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FAR Interim Rule Implements Executive Order Raising Federal Government Contractor Minimum Wage

January 27, 2022

On January 26, 2022, Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA), issued an Interim Rule amending the Federal Acquisition Regulation (FAR) in order to implement the Biden administration’s Executive Order (E.O. 14026), titled “Increasing the Minimum Wage for Federal Contractors.”  As we discussed in a prior GovCon Bulletin™ (here), E.O. 14026, signed on April 27, 2022, sought to raise the hourly minimum wage paid by federal government contractors to workers performing work on or in connection with federal government contracts to $15.00 per hour beginning January 30, 2022, and annually thereafter, beginning January 1, 2023, to an amount determined by the Secretary of Labor.

The Interim Rule, which becomes effective on January 30, 2022, amends the minimum wage provisions contained in FAR subpart 22.19 and in FAR clause 52.222-55, which sets forth an initial federal contractor minimum wage of $10.10 that has increased over time to $11.25 as of January 1, 2022.  The Interim Rule now implements E.O. 14026 by raising the federal contractor minimum hourly wage to $15.00 per hour, subject to annual increases determined by the Secretary of Labor.

The Interim Rule applies to: solicitations that are issued on or after January 30, 2022, and any resulting contracts; contracts awarded without a prior solicitation on or after January 30, 2022 (e.g., FAR Part 13 purchase orders); new contracts awarded on or after March 31, 2022, without a prior solicitation; and existing contracts - through bilateral modifications - when the contracts are extended, renewed or their options are exercised on or after the Interim Rule’s effective date.  If a contracting officer is unable to obtain a bilateral contract modification, the Interim Rule requires the contracting officer to decline to extend, renew, or exercise an option under the contract.

As for contracts that were awarded prior to March 31, 2022, the Interim Rule strongly encourages contracting officers to include an amended FAR clause setting forth the increased minimum wage “with appropriate consideration.”

The Interim Rule does not alter any of the already existing exemptions from minimum wage requirements under FAR subpart 22.19, which incorporates exemptions available under the Fair Labor Standards Act for certain workers, including individuals employed in a bona fide executive, administrative, or professional capacity. 

Comments to the Interim Rule are due by March 28, 2022.  To read the Interim Rule go here.  To read other articles from The GovCon Bulletin™ go here.

HHS Issues Final Rule For Buy Indian Act Acquisitions

January 14, 2022

On January 13, 2022, the U.S. Department of Health and Human Services (HHS) issued a Final Rule amending regulations under the Health and Human Services Acquisition Regulation (HHSAR), which supplements the Federal Acquisition Regulation (FAR), that implement the Buy Indian Act (BIA).  BIA gives the Indian Health Service (IHS) - an agency within HHS that provides health care to American Indians and Alaskan Natives - the authority to set aside procurements for businesses owned and controlled by American Indians and Alaskan Natives.  The Final Rule is intended to provide uniform administration procedures that IHS will use in all of its locations to encourage procurement relationships with American Indian and Alaskan Native labor and businesses.

Currently, the regulations implementing BIA, which are found in HHSAR Subpart 326.6, set out the procedures for making a contract award under BIA in four relatively short paragraphs in 326.604 and 326.605.  Specifically, 326.604 requires BIA contracts to be subject to competition among American Indian or Alaskan Native firms to the maximum extent practicable and requires a contracting officer to provide a justification and approval when competition is not practicable.  326.604 also requires a contracting officer to synopsize and publicize BIA solicitations.  Meanwhile, 326.605 permits a contracting officer to make a BIA award only if it is determined that the contractor will likely perform satisfactorily and will properly complete or maintain the contracted project or function.

The Final Rule replaces Subpart 326.6 in its entirety with new provisions that set out in far greater detail the procedures that contracting officers must follow when making BIA awards.  For example, 326.603-1 now requires IHS to use the negotiation authority of BIA to give preferences to Indian Economic Enterprises (IEE’s), with priority given to Indian Small Business Economic Enterprises (ISBEE’s).  326.603-3 describes the deviation procedures IHS contracting officers must follow when they determine that the application of BIA to an acquisition is inappropriate.

Among the other new provisions set forth under Subpart 326.6 are rules concerning acquisitions of commercial items and simplified acquisitions,  notices required to be inserted into solicitations for contracts set-aside for IEE’s and ISBEE’s, and the certifications and representations required to be provided to IHS by IEE offerors. 

Contractors that may be eligible for the IHS set-asides under the BIA should take special care to familiarize themselves with the new procedures set forth under the Final Rule, which becomes effective March 14, 2022.

To read the Final HHSAR Rule go here.  To read other articles from The GovCon Bulletin™ go here.

SBA Clarifies How Joint Venture Partners Determine Business Size

January 7, 2022

On January 5, 2022, the U.S. Small Business Administration (SBA) issued a clarification for how a joint venture partner should count joint venture employees and revenues for purposes of determining its own business size.  This clarification was made in the form of a correction to the SBA’s earlier October 2020 Final Rule, which merged the All Small Mentor-Protégé Program and the 8(a) Business Development (BD) Mentor-Protégé Program.

The October 2020 Final Rule provided that a joint venture partner must include its share of joint venture receipts and joint venture employees when it counts all of its employees and revenues for purposes of determining its business size.  The appropriate share of the joint venture's receipts is calculated by applying the percentage share of the joint venture’s work that is performed by the joint venture partner.  The appropriate share of the joint venture's employees is calculated by applying the percentage share of a joint venture partner’s ownership in the joint venture to the total number of individuals employed by the joint venture, after first subtracting any joint venture employee that is already accounted for in the employee count of one of the joint venture partners.

The SBA's rules do not permit a joint venture to be populated with its own employees for purposes of performing under a small business set-aside contract.  In the aftermath of the October 2020 Final Rule, some observers and practitioners mistakenly surmised that a joint venture partner of a populated joint venture does not have to include its share of the populated joint venture's receipts or employees in its own employee and revenue count.  The SBA’s January 5 clarification, however, now makes clear that a joint venture partner must include its share of joint venture employees and receipts in its employee and revenue count, regardless of whether the joint venture is populated or unpopulated. 

To read the SBA's clarification go here.   To read other articles from The GovCon Bulletin™ go here.

Courts Put Federal Government Contractor Vaccine Mandate On Hold

December 8, 2021

Yesterday, December 7, 2021, a federal district court in Georgia issued a nationwide preliminary injunction halting the Biden administration’s vaccine mandate that required federal government contractor and subcontractor employees to be fully vaccinated by January 18, 2021.  That federal court suit, brought by state elected officials in Georgia, Alabama, Kansas, South Carolina, Utah and West Virginia, challenged the Biden administration’s enforcement of Executive Order 14042 (here), which requires that contractors and subcontractors performing work on certain federal government contracts ensure that their employees are fully vaccinated against COVID-19.

In his 28-page opinion, Judge R. Stan Baker, of the U.S. District Court for the Southern District of Georgia, declined to limit application of his preliminary injunction to the states that brought the lawsuit, in part, because a trade association that was permitted to intervene in the suit had members all over the country and because limiting the preliminary injunction to the plaintiff states would, in the court's view, “only cause more confusion.”

The Georgia federal district court’s decision follows on the heels of a decision last week by a federal district court in Kentucky that granted a preliminary injunction, but only in the plaintiff states in that lawsuit - Kentucky, Tennessee and Ohio.

The Biden administration has already appealed the Kentucky federal district court’s decision, and an appeal of the Georgia federal court decision seems likely.

The Amadeo Law Firm will continue to monitor the court proceedings, and federal government contractors and subcontractors should remain alert to any future developments that may impact when or if the preliminary injunctions are lifted. 

To read other articles from The GovCon Bulletin™ go here.