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  • Question

    What are the contracting officer's responsibilities in a pre-award and post-award situation as it relates to CBA's and Wage Determinations?


    Answer

    The FAR references quoted below in pertinent part are applicable to this response.

    FAR 22.1001 -- Definitions
    As used in this subpart--
    “Agency labor advisor” means an individual responsible for advising contracting agency officials on Federal contract labor matters.

    FAR 22.1002-3 -- Wage Determinations Based on Collective Bargaining Agreements
    (a) Successor contractors performing on contracts in excess of $2,500 for substantially the same services performed in the same locality must pay wages and fringe benefits (including accrued wages and benefits and prospective increases) at least equal to those contained in any bona fide collective bargaining agreement entered into under the predecessor contract.
    This requirement is self-executing and is not contingent upon incorporating a wage determination or the wage and fringe benefit terms of the predecessor contractor’s collective bargaining agreement in the successor contract.

    FAR 22.1007 -- Requirement to Obtain Wage Determinations
    The contracting officer shall obtain wage determinations for the following service contracts:
    (b) Each contract modification which brings the contract above $2,500 and --
      (1) Extends the existing contract pursuant to an option clause or otherwise;

    FAR 22.1008-1 – Obtaining Wage Determinations
    (f) If the Contracting Officer has questions regarding the procedures for obtaining a wage determination, or questions regarding the selection of a wage determination, the Contracting Officer should request assistance from the agency labor advisor.

    FAR 22.1008-2 -- Section 4(c) Successorship with Incumbent Contractor Collective Bargaining Agreement
    (d)(2) If the Contracting Officer has timely received the collective bargaining agreement, the Contracting Officer
    may use the WDOL website to prepare a wage determination referencing the agreement and incorporate that wage determination, attached to a complete copy of the collective bargaining agreement, into the successor contract action.

    The Federal Acquisition Regulation (FAR) subpart 22.10 Service Contract Act of 1965, as Amended contains the applicable policy for application of the service contract act to contracts.

    This policy is somewhat voluminous and can be confusing to read.  In plain English the gist of the Service Contract Act (SCA) is that for contracts subject to the Act a minimum wage, set forth by the Department of Labor (DoL) on a Wage Determination (WD), must be paid to employees under the contract. The FAR does not provide a specific definition for either a WD or a Collective Bargaining Agreement (CBA).  Accordingly a brief definition of these two terms is provided as follows:
     

    Wage Determination: The document generated by the Department of Labor, Employment Standards Administration, Wage and Hour Division that sets forth the locally prevailing wage rate and fringe benefits, for the type of work performed. Wage Determinations vary by geographic regions, since locally prevailing wage rates also vary by geographic regions. Applicable wage determinations for service contract act covered acts may be accessed on-line at: http://www.wdol.gov/
     
    Collective Bargaining Agreement: means an agreement entered into as a result of collective bargaining.  collective bargaining means the performance of the mutual obligation of the representative of an agency and the exclusive representative of employees in an appropriate unit in the agency to meet at reasonable times and to consult and bargain in a good-faith effort to reach agreement with respect to the conditions of employment affecting such employees and to execute, if requested by either party, a written document incorporating any collective bargaining agreement reached, but the obligation referred to in this paragraph does not compel either party to agree to a proposal or to make a concession (Definition found in 5 U.S.C. § 7103(a)(8)&(12)) Collective Bargaining Agreements may be accessed on-line at:  http://www.dol.gov/esa/olms/regs/compliance/cba/index.htm

    When the SCA applies to a contract, the contract clause at FAR 52.222-41
    Service Contract Act of 1965 and one of the clauses at FAR 52.222-43 Fair Labor Standards Act and Service Contract Act -- Price Adjustment (Multiple Year and Option Contracts) or at FAR 52.222-44 Fair Labor Standards Act and Service Contract Act -- Price Adjustment are included in the contract.  The first clause indicates that the act applies and specifies a number of the provisions of the act.  Paragraph (m) of the clause at FAR 52.222-41 reads as follows:
    (m) Collective bargaining agreements applicable to service employees. If wages to be paid or fringe benefits to be furnished any service employees employed by the Government Prime Contractor or any subcontractor under the contract are provided for in a collective bargaining agreement which is or will be effective during any period in which the contract is being performed, the Government Prime Contractor shall report such fact to the Contracting Officer, together with full information as to the application and accrual of such wages and fringe benefits, including any prospective increases, to service employees engaged in work on the contract, and a copy of the collective bargaining agreement. Such report shall be made upon commencing performance of the contract, in the case of collective bargaining agreements effective at such time, and in the case of such agreements or provisions or amendments thereof effective at a later time during the period of contract performance such agreements shall be reported promptly after negotiation thereof.

    Note that this clause indicates that the prime contractor is responsible for furnishing full information on CBAs to the contracting officer for both the prime and the subcontractor. The process for making adjustments under the SCA is outlined in the clauses at FAR 52.222-43 or FAR 52.222-44. Reading these two clauses outlines the appropriate steps for processing price adjustments resulting from updated WDs, including limitations on the adjustments, and records that the contracting officer is entitled to review. Also, if the wage determination associated with a CBA seems unreasonable in comparison with the prevailing wages of the area, FAR 22.1003-2
    Wage Determinations Under a Collective Bargaining Agreement specifies in paragraph (a)(1)&(2) that:
     
    This requirement will not apply if the Secretary of Labor determines --
    (1) After a hearing, that the wages and fringe benefits are substantially at variance with those which prevail for services of a similar character in the locality; or
    (2) That the wages and fringe benefits are not the result of arm's length negotiations.
     
    If it appears as though the WD is substantially at variance with local wages then a hearing with the Secretary of Labor may be requested by following the procedures outlined at FAR 22.1021
    Request for Hearing.
     
    The SCA and appropriate application can be quite confusing.  A thorough reading of the applicable FAR subpart on the SCA (22.10) can be helpful, but obtaining a basic knowledge prior to reading the FAR might make it more beneficial. The Department of Labor has published a guide that explains the SCA and other labor laws at a more basic level. Reading this guide is a good place to start for education on the SCA, followed by a thorough reading of the FAR policies.  The guide may be found at:
    http://www.wdol.gov/docs/WRB2002.pdf.
     
    Contracting Agency Responsibilities when accessing SCA Wage Determinations
     
    Contracting Offices are to follow the procedures set forth below:
    a.  The contracting office will obtain the appropriate SCA WD by accessing the WDOL SCA Database prior to the issuance of a solicitation (IFB or RFP), exercise of option, contract extension, or contract modification.
    b.  The contracting office will monitor the SCA Database to determine if an  applicable WD has been revised.  Wage determinations will be considered received by the Federal Agency on the date of their publication in the NTIS Database.  The provisions of
    29 CFR 4.5(a)(2) shall be followed to determine whether a revised WD must be included in the solicitation and subsequent contract. Thus,
    1.  For contracts which are the result of sealed bidding procedures, revisions to the WD which are published in the WDOL SCA Database 10 or more days prior to bid opening shall be effective. Any revised WD which is published in the WDOL SCA Database less than 10 days prior to bid opening shall not be effective if the contracting office determines that there is not a reasonable time still available to notify bidders of the revision.
    2.  For contracts which are the result of other than sealed bidding procedures, any revision to a WD that is published in the WDOL SCA Database prior to the date of award (or the date of a specified modification having the effect of a new award) shall be effective. Any revision to a WD that is in the WDOL SCA Database after the date of award shall not be effective provided that contract performance commences within 30 days of the award date. If contract performance commences more than 30 days after award (or the specified modification), any revised WD published in the WDOL SCA Database at least 10 days prior to commencement of the work shall be effective and applicable to the contract.
    c.  If it is discovered that the most current, applicable wage determination (i.e.,  covering  the appropriate locality, occupations, type of service and fringe  benefit level for the service to be performed) contained in the WDOL SCA Database system was not included in the contract, the agency is required to incorporate the applicable wage determination in the contract as provided by
    29 CFR 4.5(c)(2), 29 CFR 4.101(b) and FAR 22.1015.  Therefore, the presence of a wage determination on the WD database does not determine the applicable WD for any specific contract.  Only those wage determinations placed into the contract at award or by modification are controlling.
     
    Professional Development via Defense Acquisition University:
    New CLC 064, “Wage Determinations for Service and Construction Contracts” 
    Tags:
    Contracting, Wage Determinations
    New CLC 064, “Wage Determinations for Service and Construction Contracts”
    CLC 064, “Wage Determinations for Service and Construction Contracts” is designed for Contracting Officers/Specialists to introduce the laws and regulations governing the minimum wage and fringe rates to be paid in most construction and service contracts.  The course describes the requirements of the Service Contract Labor and the Wage Rate Requirements statutes; and illustrates how Collective Bargaining Agreements are applied.  This course provides an opportunity for the student to explore and interact with the Department of Labor website at
    http://www.wdol.gov in order to select an appropriate wage determination for a given labor scenario. 
     
    This module will be deployed on the DAU Continuous Learning for Defense Acquisition Workforce website at
    http://www.dau.mil/clc/default.aspx under CL Modules approximately March 28, 2012.  This module will take approximately three hours to complete.

     

    Overview of the Services Contract Act of 1965, as Amended

    FAR Subpart 22.10 outlines policies and procedures relating to the Service Contract Act of 1965, as amended. The Act is an adaptation of the “prevailing wage” concept of the Davis-Bacon Act. While the law originally covered only blue-collar workers, its provisions were amended by P.L. 94-489 to extend coverage to white-collar workers. Accordingly, the minimum wage protection of the Act now extends to all workers, both blue-collar and white-collar, other than persons employed in a bona fide executive, administrative, or professional capacity as those terms are used in the Fair Labor Standards Act and in 29 CFR 541.
    P.L. 94-489 accomplished this change by adding to section 2(a)(5) of the Act a reference to 5 USC 5332, which deals with white-collar workers, and by amending the definition of service contract employee in section 8(b) of the Act.
    Once the decision has been made that a services order will properly satisfy the requiring activity’s needs, you will have to determine if the Service Contract Act of 1965, as amended applies. The Act provides for the Secretary of Labor to determine the minimum wages to be paid employees working under Federal orders for services in excess of $2,500. Wage levels vary by type of service and by locality. The wage determination is made an attachment to the order, and the contractor and any subcontractors are obligated to comply with it. Consequently, the purchasing agent must obtain from the Department of Labor, prior to the award of a service order, the determination of prevailing wages for the locality in which the order is to be performed. In addition to the micro purchase threshold requirement, other criteria spelled out in the Act are:
    ·  The principal purpose of the order is to furnish services;
    ·  It is to be performed, to a significant or substantial extent, by other than executive, administrative or professional employees;
    ·  It is to be performed primarily in the United States;
    ·  It is not otherwise exempted by law.
     
    The following examples, while not definitive or exclusive, illustrate some of the types of services covered by the Act.
    ·  Motor pool operation, parking, taxicab, and ambulance services
    ·  Packing, crating, and storage
    ·  Custodial, janitorial, housekeeping, and guard services
    ·  Food service and lodging
    ·  Laundry, dry-cleaning, linen-supply, and clothing alteration and repair services
    ·  Snow, trash, and garbage removal
    ·  Aerial spraying and aerial reconnaissance for fire detection
    ·  Some support services at installations, including grounds maintenance and landscaping
    ·  Certain specialized services requiring specific skills such as drafting, illustrating, graphic arts, stenographic reporting, or mortuary services
    ·  Electronic equipment maintenance and operation and engineering support services
    ·  Maintenance and repair of all types of equipment, for example, aircraft, engines, electrical motors, vehicles, and electronic, office and related business and construction equipment
    ·  Operation, maintenance, or logistics support of a Federal facility
    ·  Data collection, processing and analysis services
     
    The Act also authorizes the Secretary of Labor to establish occupational health and safety standards that are applicable to contractor and subcontractor employees. These standards are stated in 29 CFR 1900-1919. They contain the provision that:
    No part of the services covered by this Act will be performed in buildings, surroundings, or under working conditions provided by or under the control or supervision of the contractor or any subcontractor, which are unsanitary or hazardous or dangerous to the health or safety of service employees engaged to furnish the services.
    In relation to that provision, contractors and subcontractors must maintain records of all work injuries for a period of three years.
    Exemptions From Provisions of the Act
    The following types of orders are exempt from coverage under the Service Contract Act (See FAR 22.1003-3 and 22.1003-4).
    ·  Orders for maintenance and repair of certain information technology, scientific, medical, and office/business equipment
    ·  Orders for construction or repair
    ·  Orders under the Walsh-Healey Public Contracts Act
    ·  Orders for carriage of freight or personnel if rates for such carriage are set by the Interstate Commerce Act
    ·  Orders for communication services
    ·  Orders for public utility services
    ·  Orders for employment
    ·  Orders for operating postal contract stations for the U.S. Postal Service
    ·  Orders for services that are furnished outside of the United States
    ·  Any order exempted by the Secretary of Labor
    Submission of SF 98 and SF 98a
    Wages to be paid contractor employees under the act are determined by either prevailing rates or collective bargaining agreements. Under prevailing rates provisions, contractors with orders that exceed $2,500, must pay their employees no less than the local wages and fringe benefits as determined by the Department of Labor (DOL) or, in the absence of a wage determination, the minimum wage set forth in the Fair Labor Standards Act. To obtain the prevailing wage determination for your area, complete Standard Forms 98 and 98a, “Notice of Intention to Make a Service Contract and Response Notice” and “Attachment A”, respectively. Attach any supplemental information necessary to support the “Notice” and submit your package to the Administrator, Wage and Hour Division, Employment Standards Administration, U. S. Department of Labor, Washington, DC 20210. This request must be forwarded for recurring and known requirements not less than 60 days (nor more than 120 days, except with the approval of the Wage and Hour Division) before the earlier of (1) issuance of any RFQ, or (2) issuance of modifications for exercise of option(s), performance extensions, or change of description (scope). If the Notice is for a non-recurring or unknown requirement and advance planning is not feasible, the Notice shall be submitted as soon as possible, but not later than 30 days before commencement of the action. The following information should be included in your Notice request.
    ·  Identification of all classes of services employees to be used on the order. If a wage determination is under a Collective Bargaining Agreement (CBA), use the exact title shown in the CBA. If there is no CBA, use the exact title shown in the Wage and Hour Division’s Service Contract Act Directory of Occupations. If the Directory cannot be used, provide an appropriate job title and description.
    ·  The wage that would be paid each class if employed by the agency and subject to the provisions of the General Schedule (GS) or Wage Board (WB) rates
    ·  If known, the place of performance. If not known, request determinations for all possible places or areas of performance or for additional possible places of performance if asked to do so in writing by the prospective contractor(s).
     
    You may need to check the status or request expediting of your Notice from the Wage and Hour Division. These inquiries and requests will be made in accordance with your agency’s policies.
    If the wage determination or revision is late and there is no CBA, contact the Wage and Hour Division to ascertain when it can be expected. If the Wage and Hour Division is unable to provide the wage determination or revision by the latest date needed to maintain the solicitation schedule, you must use the latest wage determination or revision, if any, incorporated in the existing order. If any new or revised wage determination is received later in response to the Notice, you must include it in the solicitation or order within 30 calendar days of receipt. If the order has been awarded, you must equitably adjust the price to reflect any changed cost of performance resulting from incorporating the wage determination or revision. The Administrator, Wage and Hour Division, may require retroactive application of the wage determination for purchasing actions in excess of $2,500 that use more than five service employees. 
    If a CBA exists, and the response from the Wage and Hour Division is late, you must contact them to determine when the determination or revision can be expected. If the Wage and Hour Division is unable to provide the determination or revision by the latest date needed to maintain the solicitation schedule, you must incorporate in the solicitation the wage and fringe benefit terms of the CBA, or the CBA itself, and the FAR clause 52.222-47, Service Contract Act (SCA) Minimum Wages and Fringe Benefits. If the solicitation has been awarded, an equitable adjustment following receipt of the wage determination or revision will not be required, since the wage determination or revision will be based on the economic terms of the CBA.
    If your solicitation has been delayed, for whatever reason, more than 60 days from such date as indicated on the submitted Notice, you must, in accordance with your agency procedures, contact the Wage and Hour Division to determine whether the wage determination issued under the initial submission is still current. Any revision of a wage determination received by your agency as a result of that communication, or upon discovery by the Wage and Hour Division of a delay, must supersede the earlier response as the wage determination applicable to the particular purchase.
    The back of SF 98 contains instructions for its completion. (Only the original and three copies are to be forwarded.) Whenever the detailed information requested is not readily available, such pertinent general information as is available should be provided. For example, if meaningful estimates of the number of service employees in various classes to be used on the contract cannot be made, estimates of the total number of employees may be supplied. The “Response” portion of the original of the form will be completed by the Wage and Hour Division and returned.
    Supplies of Standard Form 98 are available in all GSA supply depots under stock number 7540‑00-926-8972.
    If you are unable to file the notice on time, you should submit it as soon as possible, with a detailed explanation of the circumstances that prevented filing. To comply with FAR requirements, your solicitation should contain a statement similar to the one that follows:
    The Provisions of the Service Contract Act of 1965 may apply to this solicitation. If a wage determination by the Department of Labor is applicable, an amendment to this solicitation will be issued indicating a minimum hourly wage.
    The solicitation, and any purchase order exceeding the micro-purchase threshold to which the Act applies, should include any DOL wage determination as an attachment.
    Modification of Order to Incorporate a Wage Determination
    If a required wage determination is not included in an order (because the notice was not filed or was not filed in time) and if a wage determination from the Department of Labor is received after issuance of the purchase order, the purchasing activity must discuss with the contractor a modification to:
    ·  Incorporate the wage determination that is to be effective as of the date of issuance unless otherwise specified;
    ·  Equitably adjust the order price to compensate for any increased cost of performance under the order caused by the wage determination.
     
    Submission of SF 99
    The following discussion outlines the responsibilities of the Contracting Officer in processing information to DOL to assist it in its wage rate determination. The Project Officer’s role is to identify to the Contracting Officer the types of labor that would be applicable in the performance of the contract.
    Orders in excess of micro purchase threshold must be reported to DOL on Standard Form 99, Notice of Award of Contract, if the agency does not report to the Federal Procurement Data System.
    Notification to Contractors and Employees
    At the time of award, the purchasing agent must furnish the contractor Department of Labor WH Publication 1313, Notice to Employees Working on Government Contracts, for posting at a prominent place at the work site before performance begins.
    The form advises employees of their benefits under the Service Contract Act and satisfies the requirement of the clause pertaining to the Act that states that contractors must post the form at a prominent and accessible place at the work site.
    Supplies of the form may be obtained from normal supply channels or from the Workplace Standards Administration, U.S. Department of Labor, Washington, D.C. 20210.
    Circumstances may arise that would require appealing a Wage and Hour Division determination. Examples of these circumstances are:
    ·  The terms of the CBA vary substantially from those prevailing for similar services in the locality;
    ·  The incumbent CBA was not the result of “arm’s length” negotiations;
    ·  The wage determinations contain significant errors or omissions.
     
    To resolve these issues, contact your agency labor advisor to determine appropriate action.
    When an order has provisions for adjusting the price to reflect changes, the purchasing agent is responsible for updating of the rates. This is done by issuing a modification to the order. Some typical examples of when this may occur are:
    ·  Modifications that change the description (scope) of work that cause significant labor requirements;
    ·  Exercise of options or other such extensions of performance.
     
    When these situations occur, you are required to request updated wage determinations by preparing the SF98 and 98a within the prescribed time limits and forwarding them to the Wage and Hour Division.
    Remember that early in the solicitation process, you are to determine if there is a predecessor order and if so, whether the contractor and their employees are covered by a CBA. If there is a CBA, you must obtain a copy. This may require coordination with an administrative purchasing officer who is responsible for administering the predecessor order. Paragraph (m) of the clause at FAR 52.222-41, Service Contract Act of 1965, as amended, requires incumbent contractors to furnish you copies of each CBA in existence. You are to submit a copy of each CBA together with any related documents specifying wage rates and fringe benefits currently or prospectively payable under each agreement with the Notice to the Wage and Hour Division.
    Where there is a CBA, you are required to notify the incumbent contractor and the contractor’s employees’ CBA agent in writing of the following:
    ·  The forthcoming successor order and applicable solicitation dates (issuance, closing, award, performance start, etc.)
    ·  The forthcoming order modification and applicable dates (extensions, change in requirements, performance start, etc.)
     
    This written notification must be given at least 30 days in advance of the earliest applicable purchase date in time for all parties concerned to receive it in accordance with FAR 22.1012-3, Response to Timely Submission of Notice - With Collective Bargaining Agreement.
    If the CBA does not apply to all service employees under the order, you are required to list them separately on the SF98a. They must be listed under classifications that are (1) subject to the CBA and (2) not subject to any CBA. You should estimate the number of employees in each skill classification covered in the CBA.



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