, does not exceed $6,500,000 for manufacturing contracts and $4,000,000 for all other contracts. (EDITOR’S NOTE: EDWOSBs are eligible to receive set-aside contracts in one of the 197 industries in which WOSBs are underrepresented [according to the SBA], but both EDWOSBs and WOSBs are eligible to receive set-aside contracts in one of the 133 industries in which WOSBs are substantially underrepresented [go to https://www.sba.gov/content/women-owned-small-business-program for a list of the 330 industries that are eligible for WOSB and EDWOSB set-asides].)

SBA received 495 comments on the proposed rule. Most of the comments supported the proposed rule, and SBA did not adopt any of recommended changes. However, paragraph (b) of 13 CFR 127.501, How will SBA determine the industries that are eligible for EDWOSB or WOSB requirements?, stated, “In determining the extent of disparity of WOSBs, SBA may request that the head of any federal department or agency provide SBA data or information necessary to analyze the extent of disparity of WOSBs.” To make the paragraph consistent with amendments to the definitions and other sections of the WOSB regulations, SBA is replacing the two instances of “disparity” with “underrepresentation.” For more on the proposed rule, see the June 2015 Federal Contracts Perspective article “Sole Source WOSB/EDWOSB Contracts Proposed.”



DOD Takes It Easy in September

The Department of Defense (DOD) took a break in its continual revision of the Defense FAR Supplement (DFARS) during September, merely finalizing one proposed rule, revising a DFARS subpart, requesting comments on three proposed rules, issuing two class deviations, issuing one waiver, and issuing one memorandum. Come to think of it, DOD was busy during September after all.



Denied Access to NASA Facilities Clause Finalized

The National Aeronautics and Space Administration (NASA) has finalized, without changes, the rule that proposed replacing NFS 1852.242-72, Observance of Legal Holidays, and its alternatives with a new NFS 1852.242-72, Denied Access to NASA Facilities, which would prescribe conditions and procedures pertaining to the closure of NASA facilities.

The original NFS 1852.242-72 was included in NASA contracts where contractor performance was to be performed on a NASA facility. It identified dates of legal holidays for which government employees would not be available and notified contractors that the absence of government employees might affect contractor performance or contractor access to NASA facilities. However, the government shut-down in October 2013 revealed a need for NASA to be more specific. Therefore, NASA proposed replacing the old NFS 1852.242-72 with a new NFS 1852.242-72 that would specify that “NASA may close and or deny contractor access to a NASA facility for a portion of a business day or longer due to any one of the following events: (i) federal public holidays for federal employees; (ii) fires, floods, earthquakes, unusually severe weather to include snow storms, tornadoes and hurricanes; (iii) occupational safety or health hazards; (iv) non-appropriation of funds by Congress; or (v) any other reason.” The new clause would clarify that contractors are expected to perform in accordance with their contractual requirements unless denied access to the NASA facility.

One respondent submitted comments on the proposed rule, but no changes were made to the final rule. For more on the proposed rule, see the June 2015 Federal Contracts Perspective article “Four Agencies Address Their Acquisition Supplements.”



OFCCP Finalizes Regulations Prohibiting Pay Secrecy

The Office of Federal Contract Compliance Programs (OFCCP), a part of the Department of Labor, finalized revisions to Title 41 of the Code of Federal Regulations (CFR), Part 60-1, Obligations of Contractors and Subcontractors (41 CFR part 60-1), that implement Executive Order (EO) 13665, Non-Retaliation for Disclosure of Compensation Information, which prohibits contractors from “discharg[ing] or in any other manner discriminat[ing] against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.” The revisions apply to all contractors with federal contracts that exceed $10,000.

To implement EO 13665, OFCCP proposed revisions to 41 CFR part 60-1 that would add definitions for “compensation,” “compensation information,” and “essential job functions,” and a required clause that would prohibit covered contractors and subcontractors from firing or discriminating against employees or applicants who inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants (for more on the proposed rule, see the October 2014 Federal Contracts Perspective article “OFCCP Proposes to Implement EO 13665 with Prohibitions Against Pay Secrecy”).

OFCCP received 6,524 comments on the proposed rule; 6,443 were form letters supporting the rule. The remaining 81 comments prompted several significant changes in the final rule:



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