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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


October 2021
Vol. XXII, No. 10
[pdf version]

CONTENTS


Biden Orders Federal Contractors to Protect Employees from COVID
Sudan Removed from List of State Sponsors of Terrorism
Accelerated Payments to Small Contractors Proposed/A>
Federal Minimum Wage Increased to $11.25/Hour for 2022



Biden Orders Federal Contractors to
Protect Employees from COVID

President Biden has issued Executive Order (EO) 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors, to “promote economy and efficiency in federal procurement by ensuring that the parties that contract with the federal government provide adequate COVID-19 safeguards to their workers performing on or in connection with a federal government contract or contract-like instrument…These safeguards will decrease the spread of COVID-19, which will decrease worker absence, reduce labor costs, and improve the efficiency of contractors and subcontractors at sites where they are performing work for the federal government.”

The president orders departments and agencies to “ensure that contracts and contract-like instruments…include a clause that the contractor and any subcontractors (at any tier) shall incorporate into lower-tier subcontracts. This clause shall specify that the contractor or subcontractor shall, for the duration of the contract, comply with all guidance for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force (Task Force Guidance or guidance), provided that the Director of the Office of Management and Budget (Director) approves the Task Force Guidance and determines that the guidance, if adhered to by contractors or subcontractors, will promote economy and efficiency in federal contracting. This clause shall apply to any workplace locations (as specified by the Task Force Guidance) in which an individual is working on or in connection with a federal government contract or contract-like instrument…”

Biden goes on to direct the Federal Acquisition Regulatory Council to “amend the Federal Acquisition Regulation [FAR] to provide for inclusion in federal procurement solicitations and contracts subject to this order the clause described in this order, and shall, by October 8, 2021, take initial steps to implement appropriate policy direction to acquisition offices for use of the clause by recommending that agencies exercise their authority under subpart 1.4 of the Federal Acquisition Regulation [Deviations from the FAR].”

On September 17, the Department of Defense (DOD) announced an “early engagement opportunity to support DOD implementation planning for Executive Order 14042…The public is invited to submit early inputs on EO 14042 via the DARS [Defense Acquisition Regulations System] website at https://www.acq.osd.mil/dpap/dars/early_engagement.html. Comments can be received up to 30 days after the date of this notice [that is, October 17, 2021], but comments will be most useful if received by DOD within 7 days after the date of this notice.”

On September 24, the Safer Federal Workforce Task Force published its guidance (https://www.saferfederalworkforce.gov/downloads/Draft%20contractor%20guidance%20doc_20210922.pdf). It states that “covered contractors shall adhere to the requirements of this guidance” and strongly encourages agencies “to incorporate a clause requiring compliance with this guidance”. The guidance defines terms (such as “covered contractor,” fully vaccinated,” and “mask”), identifies three workplace safety protocols and explains them (1. vaccination of covered contractor employees, except in limited circumstances where an employee is legally entitled to an accommodation; 2. requirements related to masking and physical distancing while in covered contractor workplaces; and 3. designation by covered contractors of a person or persons to coordinate COVID-19 workplace safety efforts at covered contractor workplaces), and provides Frequently Asked Questions (FAQs) (such as “Are covered contractor employees who have a prior COVID-19 infection required to be vaccinated?”).

On September 28, the director of the Office of Management and Budget (OMB) issued a notice stating that “based on my review of the Safer Federal Workforce Task Force's COVID-19 Workplace Safety: Guidance for Federal Contractors and Subcontractors, scheduled for issuance on September 24, 2021, and exercising the president’s authority…delegated to me through Executive Order No. 14042, I have determined that compliance by federal contractors and subcontractors with the COVID-19-workplace safety protocols detailed in that guidance will improve economy and efficiency by reducing absenteeism and decreasing labor costs for contractors and subcontractors working on or in connection with a federal government contract.”

On September 30, the Civilian Agency Acquisition Council (CAAC), which oversees the administration of the FAR for all civilian agencies except the National Aeronautics and Space Administration (NASA) and the Coast Guard (which are overseen by the other council, the Defense Acquisition Regulations Council, along with the Department of Defense), issued a letter “authorizing agencies to issue a class deviation to implement Executive Order 14042…” The letter provides a FAR deviation clause that states, “The contractor shall comply with all guidance, including guidance conveyed through Frequently Asked Questions, as amended during the performance of this contract, for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force (Task Force Guidance) at https://www.saferfederalworkforce.gov/contractors/. The contractor shall include the substance of this clause…in subcontracts at any tier that exceed the simplified acquisition threshold, as defined in Federal Acquisition Regulation 2.101 [Definitions – currently $250,000] on the date of subcontract award, and are for services, including construction, performed in whole or in part within the United States or its outlying areas.” Agencies are required to include the clause in the following:

Agencies are encouraged, but not required, to include the clause in the following:

The clause shall not be included in:



Sudan Removed from List of State Sponsors of Terrorism

The Department of Defense (DOD) had an easy September, merely issuing one final rule amending the DOD FAR Supplement (DFARS) to reflect the Department of State’s removal of Sudan from the list of state sponsors of terrorism, two deviations, and one FAR deviation.



Accelerated Payments to Small Contractors Proposed

The FAR Council is proposing to amend FAR 32.009, Providing Accelerated Payments to Small usiness Subcontractors, and FAR 52.232-40, Providing Accelerated Payments to Small Business Subcontractors, to implement NDAA for FY 2020 (Public Law 116-92), Section 873, Accelerated Payments Applicable to Contracts with Certain Small Business Concerns Under the Prompt Payment Act, which requires agencies to establish an accelerated payment date for: (1) small business prime contractors, with a goal of 15 days after receipt of a proper invoice, if a specific payment date is not established by contract; and (2) prime contractors that subcontract with small businesses, with a goal of 15 days after receipt of a proper invoice, if: (i) a specific payment date is not established by contract; and (ii) the contractor agrees to make accelerated payments to the subcontractor without any further consideration from, or fees charged to, the subcontractor.

Currently, FAR 32.009-1, General, requires agencies to “take measures to ensure that prime contractors pay small business subcontractors on an accelerated timetable to the maximum extent practicable, and upon receipt of accelerated payments from the government”, and FAR 32.009-2, Contract Clause, requires contracting officers to include FAR 52.232-40 in all solicitations and contracts. FAR 52.232-40 requires prime contractors to provide accelerated payments to their small business subcontractors when the government provides accelerated payments to the prime contractors.

This proposed rule would expand FAR 32.009-1 to state, “agencies shall provide accelerated payments, to the fullest extent permitted by law, with a goal of 15 days after receipt of a proper invoice and all other required documentation, if a specific payment date is not established by contract, to: (1) small business contractors; and (2) prime contractors that subcontract with a small business concern, if the prime contractor agrees to make payments to the small business subcontractor within 15 days of receiving the accelerated payment from the government, after receipt of a proper invoice and all other required documentation from the small business subcontractor, to the maximum extent practicable, without any further consideration from or fees charged to the subcontractor.” While Section 873 does not specify the number of days for the prime contractor to make accelerated payments to the subcontractor, the FAR Council proposes that the prime contractor make payments to the small business subcontractor within 15 days of receiving the accelerated payment from the government, after receipt of a proper invoice and all other required documentation from the small business subcontractor.

These changes would be incorporated into FAR 52.232-40 as paragraphs (a)(1) and (a)(2).

Comments on this proposed rule must be submitted no later than November 29, 2021, identified as “FAR Case 2020-007,” through the Federal eRulemaking Portal at http://www.regulations.gov.

To further improve cash flow and access to the federal marketplace, the FAR Council is “considering additional regulatory actions to further broaden the reach of accelerated payments to small business subcontractors and welcome public comment on how this broadening might best be accomplished. This proposed rule flows down the requirement for accelerated payments from the prime contractor to small business subcontractors; the accelerated payment requirement does not flow down to other than small businesses, i.e., large business subcontractors. As drafted, large business subcontractors in the supply chain are not required to receive accelerated payments, and therefore are not required to accelerate payments to their small business subcontractors. Should the rule be expanded to apply the accelerated payment requirement to large business subcontractors in order to reach lower tier small business subcontractors? In other words, should all businesses, large and small, be directed to accelerate payment to their subcontractors, all the way down the tiers? What are the benefits, burdens, and unintended consequences, if any, of this type of expansion?”



Federal Minimum Wage Increased to $11.25/Hour for 2022

The Department of Labor (DOL) has announced that the applicable minimum wage rate to be paid to workers performing work on or in connection with federal contracts covered by EO 13658, Establishing a Minimum Wage for Contractors, beginning January 1, 2022, is increased from $10.95 to $11.25 per hour (see FAR subpart 22.19, Establishing a Minimum Wage for Contractors).

EO 13658 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, EO 13658 stated that the 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 became $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 became $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”).

In 2017, the DOL determined that the CPI index increased by 1.691% in 2017, so the minimum wage became $10.35 per hour beginning January 1, 2018 (see the October 2017 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.35/Hour For 2018”).

In 2018, the DOL determined that the CPI index increased by 2.337% in 2018, so the minimum wage became $10.60 per hour effective January 1, 2019 (see the October 2018 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.60/Hour for 2019”).

In 2019, the DOL determined that the CPI increased by 2.036% in 2019, so the minimum wage became $10.80 per hour effective January 1, 2020 (see the October 2019 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.80/Hour for 2020”).

In 2020, the DOL determined that the CPI increased by 1.432% in 2020, so the minimum wage became $10.95 per hour effective January 1, 2021 (see the September 2020 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.95/Hour for 2021”).

Now, the DOL has determined that the CPI index increased by 2.567% in 2021, and this produces a minimum wage of $11.25 per hour effective January 1, 2022.

In addition, the required minimum cash wage that must be paid to tipped employees performing work on or in connection with covered contracts is increased from $7.65 to $7.90 per hour.

However, on April 27, 2021, President Biden signed EO 14026, Increasing the Minimum Wage for Federal Contractors, which mandates that “workers working on or in connection with a federal government contract” be paid a minimum wage of $15.00 per hour. The $15.00 rate goes into effect January 30, 2022, and will apply to federal contractors and their subcontractors (see the May 2021 Federal Contracts Perspective article “Biden Orders $15/Hour Minimum Wage on Federal Contracts”). So how do EO 13658 and EO 14026 fit together?

EO 13658 went into effect in 2015 and is still in effect today. EO 14026 has yet to go into effect: all agencies must incorporate the $15.00 minimum wage in new solicitations by January 30, 2022, and into new contracts by March 30, 2022. Also, agencies must incorporate the higher wage rate into existing contracts when the parties exercise options or otherwise extend those contracts on or after January 30, 2022.

The DOL announcement states, “For some amount of time, the Department [of Labor] anticipates that there will be some existing contracts with the federal government that do not qualify as a covered ‘new contract’ for purposes of Executive Order 14026 and thus will remain subject to the minimum wage requirements of Executive Order 13658. The Department anticipates that, in the relatively near future, essentially all covered contracts with the federal government will qualify as ‘new’ contracts under Executive Order 14026 and be subject to its higher minimum wage rate. Until such time, however, Executive Order 13658 and its regulations at 29 CFR part 10 [Establishing a Minimum Wage for Contractors] must remain in place.”





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