2019 Contractor Minimum Wage Increased to $10.60

The Department of Labor has announced the 2019 minimum wage rate for contracts covered by Executive Order 13658, Establishing a Minimum Wage for Contractors.

The 2014 executive order raised the hourly minimum wage paid by contractors to workers performing work on covered federal contracts to $10.10 per hour starting January 1, 2015. For covered tipped employees, the order set an hourly cash wage of at least $4.90.

Beginning January 1, 2016, and annually thereafter, the Secretary of Labor adjusts the rate.

The 2018 minimum wage rate is $10.35 (see 82 FR 43408).

For 2019, the minimum wage rate that generally must be paid to workers performing work on or in connection with covered contracts will be $10.60 per hour.

The required minimum cash wage for covered tipped employees will remain at $7.40 per hour. For the full text of DOL’s notice, see 83 FR 44906.

NDAA FY 2019 Signed into Law with Strong Bipartisan Support

Today, President Trump signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (H.R. 5515). The bill passed both houses with broad bipartisan support. The House approved the bill by a vote of 359 to 54 and the Senate by a vote of 87 to 10. The law authorizes FY 2019 appropriations and sets forth policies for Department of Defense programs and activities, including military personnel strengths.

Authorized Appropriations

According to a DoD statement, the law, which authorizes a $717 billion national defense budget, “rebuilds our military, increases lethality, strengthens our alliances and partnerships and reforms the way we do business.” The discretionary base budget topline for the appropriations is $639.1 billion, which includes significant increases for improving the readiness of military forces. The budget also includes $69 billion for overseas contingency operations and $8.9 billion in defense mandatory spending.

Acquisition Provisions

The DoD statement noted the NDAA:

  • Increases the military’s authorized active-duty end strength by 15,600;
  • Raises service member pay by6 percent, the largest raise in 9 years;
  • Recognizes the importance of modernizing and strengthening the Committee on Foreign Investment in the United States to more effectively guard against the risk to national security posed by certain types of foreign investment;
  • Strengthens cyber defenses, prioritizes U.S. Cyber Command readiness and affirms the cyber authorities of the Secretary of Defense; and
  • Provides waiver relief to key U.S. partners and allies from certain Russian-related sanctions under the Countering America’s Adversaries through Sanctions Act.

With regard to DoD procurements, the NDAA FY 2019 expands and clarifies the definition of “commercial products” and “commercial services” across government procurement statutes, with the goal of increasing commercial product procurements in the future. Also, the law reduces requirements for annual reports and unnecessary acquisition offices, and repeals out-of-date acquisition legislation. Other provisions include an increase of DoD’s micro-purchase threshold to $10,000, expanded authority to implement e-commerce purchases, additional limitations on the use of lowest-priced, technically-acceptable competitions, and increased oversight of other transaction authority agreements.

FAC 2005-99’s Interim Rules Implement NDAA Requirements

Federal Acquisition Circular 2005-99, issued June 15, contains two interim rules amending the Federal Acquisition Regulation. Item I—Use of Products and Services of Kaspersky Lab (FAR Case 2018-010) implements section 1634 of the National Defense Authorization Act for Fiscal Year 2018 (PL 115-91) and goes into effect on July 16, 2018. Item II—Violations of Arms Control Treaties or Agreements with the United States (FAR Case 2017-018) implements section 1290 of the NDAA FY 2017 (PL 114-328) and has a June 15, 2018, effective date. Comments on both interim rules are due by August 14, 2018. The FAC also contains a Small Entity Compliance Guide, which indicates that a regulatory flexibility analysis was prepared for each rule.

Kaspersky Lab

The FAR Case 2018-010 interim rule prohibits the government from using hardware, software, and services of Kaspersky Lab and its related entities beginning on or after October 1, 2018. The rule adds a new FAR Subpart 4.20, Prohibition on Contracting for Hardware, Software, and Services Developed or Provided by Kaspersky Lab, consisting of FAR 4.2001, Definitions, FAR 4.2002, Prohibition, and FAR 4.2003, Notification. FAR 4.2004 prescribes the associated contract clause at FAR 52.204-23. This clause prohibits contractors from providing any hardware, software, or services developed or provided by Kaspersky Lab or its related entities, or using any such hardware, software, or services in the development of data or deliverables first produced in the performance of a contract. The contractor must also report any such hardware, software, or services discovered during contract performance.

Implementation

Although this prohibition does not apply until October 1, 2018, agencies and contractors must begin to take steps immediately to meet this deadline. In this regard, covered articles include hardware, software, and services acquired before October 1, 2018, that the government will use on or that date. Because so many IT products and services are used for more than a few months, it is critical that contractors be placed on notice as soon as possible of this prohibition so that agencies can ensure that they comply with the law and avoid acquisitions of covered articles that the government will continue to use on or after October 1, 2018.

Arms Control

The interim rule in FAR Case 2017-018 prohibits contracting with entities involved in activities that violate arms control treaties or agreements with the United States. The rule adds a new section, FAR 9.109, to set forth the prohibition. FAR 9.109-1 provides the citation to the applicable statute (22 U.S.C. 2593e). Pursuant to FAR 9.109-2, contracting officers may not award, renew, or extend a contract for the procurement of products or services with an entity identified as excluded in the System for Award Management database on the basis of involvement in activities that violate U.S. arms control treaties or agreements. FAR 9.109-3 sets out the statutory exception from the contracting prohibition for the procurement of products or services along a major route of supply to a zone of active combat or a major contingency operation. FAR 9.109-4 requires an offeror certification and provides remedies for submission of a false certification. In addition, FAR 4.109-5 prescribes a new solicitation FAR 52. 209-13, for use in each solicitation for the acquisition of products or services (including construction) that exceeds the simplified acquisition threshold, other than solicitations for the acquisition of commercial items.

Impact

The implementation of this rule will protect against doing business with entities that engage in any activity that contributed to or is a significant factor in a country’s failure to comply with arms control treaties or agreements with the U.S. The government will not consider the offer of an offeror that has not provided the certification required by FAR 52.209-13, unless the offeror provides with its offer information that the President has waived application under 22 USC 2593e(d) or (e) or determined under 22 USC 2593e(g)(2) that the entity has ceased all activities for which measures were imposed under 22 USC 2593e(b).

DoD Seeks Input on Implementation of NDAA FY 2018 in DFARS

A Department of Defense notice announces an early engagement opportunity regarding implementation of the National Defense Authorization Act for Fiscal Year 2018 (PL 115-91) within the Defense Federal Acquisition Regulation Supplement. The public is invited to submit early inputs on sections of the NDAA for FY 2018 via the Defense Acquisition Regulations System website at http://www.acq.osd.mil/dpap/dars/index.html. The website will be updated when early inputs will no longer be accepted. This venue does not replace or circumvent the rulemaking process. DoD will engage in formal rulemaking, in accordance with 41 USC 1303, when it determines that rulemaking is required to implement a section of the NDAA for FY 2018 within the DFARS. The text of the notice appears at 83 FR 9501.

Section 809 Panel Issues Volume I of Final Report

The Section 809 Panel, the Department of Defense’s advisory panel on streamlining and codifying acquisition regulations, issued Volume I of its Final Report. The report contains recommendations to update DoD’s process for acquiring information technology business systems, streamline auditing requirements, address challenges in how small businesses interact with DoD, update commercial buying, clarify the definition of personal and nonpersonal services, remove statutory requirements for 13 acquisition-related DoD offices, and repeal 20 acquisition-related statutory reporting requirements.

Panel’s Mission

The 18-person panel was created by section 809 of the National Defense Authorization Act for Fiscal Year 2016, as amended by section 863(d) of the FY 2017 NDAA and sections 803(c) and 883 of the FY 2018 NDAA. The panel’s mission is to find ways to streamline and improve the defense acquisition process. The panel was given two years to develop recommendations for regulatory and statutory changes to achieve those ends. The goal of the recommendations is to shape DoD’s acquisition system into one that is simple and effective.

Dynamic Marketplace

The report sets out the framework of a “Dynamic Marketplace,” which the panel describes as an outcome-based-acquisition process for providing simplified access to the global marketplace. The goal is to harness the benefits from the global marketplace of ideas, solutions, products, and services at a speed that is closer to real time than the current acquisition process allows.

Recommendations

The report includes recommendations to repeal many obsolete statutory provisions. The purpose of the repeal is to remove provisions that either unnecessarily constrain the authority of the Secretary of Defense or are no longer operative, giving DoD greater flexibility to operate. To better facilitate commercial item acquisitions, the panel recommends eliminating 165 government-unique clauses that pose barriers to the acquisition of commercial items. Also, the panel recommends implementing a single definition for “subcontractor” to replace the current 27 separate, sometimes overlapping, definitions. The panel elaborates each of its recommendations in the report’s eight sections:

  • Commercial Buying
  • Contract Compliance and Audit
  • Defense Business Systems: Acquisition of Information Technology Systems
  • Earned Value Management for Software Programs Using Agile
  • Services Contracting
  • Small Business
  • Statutory Offices
  • Statutory Reporting

Volume I of the Final Report follows the panel’s May 2017 Interim Report. The panel is expected to publish Volume II of the Final Report in June 2018, and Volume III in January 2019.