Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules 50449 

GSA Global Supply or online at 

www.gsaglobalsupply.gsa.gov. 

§ 102–37.590 In transferring donated 

surplus vehicles, what is the responsibility 

of the SASP? 

The SASP is responsible for 

facilitating the transfer of the surplus 

vehicle to the donee in accordance with 

this part. The SASP should not sign the 

SF 97 as ‘‘transferee’’ unless the vehicle 

will be used and titled by the SASP. 

§ 102–37.595 When transferring donated 

surplus vehicles, what is the responsibility 

of the donee? 

The donee is responsible for 

processing the SF 97 in accordance with 

state licensing and titling authorities. 

The donee signs the SF 97 as 

‘‘transferee.’’ The donee is responsible 

for notifying the SASP if a SF 97 is not 

provided by the Government within a 

reasonable time after vehicle transfer. 

§ 102–37.600 When does title to a surplus 

donated vehicle change hands? 

Title to the vehicle rests with the 

holding agency until the SF 97 is signed 

by the transferee. At that point, the 

transferee will hold conditional title 

until the end of the period of restriction, 

if applicable, under the terms of the 

donation. 

Subpart J—Insuring Donated Surplus 

Property 

Sec. 

102–37.605 Is insurance required for 

liability purposes? 

102–37.610 If there is a property loss 

covered by insurance, who is entitled to 

reimbursement? 

Subpart J—Insuring Donated Surplus 

Property 

§ 102–37.605 Is insurance required for 

liability purposes? 

Yes, for vehicles, the SASP and/or the 

transferee must follow state laws for 

insurance requirements of state owned 

vehicles and state minimum insurance 

requirements for other than state owned 

vehicles. For other assets, insurance 

must be acquired to at least the 

minimum amount as mandated by 

applicable law or regulation. 

§ 102–37.610 If there is a property loss 

covered by insurance, who is entitled to 

reimbursement? 

(a) If the loss occurs while the 

property is insured and in the 

possession (or under the control) of the 

SASP, the SASP may retain proceeds to 

cover the SASP’s costs incurred to 

acquire and rehabilitate the property 

prior to its loss. GSA is entitled to 

proceeds in excess of the costs incurred 

by the state. 

(b) If the loss occurs while the 

property is insured and in the 

possession (or under the control) of the 

donee, the donee may retain proceeds to 

cover the costs that the donee incurred 

to acquire and rehabilitate the property 

prior to its loss. Entitlement to 

insurance proceeds in excess of the 

costs incurred by the donee depends on 

the time of the loss in relation to the 

period of restriction if the loss was 

incurred: 

(1) During the period of restriction 

imposed by GSA (e.g., typically up to 

the first year unless otherwise 

designated), the U.S. Government is 

entitled to the insurance proceeds, less 

any interest provided by the 

Government to the SASP to cover the 

SASP’s expenses in enforcing the 

restriction up to the time of the loss. 

(2) During an additional period of 

restriction imposed by the SASP (e.g., 

beyond the one year usually imposed by 

GSA), the SASP is entitled to the 

proceeds. 

(3) After all periods of restriction 

imposed by the GSA and/or SASP, the 

donee is entitled to the proceeds. 

12. Amend Appendix C to part 102– 

37 by alphabetically adding the 

definition of ‘‘Veterans Organizations’’ 

to read as follows: 

Appendix C to Part 102–37—Glossary 

of Terms for Determining Eligibility of 

Public Agencies and Nonprofit 

Organizations 

* * * * * 

Veterans Organizations means 

organizations eligible to receive Federal 

surplus property under Public Law 111–338, 

as codified at 40 U.S.C. 549(c)(3)(B)(x), 

whose (1) membership comprises 

substantially veterans (as defined under 38 

U.S.C.101); and (2) representatives are 

recognized by the Secretary of Veterans 

Affairs under 38 U.S.C. 5902. The 

Department of Veterans Affairs maintains a 

searchable Web site of recognized 

organizations. The address is http:// 

www.va.gov/ogc/apps/accreditation/ 

index.asp. 

[FR Doc. 2012–20441 Filed 8–20–12; 8:45 am] 

BILLING CODE 6820–14–P 

DEPARTMENT OF HOMELAND 

SECURITY 

48 CFR Parts 3016 and 3052 

[Docket No. DHS–2012–0050] 

RIN 1601–AA65 

Revision of Department of Homeland 

Security Acquisition Regulation; 

Contractor Billing and Subcontractor 

Labor Hour Rates Under Time and 

Materials Contracts (HSAR Case 2010– 

001) 

AGENCY: Office of the Chief Procurement 

Officer, DHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Department of Homeland 

Security (DHS) is proposing to amend 

its Homeland Security Acquisition 

Regulation to require contracts for time 

and material or labor hours to include 

separate labor hour rates for 

subcontractors and a description of the 

method that will be used to record and 

bill for labor hours for both contractors 

and subcontractors. 

DATES: Comments and related material 

submitted electronically must be 

submitted to the Federal eRulemaking 

Portal http://www.regulations.gov on or 

before October 22, 2012. Comments and 

related material submitted by mail must 

reach the Department of Homeland 

Security, Office of the Chief 

Procurement Officer, Acquisition Policy 

and Legislation Branch at the address 

shown below on or before October 22, 

2012 to be considered in the formation 

of the final rule. 

ADDRESSES: You may submit comments 

identified by DHS docket number DHS– 

2012–0050, using any one of the 

following methods: 

(1) Via the Internet at the Federal 

eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments 

and use docket number DHS–2012– 

0050. 

(2) By mail to the Department of 

Homeland Security, Office of the Chief 

Procurement Officer, Acquisition Policy 

and Legislation Branch, ATTN: Jeremy 

Olson, 245 Murray Lane, Bldg. 410 

(RDS), Washington, DC 20528. 

FOR FURTHER INFORMATION CONTACT: 

Jeremy Olson, Department of Homeland 

Security, Office of the Chief 

Procurement Officer, Acquisition Policy 

and Legislation Branch, (202) 447–5197, 

or by email at Jerry.Olson@dhs.gov. 

SUPPLEMENTARY INFORMATION: 

I. Request for Comments 

II. Background 

III. Discussion of Proposed Rule 

IV. Regulatory Requirements 


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50450 Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules 

A. Executive Order 12866 (Regulatory 

Planning and Review) 

B. Regulatory Flexibility Act 

C. Assistance for Small Entities 

D. Collection of Information 

I. Request for Comments 

Interested persons are invited to 

participate in this rulemaking by 

submitting comments and related 

materials. Comments and related 

materials should be organized by HSAR 

Part, and indicate the specific section 

that is being commented on. All 

comments received will be posted 

without change to http:// 

www.regulations.gov, including any 

personal information provided. See 

ADDRESSES above for information on 

how to submit comments. If you submit 

comments by mail, please submit them 

in an unbound format, no larger than 8 

1⁄2 by 11 inches, suitable for copying 

and electronic filing. You may submit 

comments either by mail or via the 

internet as identified in the ADDRESSES

section above; but to avoid duplication, 

DHS requests that you submit comments 

and materials by only one method. If 

you would like DHS to acknowledge 

receipt of comments submitted by mail, 

please enclose a self-addressed, stamped 

postcard or envelope. DHS will consider 

all comments and material received 

during the comment period. 

Viewing comments and documents: 

To view comments and read background 

documents related to this rulemaking, 

go to http://www.regulations.gov, which 

contains relevant instructions under the 

FAQs tab on the home page. 

II. Background 

This proposed rule augments two 

existing Federal Acquisition Regulation 

(FAR) policies to create a consistent 

approach within DHS for awarding 

Time and Materials/Labor Hours (T&M/ 

LH) contracts. Those two augmenting 

policies include the requirement for 

separate labor hour rates for T&M/LH 

subcontractors and the requirement for 

consistent practices for contractor labor 

hour records and labor hour billing. 

The first of the two existing FAR 

policies provides the option to require 

separate labor hour rates for each 

subcontractor under a T&M/LH contract, 

in addition to the labor hour rates 

established for the prime contractor. See 

FAR 16.601(e). The current FAR policy 

authorizes an agency either to permit 

individual contracting officers to decide 

if separate labor hour rates are necessary 

or to establish an agency procedure 

making separate rates mandatory. This 

rule proposes to establish a DHS-wide 

procedure to make the FAR option for 

consistent use of separate rates 

mandatory for DHS T&M/LH contracts. 

Federal Acquisition Regulation (FAR) 

16.601(e) further authorizes agencies to 

amend the solicitation provision at FAR 

52.216–29, Time-and-Materials/LaborHour (T&M/LH) Proposal RequirementsNon-commercial Item Acquisitions With 

Adequate Price Competition, to require 

offerors to submit offers that include 

separate labor hour rates for 

subcontractors and affiliates. The 

purpose of requiring offers to include 

such separate rates is to ensure the 

resulting contract or order will have 

individual labor hour rate schedules for 

each individual subcontractor and 

affiliate of the prime contractor and not 

contain only a single set of rates 

applicable to the prime contractor and 

all subcontractors. 

The second of the two augmenting 

Homeland Security Acquisition 

Regulation (HSAR) policies that are 

included in this proposed rule refines 

long-established FAR policies on 

consistency between contractor 

recordkeeping and contractor proposal 

and billing practices. The proposed rule 

establishes policies furthering those 

existing FAR policies so that DHS 

contractors will identify their method of 

accounting for labor hours incurred and 

agree to a price adjustment if their 

billing practices under a T&M/LH 

contract they enter into with DHS 

results in overbilling because they had 

not billed consistently with their 

recordkeeping practices. To minimize 

the burden of identifying the method of 

recordkeeping used by a contractor, the 

proposed rule includes a solicitation 

provision in which each offeror will 

check one of two blocks to designate 

which of the two types of methods its 

recordkeeping system uses, record only 

the number of hours in a standard work 

period (such as a 40 hour workweek) or 

record all hours worked in a work 

period. This will apply only to hours 

incurred by employees who are exempt 

from the Fair Labor Standards Act 

(FLSA). 

Contractors with a T&M/LH contract 

would be required to substantiate the 

number of hours billed in order to 

support payment of a voucher. There 

would be no mandatory requirement 

that a contractor use one method or the 

other; that would be the contractor’s 

choice. However, the contractor must 

consistently follow its chosen practice. 

III. Discussion of Proposed Rule 

The proposed rule would revise 48 

CFR part 3016, Types of Contracts and 

part 3052, Solicitation Provisions and 

Contract Clauses. 

Fixed hourly rates—FAR 16.601(e)(1) 

allows for three approaches in 

structuring solicitations for T&M/LH 

contracts and orders and allows 

agencies to make mandatory one of the 

three approaches identified in the 

solicitation provision at FAR 52.216– 

29(c). The proposed rule would make 

the procedure at FAR 52.216–29(c)(1), 

separate rates for each labor category, 

mandatory for DHS T&M/LH contracts 

and orders. The proposed rule provides 

procedures applicable to solicitations 

and awards for T&M/LH contracts and 

orders for non-commercial items using 

adequate price competition. The 

proposed rule would require offerors to 

propose separate, individual labor hour 

rates for each category of labor to be 

performed by the prime contractor, each 

subcontractor, and other divisions or 

subsidiaries or affiliates of the prime 

contractor under common control. The 

procedure would apply only to T&M/LH 

actions for non-commercial items to be 

awarded using adequate price 

competition. 

The purpose of these procedures is to 

ensure appropriate labor hour rates are 

paid under T&M/LH contracts and 

orders. The procedures are intended to 

eliminate unintentional windfall 

payments to the prime contractor that 

might otherwise result from work 

performed by lower labor rate 

subcontracts or affiliates that is billed at 

a higher prime contractor labor hour 

rate. 

Recording and billing hours under 

T&M/LH contracts and orders—The 

proposed rule would require all offerors 

seeking a T&M/LH contract or order to 

include a description of their method 

and their subcontractors’ methods of 

accounting for uncompensated overtime 

performed by employees who are 

exempt from the Fair Labor Standards 

Act (FLSA). It also includes a 

requirement that billings and payments 

under the resulting contracts or orders 

be made consistent with that 

description. The procedure would apply 

to all T&M/LH contracts and orders that 

exceed the Simplified Acquisition 

Threshold (SAT). 

The purpose of this procedure is to 

eliminate potential disputes regarding 

the hours that can be billed under T&M/ 

LH contracts by clearly stating in the 

contract whether the contractor and 

each subcontractor will be reimbursed 

based on recording and billing for only 

the number of hours worked not in 

excess of a standard number of hours in 

a standard work period (such as a 40 

hour workweek) or recording all hours 

worked. This procedure will ensure that 

billings and payments under T&M/LH 

contracts do not result in an unintended 


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windfall to the contractor by ensuring 

that the contractor does not bill the 

Government for all hours worked when 

its established practices are to record 

only the number of hours in a standard 

work period (such as a 40 hour 

workweek). 

IV. Regulatory Requirements 

A. Executive Order 12866 (Regulatory 

Planning and Review) and 13563 

(Improving Regulation and Regulatory 

Review). 

This proposed rule is not a significant 

regulatory action under section 3(f) of 

Executive Order 12866, as 

supplemented by Executive Order 

13563. The Office of Management and 

Budget has not reviewed it under those 

Orders. This proposed rule is not a 

major rule under 5 U.S.C. 804. 

B. Regulatory Flexibility Act 

Under the Regulatory Flexibility Act 

(RFA) (5 U.S.C. 601–612), we have 

considered whether this proposed rule 

would have a significant economic 

impact on a substantial number of small 

entities. The term ‘‘small entities’’ 

comprises small businesses, not-forprofit organizations that are 

independently owned and operated and 

are not dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000. 

This proposed rule, if made final, may 

impact a substantial number of small 

entities within the meaning of the 

Regulatory Flexibility Act, 5 U.S.C. 601, 

et seq., and DHS has thus prepared an 

initial regulatory flexibility analysis 

consistent with 5 U.S.C. 604 as follows: 

1. Description of the Reasons Why the 

Action Is Being Considered 

This proposed rule augments two 

existing Federal Acquisition Regulation 

(FAR) policies to create a consistent 

approach within DHS for awarding 

Time and Materials/Labor Hours (T&M/ 

LH) contracts. Those two augmenting 

policies include the requirement for 

separate labor hour rates for T&M/LH 

subcontractors and the requirement for 

consistent practices for contractor labor 

hour records and labor hour billing. 

The first of the two existing FAR 

policies provides the option to require 

separate labor hour rates for each 

subcontractor under a T&M/LH contract, 

in addition to the labor hour rates 

established for the prime contractor. See 

FAR 16.601(e). The current FAR policy 

authorizes an agency either to permit 

individual contracting officers to decide 

if separate labor hour rates are necessary 

or to establish an agency procedure 

making separate rates mandatory. This 

rule proposes to establish a DHS-wide 

procedure to make the FAR option for 

consistent use of separate rates 

mandatory for DHS T&M/LH contracts. 

Federal Acquisition Regulation (FAR) 

16.601(e) further authorizes agencies to 

amend the solicitation provision at FAR 

52.216–29, Time-and-Materials/LaborHour (T&M/LH) Proposal RequirementsNon-commercial Item Acquisitions With 

Adequate Price Competition, to require 

offerors to submit offers that include 

separate labor hour rates for 

subcontractors and affiliates. The 

purpose of requiring offers to include 

such separate rates is to ensure the 

resulting contract or order will have 

individual labor hour rate schedules for 

each individual subcontractor and 

affiliate of the prime contractor and not 

contain only a single set of rates 

applicable to the prime contractor and 

all subcontractors. 

The second of the two augmenting 

Homeland Security Acquisition 

Regulation (HSAR) policies that are 

included in this proposed rule refines 

long-established FAR policies on 

consistency between contractor 

recordkeeping and contractor proposal 

and billing practices. The proposed rule 

establishes policies furthering those 

existing FAR policies so that DHS 

contractors will identify their method of 

accounting for labor hours incurred and 

agree to a price adjustment if their 

billing practices under a T&M/LH 

contract they enter into with DHS 

results in overbilling because they had 

not billed consistently with their 

recordkeeping practices. 

2. Succinct Statement of the Objectives 

of, and Legal Basis for, the Proposed 

Rule 

This proposed rule would establish 

the DHS procedure to make the FAR 

option for consistent use of separate 

rates mandatory for DHS T&M/LH 

contracts. It would also establish a 

requirement that a contractor must 

consistently follow its method of record 

keeping for labor hours billed to a DHS 

contract. The legal bases for this rule are 

5 U.S.C. 301–302, 41 U.S.C. 1707, 41 

U.S.C. 1702, 48 CFR part 1, subpart 1.3, 

and DHS Delegation Number 0702. 

3. Description of and, Where Feasible, 

an Estimate of the Number of Small 

Entities To Which the Rule Will Apply 

This proposed rule would apply to all 

entities seeking a DHS contract or order 

that would be either a Time and 

Material or a Labor Hour type of 

contract. DHS believes that this 

proposed rule is not likely to have a 

significant economic impact on a 

substantial number of small entities 

because the rule does not require 

contractors or subcontractors to make 

any substantial changes in their normal 

business practices nor take any 

substantial actions under a contract 

beyond previously existing government 

requirements. 

Below are tables showing information 

on FY 2010 DHS awards, based on data 

contained in the Federal Procurement 

Data System, which would have been 

subject to this proposed rule had it been 

in effect at the time. These tables give 

a view into the numbers of entities that 

would be impacted by this proposed 

rule if the amount of contracting done 

by DHS is consistent with the amount 

performed during FY 2010. 

NUMBERS AND DOLLAR VALUES OF AWARDS

FY 2010 DHS awards 

Number of awards to other 

than small 

entities 

Number of awards to 

small entities 

Labor Hours .............................................................................................................................. 808 $401,098,840 971 $250,578,045 

Time and Materials ................................................................................................................... 2507 $1,399,245,624 1653 $483,677,645 

Grand Total ....................................................................................................................... 3315 $1,800,344,464 2624 $734,255,690 

FY2010 DHS T&M/LH Awards Numbers of firms other 

than small entities 

Small Entities 

382 $1,800,344,464 261 $734,255,690 


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4. Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements of the Proposed Rule, 

Including an Estimate of the Classes of 

Small Entities Which Will Be Subject to 

the Requirement and the Type of 

Professional Skills Necessary for 

Preparation of the Report or Record 

The proposed rule contains no new 

information collection or reporting 

requirements. Offerors are already 

required to provide information in 

response to DHS solicitations and this is 

authorized under an existing, approved 

information collection. OMB Control 

No. 1600–0005 (Offeror submissions). 

5. Identification, to the Extent 

Practicable, of all Relevant Federal 

Rules Which May Duplicate, Overlap, or 

Conflict With the Rule 

The proposed rule would not 

duplicate, overlap, or conflict with any 

other Federal rules. 

6. Description of Any Significant 

Alternatives to the Proposed Rule 

Which Accomplish the Stated 

Objectives of Applicable Statutes and 

Which Minimize Any Significant 

Economic Impact of the Rule on Small 

Entities 

The requirement proposed in this 

rulemaking is that the prime contractor 

will have to calculate and propose 

separate rates for each such 

subcontractor or affiliate rather than 

calculating a single set of rates with all 

labor hours wrapped into a single set of 

rates covering labor provided by the 

prime contractor as well as labor 

provided by subcontractors and 

affiliates. The FAR provides the option 

to make this decision in agency 

procedures or to leave this decision up 

to the offeror or to the contracting 

officer. DHS has chosen to revise its 

agency-wide procedures and is not 

aware of an alternative to this proposed 

requirement that would accomplish the 

goals of the proposed requirement. 

Likewise, the new requirements 

addressing contractors’ duties to record 

and bill for hours under T&M/LH 

contracts and orders imposes no new 

duties or requirements on a contractor 

other than to identify one of two 

methods of record-keeping described in 

a solicitation provision, use its current 

system of recordkeeping and billing, 

and agree to a price adjustment if it 

inappropriately bills for all hours 

worked when it disclosed that its 

normal practice is to bill only for a fixed 

number of hours per employee per 

period. The only significant alternative 

options DHS identified were not to issue 

this portion of the rule or to apply the 

rule to all actions, rather than applying 

it only to actions over the SAT. Not 

issuing the rule was rejected because it 

would forgo the benefits of the rule. 

Applying the rule to actions under the 

SAT was rejected because the benefits 

would likely not be substantial enough 

under those lower value contracts to 

warrant the administrative effort that 

DHS would have to expend to enforce 

the clause. 

DHS invites comments from small 

businesses and other interested parties. 

DHS also will consider comments from 

small entities concerning the affected 

HSAR subparts in accordance with 5 

U.S.C. 610. Such comments should be 

submitted separately and should cite 

HSAR Case 2010–001. 

C. Assistance for Small Entities 

Under Section 213(a) of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (Pub. L. 104–121), 

we want to assist small entities in 

understanding the rule so that they can 

better evaluate its effects on them and 

participate in the rulemaking. Small 

businesses may send comments on the 

actions of Federal employees who 

enforce, or otherwise determine 

compliance with, Federal regulations to 

the Small Business and Agriculture 

Regulatory Enforcement Ombudsman 

and the Regional Small Business 

Regulatory Fairness Boards. The 

Ombudsman evaluates these actions 

annually and rates each agency’s 

responsiveness to small business. If you 

wish to comment on actions by DHS 

employees, call 1–888–REG–FAIR (1– 

888–734–3247). The DHS will not 

retaliate against small entities that 

question or complain about this interim 

rule or any DHS policy. 

D. Collection of Information 

This proposed rule contains no new 

information collection requirements for 

which OMB approval is necessary under 

the Paperwork Reduction Act of 1995 

(Pub. L. 104–13). Offerors are already 

required to provide information in 

response to DHS solicitations and the 

burden for this is authorized under an 

existing, approved information 

collection. OMB Control No. 1600–0005 

(Offeror submissions). 

List of Subjects in 48 CFR Parts 3016 

and 3052 

Government procurement. 

Daniel L. Clever, 

Deputy Chief Procurement Officer, 

Department of Homeland Security. 

Accordingly, DHS proposes to amend 

(HSAR) 48 CFR parts 3016 and 3052 as 

follows: 

1. The authority citation for parts 

3016 and 3052 are revised to read as 

follows: 

Authority: 5 U.S.C. 301–302, 41 U.S.C. 

1707, 41 U.S.C. 1702, 48 CFR part 1, subpart 

1.3, and DHS Delegation Number 0702. 

PART 3016—TYPES OF CONTRACTS 

2. Add section 3016.601 to subpart 

3016.6 to read as follows: 

3016.601 Time-and-materials and laborhour contracts. 

(c)(2)(i) Fixed hourly rates. Each DHS 

time and materials and labor hour 

contract and order for non-commercial 

items awarded with adequate price 

competition (FAR 15.403–1(c)(1)) must 

include individual, separate labor hour 

rates for each category of labor hours 

for: 

(A) The prime contractor; 

(B) Each subcontractor; and 

(C) Each division, subsidiary and 

affiliate of the prime contractor. 

In order to require each offeror to 

propose these separate rates for each of 

those labor hour categories, the 

contracting officer shall insert the 

amended FAR solicitation provision as 

provided in (e)(1) of this subsection. 

The contracting officer shall also 

include such separate labor hour rates 

for each such category of labor hours in 

the resulting contract(s) or order(s). 

(d)(3) Limitations regarding recording 

hours under time-and-material and 

labor hour contracts and orders. 

(i) Definitions. 

Overtime means the number of hours 

worked in excess of the standard 

number of hours in a standard work 

period (such as a 40 hour workweek) by 

a contractor employee who is exempt 

from the Fair Labor Standards Act 

(FLSA). 

Standard work period means the 

minimum number of hours an FLSA 

exempt employee is required to work 

per week or some other defined period 

(e.g., 40 hours per week) in accordance 

with the contractor’s established 

policies. 

(ii) Policy. A time-and-materials and 

labor hour contract or order exceeding 

the Simplified Acquisition Threshold 

may be used only if it includes a 

description of the method that will be 

used by the prime contractor and each 

subcontractor to record and to bill for 

hours worked by employees exempt 

from the Fair Labor Standards Act 

(FLSA) under the contract or order, 

including overtime. The method used to 

record and bill for hours worked must 

be either to record and bill for all hours 

worked, or to record and bill for only 

the number of hours worked not in 


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excess of a standard number of hours in 

a standard work period (such as a 40 

hour workweek). The description of the 

method of recording and billing for 

hours worked must be consistent with 

one of the two descriptions in (HSAR) 

48 CFR 3016.601(d)(3)(iii)(A) or (B), and 

shall be incorporated into the contract 

or order. Whichever method the 

contractor states it will employ, those 

labor hour recording and billing 

practices must be consistent with the 

contractor’s disclosed or established 

practices at the time of contract award. 

(iii) Descriptions of acceptable and 

unacceptable labor hour recording and 

billing practices. Paragraphs (A) and (B) 

of this subsection provide descriptions 

of acceptable practices that may be 

incorporated into a covered action. 

These paragraphs (A) and (B) 

correspond to paragraphs (b)(i) and 

(b)(ii) respectively of the clause at 

(HSAR) 48 CFR 3052.216–76, Offeror 

Selection of Labor Hour Recording and 

Billing Practices for Time-andMaterials/Labor-Hour Contracts. 

Paragraph (C) of this subsection 

provides a description of an 

unacceptable practice. 

(A) Record and Bill for All Hours 

Worked. It is an acceptable practice for 

the contractor (subcontractor) providing 

labor hours of employees exempt from 

the Fair Labor Standards Act (FLSA) to 

bill the hours under its contract (or 

order) based on recording of all hours 

worked by those employees, including 

overtime. The contractor must state that 

its established accounting practice is to 

record all hours worked by those 

employees, including overtime. 

(1) However, if it is found after award 

that the contractor’s established 

accounting practices at the time of 

award were not based on recording all 

hours worked by employees, the 

Government shall be entitled to a price 

adjustment on all payments for labor 

hours under the contract or order. 

(2) The amount of the price 

adjustment for payments shall be the 

difference between the number of hours 

billed based on recording all hours 

worked and the hours that would have 

been recorded using the contractor’s 

established accounting practices at the 

time of award, multiplied by the 

applicable fixed hourly rates. 

(B) Record and Bill for a Standard 

Number of Hours per Standard Work 

Period (e.g., 40 hours per week). It is an 

acceptable practice for the contractor 

(subcontractor) to bill the hours worked 

by employees exempt from the Fair 

Labor Standards Act (FLSA) under its 

contract based on recording and billing 

for only the number of hours worked 

not in excess of a standard number of 

hours in a standard work period (such 

as a 40 hour workweek). The contractor 

must state that its established 

accounting practice is to record only the 

standard number of hours in a standard 

work period. The contractor’s 

(subcontractor’s) method of recording 

hours worked must pro-rate the hours 

among all jobs/functions performed by 

an employee when an employee works 

overtime. For example, under a standard 

40 hour work period, if an employee 

worked 25 hours on Contract A and 25 

hours on Contract B during a work 

period, the contractor would pro-rate 

those hours to record 20 hours on 

Contract A and 20 hours on Contract B 

so that the total number of hours for the 

period did not exceed the number of 

hours in a standard work period, 40 

hours. 

(C) Unacceptable accounting and 

billing practices. It is not an acceptable 

practice for a contractor or 

subcontractor that accounts for only a 

standard number of hours worked in a 

standard work period for employees 

exempt from the Fair Labor Standards 

Act (FLSA) (e.g., 40 hours per week), to 

account for and bill for only the first 8 

hours worked each day. All hours 

worked in excess of the standard 

number of hours in a standard work 

period, including overtime hours, must 

be pro-rated based on the total hours 

worked for all jobs/functions performed 

by the employee. If an offeror indicates 

that this is their established accounting 

practice, the Contracting Officer shall 

not award the contract or order, but 

instead shall notify the Office of the 

Chief Procurement Officer at 

procurement.support@dhs.gov for 

guidance on how to proceed. If an 

offeror provides a clarification to the 

statement it checks within the provision 

at (HSAR) 48 CFR 3016.216–75, and it 

is not clear to the contracting officer that 

the clarification is consistent with the 

requirements of the HSAR provision, 

the contracting officer shall notify the 

Office of the Chief Procurement Officer 

at procurement.support@dhs.gov for 

guidance on how to proceed. 

(e)(1) Solicitations and contracts: 

(i) Insert the provision (HSAR) 48 CFR 

3052.216–29, Time-and-Materials/ 

Labor-Hour Proposal RequirementsNon-Commercial Item Acquisition With 

Adequate Price Competition, in the 

place of the provision at FAR 52.216– 

29, Time-and-Materials/Labor-Hour 

Proposal Requirements-NonCommercial Item Acquisition With 

Adequate Price Competition, in all 

solicitations contemplating use of a 

time-and-materials or labor-hour type of 

contract for noncommercial items, if the 

price is expected to be based on 

adequate competition (FAR 15.403– 

1(c)(1)). This provision is authorized by 

Federal Acquisition Regulation (FAR) 

16.601(e)(1) which authorizes agency 

procedures to require modification of 

the FAR solicitation provision at FAR 

52.216–29, Time and Materials/LaborHour Proposal Requirements-NonCommercial Item Acquisitions With 

Adequate Price Competition. Insert the 

HSAR provision whole text into the 

solicitation to require separate proposed 

rates for all subcontractors and 

divisions, subsidiaries, and affiliates of 

the prime contractor. 

(ii) Insert the clause (HSAR) 48 CFR 

3052.216–75, Offeror Selection of LaborHour Recording and Billing Practices for 

Time-and-Materials/Labor-Hour 

Contracts, into each solicitation 

expected to result in a contract or order 

for (T&M/LH) exceeding the simplified 

acquisition threshold (SAT). 

(iii) Insert the clause (HSAR) 48 CFR 

3052.216–76, Time-and-Materials/ 

Labor-Hour Overtime Recording and 

Billing Practices, (or a clause 

substantially the same as) into time and 

material or labor-hour solicitations, 

contracts and orders exceeding the SAT 

and include the mark or other 

indication made by the contractor 

which of the two methods (recording all 

hours or prorating the excess over a 

standard work period) it will use during 

the performance of the contract/order to 

record and bill for hours worked. 

PART 3052—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

3. Amend subpart 3052.2 by adding 

section 3052.216–29 to read as follows: 

3052.216–29 Time-and-Materials/LaborHour Proposal Requirements-NonCommercial Item Acquisition With 

Adequate Price Competition. 

As prescribed in (HSAR) 48 CFR 

3016.601(e)(1)(i), insert the following 

provision: 

Time-and-Materials/Labor-Hour Proposal 

Requirements—Non-commercial Item 

Acquisition With Adequate Price 

Competition 

(a) The Government contemplates award of 

a Time-and-Materials or Labor-Hour type of 

contract resulting from this solicitation. 

(b) The offeror must specify fixed hourly 

rates in its offer that include wages, 

overhead, general and administrative 

expenses, and profit. The offeror must 

specify whether the fixed hourly rate for each 

labor category applies to labor performed 

by— 

(1) The offeror; 

(2) Subcontractors; and/or 

(3) Divisions, subsidiaries, or affiliates of 

the offeror under a common control; 

(c) The offeror must establish fixed hourly 

rates using separate rates for each category of 


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50454 Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules 

labor to be performed by each subcontractor 

and for each category of labor to be 

performed by the offeror, and for each 

category of labor to be transferred between 

divisions, subsidiaries, or affiliates of the 

offeror under a common control. 

(End of provision) 

4. Amend subpart 3052.2 by adding 

section 3052.216–75 as follows: 

3052.216–75. Offeror Selection of Labor 

Hour Recording and Billing Practices for 

Time-and-Materials/Labor-Hour Contracts. 

As prescribed in (HSAR) 48 CFR 

3016.601(e)(1)(ii), insert the following 

provision: 

Labor Hour Recording and Billing 

Practices for Time-and-Materials/ 

Labor-Hour Contracts. (XX 2010) 

(a) The offeror must identify the practices 

it intends to employ to record labor hours 

worked by employees exempt from the Fair 

Labor Standards Act (FLSA) and to bill for 

those hours under the prospective contract or 

order for which it is submitting its offer. The 

offeror must select one of the two available 

descriptions of acceptable methods as shown 

in HSAR 3052.216–76, Time-and-Materials/ 

Labor-Hour Overtime Recording and Billing 

Practices-Record. The two available 

selections are: (i) Record and Bill For All 

Hours Worked, or (ii) Record and Bill Based 

on a Standard Number of Hours Per Standard 

Work Period. Whichever of the two 

descriptions the offeror selects will be 

incorporated into any resulting contract or 

order awarded to the offeror. By making the 

selection, the offeror is indicating to the 

Government that the selected description of 

recording and billing practices is consistent 

with the contractor’s established accounting 

practices and this same method will be used 

for billing hours under the contract or order. 

(b) The offeror will not be eligible for 

award if either: 

(1) The offeror fails to indicate in its offer 

which of the two descriptions in paragraphs 

(c)(i) or (ii) below describe the offeror’s 

method of recording and billing for labor 

hours to be performed under the contract or 

order; or 

(2) The offeror submits a clarification of the 

clause 3052.216–76 Time-and-Materials/ 

Labor-Hour Overtime Recording and Billing 

Practices, and the Contracting Officer had not 

agreed prior to submittal of offers that the 

offeror’s clarification of the clause 

substantially meets the requirements of the 

clause. 

(c) The offeror must select one of the two 

below descriptions of the offeror’s system for 

recording and billing hours to be worked by 

employees exempt from the Fair Labor 

Standards Act (FLSA) under the contract that 

are included in either paragraph (i) or (ii) of 

the clause at HSAR 3052.216–76, Time-andMaterials/Labor-Hour Overtime Recording 

and Billing Practices. If a contract or order is 

awarded to the offeror, the selected 

description will be incorporated into the 

contract or order. 

[ ] (Check if the paragraph describes the 

offeror’s system)—Paragraph (i) Recording 

and billing Practices—Record and Bill For 

All Hours Worked. 

[ ] (Check if the paragraph describes the 

offeror’s system)—Paragraph (ii) Record and 

Bill For a Standard Number of Hours Per 

Standard Work Period. 

(End of provision) 

5. Amend subpart 3052.2 by adding 

section 3052.216–76 as follows: 

3052.216–76. Time-and-Materials/LaborHour Overtime Recording and Billing 

Practices. 

As prescribed in (HSAR) 48 CFR 

3016.601(e)(1)(iii), insert the following 

clause and designate either paragraph (i) 

or (ii), or insert a paragraph 

substantially the same as (i) or (ii), in 

accordance with the successful offeror’s 

selection from (HSAR) 48 CFR 

3052.216–75, Offeror Selection of Labor 

Hour Recording and Billing Practices for 

Time-and-Materials/Labor-Hour 

Contracts. 

Time-and-Materials/Labor-Hour 

Overtime Recording and Billing 

Practices—(Insert Date) 

(a) Definitions: 

Overtime means the number of hours 

worked in excess of the number of hours in 

a standard work period by a contractor 

employee who is exempt from the Fair Labor 

Standards Act (FLSA). 

Standard work period means the minimum 

number of hours a FLSA exempt employee is 

required to work per week or some other 

defined period (e.g., 40 hours per week) in 

accordance with the contractor’s established 

policies. 

(b) Only the designated paragraph (i) or (ii) 

applies. 

[ ] (i) Recording and Billing Practices— 

Record and Bill For All Hours Worked. 

The contractor (subcontractor) providing 

labor hours will bill the hours worked by 

employees exempt from the Fair Labor 

Standards Act (FLSA) under its contract (or 

order) based on recording of all hours worked 

by employees, including overtime. The 

contractor states that its established 

accounting practices are to record all hours 

worked. 

(1) If it is found after award that the 

contractor’s established accounting practices 

at the time of award were not based on 

recording all hours worked by employees, the 

Government shall be entitled to a price 

adjustment on all payments for labor hours 

under the contract or order. 

(2) The amount of the price adjustment for 

payments shall be the difference between the 

number of hours billed based on recording all 

hours worked and the hours that would have 

been recorded using the contractor’s 

established accounting practices at the time 

of award, multiplied by the applicable fixed 

hourly rates. 

- or - 

[ ] (ii) Record and Bill For a Standard 

Number of Hours Per Standard Work Period. 

The contractor (subcontractor) will bill the 

hours worked by employees exempt from the 

Fair Labor Standards Act (FLSA) under this 

contract based on recording and billing for 

only the number of hours worked not in 

excess of a standard number of hours in a 

standard work period (such as a 40 hour 

workweek). The contractor states that its 

established accounting practice is to record 

only the number of hours worked by such an 

employee not in excess of a standard number 

of hours in a standard work period (such as 

a 40 hour workweek). The contractor 

(subcontractor) further states that the 

accounting practices are based on pro-rating 

the hours among all jobs/functions performed 

by the employee when the employee works 

overtime. For example, under a standard 40 

hour work period, if the employee worked 25 

hours on Contract A and 25 hours on 

Contract B, the contractor would pro-rate 

those hours to record 20 hours on Contract 

A and 20 hours on Contract B so that the total 

number of hours recorded for the work 

period does not exceed the number of hours 

in the 40 hour standard work period. 

(c) Flow down to Subcontractors. The 

contractor and each lower tier subcontractor 

shall incorporate the substance of this clause, 

selecting the pertinent paragraph (i) or (ii), 

into each subcontract that exceeds the 

Simplified Acquisition Threshold and is 

either a Time and Materials or a Labor Hour 

contract/order. 

(End of clause) 

[FR Doc. 2012–20442 Filed 8–20–12; 8:45 am] 

BILLING CODE 9110–10–P 

DEPARTMENT OF THE TREASURY 

48 CFR Chapter 10 

RIN 1505–AC40 

Department of the Treasury 

Acquisition Regulations; Contract 

Clause on Minority and Women 

Inclusion in Contractor Workforce 

AGENCY: Departmental Offices, Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Department of the 

Treasury (the Department) is proposing 

to amend the Department of the 

Treasury Acquisition Regulation 

(DTAR) to include a contract clause on 

minority and women inclusion, as 

required by the Dodd-Frank Wall Street 

Reform and Consumer Protection Act of 

2010 (the Dodd-Frank Act). 

DATES: Comment due date: October 22, 

2012. 

ADDRESSES: Interested persons are 

invited to submit comments on all 

aspects of this proposed rule through 

one of these methods: 

Electronic Submission of Comments. 

Interested persons may submit 

comments electronically through the 

Federal eRulemaking Portal at http:// 

www.regulations.gov. Electronic 

submission of comments allows the 

commenter maximum time to prepare 


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