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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


October 2017
Vol. XVIII, No. 10
[pdf version]

CONTENTS


Hurricanes Generate Increased Thresholds, Emergency Procurement Authorities, EEO Waivers
Federal Minimum Wage Increased to $10.35/Hour For 2018
SBA Proposes Nonmanufacturer Rule Waiver
SBA Adopts NAICS 2017 For Size Standards
DOD Issues Four Additional Class Deviations
NASA Proposes Revised Invoice Submission Process



Hurricanes Generate Increased Thresholds,
Emergency Procurement Authorities, EEO Waivers

A series of hurricanes hit the United States in late August and September – Harvey (Texas), Irma (Florida), and Maria (Puerto Rico), causing billions of dollars of damage and untold suffering. In response, the Trump administration has taken several actions to ameliorate the damage and suffering caused by the hurricanes, including implementing special emergency procurement authorities, making major disaster declarations, and exempting contractors involved in hurricane relief from preparing affirmative action programs.



Federal Minimum Wage Increased to $10.35/Hour For 2018

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, 2018, is increased from $10.20 to $10.35 per hour.

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 (DOL) 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.

In 2015, the DOL determined that the CPI increased by 0.345% in 2015, so the minimum wage would be $10.15 per hour beginning January 1, 2016 (see the October 2015 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.15/Hour for 2016”).

In 2016, the DOL determined that the CPI increased by 0.278% in 2016, so the minimum wage would be $10.20 per hour beginning January 1, 2017 (see the October 2016 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.20/Hour for 2017”).

Now, the DOL has determined that the CPI index increased by 1.691% in 2017, and this produces a minimum wage of $10.35 per hour, which will go into effect on January 1, 2018.

The required minimum cash wage that must be paid to tipped employees performing work on or in connection with covered contracts is increased from $6.80 to $7.25 per hour ($4.90 per hour was the original minimum cash wage for tipped employees established in the executive order).



SBA Proposes Nonmanufacturer Rule Waiver

The Small Business Administration (SBA) is proposing to issue a nonmanufacturer rule waiver for positive airway pressure devices and supplies manufacturing under Product Service Code (PSC) 6515, Medical and Surgical Instruments, Equipment, and Supplies, North American Industry Classification System (NAICS) codes 333912, Surgical and Medical Instrument Manufacturing, and NAICS code 339113, Surgical Appliance and Supplies Manufacturing.

SBA is inviting the public to comment on this proposed waiver or to provide information on potential small business sources on any small business manufacturers of this class of products that are available to participate in the federal market by October 18, 2017, to the Federal Rulemaking Portal at https://www.regulations.gov under Docket ID SBA-2017-0006.

EDITOR’S NOTE: Public Law 100-656, enacted November 15, 1988, requires those with federal contracts that are set-aside for small businesses or awarded through the 8(a) program to provide the product of a small business manufacturer or processor if the recipient is not the actual manufacturer or processor (see paragraph (f) of FAR 19.102, Size Standards). This is called the “nonmanufacturer rule.” However, SBA may waive this requirement if there are no small business manufacturers or processors.

The SBA regulation on the nonmanufacturer rule is in Title 13 of the Code of Federal Regulations (CFR), Business and Credit Administration; part 121, Small Business Size Standards; under paragraph (b) of 121.406, How does a small business concern qualify to provide manufactured products or other supply items under a small business set-aside, service-disabled veteran-owned small business set-aside, WOSB [women-owned small business] or EDWOSB [economically disadvantaged women-owned small business] set-aside, or 8(a) contract? The SBA regulation on the waiver of the nonmanufacturer rule is 13 CFR 121.1202, When Will a Waiver of the Nonmanufacturer Rule Be Granted for a Class of Products? A complete list of products for which the nonmanufacturer rule has been waived is available at https://www.sba.gov/contracting/contracting-officials/non-manufacturer-rule/class-waivers.



SBA Adopts NAICS 2017 For Size Standards

The SBA is adopting, without change, the Office of Management and Budget’s (OMB) North American Industry Classification System (NAICS) revision for 2017 (NAICS 2017) into its table of small business size standards effective October 1, 2017, the beginning of the 2018 fiscal year.

NAICS 2017 created 21 new industries by reclassifying, combining, or splitting 29 existing industries under changes made to NAICS in 2012 (NAICS 2012) (see the September 2016 Federal Contracts Perspective article “OMB Issues 2017 Version of the NAICS”). Most of the changes involved industries in petroleum and natural gas extraction, mining, major household appliance manufacturing, electronic shopping and mail-order houses, and research and development in nanotechnology.

Of the 21 new industries, five were created by merging two or more of thirteen NAICS 2012 industries, while three were created by combining part of one industry with another industry. Three new industries were created by splitting two industries to two parts each with one part of each industry defined as a separate industry and other parts of the two industries combined to form a separate new industry. One new industry was formed by designating part of one industry as a separate industry. OMB also changed 6-digit NAICS codes for eight industries without changing their definitions and titles and amended the title of one industry without changing its 6-digit code.

These 21 new industries require small business size standards. SBA’s proposed size standards for these 21 new industries (see the May 2017 Federal Contracts Perspective article “SBA Proposes to Adopt NAICS 2017 for Size Standards”) would increase the size standards for six of the NAICS 2012 industries and part of one industry, decrease to size standards for two, change the size standards measure from average annual receipts to number of employees for one, and leave unchanged the size standards for twenty industries and part of one industry.

Three respondents submitted comments on the proposed size standards. Two of the respondents submitted comments on NAICS codes that were not changed in the NAICS 2017 (so were outside the scope of the proposed rule), and the other respondent suggested revising the size standard for one industry, but that suggestion was not adopted. Therefore, SBA has adopted, without changes, the proposed size standards for the new industries created by NAICS 2017.



DOD Issues Four Additional Class Deviations

Besides the two deviations the Department of Defense (DOD) issued pertaining to hurricane relief (the deviation on OFCCP waiver and the deviation on special emergency procurement authorities – see the article above), DOD issued four additional class deviations on miscellaneous issues. In addition, DOD issued guidance on the implementation of National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations.



NASA Proposes Revised Invoice Submission Process

The National Aeronautics and Space Administration (NASA) is proposing to make revisions to its voucher and invoice submittal and payment process to comply with the Office of Management and Budget (OMB) memorandum that directed federal agencies to transition to electronic invoicing for appropriate federal procurements by the end of Fiscal Year (FY) 2018 (for more on the OMB memorandum, see the August 2015 Federal Contracts Perspective article “Agencies to Convert to All-Electronic Invoicing”).

In September 2016, NASA revised its voucher submission and payment process to electronically process cost-type vouchers under cost-reimbursement type contracts. This proposed rule would revise NASA’s submission and payment process to have invoices for fixed-price contracts submitted electronically. Therefore, NASA proposes to revise the following sections of the NASA FAR Supplement (NFS):

Comments on this proposed rule must be submitted by November 17, 2017, identified as “NFS Case 2017-N014,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) email: John.J.Lopez@nasa.gov; (3) fax: 202-358-3082; or (4) mail: National Aeronautics and Space Administration, Headquarters, Office of Procurement, Contract and Grant Policy Division, Attn: John J. López, LP-011, 300 E Street SW, Washington, DC 20546-0001.





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