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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


July 2020
Vol. XXI, No. 7
[pdf version]

CONTENTS


Inflation Adjustment of Acquisition-Related Thresholds Proposed
DOD Revs Up the Regulation Changes
GSA Takes Two COVID-19 Related Actions
VAAR Cleanup Continues
Labor Revises Fluctuating Workweek Overtime Rules
GSA Awards Three E-Marketplace Platform Contracts



Inflation Adjustment of Acquisition-Related
Thresholds Proposed

Every five years, the acquisition-related thresholds in the Federal Acquisition Regulation (FAR) are required by statute to be adjusted to compensate for inflation during those five years. To comply with this statutory requirement, a proposed rule has been published that provides the updated thresholds and explains how the threshold adjustments were calculated. In addition, two other proposed rules were published in June to implement Small Business Administration (SBA) regulation changes: one regarding joint ventures, and the other to provide examples of activities considered to be failures to make a good faith effort to comply with a small business subcontracting plan.



DOD Revs Up the Regulation Changes

After taking a break to take action against the COVID-19, the Department of Defense (DOD) got back to its normal frenetic pace in June, issuing six final rules amending the Defense FAR Supplement (DFARS), two proposed rules, a deviation, and a policy memorandum.



GSA Takes Two COVID-19 Related Actions

Though the government has taken most of the acquisition-related actions it can to combat the Coronavirus (or COVID-19) (see the April 2020 Federal Contracts Perspective article “Coronavirus Overruns United States, Emergency Acquisition Authorities Invoked,” the May 2020 Federal Contracts Perspective article “Acquisition Community Fighting COVID-19 on a Multitude of Fronts,” and the June 2020 Federal Contracts Perspective article “Running Out of Actions to Take Against COVID-19”), the General Services Administration (GSA) still found two actions it could take. In addition to these two COVID-related actions, GSA issued a final rule updating several website addresses (URLs – Uniform Resource Locators) in the GSAR that are outdated.



VAAR Cleanup Continues

The Department of Veterans Affairs (VA) continues amending and updating its VA Acquisition Regulation (VAAR) in phased increments to revise or remove any policy superseded by changes in the FAR, to remove redundant and duplicate material already covered by the FAR; to remove procedural guidance internal to VA and place it into the VA Acquisition Manual (VAAM), correct inconsistencies within the VAAR; to incorporate any new VA-specific regulations or policies; delete outdated material or information; and renumber VAAR text, clauses, and provisions to conform to the FAR format, numbering, and arrangement.

In June, VA issued a final rule revising VAAR part 804, Administrative Matters; VAAR part 805, Publicizing Contract Actions; and VAAR part 849, Termination of Contracts; and corresponding clauses and provisions. In addition, VA issued two proposed rules: one to remove VAAR part 825, Foreign Acquisition, and the other to remove VAAR subpart 871.1, Loan Guaranty and Direct Loan Programs.



Labor Revises Fluctuating Workweek Overtime Rules

The Department of Labor (DOL) is revising its regulation for computing overtime compensation of salaried nonexempt employees who work hours that vary each week (called a “fluctuating workweek”) under the Fair Labor Standards Act (FLSA), which is codified in 29 USC Chapter 8, Fair Labor Standards, and consists of Sections 201 through 219. The FLSA guarantees a minimum wage for all hours worked and limits to 40 the number of hours per week a covered nonexempt employee can work without additional compensation (paragraph (a)(1) of 29 USC 207, Maximum Hours). (EDITOR’S NOTE: The FLSA is addressed in FAR part 22, Application of Labor Laws to Government Acquisitions, particularly FAR subpart 22.10, Service Contract Labor Standards.)

DOL’s regulations implementing 29 USC Chapter 8 are in 29 CFR part 778, Overtime Compensation. 29 CFR 778.114, Fixed Salary for Fluctuating Hours, permits an employer to use the “fluctuating workweek method” to compute overtime compensation if the employee works fluctuating hours from week to week and “there is a clear mutual understanding of the parties that the fixed salary is compensation (apart from overtime premiums) for the hours worked each workweek, whatever their number, rather than for working 40 hours or some other fixed weekly work period...” Because the employee’s hours of work fluctuate from week to week, the regular rate must be determined separately each week based on the number of hours actually worked each week.

However, the payment of additional bonus and premium payments on top of the fixed salary to employees compensated under the fluctuating workweek method has presented challenges to employers and the courts alike. This rule clarifies that bonus payments, premium payments, and other additional pay are consistent with using the fluctuating workweek method of compensation, and that such payments must be included in the calculation of the regular rate (unless the payment is excluded, such as gifts, rewards paid in recognition of services performed, etc. – see 29 USC 207(e)(1) through (e)(8)).

DOL believes that this rule will allow employers and employees to better utilize flexible work schedules. This is especially important as workers return to work following the COVID-19 pandemic. Some employers are likely to promote social distancing in the workplace by having their employees adopt variable work schedules, possibly staggering their start and end times for the day. This rule will make it easier for employers and employees to agree to unique scheduling arrangements while allowing employees to retain access to the bonuses and premiums they would otherwise earn.

The following are the changes DOL is making to 29 CFR 778.114:

EDITOR’S NOTE: The fluctuating workweek method described in 29 CFR 778.114 is not the only method where additional overtime compensation is computed as one-half the regular rate:



GSA Awards Three E-Marketplace Platform Contracts

The General Services Administration (GSA) announced it has awarded contracts to three e-marketplace platform providers as authorized by the NDAA for FY 2018 (Public Law 115-91), Section 846, Procurement Through Commercial E-Commerce Portals, which requires GSA to “establish a program to procure commercial products through commercial e-commerce portals for purposes of enhancing competition, expediting procurement, enabling market research, and ensuring reasonable pricing of commercial products. The administrator [of GSA] shall carry out the program…through multiple contracts with multiple commercial e-commerce portal providers, and shall design the program to be implemented in phases with the objective of enabling governmentwide use of such portals...The head of a department or agency may procure, as appropriate, commercial products for the department or agency using the program.”

GSA issued a solicitation in October 2019 requesting proposals from e-marketplace portal providers for commercial e-marketplace platforms that can provide business-to-business (B2B) e-commerce capabilities for federal agencies using the Government Purchase Card (GPC) for the purchase of commercial off-the-shelf (COTS) items. The solicitation was expected to result in two or more no-cost contracts with commercial e-marketplace providers for initial proof-of-concept, each with a period of performance of one-year with two one-year option years. However, the solicitation stated that GSA reserved the right to award as many contracts as determined appropriate by the contracting officer. (For more on the solicitation, see “Solicitation Issued for Participation in the Commercial e-Commerce Portals Implementation” under the November 2019 Federal Contracts Perspective article “GSA Consolidating Schedules, Retiring FedBizOpps.”)

GSA decided to award no-cost contracts to Amazon Business, Fisher Scientific, and Overstock.com. Contracts to these three will allow GSA to test the use of commercial e-commerce portals for purchases below the micro-purchase threshold ($10,000) using a proof-of-concept for up to three years.

These contracts and platforms will be available to federal agencies as part of an effort to modernize the buying experience for agencies and help them gain insights into their open-market online spending that occurs outside of existing contracts. It is estimated that open market purchases on government purchase cards represent approximately $6 billion a year.

GSA anticipates the e-marketplace platforms will be available for use within the next 30 days.





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