2024-25656. General Services Administration Acquisition Regulation (GSAR); Construction Labor Requirements for Lease Acquisitions

Action	Number of hours	Cost per qualifying event	Number of qualifying lease contracts	Total cost
Updating Wage Determinations (Public)	2	$94.44	727	$137,316
Payroll Reviews and Certification (Public)	* 1.5	94.44	727	2,471,684
Familiarization with DBA Requirements (Public)	2	94.44	727	137,316
Familiarization With E.O. 13706 Establishing Paid Sick Leave for Federal Contractors (Public)	5	94.44	727	343,289
Familiarization With E.O. Executive Order 14026 Increasing the Minimum Wage for Federal Contractors (Public)	3	94.44	727	205,974
Total (Public)				3,295,579
Updating Wage Determinations (Government)	.5	94.44	727	34,329
Payroll Reviews and Certifications (Government)	2	94.44	727	137,316
Monitoring and Reporting CWRR,and Paid Sick Leave(Government)	1.5	94.44	727	102,987
Total Government				274,632
Total Public + Total Government				3,570,211
* For 24 weeks.

Although there are no quantifiable cost savings in implementing this proposed rule, the majority of the costs incurred (95%) are associated with the conducting of weekly payroll reviews and certification. GSA expects to have an automated resolution in the near future which is expected to significantly reduce the cost of performing this activity.

IV. Executive Orders 12866, 13563, and 14094

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. E.O. 14094 (Modernizing Regulatory Review) supplements and reaffirms the principles, structures, and definitions governing contemporary regulatory review established in E.O. 12866 and E.O. 13563.

This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.

V. Regulatory Flexibility Act

The change may 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, et seq. because of the application of the CWRR to a larger number of leases. An Initial Regulatory Flexibility Analysis (IRFA) has been prepared consistent with 5 U.S.C. 603.

The Regulatory Secretariat will be submitting a copy of the Initial Regulatory Flexibility Analysis (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. GSA invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

GSA will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (GSAR Case 2021-G530) in correspondence.

The analysis is summarized as follows:

The General Services Administration (GSA) is proposing to amend the General Services Administration Acquisition Regulation (GSAR) to add a new section to adopt the amended definition of the term “public building or public work” from the Department of Labor's (DOL) Updating the Davis-Bacon Acts Regulations final rule and to include compliance with the minimum wage and sick leave Executive Orders and ( print page 87997) other requirements for leasehold acquisitions of real property when there is a qualifying construction event as defined in this rule.

The objective of the rule is to amend GSAR Subpart 570.1, General, by creating section 571.119 Construction Labor requirements for lease acquisition and adding applicable labor clauses at 570.701 FAR provisions and clauses to clarify when GSA's lease contracts with a qualifying construction event would need to apply Construction Wage Rate Requirements (CWRR).

Title 40 of the United States Code (U.S.C.) Section 121 authorizes GSA to issue regulations, including the GSAR, to control the relationship between GSA and contractors.

The rule will apply to large and small businesses. For purposes of this assessment, information generated from the Real Estate Across the United States (REXUS) has been used as the basis for estimating the number of contractors that may be involved. GSA estimates that of the 7,618 lease contracts in its inventory approximately 727 annual lease contracts are projected annually to have a qualifying construction event of which over 509 (70 percent) are estimated to involve small business entities.

It is anticipated that these changes will ensure both large and small businesses comply with CWRR statutory requirements for lease contracts with a qualifying construction event. These changes will clarify the requirements for the acquisition workforce, offerors and lessors and ensure that all laborers and mechanics receive the appropriate wages, protections provided by the statute, and receive the paid sick leave and minimum wages provided by executive orders. Overall, the implementation of the changes to the application of CWRR will ensure small businesses can compete equally with large businesses when recruiting qualified and experienced laborers and mechanics.

The rule will not impose any additional reporting, recordkeeping and other compliance requirements than those required by the CWRR statute as updated in the DOL DBRA final rule.

There are no known significant alternative approaches to the rule. The changes to the Davis-Bacon and Related Acts final rule clarify that the definition of “building or work” and “public building (or public work)” applies to lease contracts involving public construction over $2,000.

VI. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; however these changes to the GSAR do not impose additional information collection requirements to the paperwork burden previously approved under the Office of Management and Budget Control Numbers 1235-0008 and 1235-0018 (Davis-Bacon Certified Payroll); and OMB control number 1235-0023 (Requests to Approve Conformed Wage Classifications and Unconventional Fringe Benefit Plans Under the Davis-Bacon and Related Acts/Contract Work Hours and Safety Standards Act).

List of Subjects in 48 CFR Part 570

• Government procurement

Jeffrey A. Koses,

Senior Procurement Executive, Office of Acquisition Policy, Office of Government-wide Policy, General Services Administration.

Therefore, GSA proposes amending 48 CFR part 570 as set forth below:

1. The authority citation for 48 CFR part 570 continues to read as follows:

Authority: 40 U.S.C. 121(c).

PART 570—ACQUIRING LEASEHOLD INTERESTS IN REAL PROPERTY

2. Add section 570.119 to read as follows:

570.119

Construction labor requirements for lease acquisitions.

This section applies to all new and existing leases with a qualifying construction event where the work is performed in whole or in part within the 50 states, District of Columbia, or the Commonwealth of Northern Mariana Islands. See FAR subpart 22.4, GSAR Subpart 522.4, and the Public Buildings Service (PBS) Pricing Desk Guide located at https://www.gsa.gov/​real-estate/​pricing-policy for additional guidance, as applicable.

570.119-1

Definitions.

As used in this section—

Building specific amortized capital (BSAC) improvements means security items that are a separate capital investment in the property. See PBS Pricing Desk Guide for additional information at https://www.gsa.gov/​real-estate/​pricing-policy.

Building shell improvements means improvements to provide the complete enveloping structure, the base building systems, and the finished common areas ( e.g., building common and floor common) of a building that adjoin the occupant areas. See PBS Pricing Desk Guide for additional information at https://www.gsa.gov/​real-estate/​pricing-policy.

Public Building or Public Works includes construction activity involving just a portion of a building or work, including the installation, where appropriate, of equipment or components into a building or work, and even where the entire building or work is not owned, leased by, or to be used by a Federal agency so long as the other requirements for coverage are met. Examples of other requirements for coverage include the Federal government's sufficient involvement with the lease, and the existence of a contract for construction that is authorized or financed by the Federal government.

Qualifying construction event means an event that requires construction, alteration, or repair work as defined in FAR 22.401, in excess of $2,000 of Federal funds, required by the Government in or in connection with leases of real property. There may be one or more qualifying construction events during the lease term. A qualifying construction event exists where the construction, alteration, or repair work—

(1) Is carried on by authority of or with funds of a Federal agency to serve the interest of the general public, and there is sufficient involvement of the Federal government in the lease and specified construction so as to satisfy the definition of a public building or public work and supplemental language included in this section;

(2) Has a defined begin and end date; and

(3) Includes, at a minimum, one or more of the following:

(i) Initial occupancy build-out ( e.g., building shell improvements, tenant improvements, BSAC improvements-construction portions only);

(ii) Build-out projects associated with expansion or reduction in square footage;

(iii) Stand-alone alterations projects; or

(iv) Cyclical carpet replacement and re-painting required by the lease contract, not including maintenance.

Tenant improvements (TI) means finishes and fixtures that typically take space from the shell condition to a finished, usable condition. The resulting space is complete, meets applicable building codes, and meets the customer agency's functional needs. See PBS Pricing Desk Guide for additional information at https://www.gsa.gov/​real-estate/​pricing-policy.

570.119-2

Inapplicability.

The following paragraphs specify circumstances in which certain labor standards do not apply paragraphs specify circumstances in which certain labor standards do not apply:

(a) Service Contract Labor Standards (SCLS). The SCLS, also known as Service Contract Act (SCA), does not apply per 41 U.S.C.6702, 29 CFR 4.115(b), and 29 CFR 4.134(b)to lease contracts for government occupancy.

(b) Construction wage rate requirements (CWRR). The CWRR does not apply to the following work:

(1) Maintenance services which are regularly scheduled, routine, or ( print page 87998) recurring tasks provided on an incidental basis and not performed as part of a qualifying construction event associated with the lease. Examples include—

(i) Janitorial services;

(ii) Utility services; and

(iii) Landscaping services.

(2) Repair or replacement work required under the lease contract which is not substantial or segregable. Examples include work of the following type where such work is not substantial or segregable—

(i) Repairing or replacing broken or damaged improvements ( e.g., locks, partitioning, flooring, or ceiling tiles);

(ii) Repairing or replacing building systems ( e.g., mechanical, electrical, plumbing); and

(iii) Repairing or replacing finishes in common areas ( e.g., carpet, paint, or ceiling tiles).

(3) Alteration or repair work within the Government's space which were not requested by the Government;

(4) Design work for a qualifying construction event; and

(5) Leases or projects in Guam, Puerto Rico, U.S. Virgin Islands, U.S. Territories or foreign countries.

570.119-3

Procedures.

(a) Requirements. Contracting officers must ensure solicitations and resultant contracts with an anticipated qualifying construction event include the appropriate labor clauses and wage determination(s). Contracting officers must also ensure that all existing lease contracts with qualifying construction events (whether ordered by lease amendments or other methods) are formalized in a contract modification, extension, or option that includes the appropriate labor clauses and wage determination(s).

(1) Appropriate construction labor clauses. Contracting officers shall include Construction Wage Rate Requirements (CWRR), also known as Davis-Bacon Act (DBA), clauses in any solicitation, resulting contract, and contract modification involving anticipated qualifying construction events (see 570.701(d)).

(2) Wage determination requirements. Contracting officers shall follow compliance outlined in FAR 22.404 and this section.

(i) Contracting officers shall include the most recent wage determination(s) for the applicable location(s) and the type(s) of construction work ( e.g., building, heavy, highway, residential) in solicitations, before requesting final proposal revisions, or, for qualifying construction events associated with lease modifications, with the initial pricing request to the lessor.

(ii) Contracting officers shall provide the most recent wage determination(s) to the apparent successful offeror if the wage determination(s) changes after the final proposal revisions are received but prior to the award of the lease contract.

(b) Compliance monitoring procedures. Contracting officers shall follow compliance and reporting requirements outlined in FAR 22.406-7, FAR 22.2109, or FAR 22.1905 for lease acquisitions with qualifying construction events:

(1) Compliance Monitoring. (i) The contracting officer must take reasonable steps during and after each qualifying construction event to ensure compliance with the requirements outlined in this section to include the:

(A) Payment of correct wage determination or minimum wage rates during each qualifying construction event.

(B) Receipt of payroll records from the lessor from each qualifying construction event, as required.

(C) Accessibility of all payroll records to the DOL during the 3-year retention period for investigation or audits.

(ii) The contracting officer is responsible for tracking discrepancies for qualifying construction events, including investigation, reporting, and resolution. Outstanding discrepancies unresolved at the completion of the construction work shall be followed up until resolved.

(2) Reporting. The PBS Leasing Office is responsible for the timely submission of reports to DOL including enforcement and forecasting reports (see FAR 22.406-13 and 522.406-13). The PBS Leasing Office shall submit a copy of these reports to the GSA Labor Advisor at [e-mail].

3. Amend section 570.701 by adding paragraph (1) to the table to read as follows:

570.701

FAR provisions and clauses.

* * * * *

If . . .	Then include . . .
*         *         *         *         *         *         *
(1) Insert the following clauses in the solicitation, resulting contract or contract modification that involve a qualifying construction event in excess of $2,000:	52.222-4 Contract Work Hours and Safety Standards—Overtime Compensation. 52.222-5 Construction Wage Rate Requirements Secondary Site of the Work. 52.222-6 Construction Wage Rate Requirements.
	52.222-7 Withholding of Funds.
	52.222-8 Payrolls and Basic Records.
	52.222-9 Apprentices and Trainees.
	52.222-10 Compliance with Copeland Act Requirements.
	52.222-11 Subcontracts (Labor Standards).
	52.222-12 Contract Termination-Debarment.
	52.222-13 Compliance with Construction Wage Rate Requirements and Related Regulations.
	52.222-14 Disputes Concerning Labor Standards.
	52.222-15 Certification of Eligibility.
	52.222-55 Minimum Wages for Contractor Workers Under Executive Order 14026.
	52.222-62 Paid Sick Leave Under Executive Order 13706.