Georgia Tech Procurement Assistance Center

Increase in 2017 Service Contract Act health & welfare rate; Lower rate for contracts covered by federal paid sick leave EO

By

The U.S. Department of Labor (DOL) has released its annual memorandum with the rate increase for Service Contract Act (SCA) Health and Welfare (H&W) Fringe Benefits. The new rate of $4.41 per hour (up from the 2015-2016 rate of $4.27 per hour) is required in all government contract bids or other service contracts awarded on or after August 1, 2017.

A special rate of $1.91 per hour is set for Hawaii, which takes into account that state’s mandatory health insurance coverage. However, an employer may use this lower rate only if it actually makes contributions for employees under the Hawaii Prepaid Health Care Act.

DOL officials indicated earlier this year that the rates set for 2017 would account for contracts subject to Executive Order 13706, which applies to new contracts that result from solicitations issued on or after January 1, 2017, or that are awarded outside the solicitation process on or after that date. The EO requires covered contractors to provide employees up to 56 hours of paid leave sick leave annually.

Keep reading this article at: http://www.jdsupra.com/legalnews/increase-in-2017-service-contract-act-87128/

I think my company is a federal contractor and has regulatory obligations, but where can I look to search for that information?

By

Doing business with the United States federal government can be very lucrative, but it comes with a price.

That price arrives in the form of reporting obligations, recordkeeping, outreach, and much more.

Failure to comply with all applicable regulatory requirements can also have steep consequences, so it is very important for federal contractors to ensure they are doing all that is required.

Companies are sometimes unaware that they are a covered contractor or subcontractor and, thus, find themselves unprepared for an Office of Federal Contract Compliance Programs (OFCCP) compliance review. In an effort to better prepare for these types of situations, this article is intended to provide some practical information and resources about federal contractor thresholds and where to look for federal contracts.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=598152

Why the U.S. government hates the idea of independent contractors

By

Say your business is doing well, and you to need to hire some extra workers.

But you may be terrified of all the obligations that go along with adding a person who must be treated as an employee. So you would prefer to add someone who can rightly be treated as an independent contractor. Good idea!

Unfortunately, the government hates the idea of independent contractors, and the IRS has skirmished with businesses for decades about the so-called worker classification issue. Here’s what you need to know about the subject.

Worker classification matters

When a worker is classified as an employee of your business, you generally must withhold federal income tax and the employee’s share of Social Security and Medicare taxes from the worker’s wages. Your business must then pay the employer’s share of Social Security and Medicare taxes, pay federal unemployment tax, file federal payroll tax returns, and follow lots of burdensome IRS and Labor Department rules. You may also get socked with state and local unemployment and worker compensation taxes and have to comply with even more rules and regulations. Dealing with all this stuff can cost thousands of extra dollars a year for each employee.

On the other hand, independent contractor status is beneficial to a business because you don’t have to worry about employment tax issues, and you don’t have to provide expensive fringe benefits like health insurance, retirement plan contributions, and paid vacations.

Keep reading this article at: http://www.marketwatch.com/story/why-the-us-government-hates-the-idea-of-independent-contractors-2017-05-23

President puts last nail in coffin to eliminate ‘blacklisting’ rule for federal contractors

By

President Donald Trump on Monday signed a joint resolution shutting down an Obama administration-era rule that supporters said evened the playing field for law-abiding contractors, but which the current administration said amounted to “blacklisting” easy targets.

House Joint Resolution 37 stated that Congress “disapproves” the Fair Pay and Safe Workplaces rule  and “such rule shall have no force or effect.”

H.J. Res. 37 was part of a package of resolutions signed March 27 by President Trump, which “roll back job killing rules,” said White House Press Secretary Sean Spicer during a press briefing earlier in the day.

Keep reading this article at: http://federalnewsradio.com/industryassociations/2017/03/trump-signs-joint-resolution-to-roll-back-blacklisting-rule-for-federal-contractors/

Contractors applaud House vote to kill fair pay, safe workplace rule

By

Two major contracting groups hailed House passage on Thursday (Feb. 2, 2017) of a long-expected resolution to undo the Obama administration’s 2014 “Fair Pay and Safe Workplaces” order requiring contractors to report past violations of 14 labor laws.

House joint resolution 37, sponsored by Rep. Virginia Foxx, R-N.C., declares that the implementation rule submitted in August by the Defense Department, General Services Administration, and NASA relating to the Federal Acquisition Regulation (FAR) has no effect.

It passed 236-187 amid a series of votes using the 1996 Congressional Review Act to nullify regulations enacted in the past 60 days. (Other rules involved streams protection, land management royalties and Social Security rules on gun purchase background checks for people with mental disabilities.)

“We welcome the House action,” said David Berteau, president and CEO of the 400-member Professional Services Council, in a statement. “The blacklisting rule fails to provide companies with basic due process, imposes significant new and non-value added reporting requirements, and risks denying federal buyers access to the best private-sector providers to meet government needs. With the disapproval of this rule by the House, and we hope with prompt action by the Senate and then signature by the president, a significant overhang will be removed from the acquisition process.”

Keep reading this article at: http://www.govexec.com/contracting/2017/02/contractors-applaud-house-vote-kill-obama-fair-pay-safe-workplace-rule/135140

New guidance on contractor risk management under the human trafficking rule released

By

On December 7, the Office of Management and Budget, the Department of Labor, and the Office to Monitor and Combat Trafficking in Persons in the Department of State, issued a proposed memorandum titled “Anti-Trafficking Risk Management Best Practices & Mitigation Considerations.”  The document is intended, at least in part, to “promote clarity and consistency in the implementation of anti-trafficking requirements” imposed by Executive Order 13627, Title XVII of the FY 2013 National Defense Authorization Act, and the implementing regulatory provisions applicable to all federal contractors at FAR 22.17 and FAR 52.222-50.

human-trafficking-united-nations
Source: United Nations Office of Drugs and Crime

Although the guidance document is in draft form, it is important for contractors to consider closely because it: (1) outlines the government’s contemplated expectations on anti-trafficking risk mitigation, and (2) informs agencies that they may immediately take the contents of the memorandum “into consideration in applying the anti-trafficking requirements in the Federal Acquisition Regulation (FAR).”

In addition to reiterating the basic requirements of the anti-trafficking FAR rule (which we have covered in other posts), the memorandum outlines a series of “best practices and mitigation considerations” designed to inform contracting officers’ assessments of whether contractors are effectively carrying out their compliance responsibilities.  Although the guidance states that it is “not intended to augment or otherwise change existing regulatory requirements,” it does specify that, in the event the government becomes aware of a trafficking violation, a contractor’s compliance with the practices identified in the guidance are to be construed as mitigating considerations weighing in the contractor’s favor.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2016/12/new-guidance-contractor-risk-management-human-trafficking-rule-released/

Court of Appeals affirms lengthy prison sentences for men engaging in DBE fraud 

By

USDOTThe U.S. Attorney’s Office for the Middle District of Pennsylvania has announced that Joseph W. Nagle of Deerfield Beach, Florida and Ernest G. Fink, Jr. of Orwigsburg, Pennsylvania, the former owners of Schuylkill Products Inc., (SPI) had their sentences affirmed by the Third Circuit Court of Appeals.

Nagle was sentenced to 84 months’ imprisonment on November 30, 2015, and Fink was sentenced to 41 months’ imprisonment on February 24, 2016, for their roles in a massive conspiracy to defraud the U.S. Department of Transportation’s Disadvantage Enterprise (DBE) program.

According to USDOT, their scheme, which lasted for over 15 years and involved over $136 million in government contracts in Pennsylvania alone, is the largest reported DBE fraud in the nation’s history.

In April 2012, after a four-week jury trial, a jury convicted Nagle on 26 charges relating to the scheme, including conspiracy to defraud USDOT, mail fraud, wire fraud, and money laundering.  Fink previously pleaded guilty to conspiracy to defraud the USDOT in August 2010.

In 2014, three other former executives associated with SPI were sentenced for their roles in the scheme.

  • Romeo P. Cruz, of Westhaven, Connecticut, the former owner of Marikina Construction Corp., which operated as a front for SPI, was sentenced to 33 months’ imprisonment.
  • Timothy G. Hubler, of Ashland, Pennsylvania, SPI’s former Vice-President in charge of field operations, was sentenced to 33 months’ imprisonment.
  • Dennis F. Campbell, of Orwigsburg, Pennsylvania, SPI’s former Vice-President in charge of sales and marketing, was sentenced to 24 months’ imprisonment.

The investigation was conducted by the FBI, USDOT’s Inspector General’s Office, the U.S. Department of Labor Inspector General’s Office, and the Criminal Investigation Division of the IRS.

Source: https://www.justice.gov/usao-mdpa/pr/third-circuit-court-appeals-affirms-lengthy-prison-sentences-two-men-who-executed

 

‘Fair Pay, Safe Workplaces’ rule for federal contractors appears endangered

By

DOLAmong the many Obama administration regulations that President-elect Trump plans to eviscerate could be the “Fair Pay and Safe Workplaces” rule the Labor Department finalized in August.

Labor’s goal was to protect workers against abuses such as wage theft and health violations by instituting additional disclosure and reporting requirements for federal contractors concerning their compliance with 14 labor laws. Industry viewed the impact as a burdensome “blacklisting” of contractors whose reputations, in some cases, could suffer from unproven allegations of past worker abuse.

In October, a Texas district judge issued a preliminary injunction blocking parts of the rule in response to a suit brought by a chapter of the Associated Builders and Contractors. The judge decided that the rule’s reporting requirements reach beyond executive authority and are otherwise preempted by federal labor laws. She left only the paycheck transparency provisions intact to take effect Jan. 1, 2017.

Keep reading this article at: http://www.govexec.com/contracting/2016/11/obamas-fair-pay-safe-workplaces-rule-federal-contractors-appears-endangered/133436

Bad-faith federal litigation tactics compel court to award small business attorneys’ fees

By

Even though the federal government maintains an entire agency whose mission is purportedly to assist small businesses — the Small Business Administration (SBA) — regulators seem ever oblivious to their impact on entrepreneurs. The National Labor Relations Board’s (NLRB) effort to redefine who is an “employer” and the NLRB’s and the Department of Labor’s (DOL) enmity toward independent contracting are two current examples. A third is DOL’s so-called Fiduciary Rule, which hits sole-practitioner and small-business investment and insurance advisors especially hard.

Air Force SealSmall businesses are also at a particular disadvantage when disputes with the government end up in court. A recent U.S. Court of Federal Claims decision, SUFI Network Services, Inc. v. US, exhibits government’s unfortunate willingness to exploit its power in disputes with a small business and the role courts can play in protecting entrepreneurs’ rights.

SUFI contracted with the U.S. Air Force (USAF) in 1996 to be the exclusive long-distance-call service provider for the guest lodging facilities on Air Force bases in Germany. Over the next 8 years, USAF personnel made it impossible for SUFI to successfully offer services.

For example, calling cards were provided to guests to circumvent SUFI’s service. Also, requests by SUFI that government phones be removed from the facilities were repeatedly ignored. SUFI declared that the USAF had committed a material breach of the contract and ceased services in August 2004. As required by the contract, SUFI filed a claim with its contracting officer for $130 million in damages. The officer awarded $133,000.

Obviously dissatisfied, SUFI appealed to the Armed Services Board of Contract Appeals (hereinafter, Board), increasing its request to $163 million.

Keep reading this article at: http://www.forbes.com/sites/wlf/2016/11/25/bad-faith-federal-litigation-tactics-compel-court-to-award-small-business-attorneys-fees/#14f0203f1f35

Implementation of Labor Department’s Dec. 1 overtime rule stopped

By

DOLA Texas court has issued a nationwide preliminary injunction stopping implementation of the Department of Labor’s (DOL) rule to more than double the current salary threshold for certain exemptions from overtime pay.

The court ruled on November 22, just a few days before its December 1, 2016 implementation date.

The court ruling came in response to lawsuits filed by 21 states, the U.S. Chamber of Commerce, and other business groups.  The plaintiffs argued that the DOL exceeded its statutory authority in raising the salary threshold and by providing for the automatic adjustment of the threshold every three years.

  • The DOL rule would raise the salary threshold from $23,660 to $47,476 annually, more than doubling the minimum annual salary a worker can earn and qualify for an exemption from the overtime pay provisions of the Fair Labor Standards Act.
  • DOL’s rule would also adjust the threshold every three years based on the 40th percentile of wages for full-time salaried workers in the lowest wage earning geographic area captured by the U.S. Census.

The preliminary injunction issued by the court cites concerns that the rule improperly created a salary test that would consume Congressional intent that the exemption be based on the type of duties performed. Additionally, the court found merit in plaintiffs’ argument that states would be irreparably harmed by implementation of the rule before a final decision by the court because states facing budget restraints would have to expend a substantial sum of unrecoverable public funds to increase salaries or pay overtime to employees and may possibly have to layoff or reorganize workforces causing a substantial interference in government services.

A preliminary injunction is not permanent, but it does preserve the current rule while the court deliberates the merits of the case. As a result, the new rule will not take effect on December 1, 2016, and employers may continue to classify employees as exempt if they pay employees at least $23,660 annually on a salary basis and if the employees meet the appropriate duties test.

DOL’s rule could still become effective if the Texas court does not issue a permanent injunction or otherwise rule against the DOL.  The Labor Department is expected to challenge the ruling.

Because the preliminary injunction could be lifted on short notice, legal experts advise that employers should continue to prepare for changes called for in DOL’s rule.

Critical preparation considerations are discussed by the Piliero Mazza law firm at: http://www.pilieromazza.com/blog/far-reaching-impact-of-dols-increase-to-flsa-salary-thresholds

Contracting News

Read More

Contracting Tips

Read More

GTPAC News

Read More

Georgia Tech News

Read More