[Federal Register: January 9, 2009 (Volume 74, Number 6)]
[Proposed Rules]
[Page 872-874]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ja09-11]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 22 and 52
[FAR Case 2007-021; Docket 2009-0014; Sequence 1]
RIN 9000-AL14
Federal Acquisition Regulation; FAR Case 2007-021, Fair Labor
Standards Act and Service Contract Act Price Adjustment Clauses
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) to specifically require the
incorporation of the FAR clauses regarding Fair Labor Standards Act and
Service Contract Act-Price Adjustment (Multi-Year and Option Contracts)
and Fair Labor Standards Act and Service Contract Act-Price Adjustment
in time-and-materials and labor--hour service contracts that are
subject to the Service Contract Act.
DATES: Interested parties should submit written comments to the
Regulatory Secretariat on or before March 10, 2009 to be considered in
the formulation of a final rule.
ADDRESSES: Submit comments identified by FAR case 2007-021 by any of
the following methods:
Regulations.gov: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov. Submit
comments via the Federal eRulemaking portal by inputting ``FAR Case
2007-021'' under the heading ``Comment or Submission''. Select the link
``Send a Comment or Submission'' that corresponds with FAR Case 2007-
021. Follow the instructions provided to complete the ``Public Comment
and Submission Form''. Please include your name, company name (if any),
and ``FAR Case 2007-021'' on your attached document.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat (VPR), 1800 F Street, NW, Room 4035, ATTN: Hada Flowers,
Washington, DC 20405.
Instructions: Please submit comments only and cite FAR case 2007-
021 in all correspondence related to this case. All comments received
will be posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov, including
any personal and/or business confidential information provided.
FOR FURTHER INFORMATION CONTACT Ms. Meredith Murphy, Procurement
Analyst, at (202) 208-6925 for clarification of content. For
information pertaining to status or publication schedules, contact the
Regulatory Secretariat at (202) 501-4755. Please cite FAR case 2007-
021.
SUPPLEMENTARY INFORMATION:
A. Background
This rule proposes to amend the Federal Acquisition Regulation
(FAR) to revise the clause prescriptions at FAR 22.1006(c)(1) and (2)
to specifically require that time-and-materials and labor-hour service
contracts subject to the Service Contract Act contain the appropriate
price adjustment clauses set forth at 52.222-43 and 52.222-44.
Despite the current prescriptions which do not require use of the
clauses in time-and-materials or labor-hour
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contracts, there is, in fact, broad usage of the clause(s) in such
contracts. Adoption of the proposed change would achieve consistency
throughout the Government acquisition community and resolve potential
inequities where the clauses have not been applied. Not only would this
achieve an equitable result for contractors, but it would also allow
the Government to avoid use of other means of adjusting contract unit
price labor rates which may be more costly to the Government. Other
means of adjusting contract labor rates, such as allowing for wage/
benefit escalation, equitable adjustment or economic price adjustment,
would likely include profit, overhead and general and administrative
expenses. The clauses at 52.222-43 and 52.222-44 explicitly exclude
these additional costs.
The clause prescriptions at FAR 22.1006(c)(1) and (c)(2) currently
require that Service Contract Act wage determination updates be applied
to contracts subject to the clause at 52.222-41, Service Contract Act
of 1965, but, as required by FAR clause 52.222-41, minimum monetary
wages and fringe benefits to be paid to service employees under the
contract may be subject to adjustment, under wage determinations issued
by the Department of Labor. While there may be other means permitted to
adjust fixed labor rates on time-and-materials or labor-hour contracts,
those other means will not achieve the consistent results that use of
the Service Contract Act price adjustment clause(s) will achieve.
Requirement by the prescription for the clauses will achieve that
consistency and at the same time will allow the Government to avoid any
adjustment to profit, overhead or general and administrative costs that
could be incurred in addition to wage or fringe benefit costs
increases.
The proposed rule requires Government time-and-materials and labor-
hour service contracts to incorporate the appropriate price adjustment
clauses.
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The Councils do not expect this proposed 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 it merely clarifies the existing prescriptions relating to
service contracts. FAR clause 52.222-41 requires contractors to comply
with wage determinations of the Department of Labor and may require
adjustment to wage rates during the term of the contract. Most
contracts that include this clause therefore provide some mechanism for
dealing with the potential required price adjustment. The Councils have
been advised that use of these clauses for time-and-materials and
labor-hour service contracts is already widespread. Uniform use of the
appropriate clause will ensure consistency in the adjustment method for
any required increase in wage rate, but should not have a significant
cost impact.
An Initial Regulatory Flexibility Analysis has, therefore, not been
performed. We invite comments from small businesses and other
interested parties. The Councils will consider comments from small
entities concerning the affected FAR Parts 22 and 52 in accordance with
5 U.S.C. 610. Interested parties must submit such comments separately
and should cite 5 U.S.C. 601, et seq. (FAR case 2007-021), in all
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
changes to the FAR do not impose information collection requirements
that require the approval of the Office of Management and Budget under
44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Parts 22 and 52
Government procurement.
Dated: December 9, 2008.
Al Matera,
Director, Office of Acquisition Policy.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 22 and
52 as set forth below:
1. The authority citation for 48 CFR parts 22 and 52 continues to
read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS
22.1006 [Amended]
2. Amend section 22.1006 by removing from paragraphs (c)(1) and
(c)(2) ``fixed-price'' and adding ``fixed-price, time-and-materials, or
labor-hour'' in its place.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
52.212-5 [Amended]
3. Amend section 52.212-5 by removing the date of the clause and
adding ``(DATE)'' in its place; by removing from paragraph (c)(3)
``(Nov 2006)'' and adding ``(Date)'' in its place; and by removing from
paragraph (c)(4) ``(Feb 2002)'' and adding ``(Date)'' in its place.
4. Amend section 52.222-43 by revising the date of the clause,
paragraph (d), and the third and fourth sentences of paragraph (f) to
read as follows:
52.222-43 Fair Labor Standards Act and Service Contract Act--Price
Adjustment (Multiple Year and Option Contracts).
* * * * *
FAIR LABOR STANDARDS ACT AND SERVICE CONTRACT ACT--PRICE
ADJUSTMENT (MULTIPLE YEAR AND OPTION CONTRACTS) (DATE)
* * * * *
(d) The contract price, contract unit price labor rates, or fixed
hourly labor rates will be adjusted to reflect the Contractor's actual
increase or decrease in applicable wages and fringe benefits to the
extent that the increase is made to comply with or the decrease is
voluntarily made by the Contractor as a result of--
* * * * *
(f) * * * The notice shall contain a statement of the amount
claimed and the change in fixed hourly rates (if this is a time-and-
materials or labor-hour contract), and any relevant supporting data,
including payroll records, that the Contracting Officer may reasonably
require. Upon agreement of the parties, the contract price, contract
unit price labor rates, or fixed hourly rates shall be modified in
writing. * * *
* * * * *
(End of clause)
5. Amend section 52.222-44 by revising the date of the clause,
paragraph (c), and the third and fourth sentences of paragraph (e) to
read as follows:
52.222-44 Fair Labor Standards Act and Service Contract Act--Price
Adjustment.
* * * * *
FAIR LABOR STANDARDS ACT AND SERVICE CONTRACT ACT--PRICE
ADJUSTMENT (DATE)
* * * * *
(c) The contract price, contract unit price labor rates, or fixed
hourly labor rates will be adjusted to reflect increases or decreases
by the Contractor in wages and fringe benefits to the extent that
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these increases or decreases are made to comply with--
* * * * *
(e) * * * The notice shall contain a statement of the amount and
the change in fixed hourly rates (if this is a time-and-materials or
labor-hour contract) claimed and any relevant supporting data that the
Contracting Officer may reasonably require. Upon agreement of the
parties, the contract price, contract unit price labor rates, or fixed
hourly rates shall be modified in writing. * * *
* * * * *
(End of clause)
[FR Doc. E9-217 Filed 1-8-09; 8:45 am]
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