Six months into Trump’s presidency, we wrote about how Trump’s $1 trillion infrastructure plan was likely to include more federal deregulation, including possible repeal or suspension of the Davis Bacon Act (DBA).  Two months after that article, comments from the House Transportation and Infrastructure Committee suggested Trump had changed his tune and would retain the

On July 25, 2017, the U.S. Department of Labor (DOL), Wage and Hour Division, issued a memorandum increasing the health and welfare fringe benefits rate for contracts covered by the McNamara-O’Hara Service Contract Act (SCA).

The SCA requires contractors and subcontractors performing work on federally funded prime contracts in excess of $2,500 to pay service

25927634816_d55644f384_kNearly 100 days into the new presidency, all eyes are on which of his campaign promises President Trump will implement next.  One such promise put into motion is the President’s estimated $1 trillion infrastructure plan.  Touted during his campaign as a means to stimulate job growth, the President’s plan may come with more federal deregulation than the construction and government contracting industries anticipated, including possible repeal or suspension of the Davis Bacon Act (DBA).

Introduced in the midst of the Great Depression, Congress enacted the DBA as a means to prevent failing wages.  Eighty years later, the DBA has become synonymous with federal contracting.  Also known as the federal prevailing wage statue, the DBA requires payment of prevailing wages on federally funded or assisted construction projects for contracts in excess of $2,000.  Critics of the DBA argue that the prevailing rates artificially and unreasonably increase project costs, and that the U.S. Department of Labor is unable to develop an efficient process for determining market-rate wages.  Proponents – particularly labor unions – argue the DBA prevents a “race to the bottom,” increasing productivity and improving local economies.
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Last month, we wrote about the House passing a resolution (H.J. Res. 37) pursuant to the Congressional Review Act to repeal the Fair Pay and Safe Workplaces rule (commonly known as the contractor “Blacklisting” rule). At the time we predicted the resolution would also pass the Senate and be signed by President Trump. On March 6, 2017, the Senate passed the joint resolution, and joint resolution was signed by President Trump yesterday, permanently nullifying the Blacklisting rule before it ever took effect.
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logo-titleBack in October 2016, we wrote about the Fair Pay and Safe Workplaces rule (commonly known as the contractor “Blacklisting” rule) and how its implementation had been temporarily halted by a federal court in Texas.  The Blacklisting rule would have allowed agencies to essentially debar contractors on a contract-by-contract basis if a contractor had a labor law violation on its record.  Many in the contracting community lobbied hard against this rule, arguing (among other things) that the Blacklisting rule would put contractors at risk of inconsistent disqualification from procurements without the same due process rights that go along with agency suspension and debarment programs.  Well, it now looks like Congress has decided to step in and flex a rarely used law to get rid of the Blacklisting rule for good.

Today, by a vote of 236-187, the House of Representatives passed a disapproval resolution pursuant to the Congressional Review Act to repeal the Blacklisting rule.  
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logo-titleStarting October 25th many new federal government contract solicitations were to contain the clauses required under the Fair Pay and Safe Workplaces Final Rule based on the Executive Order put in place by the Obama administration.  These clauses would impose significant new compliance and reporting obligations on federal contractors (and eventually on subcontractors). The stated

Ali_al_Salem_WelcomeIn the recent ASBCA case Appeal of SupplyCore, Inc., ASBCA No. 58676, the government successfully defended against a claim for post-termination labor costs, where the contractor argued that the government had violated the duty of good faith and fair dealing with regard to the timing of the Army’s decision to not exercise a contract option.

In 2008, the Army had awarded SupplyCore a one year fixed price contract for warehouse management at Camp Ali Al Salem in Kuwait. The contract contained 4 one year options.  The options were to be extended on written notice to SupplyCore within 30 days, so long as the Army had provided a (nonbinding) written notice of intent to extend at least 60 days before the contract expired.  The contract also required SupplyCore to comply with local labor laws pursuant to DFARS 252.222-7002.  At the time the contract was entered in 2008, Kuwaiti labor laws required only a 15-day notice of termination of employment.  However, in 2010, that changed to a 90-day notice.

After initially extending the contract for the first three options, the Army gave notice of intent to exercise the fourth option 60 days prior to contract expiration.  Subsequent to the notice, the Army decided due to a reduction in activity at the base, it was more cost-effective to staff the warehouse with soldiers.  Consequently, 9 days after sending the intent to extend letter to SupplyCore, the Army informed SupplyCore that the contract would not be extended.

Supplycore then filed a claim for $145,634.80 from the Army for labor costs required to be paid for the 39 days after contract expiration that SupplyCore was responsible to pay under Kuwaiti labor laws (90-day notice of termination to employees, less 51-day notice provide by Army prior to end of contract).  When the Army denied the claim, SupplyCore filed its appeal, asserting in part breach of the duty of good faith for failing to give a 90-day notice.  On the Army’s Summary Judgment Motion, the Board found that the only reasonable assumption on the part of SupplyCore was that the contract was set to expire, and it was unreasonable to presume 90 days prior, or even 60 days prior with the written notice, that the contract would continue.
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On December 9, 2014, the U.S Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) published a final rule implementing Executive Order (EO) 13672 effectively amending EO 11246, which previously only prohibited discrimination by federal contractors and subcontractors on the bases of race, color, religion, sex, and national origin.  EO 13672 now extends sexual orientation and gender identity protections to employees and applicants in the federal contracting workplace.  The final rule does not take effect until April 8, 2015 and applies to all covered contracts entered into or modified on or after that date.  The new rule does not define “sexual orientation” or “gender identity,” however according to OFCCP, the agency will utilize the same definitions used by the Equal Employment Opportunity Commission and developed under Title VII case law.

The new rule will affect several aspects of the federal contracting workplace including the following:

  • New Equal Opportunity Clause Required.  Currently, 41 C.F.R. § 60-1.4 requires that government contracts include an equal opportunity clause which in part prohibits a federal government contractor from discriminating any employee or applicant on the basis of race, color, religion, sex, or national origin.  When the rule takes effect in April 2015, covered contracts entered into or modified after that date must contain the new equal opportunity clause which adds reference to sexual orientation and gender identity.
  • New Taglines for Federal Government Contract “Advertising.”  The final rule also requires that in all solicitations or advertisements for employees or applicants, contractors must state that “all qualified applicants will receive consideration for employment without regard to race, color, religion, sexual orientation, gender identity, or national origin.”  According to OFCCP, this requirement may also be satisfied by simply including that the contractor is an “Equal Opportunity Employer.”
  • Compliance Reporting Requirements.  EO 13672 broadens the requirement that prospective contractors may be required by the Secretary of Labor to provide a statement from any labor union or agency referring workers to the contractor stating that the contractor’s practices and policies do not discriminate on the basis of sexual orientation or gender identity as part of its Compliance Report.

Notwithstanding these new requirements, EO 13672 does not impose several requirements that are usually par for the course in equal opportunity amendments:
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As Congress reconvenes it will consider a new bill that would direct federal agencies to give preferential points in the bidding process to federal government contractors based on their labor practices. The bill, proposed by Rep. Eleanor Holmes Norton (D-D.C.), would give points to companies that pay their employees a living wage with benefits