Rule2022-01507
Federal Acquisition Regulation: Increasing the Minimum Wage for Contractors
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 26, 2022
Effective
January 30, 2022
Issuing agencies
Defense DepartmentGeneral Services AdministrationNational Aeronautics and Space Administration
Abstract
DoD, GSA, and NASA are issuing an interim rule amending the Federal Acquisition Regulation (FAR) to implement an Executive Order titled "Increasing the Minimum Wage for Federal Contractors" and a final rule issued by the Department of Labor. This Executive Order seeks to raise the hourly minimum wage paid by contractors to workers performing work on or in connection with covered Federal contracts to $15.00 per hour beginning January 30, 2022, and beginning January 1, 2023, and annually thereafter, an amount determined by the Secretary of Labor.
Full Text
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<title>Federal Register, Volume 87 Issue 17 (Wednesday, January 26, 2022)</title>
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[Federal Register Volume 87, Number 17 (Wednesday, January 26, 2022)]
[Rules and Regulations]
[Pages 4117-4124]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-01507]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 22, and 52
[FAC 2022-04; FAR Case 2021-014, Docket No. FAR-2021-0014, Sequence No.
1]
RIN 9000-AO31
Federal Acquisition Regulation: Increasing the Minimum Wage for
Contractors
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Interim rule.
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SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the
Federal Acquisition Regulation (FAR) to implement an Executive Order
titled ``Increasing the Minimum Wage for Federal Contractors'' and a
final rule issued by the Department of Labor. This Executive Order
seeks to raise the hourly minimum wage paid by contractors to workers
performing work on or in connection with covered Federal contracts to
$15.00 per hour beginning January 30, 2022, and beginning January 1,
2023, and annually thereafter, an amount determined by the Secretary of
Labor.
DATES:
Effective: January 30, 2022.
Applicability: This rule applies as follows:
1. To solicitations issued on or after January 30, 2022, and their
resulting contracts.
2. To new contracts awarded without a prior solicitation (e.g., a
purchase order under part 13), on or after January 30, 2022.
3. To new contracts with a prior solicitation awarded on or after
March 31, 2022.
4. To existing contracts, including procurements for recreational
services, when extending, renewing, or exercising an option on the
existing contract on or after the effective date of the rule.
Contracting officers shall incorporate the amended clause in this rule
at 52.222-55, Minimum Wages for Contractor Workers Under Executive
Order 14026, in the existing contracts through bilateral modifications.
In such a circumstance, if the contracting officer is unable to
incorporate the clause in an existing contract through bilateral
modification, then the contracting officer shall decline to extend,
renew, or exercise the option on the existing contract.
5. In accordance with FAR 1.108(d), contracting officers are
strongly encouraged to include the amended clause in other contracts
awarded before March 31, 2022, with appropriate consideration.
Comment Date: Interested parties should submit written comments to
the Regulatory Secretariat Division at the address shown below on or
before March 28, 2022 to be considered in the formation of the final
rule.
ADDRESSES: Submit comments in response to FAC 2022-04, FAR Case 2021-
014 to the Federal eRulemaking portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by
searching for ``FAR Case 2021-014''. Select the link ``Comment Now''
that corresponds with ``FAR Case 2021-014''. Follow the instructions
provided on the ``Comment Now'' screen. Please include your name,
company name (if any), and ``FAR Case 2021-014'' on your attached
document. If your comment cannot be submitted using <a href="https://www.regulations.gov">https://www.regulations.gov</a>, call or email the points of contact in the FOR
FURTHER INFORMATION CONTACT section of this document for alternate
instructions.
Instructions: Please submit comments only and cite ``FAR Case 2021-
014'' in all correspondence related to this case. Comments received
generally will be posted without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
including any personal and/or business confidential information
provided. To confirm receipt of your comment(s), please check <a href="https://www.regulations.gov">https://www.regulations.gov</a>, approximately two to three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: Ms. Malissa Jones, Procurement
Analyst, at 571-882-4687 or by email at <a href="/cdn-cgi/l/email-protection#4d202c21243e3e2c63272223283e0d2a3e2c632a223b"><span class="__cf_email__" data-cfemail="741915181d0707155a1e1b1a1107341307155a131b02">[email protected]</span></a>, for
clarification of content. For information pertaining to status or
publication schedules, contact the Regulatory Secretariat Division at
202-501-4755 or <a href="/cdn-cgi/l/email-protection#bafde9fbe8dfdde9dfd9faddc9db94ddd5cc"><span class="__cf_email__" data-cfemail="f8bfabb9aa9d9fab9d9bb89f8b99d69f978e">[email protected]</span></a>. Please cite FAC 2022-04, FAR Case
2021-014.
SUPPLEMENTARY INFORMATION:
I. Background
This interim rule revises the FAR to implement Executive Order
(E.O.) 14026, Increasing the Minimum Wage for Federal Contractors,
signed April 27, 2021, and published in the Federal Register at 86 FR
22835, on April 30, 2021. The interim rule also implements a final rule
issued by the Wage and Hour Division of the Department of Labor (DOL),
published at 86 FR 67126, on November 24, 2021, also entitled
``Increasing the Minimum Wage for Federal Contractors.'' The DOL rule
added a new 29 CFR part 23. The DOL rule covers FAR-based contracts,
non-FAR-based contracts, and contract-like instruments; this interim
rule only applies to FAR-based contracts.
The hourly minimum wage paid to workers on specified Federal
contracts was first established by E.O. 13658, Establishing a Minimum
Wage for Contractors, which was signed February 12, 2014, and published
in the Federal Register at 79 FR 9851, on February 20, 2014. E.O. 13658
established an hourly minimum wage of $10.10 beginning January 1, 2015,
and beginning January 1, 2016, and annually thereafter, an amount
determined by the Secretary of Labor. The DOL implemented E.O. 13658
through a final rule published at 79 FR 60634, on October 7, 2014, also
[[Page 4118]]
entitled ``Establishing a Minimum Wage for Contractors.'' The 2014 DOL
final rule added a new 29 CFR part 10. An interim FAR rule was
published in the Federal Register at 79 FR 74544 on December 15, 2014.
The 2014 interim rule added new FAR subpart 22.19 and new FAR clause
52.222-55, Minimum Wages Under Executive Order 13658. A final rule was
published at 80 FR 75915 on December 4, 2015.
Annual increases were announced by DOL. The most recent increases
were to $10.95 on January 1, 2021 (August 31, 2020, 85 FR 53850) and to
$11.25 on January 1, 2022 (September 16, 2021, 86 FR 51683).
Subsequent to E.O. 13658, E.O. 13838, Exemption From Executive
Order 13658 for Recreational Services on Federal Lands, was signed on
May 25, 2018, and published in the Federal Register at 83 FR 25341 on
June 1, 2018. E.O. 13838 exempted contracts or contract-like
instruments entered into with the Federal Government in connection with
seasonal recreational services or seasonal recreational equipment
rental for the general public on Federal lands from the minimum wage
requirements of E.O. 13658. The DOL published a rule in the Federal
Register at 83 FR 48537 on September 26, 2018, to implement the
exemption authorized by E.O. 13838. The FAR implemented E.O. 13838 and
the 2018 DOL rule through a final rule published in the Federal
Register at 85 FR 67626 on October 23, 2020. The FAR amended subpart
22.19 and the clause 52.222-55 to implement the exemption for contracts
for seasonal recreational services or seasonal recreational equipment
rental for the general public on Federal lands.
E.O. 14026 revokes E.O. 13838 as of January 30, 2022. E.O. 14026
also supersedes E.O. 13658 as of January 30, 2022, but only to the
extent it is inconsistent with E.O. 14026. E.O. 14026 raises the hourly
minimum wage paid by certain Federal contractors to workers performing
work on or in connection with covered Federal contracts to $15.00 per
hour beginning January 30, 2022, and beginning January 1, 2023, and
annually thereafter, an amount determined by the Secretary of Labor.
E.O. 14026 also raises the cash wages to be paid to tipped workers. The
higher minimum wage rate(s) for workers are reflected in the 2021 DOL
final rule implementing E.O. 14026 (in 29 CFR part 23) as compared to
the DOL final rule implementing E.O. 13658 (in 29 CFR part 10). There
are some substantive differences between DOL's final rules implementing
E.O. 13658 and E.O. 14026. For example, in the 2021 DOL final rule (86
FR 67126), the definition of ``United States'' is expanded to include
specified U.S. territories and possessions. These differences are the
basis for the revisions made to FAR subpart 22.19 and FAR clause
52.222-55 via this interim rule.
II. Discussion and Analysis
Due to the similarities between E.O. 13658 and 14026, and the
similarities between DOL's implementing regulations at 29 CFR part 10
and part 23 respectively, there are limited changes being made to the
FAR. (For details on the E.O 13658 implementation see the DOL final
rule at 79 FR 60634. See 79 FR 74544 for the interim FAR rule
implementing E.O. 13658 published in the Federal Register on December
15, 2014, and 80 FR 75915 for the final rule published on December 4,
2015).
The following are a list of those changes:
A. References to the E.O. and DOL regulations--The FAR is either
replacing the reference to E.O. 13658 with E.O. 14026 or adding
references to E.O. 14026, as appropriate, throughout parts 22 and 52.
Similarly, the citations to DOL's implementing regulations of E.O.
13658 at 29 CFR part 10 are either being replaced with citations to
DOL's implementing regulations of E.O. 14026 at 29 CFR part 23, or
citations to 29 CFR part 23 are being added.
B. Increasing the minimum wage--Throughout subpart 22.19 and the
clause 52.222-55, the initial minimum wage of $10.10 established by
E.O. 13658 is replaced with the minimum wage of $15.00 specified by
E.O. 14026. This update to the minimum wage resulted in revisions to
the price adjustment examples provided in FAR 22.1904(b)(2). The
calculation process in FAR 22.1904(b)(2) may be used for calculating a
contract modification for the changeover from the E.O. 13658 rate to
the E.O. 14026 rate of $15.00. For this example, the E.O. rate as of
January 1, 2022, is $11.25. If the current service or construction wage
determination rate applicable to this worker under the contract is
$11.55, and if the actual wage currently paid to the worker is $12.25,
then the price adjustment calculation for this worker is $2.75 ($15.00
minus $12.25 = $2.75). Some employees who are not covered by the E.O.,
such as supervisors, may be making close to $15 an hour. The contractor
may wish to voluntarily raise the wages of such employees to avoid wage
compression or maintain fairness; however, doing so is not a
requirement of compliance with E.O. 14026. While agencies are not
required to do so, the clause language and examples in 22.1904(b)(2) do
not prohibit an agency from permitting a price increase (e.g., as
prescribed at FAR part 43) to address wage compression impacts of
modifying the contract to include the new minimum wage rate of E.O.
14026, if the agency determines such an adjustment will result in
better contract performance. The contractor should present to the
agency the calculations for those employees separate from the
calculations for workers covered by the E.O.
C. New requirements for tipped workers--FAR 22.1902(c) addresses
the policies and procedures implemented in accordance with the DOL
regulations at 29 CFR 23.240(b) and 23.280 that address the
relationship between the E.O. minimum wage and wages of workers engaged
in an occupation in which they customarily and regularly receive more
than $30 a month in tips.
D. Dates--Throughout subpart 22.19 and the clause 52.222-55, the
January 1, 2015, and January 1, 2016, dates associated with
implementation of E.O. 13658 are being replaced with the January 30,
2022, and January 1, 2023, dates associated with implementation of E.O.
14026.
E. Definition of ``worker''--Clarification is added to the
definition of ``worker'' at FAR 22.1901 and 52.222-55(a) to explain
what it means for a worker to perform on a contract and to perform in
connection with a contract. This clarification is consistent with the
definition of ``worker'' in DOL's final rule implementing E.O. 14026
and the definition of ``employee'' in FAR subpart 22.21, which
implements E.O. 13706, Establishing Paid Sick Leave for Federal
Contractors.
F. Definition of ``United States''--The definition of ``United
States'' is added to FAR 22.1901, and revised at 52.222-55(a), to
include Puerto Rico, the Northern Mariana Islands, American Samoa,
Guam, the U.S. Virgin Islands, Johnston Island, Wake Island, and the
outer Continental Shelf. The expansion of the definition beyond the 50
states and the District of Columbia is consistent with DOL's final rule
implementing E.O. 14026.
G. Revocation of recreational services exemption--Deletions are
made throughout subpart 22.19 and the clause 52.222-55 to remove the
exemption authorized by E.O. 13838 for seasonal recreational services
or seasonal recreational equipment rental. Consistent with E.O. 14026
revoking E.O. 13838, DOL's implementing regulations at 29 CFR part 23
do not contain the exemption to the minimum wage requirements for
seasonal
[[Page 4119]]
recreational services or seasonal recreational equipment rental.
Recreational services contracts should be modified, similar to other
existing contracts, according to the Applicability section of this
rule.
H. New title for the clause--The title of the clause has been
changed to emphasize that, although using the same clause number, the
clause implements a different Executive Order.
I. Conforming changes--Minor conforming changes are made to the
clauses at FAR 52.212-5, Contract Terms and Conditions Required To
Implement Statutes or Executive Orders--Commercial Products and
Commercial Services; 52.213-4, Terms and Conditions--Simplified
Acquisitions (Other Than Commercial Products and Commercial Services);
52.222-62, Paid Sick Leave Under Executive Order 13706; and 52.244-6,
Subcontracts for Commercial Products and Commercial Services.
J. Option exercise--DOL's final rule implementing E.O. 14026
included a definition for ``new contract'' at 29 CFR 23.20. The FAR
rule did not adopt this definition. However, when FAR rules apply to
existing contracts, application is addressed in the Effective Date/
Applicability section of the preamble, not in the Code of Federal
Regulations. Treatment of bilateral modifications to existing contracts
is addressed in the Applicability section at the beginning of this
preamble. As a result, in the Effective Date/Applicability section of
the preamble, contracting officers are required to incorporate the
clause 52.222-55 into existing contracts during option exercise via a
bilateral modification. If the contracting officer is unable to
incorporate the clause 52.222-55 in an existing contract during option
exercise via a bilateral modification, then the contracting officer
shall decline to extend, renew, or exercise the option on the existing
contract.
K. Exclusion from 29 CFR part 23--Section 9(b) of Executive Order
14026 provides that as an ``exception'' to the general coverage of new
contracts, where agencies have issued a solicitation before January 30,
2022, and entered into a new contract resulting from such solicitation
within 60 days of such date, agencies are strongly encouraged but not
required to ensure that the E.O. 14026 minimum wage rates are paid
under the new contract. However, if such contract is later extended or
renewed, or an option is subsequently exercised under that contract,
the E.O. 14026 minimum wage requirements will apply to that extension,
renewal, or option. Accordingly, DOL's final rule included an exclusion
providing that 29 CFR part 23 does not apply to contracts that result
from a solicitation issued prior to January 30, 2022, and that are
entered into on or between January 30, 2022 and March 30, 2022.
Consistent with section 9(b) of the order, the exclusion states that,
if such a contract is subsequently extended or renewed, or an option is
subsequently exercised under that contract, the Executive order and
part 23 would apply to that extension, renewal, or option. The
Department noted that this exclusion is only applicable to contracts
resulting from solicitations that are issued prior to January 30, 2022,
and that are entered into by March 30, 2022. Any covered contract
entered into on or after March 31, 2022, will be subject to E.O. 14026
and part 23 regardless of when the solicitation was issued.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Products (Including Commercially
Available Off-the-Shelf (COTS) Items) or Commercial Services
This rule amends the clause at FAR 52.222-55. As a result of the
amendment to the clause 52.222-55, minor conforming changes are also
being made to other clauses (see Section II). The clause continues to
apply to acquisitions at or below the SAT and to acquisitions for
commercial services.
IV. Expected Impact of the Rule
This rule implements the increased minimum wage requirements for
Federal contractors in E.O. 14026 and the associated Department of
Labor (DOL) implementing regulations at 29 CFR part 23. This rule makes
revisions to the existing FAR coverage regarding minimum wage
requirements for Federal contractors by--
<bullet> Increasing the hourly minimum wage paid by certain Federal
contractors to workers performing work on or in connection with covered
Federal contracts to $15.00 per hour, beginning January 30, 2022, and
beginning January 1, 2023, and annually thereafter increasing the
hourly minimum wage paid by, an amount determined by the Secretary of
Labor;
<bullet> Referencing DOL's new requirements for tipped workers at
29 CFR part 23, which incorporates the increased hourly minimum cash
wage paid to tipped workers as authorized by E.O. 14026;
<bullet> Expanding the geographical scope of the minimum wage
requirements by defining United States as including specified U.S.
territories and possessions; and
<bullet> Removing the exemption for seasonal recreational services
or seasonal recreational equipment rental from the minimum wage
requirements.
These revisions will drive employer costs such as those for
regulatory familiarization, implementation, and compliance. These costs
may translate into higher contract pricing which results in cost to the
taxpayer. These revisions are expected to result in benefits such as
improved Government services, increased morale and productivity of
contractor staff, and reduced turnover and absenteeism in contractor
staff. For more detail on the impacts associated with these revisions,
see Section IV of the DOL final rule implementing E.O. 14026 and
creating 29 CFR part 23, published at 86 FR 67127, on November 24,
2021, entitled ``Increasing the Minimum Wage for Federal Contractors.''
The revisions listed above drive costs and benefits that are the
result of the implementation of DOL's final rule in the FAR. Therefore,
those costs and benefits are attributable to the DOL final rule. The
impacts of this FAR rule that are attributable to the FAR are no more
than de minimis.
V. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993.
VI. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD, GSA, and NASA will
send the rule and the ``Submission of Federal Rules Under the
Congressional Review Act'' form to each House of the Congress and to
the Comptroller General of the United States. A major rule cannot take
effect until 60 days after it is published in the Federal Register. The
Office of Information and Regulatory Affairs (OIRA) in the Office of
Management and Budget has determined that this is not a major rule
under 5 U.S.C. 804.
[[Page 4120]]
VII. Regulatory Flexibility Act
DoD, GSA, and NASA do not expect this 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. 601-612, because
the Department of Labor has determined that their rule would not have a
significant impact on a substantial number of small entities. DoD, GSA,
and NASA agree with this assessment. DOL has strived to have the final
rule implement the minimum wage requirements of E.O. 14026 with the
least possible burden for small entities. The DOL final rule provides
several efficient and informal alternative dispute mechanisms to
resolve concerns about contractor compliance, including having the
contracting agency provide compliance assistance to the contractor
about the minimum wage requirements and allowing for DOL to attempt an
informal conciliation of complaints instead of engaging in extensive
investigations. These tools will provide contractors with an
opportunity to resolve inadvertent errors rapidly and before
significant liabilities develop. Additionally, much of the cost
associated with the DOL final rule will either be reimbursed by the
Federal Government or offset by productivity gains and cost-savings.
However, an Initial Regulatory Flexibility Analysis (IRFA) has been
performed and is summarized as follows:
This rule amends the Federal Acquisition Regulation (FAR) to
implement an Executive Order, which increases the minimum wage for
Federal contractors, and associated Department of Labor (DOL)
regulatory requirements at 29 CFR part 23.
The objective of this rule is to implement Executive Order (E.O.)
14026, Increasing the Minimum Wage for Federal Contractors, signed
April 27, 2021, and published in the Federal Register at 86 FR 22835,
on April 30, 2021, as well as the associated DOL regulatory
requirements at 29 CFR part 23. In accordance with E.O. 14026 and DOL
regulations at 29 CFR part 23, this rule updates the FAR by--
<bullet> Increasing the hourly minimum wage paid by certain Federal
contractors to workers performing work on or in connection with covered
Federal contracts to $15.00 per hour, beginning January 30, 2022, and
beginning January 1, 2023, and annually thereafter, an amount
determined by the Secretary of Labor;
<bullet> Referencing DOL's new requirements for tipped workers at
29 CFR part 23, which incorporates the increased hourly minimum cash
wage paid to tipped workers as authorized by E.O. 14026;
<bullet> Expanding the geographical scope of the minimum wage
requirements by defining United States as including U.S. territories
and possessions; and
<bullet> Removing the exemption for seasonal recreational services
or seasonal recreational equipment rental from the minimum wage
requirements.
This rule applies to contracts awarded under FAR procedures and
covered by the Service Contract Labor Standards statute (41 U.S.C.
chapter 67; see FAR subpart 22.10), including contracts for the
acquisition of commercial services, and the Wage Rate Requirements
(Construction) statute (40 U.S.C. chapter 31 subchapter IV; see FAR
subpart 22.4). The minimum wage requirements of E.O. 14026 are
implemented through revised FAR clause 52.222-55, Minimum Wages for
Contractor Workers Under Executive Order 14026, which is prescribed for
solicitations and contracts that include the clause at 52.222-6,
Construction Wage Rate Requirements, or 52.222-41, Service Contract
Labor Standards, where work is to be performed, in whole or in part, in
the United States. FAR clause 52.222-55 flows down to covered
subcontractors at all tiers.
As already specified in the existing FAR at 22.1903(b)(2), this
rule does not apply to--
<bullet> Fair Labor Standards Act (FLSA)-covered individuals
performing in connection with contracts covered by the E.O., i.e.,
those individuals who perform duties necessary to the performance of
the contract, but who are not directly engaged in performing the
specific work called for by the contract, and who spend less than 20
percent of their hours worked in a particular workweek performing in
connection with such contracts;
<bullet> Individuals exempted from the minimum wage requirements of
the FLSA under 29 U.S.C. 213(a) and 214(a) and (b), unless otherwise
covered by the Service Contract Labor Standards statute or the Wage
Rate Requirements (Construction) statute. These individuals include but
are not limited to--
[cir] Learners, apprentices, or messengers whose wages are
calculated pursuant to special certificates issued under 29 U.S.C.
214(a);
[cir] Students whose wages are calculated pursuant to special
certificates issued under 29 U.S.C. 214(b); and
[cir] Those employed in a bona fide executive, administrative, or
professional capacity (29 U.S.C. 213(a)(1) and 29 CFR part 541).
Small businesses in the service or construction industry with FAR-
based contracts or subcontracts subject to revised FAR clause 52.222-55
will be impacted unless an exclusion listed above applies. The rule
will require these contractors and subcontractors to raise their
employees' minimum hourly rate to $15.00 per hour, beginning January
30, 2022, then annually adjust it thereafter, if necessary, based on
the annual minimum wage rate determined by the DOL.
Data available through the Federal Procurement Data System (FPDS)
for fiscal year 2020 reveals 21,895 contracts were awarded for services
which contained the clause at 52.222-41, Labor Standards, or for
construction which contained the clause at 52.222-6, Construction Wage
Rate Requirements, to 11,820 unique small businesses.
Subcontract data is available from the Federal Funding
Accountability and Transparency Act Subaward Reporting System (FSRS) at
<a href="http://www.USASpending.gov">www.USASpending.gov</a>. However, this system does not distinguish small
businesses from other than small businesses and the data does not
separate out construction and services subject to the minimum wage
requirements. Data for fiscal year 2020 show there were a total of
79,218 subcontracts for services and construction reported; these
subcontracts were awarded to 20,120 unique entities. For estimating
purposes, DoD, GSA, and NASA assumed that 20 percent of subcontracts
have a second-tier subcontractor, 10 percent of second-tier
subcontractors have a third-tier subcontractor, and 5 percent of third-
tier subcontractors have a fourth-tier subcontractor. This calculation
estimates the total number of unique subcontractors is 24,567. However,
since the FSRS data does not distinguish small businesses from other
than small businesses, products from services, or professional services
from those services subject to the minimum wage requirements, this
number is an overestimate of the small entities to which this rule will
apply.
The DOL noted in their final rule (86 FR 67126 at 67193) that the
rule did not impose any additional notice or recordkeeping requirements
on contractors, and therefore, the burden for complying with the
recordkeeping requirements was not adjusted. However, DOL submitted a
revised information collection request to OMB to revise the existing
information collection for control number 1235-0018 to incorporate the
recordkeeping regulatory citations in its final rule.
[[Page 4121]]
The Department of Labor found that, ``Small entities will have
regulatory familiarization, implementation, and payroll costs (i.e.,
transfers). Average Year 1 costs and transfers per small contractor
with affected employees range from $4,578 to $14,221 by industry.
Additionally, much of this cost will either be reimbursed by the
Federal Government or offset by productivity gains and cost-savings.
Therefore, the Department believes this final rule will not have a
significant impact on small businesses.''
Section 1 of E.O. 14026 explains that raising the minimum wage
enhances worker productivity and generates higher-quality work by
boosting workers' health, morale, effort; reducing absenteeism and
turnover; and lowering supervisory and training costs.
This rule does not duplicate, overlap, or conflict with any other
Federal rules.
DoD, GSA, and NASA were unable to identify any significant
alternatives that would meet the requirements of E.O. 14026 and DOL
regulation.
The Regulatory Secretariat Division has submitted a copy of the
IRFA to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the IRFA may be obtained from the Regulatory
Secretariat Division. DoD, GSA, and NASA invite comments from small
business concerns and other interested parties on the expected impact
of this rule on small entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2021-014),
in correspondence.
VIII. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. 3501-3521) applies to the
information collection described in this rule; however, these changes
to the FAR do not impose additional information collection requirements
to the paperwork burden previously approved for the DOL regulations
under OMB Control Number 1235-0018, Records to be Kept by Employers--
Fair Labor Standards Act.
IX. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense, the Administrator of General Services, and the
Administrator of the National Aeronautics and Space Administration that
urgent and compelling reasons exist to promulgate this interim rule
without prior opportunity for public comment. This action is necessary
because Executive Order 14026, Increasing the Minimum Wage for Federal
Contractors, requires DoD, GSA, and NASA to issue regulations within 60
days of the Department of Labor (DOL) rule and to include a clause that
specifies the new $15.00 per hour minimum wage will be paid to workers
performing on or in connection with covered contracts beginning January
30, 2022. The DOL final rule was published November 24, 2021. The DOL
rule was published for public comment prior to publication of the final
rule. This action is largely a ministerial implementation of the DOL
final rule at 86 FR 67126; therefore, prior notice and comment is
unnecessary given that DOL took full comment. However, pursuant to 41
U.S.C. 1707 and FAR 1.501-3(b), the Department of Defense, General
Services Administration, and National Aeronautics and Space
Administration will consider public comments received in response to
this interim rule in the formation of the final rule.
List of Subjects in 48 CFR Parts 2, 22, and 52
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 22, and 52 as
set forth below:
0
1. The authority citation for 48 CFR parts 2, 22, and 52 continues to
read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
PART 2--DEFINITIONS OF WORDS AND TERMS
0
2. Amend section 2.101, in paragraph (b)(2), in the definition of
``United States'' by--
0
a. Redesignating paragraphs (8) through (11) as paragraphs (9) through
(12);
0
b. Adding a new paragraph (8); and
0
c. Removing from the newly redesignated paragraph (11) the word
``Part'' and adding ``part'' in its place.
The addition reads as follows:
2.101 Definitions.
* * * * *
(b) * * *
(2) * * *
United States * * *
(8) For use in subpart 22.19, see the definition at 22.1901.
* * * * *
PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS
0
3. Revise section 22.403-4 to read as follows:
22.403-4 Executive Orders 13658 and 14026.
Executive Order (E.O.) 13658 established minimum wages for certain
workers at $10.10 per hour. The E.O. 13658 rate has increased each year
since 2015, rising to $11.25 on January 1, 2022. As of January 30,
2022, E.O. 13658 is superseded by E.O. 14026 to the extent that it is
inconsistent with E.O. 14026; the minimum wage rate for certain workers
is increased to $15.00 per hour. The wage rate is subject to annual
increases by an amount determined by the Secretary of Labor. See
subpart 22.19. The clause at 52.222-55, Minimum Wages for Contractor
Workers under Executive Order 14026, requires the E.O. 14026 minimum
wage rate to be paid if it is higher than other minimum wage rates,
such as the subpart 22.4 statutory wage determination amount.
0
4. Revise section 22.1002-5 to read as follows:
22.1002-5 Executive Orders 13658 and 14026.
Executive Order (E.O.) 13658 established minimum wages for certain
workers at $10.10 per hour. The E.O. 13658 rate has increased each year
since 2015, rising to $11.25 on January 1, 2022. As of January 30,
2022, E.O. 13658 is superseded by E.O. 14026 to the extent that it is
inconsistent with E.O. 14026; the minimum wage rate for certain workers
is increased to $15.00 per hour. The wage rate is subject to annual
increases by an amount determined by the Secretary of Labor. See
subpart 22.19. The clause at 52.222-55, Minimum Wages for Contractor
Workers under Executive Order 14026, requires the E.O. 14026 minimum
wage rate to be paid if it is higher than other minimum wage rates,
such as the subpart 22.10 statutory wage determination amount.
Subpart 22.19--Increasing the Minimum Wage for Contractors
0
5. Revise the heading of subpart 22.19 to read as set forth above.
0
6. Revise section 22.1900 to read as follows:
22.1900 Scope of subpart.
This subpart prescribes policies and procedures to implement
Executive Order (E.O.) 14026, Increasing the
[[Page 4122]]
Minimum Wage for Federal Contractors, which requires minimum wages for
certain workers; Department of Labor (DOL) implementing regulations are
found at 29 CFR part 23. This E.O. superseded E.O. 13658; DOL
implementing regulations for E.O. 13658 are found at 29 CFR part 10.
0
7. Amend section 22.1901 by--
0
a. Removing the definitions of ``Seasonal recreational equipment
rental'' and ``Seasonal recreational services'';
0
b. Adding in alphabetical order a definition for ``United States''; and
0
c. Revising the definition of ``Worker''.
The addition and revision read as follows:
22.1901 Definitions.
* * * * *
United States means the 50 States, the District of Columbia, Puerto
Rico, the Northern Mariana Islands, American Samoa, Guam, the U.S.
Virgin Islands, Johnston Island, Wake Island, and the outer Continental
Shelf as defined in the Outer Continental Shelf Lands Act (43 U.S.C.
1331, et seq.).
Worker (in accordance with 29 CFR 23.20)--
(1)(i) Means any person engaged in performing work on, or in
connection with, a contract covered by Executive Order 14026, and
(A) Whose wages under such contract are governed by the Fair Labor
Standards Act (29 U.S.C. chapter 8), the Service Contract Labor
Standards statute (41 U.S.C. chapter 67), or the Wage Rate Requirements
(Construction) statute (40 U.S.C. chapter 31, subchapter IV),
(B) Other than individuals employed in a bona fide executive,
administrative, or professional capacity, as those terms are defined in
29 CFR part 541,
(C) Regardless of the contractual relationship alleged to exist
between the individual and the employer.
(ii) Includes workers performing on, or in connection with, the
contract whose wages are calculated pursuant to special certificates
issued under 29 U.S.C. 214(c).
(iii) Also includes any person working on, or in connection with,
the contract and individually registered in a bona fide apprenticeship
or training program registered with the Department of Labor's
Employment and Training Administration, Office of Apprenticeship, or
with a State Apprenticeship Agency recognized by the Office of
Apprenticeship.
(2)(i) A worker performs on a contract if the worker directly
performs the specific services called for by the contract; and
(ii) A worker performs in connection with a contract if the
worker's work activities are necessary to the performance of a contract
but are not the specific services called for by the contract.
0
8. Amend section 22.1902 by--
0
a. Revising paragraph (a);
0
b. Removing from paragraph (b)(1) the phrase ``ordinance establishing''
and adding ``ordinance or any applicable contract establishing'' in its
place; and
0
c. Removing from paragraph (c) the phrase ``29 CFR 10.24(b) and 10.28''
and adding ``29 CFR 23.240(b) and 23.280'' in its place.
The revision reads as follows:
22.1902 Policy.
(a) Pursuant to Executive Order 14026, the minimum hourly wage rate
required to be paid to workers performing on, or in connection with,
contracts and subcontracts subject to this subpart is--
(1) At least $15.00 per hour beginning January 30, 2022; and
(2) Beginning January 1, 2023, and annually thereafter, an amount
determined by the Secretary of Labor. The Administrator of the Wage and
Hour Division (the Administrator) will notify the public of the new
E.O. minimum wage rate at least 90 days before it is to take effect.
(See 22.1904.)
* * * * *
0
9. Amend section 22.1903 by--
0
a. Revising paragraph (a);
0
b. Removing from paragraph (b)(2)(ii)(C) the phrase ``29 CFR part 541);
or'' and adding ``29 CFR part 541).'' in its place; and
0
c. Removing paragraph (b)(2)(iii).
The revision reads as follows:
22.1903 Applicability.
(a) This subpart applies to contracts covered by the Service
Contract Labor Standards statute (41 U.S.C. chapter 67, formerly known
as the Service Contract Act, subpart 22.10), or the Wage Rate
Requirements (Construction) statute (40 U.S.C. chapter 31, Subchapter
IV, formerly known as the Davis Bacon Act, subpart 22.4), that require
performance in whole or in part within the United States (the 50
States, the District of Columbia, Puerto Rico, the Northern Mariana
Islands, American Samoa, Guam, the U.S. Virgin Islands, Johnston
Island, Wake Island, and the outer Continental Shelf as defined in the
Outer Continental Shelf Lands Act (43 U.S.C. 1331, et seq.)). When
performance is in part within and in part outside the United States,
this subpart applies to the part of the contract that is performed
within the United States.
* * * * *
0
10. Amend section 22.1904 by--
0
a. Removing from paragraph (a) introductory text the date ``January 1,
2016'' and adding ``January 30, 2022'' in its place; and
0
b. Revising the table in paragraph (b)(2).
The revision reads as follows:
22.1904 Annual Executive Order Minimum Wage Rate.
* * * * *
(b) * * * *
(2) * * *
------------------------------------------------------------------------
------------------------------------------------------------------------
(i) Example 1--New E.O. wage rate is $16.10.
------------------------------------------------------------------------
Previous E.O. wage rate is $15.70...... Analysis: The calculation is
$16.10-$15.80 = $.30. The
price adjustment for this
worker is $.30.
The current service or construction
wage determination rate applicable to
this worker under the contract is
$15.75.
The actual wage currently paid to the
worker is $15.80.
------------------------------------------------------------------------
(ii) Example 2--New E.O. wage rate is $15.50.
------------------------------------------------------------------------
Previous E.O. wage rate is $15.10...... Analysis: The calculation is
$15.50-$15.80 = -$.30. There
is no price adjustment for
this worker.
The current service or construction
wage determination rate applicable to
this worker under the contract is
$15.75.
The actual wage currently paid to the
worker is $15.80.
------------------------------------------------------------------------
[[Page 4123]]
* * * * *
22.1905 [Amended]
0
11. Amend section 22.1905 by--
0
a. Removing from paragraph (a)(1) the phrase ``29 CFR part 10'' and
adding ``29 CFR part 10 or part 23'' in its place;
0
b. Removing from paragraph (a)(3) the phrase ``Minimum Wages Under
Executive Order 13658'' and adding ``Minimum Wages for Contractor
Workers Under Executive Order 14026'' in its place;
0
c. Revising paragraph (b)(3)(iii);
0
d. Removing from paragraph (c) the phrase ``29 CFR part 10.43'' and
adding ``29 CFR part 23.430'' in its place;
0
e. Revising paragraphs (d)(2) and (d)(3)(i); and
0
f. Removing from paragraph (d)(4) the phrase ``which the E.O. applies''
and adding ``which E.O. 14026 applies'' in its place.
The revisions read as follows:
22.1905 Enforcement of Executive Order Minimum Wage Requirements.
* * * * *
(b) * * *
(3) * * *
(iii) Evidence that clause 52.222-55, Minimum Wages for Contractor
Workers Under Executive Order 14026, (or its predecessor for complaints
under 29 CFR part 10) was included in the contract;
* * * * *
(d) * * *
(2) Antiretaliation. When a contractor has been found to have
violated paragraph (i) of clause 52.222-55, Minimum Wages for
Contractor Workers Under Executive Order 14026, the Administrator may
provide for relief to the worker in accordance with 29 CFR 23.440.
(3) * * *
(i) The Department of Labor may initiate debarment proceedings
under 29 CFR 23.520 whenever a contractor is found to have disregarded
its obligations under 29 CFR part 23.
* * * * *
22.1906 [Amended]
0
12. Amend section 22.1906 by--
0
a. Removing the phrase ``Minimum Wages Under Executive Order 13658''
and adding ``Minimum Wages for Contractor Workers Under Executive Order
14026'' in its place; and
0
b. Removing the phrase ``(the 50 States and the District of
Columbia)''.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
13. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Revising paragraph (c)(7);
0
c. Removing from paragraph (c)(8) ``JAN 2017'' and adding ``JAN 2022''
in its place;
0
d. Revising paragraph (e)(1)(xvii);
0
e. Removing from paragraph (e)(1)(xviii) ``JAN 2017'' and adding ``JAN
2022'' in its place; and
0
f. In Alternate II:
0
i. Revising the date of the Alternate;
0
ii. Revising paragraph (e)(1)(ii)(P); and
0
iii. Removing from paragraph (e)(1)(ii)(Q) ``JAN 2017'' and adding
``JAN 2022'' in its place.
The revisions read as follows:
52.212-5 Contract Terms and Conditions Required To Implement Statutes
or Executive Orders--Commercial Products and Commercial Services.
* * * * *
Contract Terms and Conditions Required To Implement Statutes or
Executive Orders--Commercial Products and Commercial Services (JAN
2022)
* * * * *
(c) * * *
__(7) 52.222-55, Minimum Wages for Contractor Workers Under
Executive Order 14026 (JAN 2022).
* * * * *
(e)(1) * * *
* * * * *
(xvii) 52.222-55, Minimum Wages for Contractor Workers Under
Executive Order 14026 (JAN 2022).
* * * * *
Alternate II (JAN 2022). * * *
(e)(1) * * *
(ii) * * *
(P) 52.222-55, Minimum Wages for Contractor Workers Under Executive
Order 14026 (JAN 2022).
* * * * *
0
14. Amend section 52.213-4 by--
0
a. Revising the date of the clause;
0
b. Revising paragraphs (a)(2)(viii) and (b)(1)(ix); and
0
c. Removing from paragraph (b)(1)(x) the phrase ``(JAN 2017)'' and
adding ``(JAN 2022)'' in its place.
The revisions read as follows:
52.213-4 Terms and Conditions--Simplified Acquisitions (Other Than
Commercial Products and Commercial Services).
* * * * *
Terms and Conditions--Simplified Acquisitions (Other Than Commercial
Products and Commercial Services). (JAN 2022)
(a) * * *
(2) * * *
(viii) 52.244-6, Subcontracts for Commercial Products and
Commercial Services (JAN 2022).
* * * * *
(b) * * *
(1) * * *
(ix) 52.222-55, Minimum Wages for Contractor Workers Under
Executive Order 14026 (JAN 2022) (Applies when 52.222-6 or 52.222-41
are in the contract and performance in whole or in part is in the
United States (the 50 States, the District of Columbia, Puerto Rico,
the Northern Mariana Islands, American Samoa, Guam, the U.S. Virgin
Islands, Johnston Island, Wake Island, and the outer Continental Shelf
as defined in the Outer Continental Shelf Lands Act (43 U.S.C. 1331, et
seq.))).
* * * * *
0
15. Amend section 52.222-55 by--
0
a. Revising the section heading, the clause heading, and the date of
the clause;
0
b. In paragraph (a)--
0
i. Removing the definitions of ``Seasonal recreational equipment
rental'' and ``Seasonal recreational services'';
0
ii. Revising the definition of ``United States'';
0
iii. In the definition of ``Worker''--
0
A. Redesignating paragraph (1) introductory text as (1)(i),
redesignating paragraphs (1)(i) through (iii) as paragraphs (1)(i)(A)
through (C), and redesignating paragraphs (2) and (3) as paragraphs
(1)(ii) and (iii);
0
B. Removing from the newly redesignated paragraph (1)(i) introductory
text the phrase ``13658'' and adding ``14026'' in its place; and
0
C. Adding a new paragraph (2);
0
c. Removing from paragraph (b)(1) the phrases ``$10.10'' and ``January
1, 2015'' and adding ``$15.00'' and ``January 30, 2022'' in their
places, respectively;
0
d. Removing from paragraph (b)(2) the date ``January 1, 2016'' and
adding ``January 1, 2023'' in its place;
0
e. Removing from paragraph (b)(6) the phrase ``29 CFR 10.23'' and
adding ``29 CFR 23.230'' in its place;
0
f. Removing from paragraph (b)(8) the phrase ``ordinance establishing a
minimum wage higher than the E.O.'' and adding ``ordinance or any
applicable contract establishing a minimum wage higher than the E.O.
14026'' in its place;
0
g. Removing from paragraph (b)(10) the phrase ``29 CFR 10.24(b) and
10.28'' and adding ``29 CFR 23.240(b) and 23.280'' in its place;
0
h. Removing from paragraph (c)(2)(ii)(C) the phrase ``29 CFR part 541);
or'' and adding ``29 CFR part 541).'' in its place;
[[Page 4124]]
0
i. Removing paragraph (c)(2)(iii);
0
j. Removing from paragraph (d) the phrase ``<a href="http://www.dol.gov/whd/govcontracts">www.dol.gov/whd/govcontracts</a>'' and adding ``<a href="http://www.dol.gov/agencies/whd/government-contracts">www.dol.gov/agencies/whd/government-contracts</a>'' in its place;
0
k. Removing from paragraph (e)(4) the phrases ``29 CFR 10.26'' and
adding ``29 CFR 23.260'' in its place; and
0
l. Removing from paragraph (h) the phrase ``29 CFR 10.51'' and ``29 CFR
part 10'' and adding ``29 CFR 23.510'' and ``29 CFR part 23'' in their
places, respectively.
The revisions and additions read as follows:
52.222-55 Minimum Wages for Contractor Workers Under Executive Order
14026.
* * * * *
Minimum Wages for Contractor Workers Under Executive Order 14026 (JAN
2022)
(a) * * *
``United States'' means the 50 states, the District of Columbia,
Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, the
U.S. Virgin Islands, Johnston Island, Wake Island, and the outer
Continental Shelf as defined in the Outer Continental Shelf Lands Act
(43 U.S.C. 1331, et seq.).
``Worker''--
* * * * *
(2)(i) A worker performs on a contract if the worker directly
performs the specific services called for by the contract; and
(ii) A worker performs in connection with a contract if the
worker's work activities are necessary to the performance of a contract
but are not the specific services called for by the contract.
* * * * *
0
16. Amend section 52.222-62 by--
0
a. Revising the date of the clause; and
0
b. Removing from paragraph (i)(6) the phrase ``E.O. 13658'' and adding
``E.O. 14026'' in its place.
The revision reads as follows:
52.222-62 Paid Sick Leave Under Executive Order 13706.
* * * * *
Paid Sick Leave Under Executive Order 13706 (JAN 2022)
* * * * *
0
17. Amend section 52.244-6 by--
0
a. Revising the date of the clause;
0
b. Removing from paragraph (c)(1)(xv) the phrase ``Wages under
Executive Order 13658'' and adding ``Wages for Contractor Workers under
Executive Order 14026'' in its place; and
0
c. Removing from paragraph (c)(1)(xvi) the phrase ``(JAN 2017)'' and
adding ``(JAN 2022)'' in its place.
The revision reads as follows:
52.244-6 Subcontracts for Commercial Products and Commercial
Services.
* * * * *
Subcontracts for Commercial Products and Commercial Services (JAN 2022)
* * * * *
[FR Doc. 2022-01507 Filed 1-25-22; 8:45 am]
BILLING CODE 6820-EP-P
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