Weekly Update for Government Contractors and Commercial Businesses – February 9, 2023

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LABOR & EMPLOYMENT

Have You Updated the Minimum Wage? Government Contractors Struggle with Minimum Wage Confusion, 02.07.23, Nichole Atallah
On January 1, 2023, the minimum wage for government contractors under Executive Order 14026 increased from $15.00 per hour to $16.20 per hour. We wrote about Executive Order 14026 and its requirements previously here. There continues to be confusion as to when and how Executive Order 14026 applies, so here are a few key components that government contractors should keep in mind. Read more here.

DOL Announces Enforcement Guidance Changes to Save Lives, Target Employers Who Put Profit Over Safety
The Department of Labor announced that its Occupational Safety and Health Administration (OSHA) has issued new enforcement guidance to make its penalties more effective in stopping employers from repeatedly exposing workers to life-threatening hazards or failing to comply with certain workplace safety and health requirements. OSHA Regional Administrators and Area Office Directors now have the authority to cite certain types of violations as “instance-by-instance citations” for cases where the agency identifies “high-gravity” serious violations of OSHA standards specific to certain conditions where the language of the rule supports a citation for each instance of non-compliance. These conditions include lockout / tagout, machine guarding, permit-required confined space, respiratory protection, falls, trenching and for cases with other-than-serious violations specific to recordkeeping. Read more here.

Federal Court Requires Las Vegas Paint, Specialty Coatings Contractor Who Intimidated Workers to Pay $3.6M to 593 Employees in Four States
The Department of Labor (DOL) obtained a consent judgment in federal court in Las Vegas requiring Cory Summerhays and his company, Unforgettable Coatings Inc., to pay more than $3.6 million in back wages, liquidated damages, interest and penalties to 593 employees in Arizona, Idaho, Nevada, and Utah. The action follows a five-month investigation by DOL’s Wage and Hour Division that found that, in violation of the Fair Labor Standards Act, the employer falsified pay records to deprive workers of earned overtime wages and then intimidated workers who questioned the company’s pay practices. Read more here.

Upcoming Labor & Employment Presentations

WEBINAR: Prevailing Wage: Davis-Bacon Act and Service Contract Act, February 9,  Sarah Nash. Read more here.

WEBINAR: Top 5 Employment Challenges in 2023 for Government Contractors, February 22, Sarah Nash. Read more here.

WEBINAR: What’s New in OFCCP Compliance? Important 2023 Updates for Government Contractors, March 14, Sara Strosser. Read more here.

GOVERNMENT CONTRACTS

GSA Technology Contractors: 4 Requirements to Ensure Only Approved Software Is Used, 02.02.23, Cy Alba and Daniel Figuenick
Almost two years ago, Executive Order 14028 – Improving the Nation’s Cybersecurity (EO) was issued requiring a host of actions be taken by the Federal Acquisition Regulation Council, the National Institute of Standards and Technology (NIST), as well as the Office of Management and Budget (OMB). NIST completed one of those actions, which required it to identify “practices that enhance the security of the software supply chain,” when it released guidance on a secure software development framework and software supply chain security. In a recent memo, OMB (in accordance with the EO) requested all agencies comply with these NIST guidelines. Notably, the General Services Administration (GSA) is one of the first among the federal agencies to provide an update regarding specific actions it plans on taking to ensure only approved software is used under its contracts. Contractors already providing software under a GSA contract, or who are planning on doing so in the future, should become familiar with the four requirements covered in this blog post. Read more here.

Increased DOD Contract Spending Provides Opportunities for Small Businesses
A new year brings continued growth and new opportunities for small businesses in defense contracting. Following a $40 billion COVID-19 related dip in 2021, Department of Defense (DOD) contract spending rose by 6.7 percent to reach a total of $436 billion in 2022. One area of emphasis is research and development, with a push across DOD for advancement in cybersecurity, artificial intelligence, machine learning, quantum computing, and 5G communications. This emphasis particularly benefits small businesses. Of the businesses contracted by DOD for research and development in 2021, 77 percent are classified as small businesses. Read more here.

DOD Instructs Acquisition Teams to Prioritize Small Business Engagement Over Best-in-Class Contracts
The Department of Defense is tweaking its contracting strategy to place more of an emphasis on meeting small business acquisition goals, even it if means supplanting its use of best-in-class vehicles. The Office of the Under Secretary for Defense for Acquisition and Sustainment released a memorandum that described small businesses as “critical” to its mission while outlining specific steps the department can take to increase small business participation in the federal marketplace, from transitioning to bundling and consolidating contracts to expanding access to education on category management practices. The memorandum said that meeting small business goals and increasing contracting opportunities for small disadvantaged businesses and other socioeconomic small businesses should be prioritized over attaining best-in-class contract goals “if achievement of both goals is not possible.” Read more here.

Prompt Payment Interest Rate: Contract Disputes Act
An agency that has acquired a property or service from a business concern and has failed to pay for the complete delivery of the property or service by the required payment date pays the business concern an interest penalty. The Contract Disputes Act and the Prompt Payment Act provide for the calculation of interest due on claims at the rate established by the Secretary of the Treasury. The Department of the Treasury gave notice that the Secretary of the Treasury has determined that the rate of interest applicable for the period beginning January 1, 2023, and ending on June 30, 2023, is 4 5/8 per centum per annum. Read more here.

Guidance on Awarding Cost-Reimbursement Contracts
The Department of Defense (DOD) published a memorandum that provides guidance on proper contract file documentation and pre-coordination with the planned contract administration office for cost-reimbursement contracts. It is meant to implement the DOD Inspector General recommendations in “Audit of the Military Services’ Award of Cost-Reimbursement Contracts,” which identified inconsistencies in contracting officers’ documentation of contract files and in coordination with the Defense Contract Management Agency. Read more here.

DFARS: Definition of “Commercial Item”
The Department of Defense issued a final rule that amends the Defense Federal Acquisition Regulation Supplement to implement a revised definition of “commercial item” in accordance with two sections of the National Defense Authorization Act for Fiscal Year 2019. Read more here.

DFARS: Treatment of Incurred Independent Research and Development Costs
The Department of Defense (DOD) issued a final rule that amends the Defense Federal Acquisition Regulation Supplement to implement a section of the National Defense Authorization Act for Fiscal Year 2017 that makes amendments regarding the treatment of independent research and development expenditures and requires the Defense Contract Audit Agency to provide an annual report to Congress on independent research and development and bid and proposal expenditures associated with awarded DOD contracts for the prior Government fiscal year. Read more here.

DFARS: Restriction on Acquisition of Personal Protective Equipment and Certain Items from Non-Allied Foreign Nations
The Department of Defense issued an interim rule amending the Defense Federal Acquisition Regulation Supplement to restrict the acquisition of personal protective equipment and certain other items from the Democratic People’s Republic of North Korea, the People’s Republic of China, the Russian Federation, and the Islamic Republic of Iran in accordance with a section of the National Defense Authorization Act for Fiscal Year 2022. Comments on the interim rule are due April 3, 2023. Read more here.

DFARS: Defense Commercial Solutions Opening
The Department of Defense (DOD) is proposing to amend the Defense Federal Acquisition Regulation Supplement to implement a section of the National Defense Authorization Act for Fiscal Year 2022 that authorizes DOD to acquire innovative commercial products and commercial services using general solicitation competitive procedures, as well as a section of the National Defense Authorization Act for Fiscal Year 2023 that makes an amendment to that authority. Comments on the proposed rule are due April 3, 2023. Read more here.

Upcoming Government Contracts Presentations

WEBINAR: Unlocking the Secrets of Debriefings, Gov’t Evaluation of Proposals and Protests, February 9, Katie Burrows and Eric Valle. Read more here.

EVENT: Considerations for 8(a) Participants, Graduates, and Their Contracts in M&A Transactions, February 14, Cy Alba and Abby Baker. Read more here.

WEBINAR: Top 5 Employment Challenges in 2023 for Government Contractors, February 22, Sarah Nash. Read more here.

EVENT: Federal Acquisition Regulation (FAR): Overview, March 3, Cy Alba. Read more here.

WEBINAR: Government Contract Claims: Top 10 Things to Know About the Contract Disputes Act, March 7, Lauren Brier and Dozier Gardner. Read more here.