[Federal Register Volume 74, Number 153 (Tuesday, August 11, 2009)]
[Rules and Regulations]
[Pages 40460-40461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-19163]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 22 and 52
[FAC 2005-36; FAR Case 2007-021; Item II; Docket 2009-0004; Sequence 2]
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: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on a final rule
amending the Federal Acquisition Regulation (FAR) to specifically
require the incorporation of FAR clauses 52.222-43, Fair Labor
Standards Act and Service Contract Act--Price Adjustment (Multiple Year
and Option Contracts) and 52.222-44, 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. No comments were received in response to the proposed rule.
DATES: Effective Date: September 10, 2009.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
Ms. Meredith Murphy, Procurement Analyst, at (202) 208-6925. For
information pertaining to status or publication schedules, contact the
Regulatory Secretariat at (202) 501-4755. Please cite FAC 2005-36, FAR
case 2007-021.
SUPPLEMENTARY INFORMATION:
A. Background
This final rule amends the 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 FAR 52.222-43 and 52.222-44.
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 74 FR 872 on January 9, 2009.
Despite the fact that the previous prescriptions did not require
use of the clauses in time-and-materials or labor-hour contracts, there
was actually broad usage of the clause(s) in such contracts. This
change will achieve consistency throughout the Government acquisition
community and resolve potential inequities where the clauses have not
been applied. It will achieve an equitable result for contractors and
will 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 FAR 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 FAR 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 do not achieve the consistent results that use of the
Service Contract Act price adjustment clause(s) will achieve.
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 Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not 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
[[Page 40461]]
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.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the 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.
Chapter 35, et seq.
List of Subjects in 48 CFR Parts 22 and 52
Government procurement.
Dated: August 4, 2009.
Al Matera,
Director, Office of Acquisition Policy.
0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 22 and 52 as set forth
below:
0
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]
0
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]
0
3. Amend section 52.212-5 by removing from the date of the clause
``(June 2009)'' and adding ``(Sep 2009)'' in its place; by removing
from paragraph (c)(3) ``(Nov 2006)'' and adding ``(Sep 2009)'' in its
place; and by removing from paragraph (c)(4) ``(Feb 2002)'' and adding
``(Sep 2009)'' in its place.
0
4. Amend section 52.222-43 by revising the date of the clause,
introductory text in 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) (Sep 2009)
* * * * *
(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. * * *
* * * * *
0
5. Amend section 52.222-44 by revising the date of the clause,
introductory text of 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 (Sep 2009)
* * * * *
(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 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. * * *
* * * * *
[FR Doc. E9-19163 Filed 8-10-09; 8:45 am]
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