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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


May 2021
Vol. XXII, No. 5
[pdf version]

CONTENTS


Biden Orders $15/Hour Minimum Wage on Federal Contracts
GSA Tidies Up a Bit, Too
EPA Proposes Addressing Invoicing Via the IPP
DOD Prohibits Networks Allowing Pornography
DHS Suspends Limitations for Unaccompanied Children



Biden Orders $15/Hour Minimum Wage
on Federal Contracts

On April 27, President Biden issued Executive Order 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 1, 2022, and will apply to federal contractors and their subcontractors. Executive Order 14026 is an extension and update of Executive Order 13658, Establishing a Minimum Wage for Contractors, which was issued by President Obama in 2014 (when Joe Biden was vice president) (see the March 2014 Federal Contracts Perspective article “President Issues Executive Order Mandating $10.10/Hour Minimum Wage”). Executive Order 14026 increases the minimum wage applicable to federal contracts from $10.95 per hour, a 37% increase (see the September 2020 Federal Contracts Perspective article “Federal Minimum Wage Increased to $10.95/Hour for 2021”).

Executive Order 14026 will:

Executive Order 14026 applies to “any new contract; new contract-like instrument; new solicitation; extension or renewal of an existing contract or contract-like instrument; and exercise of an option on an existing contract or contract-like instrument, if (i): (A) it is a procurement contract or contract-like instrument for services or construction; (B) it is a contract or contract-like instrument for services covered by the Service Contract Act [which applies to federal contracts and subcontracts for services exceeding $2,500]; (C) it is a contract or contract-like instrument for concessions, including any concessions contract excluded by Department of Labor regulations...; or (D) it is a contract or contract-like instrument entered into with the federal government in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public; and (ii) the wages of workers under such contract or contract-like instrument are governed by the Fair Labor Standards Act [which establishes $7.25/hour as the national minimum wage and mandates overtime pay at a rate not less than one and a half times the regular rate of pay after 40 hours of work in a workweek], the Service Contract Act, or the Davis-Bacon Act [which applies to most federal contracts for construction exceeding $2,000].”

The Secretary of Labor is required to issue regulations implementing Executive Order 14026 by November 24, 2021. The Federal Acquisition Regulation (FAR) is to be amended within 60 days of the issuance of the Labor regulations to require the inclusion of a clause in solicitations and contracts that provides, as a condition of payment, that the contractor is to pay workers employed in the performance of the contract or any covered subcontract the minimum wage specified by the executive order.

EDITOR’S NOTE: President Biden states in his executive order that “raising the minimum wage enhances worker productivity and generates higher-quality work by boosting workers’ health, morale, and effort; reducing absenteeism and turnover; and lowering supervisory and training costs.” If this is the case, why hadn’t contractors raised the wages themselves to $15/hour to obtain an edge over their competitors?



GSA Tidies Up a Bit, Too

As did the Department of Defense in March (see the April 2021 Federal Contracts Perspective article “DOD Tides Up a Bit”), the General Services Administration (GSA) took it easy in April and lightly touched up the GSA Acquisition Regulation (GSAR) a bit.



EPA Proposes Addressing Invoicing Via the IPP

The Environmental Protection Agency (EPA) is proposing to amend EPA Acquisition Regulation (EPAAR) 1552.232-70, Submission of Invoices, to further address electronic invoicing at EPA via the Invoice Processing Platform (IPP) (https://www.ipp.gov/). EPAAR 1552.232-70 is for cost-reimbursable and time-and-materials contracts and orders, which require considerable supporting documentation. While such documentation is necessary for those types of contracts and orders, that extensive documentation is not necessary for other contract types, like firm-fixed-price (FFP) contracts. Therefore, this proposed rule would amend EPAAR 1552.232-70 as follows:

Comments on this proposed rule must be submitted by June 14, 2021, identified as “Docket ID No. EPA-HQ-OMS-2020-0389,” through the Federal eRulemaking portal at https://www.regulations.gov.



DOD Prohibits Networks Allowing Pornography

The Department of Defense (DOD) Office of Defense Pricing and Contracting issued a class deviation implementing Section 8116 of the Consolidated Appropriations Act, 2021 (Public Law 116-260), which provides that “none of the funds made available in this act may be used to maintain or establish a computer network unless such network is designed to block access to pornography websites.” Section 8116 goes on to provide that “nothing [in Section 8116] shall limit the use of funds necessary for any federal, state, tribal, or local law enforcement agency or any other entity carrying out criminal investigations, prosecution, or adjudication activities, or for any activity necessary for the national defense, including intelligence activities.”

This class deviation implements Section 8116 by requiring the inclusion of DFARS 252.239-7098, Prohibition on Contracting to Maintain or Establish a Computer Network Unless Such Network is Designed to Block Access to Certain Websites – Representation (DEVIATION 2021-O0003), in all solicitations that will use funds made available by Public Law 116-260, including those for the acquisition of commercial items under FAR part 12, Acquisition of Commercial Items. DFARS 252.239-7098 (DEVIATION 2021-O0003) includes the following representation: “By submission of its offer, the offeror represents that it is not providing as part of its offer a proposal to maintain or establish a computer network unless such network is designed to block access to pornography websites.”



DHS Suspends Limitations for Unaccompanied Children

The Department of Homeland Security (DHS) has issued a class deviation from the Homeland Security Acquisition Manual (HSAM) suspending the HSAM limitations on the use of incremental funding of fixed-price, time-and-material, or labor hour contracts for services to facilitate the rapid procurement of services and supplies required to support unaccompanied alien children (UAC) while in DHS custody awaiting transfer to the Department of Health and Human Services (HHS).

FAR 52.232-22, Limitation of Funds, provides policy and procedures on incremental funding, but the clause applies only to cost-type contracts. Paragraph (e) of HSAM 3032.702, Policy [for contract funding], restricts use of incremental funding of fixed-price, time-and-material, or labor-hour contracts to only during a continuing resolution (CR) or the short-term apportionment immediately following a CR. In addition, paragraph (f) prohibits the use of incremental funding for non-severable services and all supplies.

“It is imperative the department maximize funding flexibility to provide quick and efficient mission critical response efforts for UAC,” states Soraya Correa, DHS Chief Procurement Officer. “DHS must take immediate measures to provide shelter, meals, medical care, and other related services and supporting supplies for UAC. In this situation, strict compliance with HSAM requirements could result in failure to procure, or to provide essential supplies and materials when needed. Delays in procuring services and related supplies for UAC in DHS custody could pose a substantial risk to human life, health, and safety.”

Therefore, “effective immediately for procurements of supplies and materials in support of UAC requirements, contracting officers may incrementally fund fixed-price, time-and-materials, and labor-hour contracts for services, including non-severable services. The policy for supplies to be fully funded remains in effect.” Awards and modifications using incremental funding must be approved one level above the contracting officer, and the contract file must contain documentation that clearly explains how the procurement supports UAC in DHS custody.

This class deviation expires September 30, 2021, unless it is modified or rescinded.





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