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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


August 2015
Vol. XVI, No. 8
[pdf version]

CONTENTS


FAC 2005-83 Adjusts Federal Acquisition-Related Thresholds, Makes FAR Subpart 13.5 Permanent
Labor Proposes Revising Overtime Pay Rules
Agencies to Convert to All-Electronic Invoicing
GSA to Remove Unnecessary Construction Clauses
Prompt Payment Interest Rate Set at 2 3/8%



FAC 2005-83 Adjusts Federal Acquisition-Related Thresholds,
Makes FAR Subpart 13.5 Permanent

Federal Acquisition Circular (FAC) 2005-83 undertook the task required every five years by statute of amending the acquisition-related thresholds in the Federal Acquisition Regulation (FAR) to reflect inflation that has taken place since 2010, the last time the acquisition-related thresholds were revised. In addition, FAC 2005-83 makes the authority to use simplified acquisition procedures for certain commercial items permanent, addresses the prohibition against contracting with inverted domestic corporations, and tidies up some administrative loose ends.



Labor Proposes Revising Overtime Pay Rules

The Department of Labor (DOL) is proposing to update and revise its regulations issued under the Fair Labor Standards Act (FLSA) that address the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. To be considered exempt, employees must meet certain minimum tests related to their primary job duties and be paid on a salary basis at not less than a specified minimum amount. The standard salary level required for exemption is currently $455 a week ($23,660 for a full-year worker) and was last updated in 2004.

The FLSA was passed in 1938 to guarantee a minimum wage and limit the number of hours an employee could work without additional compensation. Most workers covered under the FLSA must receive overtime pay of at least 1.5 times their regular pay rate for hours worked in excess of 40 hours per week. However, the FLSA excludes certain white collar employees from minimum wage and overtime pay protections on the grounds that these employees earn salaries well above the minimum wage and enjoy other privileges (such as above-average fringe benefits, greater job security, and better opportunities for advancement) that set them apart from workers entitled to overtime pay.

On March 13, 2014, President Obama issued a memorandum to the Secretary of Labor directing him to modernize and streamline the existing overtime regulations for executive, administrative, and professional employees. “Regulations regarding exemptions from the Act’s overtime requirement, particularly for executive, administrative, and professional employees (often referred to as “white collar” exemptions) have not kept up with our modern economy. Because these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage. Therefore, I hereby direct you to propose revisions to modernize and streamline the existing overtime regulations. In doing so, you shall consider how the regulations could be revised to update existing protections consistent with the intent of the Act; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply.”

In response to the president’s direction, the DOL has issued a 97-page proposed rule that would amend Title 29 of the Code of Federal Regulations (CFR), Part 541 (29 CFR part 541), Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Computer and Outside Sales Employees, to increase the salary level for exemption to $921 a week, and to simplify the identification of nonexempt employees to make the “white collar” exemption easier for employers and workers to understand. Furthermore, DOL proposes to update the salary level automatically to prevent the level from becoming outdated. (The proposed rule would set $774 as the salary level for American Samoa, and $1,404 as the salary level for the motion picture industry.)

Comments on the proposed rule must be submitted no later than September 4, 2015, identified as “Regulatory Information Number (RIN) 1235-AA11,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: Mary Ziegler, Director of the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210. “Comments received after the comment period closes [11:59 pm on September 4] will not be considered. Submit only one copy of your comments by only one method.”



Agencies to Convert to All-Electronic Invoicing

The Office of Management and Budget (OMB) has issued a memorandum to all chief financial officers, chief acquisition officers, and senior procurement executives directing their agencies to transition to all-electronic invoicing for appropriate federal procurements by the end of FY 2018.

“The federal government is the largest single purchaser of goods and services in the United States, processing over 19 million invoices each year,” states David Mader, Acting Deputy Director of Management, and Anne Rung, Administrator for the Office of Federal Procurement Policy (OFPP). “Approximately 40% of these invoices are processed using electronic invoicing with the remaining using a mix of electronic and manual processes that provide little visibility to businesses and can result in tax dollars being used for late payment fees rather than to support critical agency missions.”

Noting that the Departments of Defense, Transportation, and Treasury have well-established electronic invoicing systems, the memorandum:

“Agencies are encouraged to use https://community.max.gov/x/FACBM for assistance in the implementation of this memorandum, to provide a forum for interagency dialogue, to submit questions, and to share lessons learned across agencies. This site also contains information on points of contact for existing electronic invoicing solutions as well as data standards, user manuals, and other relevant information.”



GSA to Remove Unnecessary Construction Clauses

The General Services Administration (GSA) is proposing to amend GSA Acquisition Regulation (GSAR) part 536, Construction and Architect-Engineer Contracts, and GSAR part 552, Solicitation Provisions and Contract Clauses, to remove unnecessary construction clauses.

GSA started an ongoing revision of the GSAR in 2006 to improve clarity and simplify procedures (see the March 2006 Federal Contracts Perspective article “GSAR Rewrite Underway”). In 2008, GSA proposed a rewrite of GSAR part 536 and corresponding provisions and clauses in GSAR part 552 (see the January 2009 Federal Contracts Perspective article “GSAR Protests, Disputes, and Appeals Regulations Rewritten”). However, GSA withdrew this proposed rule because it believed that further review was appropriate to address the variety of issues that were raised in comments on the proposed rule and “to address strong stakeholder interest” (see the March 2015 Federal Contracts Perspective article “GSA Revises Its Regulations”).

This proposed rule would remove seven construction clauses and their corresponding prescriptions in GSAR subpart 536.5, Contract Clauses, that are now either covered in the FAR or are no longer necessary for the agency. The following are the seven clauses that would be removed (along with the corresponding prescriptions in parentheses):

The first six clauses would be removed because they address technical details contained in a contract’s (or task order’s) scope of work or specifications, so a clause is unnecessary. GSAR 552.236-83 would be removed because it conflicts with FAR subpart 22.5, Use of Project Labor Agreements for Federal Construction Projects, and FAR 52.222-33, Notice of Requirement for Project Labor Agreement.

In addition, GSAR 536.101, Applicability, which currently states “if a requirement in this part is inconsistent with a requirement in another GSAR part, this part takes precedence”, would be revised to read as follows: “This part supplements FAR part 36 policies and procedures applicable to contracting for construction and architect-engineer services. Contracts for construction management services are covered by FAR part 37 [service contracting] and GSAM part 537. Part 536 shall take precedence when the acquisition involves construction or architect-engineer services, and when the requirement is inconsistent with another part of the GSAR.”

Comments on the proposed rule must be submitted no later than September 28, 2015, identified as “GSAR case 2015-G508,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: General Services Administration, Regulatory Secretariat (MVCB), ATTN: Ms. Flowers, 1800 F Street NW, 2nd Floor, Washington, DC 20405.



Prompt Payment Interest Rate Set at 2 3/8%

The Treasury Department has established 2 3/8% (2.375%) as the interest rate for the computation of payments made between July 1, 2015, and December 31, 2015, under the Prompt Payment Act and the Contracts Disputes Act. This rate is also used in facilities capital cost of money calculations.

The interest rate for the prior six-month period (January 1, 2015, through June 30, 2014) was 2 1/8% (2.125%). The interest rate for July 1, 2014, through December 31, 2014, was 2% (2.000%).

All prompt payment interest rates since 1980 (in six-month increments) are available at https://www.fiscal.treasury.gov/fsservices/gov/pmt/promptPayment/rates.htm.

FAR subpart 32.9, Prompt Payment; FAR subpart 33.2, Disputes and Appeals; FAR 31.205-10, Cost of Money; and Cost Accounting Standard (CAS) 9904.414, Cost of Money as an Element of the Cost of Facilities Capital, are affected by this interest rate.





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