How Is Your Domestic Preference Compliance? President Trump Signals More Scrutiny of “Buy American, Hire American” Practices

Justin A. Chiarodo and Stephanie M. Harden

President Trump signed an Executive Order yesterday, marking another step forward in his promotion of “Buy American” and “Hire American” policies. The Executive Order focuses on two areas: cracking down abuse of the H-1B guest worker program and promoting the purchase of American products in federal procurements. We tackle in this post the “Buy American” portion of the Executive Order, which is of particular importance to federal contractors. Continue reading “How Is Your Domestic Preference Compliance? President Trump Signals More Scrutiny of “Buy American, Hire American” Practices”

President Trump Rolls Back Obama-Era Fair Pay and Safe Workplaces Rule

Stephanie M. Harden and Alexander H. Berman

On Monday, March 27, President Trump exercised his authority under the Congressional Review Act (“CRA”) to nullify the Obama-era Fair Pay and Safe Workplaces Rule, which was promulgated pursuant to President Obama’s 2014 Executive Order 13673. The rollback, which has been much anticipated by the contracting community, is part of a push by the Trump administration and the 115th Congress to scale back a number of contracting regulations that were put into effect under the Obama administration (for more on this topic, see our prior post here).

President Trump’s March 27th signing of the resolution—which effectively removes the rule from the books—follows the passage of a joint disapproval of the rule by the House and Senate. Though the rule’s reporting requirements and arbitration prohibitions had already been blocked in October 2016 by a district judge in the Eastern District of Texas, the CRA resolution, now bearing a Presidential signature, fully nullifies the entire rule and all of its requirements on federal contractors—including its paycheck transparency provisions, which were previously left intact by the court in Texas. Indeed, pursuant to the CRA, a rule that is nullified using this process “shall be treated as though such rule had never taken effect.” 5 U.S.C. § 801(f). Continue reading “President Trump Rolls Back Obama-Era Fair Pay and Safe Workplaces Rule”

Five Things Government Contractors Should Keep in Mind about Political Activities this Election Season

Justin Chiarodo and Stephanie M. Harden 

ChiarodoJ+ZechmannSThe 2016 election season is unlike any other in recent memory. But like elections past and yet to come, political contributions and lobbying remain a mainstay of the political process. This is particularly true in the federal government contracting community, which is heavily influenced by executive and legislative action (and inaction). Though we can expect the unexpected in the three months leading up to the election, we offer below five fundamental “do’s and don’ts” that government contractors should keep in mind to guide their political activities. Continue reading “Five Things Government Contractors Should Keep in Mind about Political Activities this Election Season”

Human Trafficking Regulations to be Updated to Define “Recruitment Fees”

Justin A. Chiarodo and Stephanie M. Harden

Justin A. Chiarodo Stephanie Marie ZechmannIn the latest regulatory action targeted at human trafficking, the Federal Acquisition Regulatory Councils (“FAR Councils”) on May 11, 2016 issued a proposed rule to include a sweeping new definition of the term “recruitment fees.” The proposed definition would cover nearly any conceivable charge related to recruiting, hiring, and onboarding of employees, no matter the location of the employee, the skill level of the job, or customary business practices in the industry. Contractors should pay close attention, given that the rule also makes them responsible for recruitment fees collected by third parties, including subcontractors at all tiers, recruiters, and staffing firms.

Recognizing the far-reaching consequences the rule will have, the FAR Councils have flagged key open questions for contractors to comment upon. Given the potential sweeping change, contractors should think carefully about how the proposed rule will impact their hiring practices. Continue reading “Human Trafficking Regulations to be Updated to Define “Recruitment Fees””

What Service Contractors Need to Know About the Executive Order Raising the Minimum Wage

 

Merle M. DeLancey Jr. and Stephanie M. Harden

Merle DelanceyStephanie Marie ZechmannStarting January 1, 2015, a minimum wage of $10.10 per hour will apply to certain federal government contracts issued or awarded after that date. This alert provides key details about this new minimum wage that service contractors need to know.

Which Contracts Are Covered?

On February 12, 2014, President Obama signed Executive Order 13658, which instructed the Secretary of Labor to raise the minimum wage on federal construction and service contracts to $10.10 per hour beginning in 2015 and, beginning in January 2016, to an amount set by the Secretary on an annual basis. The Department of Labor issued a final rule implementing this new minimum wage in October 2014. See 79 Fed. Reg. 60,633 (Oct. 7, 2014).

The Department of Labor’s final rule generally extends to the following four categories of “contracts” and “contract-like instruments”:

  1. Procurement contracts for construction services covered by the Davis-Bacon Act (DBA);
    2. Service contracts covered by the Service Contract Act (SCA);
    3. Concession contracts, including any concession contract excluded from the SCA by the Department of Labor’s regulations at 29 C.F.R. § 4.133(b); and
    4. Contracts in connection with federal property or lands related to offering services for federal employees, their dependents, or the general public.

Continue reading “What Service Contractors Need to Know About the Executive Order Raising the Minimum Wage”

The Expansion of the Business Systems Rule Beyond DoD

David M. Nadler, Justin A. Chiarodo, David Yang, and Stephanie M. Harden

David M. NadlerJustin A. ChiarodoDavid YangStephanie Marie ZechmannWith the potential for millions of dollars in withholdings on contract payments, Department of Defense (DoD) contractors have become all too familiar with the Business Systems Rule since it was first implemented in 2011. The Department of Energy (DoE) is now following in the steps of DoD and promulgating its own Business Systems Rule. On April 1, 2014, DoE issued a Notice of Proposed Rulemaking for its Business Systems Rule, which is largely modeled off of the DoD rule. This expansion of the Business Systems Rule beyond DoD warrants careful attention by contractors who may not have previously been covered, as effective and proactive compliance is essential to mitigating the risk of withholdings under the rule.

Overview of the DoD Business Systems Rule

The DoD Business Systems Rule permits DoD to withhold contractor payments on covered contracts if one or more “significant deficiencies” are found in any of the six business systems covered by the rule. The term “significant deficiency” is broadly defined as “a shortcoming in the system that materially affects the ability of officials of DoD and the Contractor to rely upon information produced by the system that is needed for management purposes”–a definition which leaves great discretion to the Contracting Officers responsible for determining system acceptability. Continue reading “The Expansion of the Business Systems Rule Beyond DoD”

Final Rule Expanding the FAR’s Compensation Cap to All Contractor Employees on DoD, NASA, and Coast Guard Contracts

Scott Arnold and Stephanie M. Harden

Scott ArnoldStephanie Marie ZechmannOn May 30, 2014, the Federal Acquisition Regulatory Council issued a final rule expanding the FAR’s executive compensation cap—which is currently set at $952,308—to all contractor employees on contracts for the Department of Defense (DoD), NASA, and the Coast Guard. The final rule adopts without any changes the interim final rule issued on June 26, 2013, as modified by a subsequent technical amendment.

Overview of the Final Rule

The FAR’s executive compensation cap limits the allowability of executive compensation to an amount set each year by the Administrator of the Office of Federal Procurement Policy. The rule, which is implemented by FAR 31.205-6(p), previously applied only to the CEO and the next four most highly compensated employees in management at the company’s headquarters, as well as the five most highly compensated employees at certain other home offices of the contractor. The updated rule expands the applicability of the cap to all contractor employees on DoD, NASA, and Coast Guard contracts awarded on or after December 31, 2011.

The final rule was issued pursuant to Section 803 of the National Defense Authorization Act (NDAA) for Fiscal Year 2012 (Pub. L. 112-81). In response to a comment that the final rule will reduce contractors’ ability to attract and retain experienced and talented individuals, the comments to the final rule explain that a June 2013 GAO report found that less than .4 percent of defense contractor employees would be affected by a cap set at the President’s salary of $400,000. The comments also note that GAO found that fewer than .1 percent of employees covered by the existing cap were affected by the cap from 2010 to 2012. The final rule also indicated that the DoD is not prohibited from considering an exception to the cap for scientists and engineers. Continue reading “Final Rule Expanding the FAR’s Compensation Cap to All Contractor Employees on DoD, NASA, and Coast Guard Contracts”