Source: http://farsite.hill.af.mil/reghtml/changes/fac/fac2005-79.htm
Timestamp: 2019-02-20 08:04:41
Document Index: 205510410

Matched Legal Cases: ['art 10', 'art 52', 'art 6', 'art 22', 'art 22', 'ART 1', 'art 22', 'art 10']

FAC2005-79
[FR Doc No: 2014-29139]
Federal Acquisition Regulations; Interim Final Rules and Proposed Rule
Federal Register / Vol. 79 , No. 240 / Monday, December 15, 2014 / Rules and Regulations
[Docket No. FAR 2014-0051, Sequence No. 7]
SUMMARY: This document summarizes the Federal Acquisition Regulation (FAR) rules agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) in this Federal Acquisition Circular (FAC) 2005-79. A companion document, the Small Entity Compliance Guide (SECG), follows this FAC. The FAC, including the SECG, is available via the Internet at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: The analyst whose name appears in the table below in relation to the FAR case. Please cite FAC 2005-79 and the specific FAR case number. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755.
Establishing a Minimum Wage for Contractors.
SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the actual revisions and/or amendments made by these rules, refer to the specific item numbers and subjects set forth in the documents following these item summaries. FAC 2005-79 amends the FAR as specified below:
Item I--Establishing a Minimum Wage for Contractors (FAR Case 2015-003)
Item II--Prohibition on Contracting With Inverted Domestic Corporations (FAR Case 2014-017)
[FR Doc No: 2014-29137]
[FAC 2005-79; FAR Case 2015-003; Item I; Docket No. 2014-0050; Sequence No. 1]
RIN 9000-AM82
SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the Federal Acquisition Regulation (FAR) to implement the Executive Order, Establishing a Minimum Wage for Contractors, and a final rule issued by the Department of Labor.
DATES: Effective: December 15, 2015.
Applicability: This rule applies to solicitations issued on or after the effective date of the rule. Applicability of the clause at 52.222-55, Minimum Wages Under Executive Order 13658, to existing contracts that do not contain a class deviation clause implementing the Executive Order (E.O.), is as follows--
ADDRESSES: Submit comments identified by FAC 2005-79, FAR Case 2015-003 by any of the following methods:
comments via the Federal eRulemaking portal by searching for ``FAR Case 2015-003''. Select the link ``Comment Now'' that corresponds with ``FAR Case 2015-003''. Follow the instructions provided at the ``Comment Now'' screen. Please include your name, company name (if any), and ``FAR Case 2015-003'' on your attached document.
Instructions: Please submit comments only and cite ``FAR Case 2015-003'' in all correspondence related to this case. All comments received will be posted without change to http://www.regulations.gov, including any personal and/or business confidential information provided.
FOR FURTHER INFORMATION CONTACT: Mr. Edward Loeb, Procurement Analyst, at 202-501-0650 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory
Secretariat Division at 202-501-4755. Please cite FAC 2005-79, FAR Case 2015-003.
DoD, GSA, and NASA are issuing an interim rule amending the FAR to implement E.O. 13658, Establishing a Minimum Wage for Contractors. The E.O. was signed February 12, 2014, and published in the Federal Register at 79 FR 9851, on February 20, 2014. The FAR is also implementing a final rule issued by the Wage and Hour Division of the Department of Labor (DOL), published at 79 FR 60634, on October 7, 2014, also entitled ``Establishing a Minimum Wage for Contractors.'' The DOL rule added a new 29 CFR part 10. The DOL rule covers both FAR-based contracts, and non-FAR-based contracts and contract-like instruments; this interim rule only applies to FAR-based contracts.
The E.O. seeks to increase efficiency and cost savings in the work performed by parties who contract with the Federal Government by raising the hourly minimum wage paid to workers on specified Federal contracts. Beginning January 1, 2015, the hourly rate will be $10.10, and beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of Labor. The E.O. explains that ``[r]aising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and accompanying costs, and reduces supervisory costs,'' and that ``[t]hese savings and quality improvements will lead to improved economy and efficiency in Government procurement.'' The E.O. directed DOL to issue regulations by October 1, 2014, and for the FAR Council to issue regulations within 60 days of the DOL regulations.
2. Define a ``worker'' to whom the rule applies (29 CFR 10.2) (FAR 22.1901 and 52.222-55(a)).
4. Only apply to contracts with the Federal Government requiring performance in whole or in part within the United States (the 50 states and the District of Columbia) (29 CFR 10.2 and 10.3) (FAR 22.1903, 22.1906 and 52.222-55 (a), (b)(1), and (k)).
b. Definition of ``Worker''. FAR 22.1901 incorporates the DOL definition, updating the statutory references to reflect the recodification of Titles 40 and 41 of the United States Code (see FAR 1.110).
The DOL rule included a definition of ``tipped employees'' at 29 CFR 10.2 as well as a discussion of treatment of tipped employees at 29 CFR 10.28. DoD, GSA, and NASA determined that a detailed discussion of tipped employees or a definition is not needed because tipped employees are infrequently employed under FAR-based contracts, and concluded that reference to 29 CFR 10.24(b) and 10.28 in the FAR rule is adequate coverage.
d. Applicability. FAR 22.1903(a) provides applicability to contracts governed by the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute, and to performance in whole or in part in the United States. The FAR 2.101 definition of ``United States,'' as used in the geographic sense, is used in this rule--the 50 states and the District of Columbia.
FAR 22.1903(b) delineates individuals to whom the subpart applies or does not apply. The subpart does not apply to an individual who performs solely ``in connection with'' covered contracts for less than 20% of hours worked in a given work week. DOL, in its final rule preamble (79 FR 60634 at 60661), gave helpful examples.
3. Coverage is added to part 52 to--
a. Revise the clause at 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders--Commercial Items, to include 52.222-55, Minimum Wages Under Executive Order 13658;
b. Revise the clause at 52.213-4, Terms and Conditions--Simplified Acquisitions (Other than Commercial Items), to include 52.222-55, Minimum Wages Under Executive Order 13658; and
i. Paragraph (a) definitions of ``Worker'' and ``United States'' are provided.
b. Appendix A, paragraph (i), Certification of Eligibility. This paragraph duplicates coverage in paragraph (p) of FAR clause 52.222-41, Service Contract Labor Standards, for service and 52.222-15, Certification of Eligibility, for construction contracts. 41 U.S.C. 1304 discourages adding certifications to the FAR.
e. Terms defined in 29 CFR 10.2, Definitions, include ``new contract''. The FAR rule did not adopt this definition as not all the elements of the definition apply to or are consistent with FAR principles. When FAR rules apply to existing contracts, application is addressed in the Effective Date/Applicability section of the preamble, not in the Code of Federal Regulations; treatment of bilateral modifications to existing contracts is addressed in the Applicability section at the beginning of this preamble. In discussing treatment of existing contracts DOL stated in the preamble of its rule, ``if parties bilaterally negotiate a modification that is outside the scope of the contract, the agency will be required to create a new contract, triggering solicitation and/or justification requirements, and thus such a modification after January 1, 2015 should be addressed as a new contract subject to the Executive Order''. We understand this to refer to the long-standing requirement for any out-of-scope modification to be addressed as a new procurement and conducted in accordance with the requirements of FAR part 6, Competition Requirements.
This rule applies to contracts awarded under FAR procedures and covered by the Service Contract Labor Standards statute (41 U.S.C. chapter 67; see FAR subpart 22.10), including contracts for the acquisition of commercial services, and the Wage Rate Requirements (Construction) statute (40 U.S.C. chapter 31 subchapter IV; see FAR subpart 22.4). The FAR rule does not apply to certain contracts, such as concession contracts, which may be covered by the DOL rule and the E.O. but are not FAR contracts. FAR 1.104 addresses the applicability of the FAR to Federal acquisitions. FAR 2.101 states ``acquisition'' means the ``acquiring by contract with appropriated funds of supplies or services . . .''.
The rule establishes requirements for contractors under contracts containing the clauses at 52.222-6, Construction Wage Rate Requirements, or 52.222-41, Labor Standards, i.e. ``covered contracts'', to pay no less than the applicable E.O. minimum wage to workers for all hours worked on or in connection with a covered contract. Contractors must also include a minimum wage contract clause in covered subcontracts and require covered subcontractors to include the substance of the clause in covered lower-tier contracts.
This rule applies to workers as defined at 22.1901. As provided in that definition--
This rule does not apply to--
Individuals exempted from the minimum wage requirements of the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise covered by the Service Contract Labor Standards statute, or the Wage Rate Requirements (Construction) statute. These individuals include but are not limited to--
Data available through the Federal Procurement Data System (FPDS) for Fiscal Year 2013, reveals 16,264 contracts were awarded to unique small business vendors for services which contained the clause at 52.222-41, Labor Standards. Additionally, 5,211 contracts were awarded to unique small business vendors for construction which contained the clause at 52.222-6, Construction Wage Rate Requirements, for a total of 21,475 unique small businesses. Subcontract data is available from the USASpending Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS), however this system does not distinguish small businesses from other than small businesses. Data for Fiscal Year 2013 shows there were a total of 20,127 subcontracts for services and construction reported and of those 5,391 were unique DUNS. These 5,391 first tier unique subcontracts are approximately 25% of the 21,475 unique contracts. Given that first tier subcontracts account for 25%, then for estimating purposes, 20% of subcontracts have a second-tier, 10% of second tier have a third tier, and 5% of third tier have a fourth tier. This calculation estimates the total number of subcontracts is 6,631. However, since the FSRS does not distinguish small businesses, this number is overestimated. Data from FPDS has shown that typically, approximately 60% of a contractor population is small.
The Paperwork Reduction Act (44 U.S.C chapter 35) does apply; however, these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved for the DOL regulations under OMB Control Number 1235-0018, Records to be kept by Employers--Fair Labor Standards Act.
PART 1--FEDERAL AQUSITION REGULATIONS SYSTEM
2. Amend section 1.106, in the table following the introductory text, by--a. Removing the FAR Segment ``52.222-8'' and its corresponding OMB control numbers ``1215-0149 and 1215-0017'' and adding ``52.222-8'' and ``1235-0008 and 1235-0018'' in their places, respectively;
b. Removing the FAR segment ``52.222-41'' and its corresponding OMB control numbers ``1215-0017 and 1215-0150'' and adding ``52.222-41'' and ``1235-0018 and 1235-0007'' in their places, respectively; and
c. Adding in numerical sequence, FAR segment ``52.222-55'' and its corresponding OMB Control No. ``1235-0018''.
3. Amend section 22.001 by adding, in alphabetical order, the definition ``Agency labor advisor'' to read as follows:
6. Amend section 22.1001 by removing the definition ``Agency labor advisor.''
Subpart 22.19--Establishing a Minimum Wage for Contractors
22.1901 Definition.
Worker, as used in this subpart, (in accordance with 29 CFR 10.2)--
(b)(1) This subpart applies to workers as defined at 22.1901. As provided in that definition--
(2) This subpart does not apply to--
(ii) Individuals exempted from the minimum wage requirements of the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise covered by the Service Contract Labor Standards statute or the Wage Rate Requirements (Construction) statute. These individuals include but are not limited to--
(a) For the E.O. minimum wage rate that becomes effective on January 1, 2016, and annually thereafter, the Administrator will--
(i) Example 1_New E.O. wage rate is $11.10.
Previous E.O. wage rate is $10.70 The current Service or Construction wage determination rate under the contract is $10.75
The actual wage paid to the worker prior the new minimum wage is $10.80
(ii) Example 2_New E.O. wage rate is $10.50.
Previous E.O. wage rate is $10.10. The current Service or Construction wage determination rate under the contract is $10.75.
The actual wage paid to the worker prior to the new minimum wage is $10.80.
(c) Investigations. Complaints will be investigated by the Administrator, if warranted, in accordance with the procedures in 29 CFR part 10.43. (d) Remedies and sanctions--(1) Unpaid wages. When the Administrator's investigation reveals that a contractor has failed to pay the applicable E.O. minimum wage, the Administrator will notify the contractor and the contracting agency of the unpaid wage violation, and request that the contractor remedy the violation. If the contractor does not remedy the violation, the Administrator may direct withholding of payments due on the contract or any other contract between the contractor and the Federal Government. Upon final decision and direction of the Administrator, the contracting agency shall transfer the withheld funds to the Department of Labor for disbursement in accordance with the procedures at 22.406-9(c).
10. Amend 52.212-5 by--
d. Revising the date of Alternate II; and adding paragraph
(e)(1)(ii)(O).
Contract Terms and Conditions Required To Implement Statutes or Executive Orders--Commercial Items DEC 2014)
52.213-4 Terms and Conditions--Simplified Acquisitions (Other than
Terms and Conditions--Simplified Acquisitions (Other Than Commercial Items) (DEC 2014)
52.222-55, Minimum Wages Under Executive Order 13658.
``Worker''--
(c)(1) This clause applies to workers as defined in paragraph (a). As provided in that definition--
(ii) Individuals exempted from the minimum wage requirements of the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise covered by the Service Contract Labor Standards statute, or the Wage Rate Requirements (Construction) statute. These individuals include but are not limited to--
[FR Doc No: 2014-29153]
[FAC 2005-79; FAR Case 2014-017; Item II; Docket No. 2014-0017, Sequence No. 1]
SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the provisions of the Federal Acquisition Regulation (FAR) that address the continuing Governmentwide statutory prohibition on the use of appropriated (or otherwise made available) funds for contracts with any foreign incorporated entity that is an inverted domestic corporation or any subsidiary of such entity.
DATES: Effective: December 15, 2014.
ADDRESSES: Submit comments identified by FAC 2005-79, FAR Case2014-017, by any of the following methods:
Regulations.gov: http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by searching for ``FAR Case 2014-017'' Select the link ``Comment Now'' that corresponds with ``FAR Case 2014-017''. Follow the instructions provided at the ``Comment Now'' screen. Please include your name, company name (if any), and ``FAR Case 2014-017'' on your attached document.
FOR FURTHER INFORMATION CONTACT: Mr. Michael O. Jackson, Procurement Analyst, at 202-208-4949 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755. Please cite FAC 2005-79, FAR Case 2014-017.
This interim rule also makes several technical revisions to the coverage in FAR 9.108 to state more clearly when a corporation is covered by the prohibition. In particular, it eliminates unclear discussion and references in the definition of ``inverted domestic corporation''.
Finally, the interim rule makes conforming changes to solicitation provisions and contract FAR clauses at 52.204-8, 52.209-2, 52.209-10, 52.213-3, and 52.212-5 so that offerors and contractors have clearer notice of the ongoing and continuing nature of the statutory prohibition on contracting with inverted domestic corporations and their subsidiaries.
DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because this rule will only impact an offeror that is an inverted domestic corporation and wants to do business with the Government. It is expected that the number of small entities impacted by this rule will be minimal. Small business concerns are unlikely to have been incorporated in the United States (or, if a partnership, established in the United States) and then subsequently incorporated in a foreign country; the major participants in these transactions are reportedly large multinational corporations. No domestic entities will be impacted by this rule. For the definition of ``small business'', the Regulatory Flexibility Act refers to the Small Business Act, which in turn allows the U.S. Small Business Administration (SBA) Administrator to specify detailed definitions or standards (5 U.S.C. 601(3) and 15 U.S.C. 632(a)). The SBA regulations at 13 CFR 121.105 discuss who is a small business: ``(a)(1) Except for small agricultural cooperatives, a business concern eligible for assistance from SBA as a small business is a business entity organized for profit, with a place of business located in the United States, and which operates primarily within the United States or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor''. Therefore, an Initial Regulatory Flexibility Analysis has not been performed. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities.
2. Amend section 9.108-1 by revising the definition ``Inverted domestic corporation'' to read as follows:
(v) 52.209-2, Prohibition on Contracting with Inverted Domestic Corporations--Representation.
Prohibition on Contracting With Inverted Domestic Corporations--Representation (Dec 2014)
8. Amend section 52.209-10 by revising the date of the clause and in paragraph (a), the definition ``Inverted domestic corporation'' to read as follows:
9. Amend section 52.212-3 by revising the date of the provision; in paragraph (a), the definition ``Inverted domestic corporation'' and paragraph (n)(1) to read as follows:
Offeror Representations and Certifications--Commercial Items (Dec 2014)
Contract Terms and Conditions Required To Implement Statutes or Executive Orders--Commercial Items (Dec 2014)
[FR Doc No: 2014-29148]
[Docket No. FAR 2014-0052, Sequence No. 7]
SUMMARY: This document is issued under the joint authority of DOD, GSA, and NASA. This Small Entity Compliance Guide has been prepared in accordance with section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996. It consists of a summary of the rules appearing in Federal Acquisition Circular (FAC) 2005-79, which amends the Federal Acquisition Regulation (FAR). An asterisk (*) next to a rule indicates that a regulatory flexibility analysis has been prepared. Interested parties may obtain further information regarding these rules by referring to FAC 2005-79, which precedes this document. These documents are also available via the Internet at http://www.regulations.gov.
DATES: December 15, 2014.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact the analyst whose name appears in the table below. Please cite FAC 2005-79 and the FAR case number. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755.