[Federal Register Volume 60, Number 116 (Friday, June 16, 1995)]
[Proposed Rules]
[Pages 31660-31661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14780]
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DEPARTMENT OF LABOR
Office of the Secretary
29 CFR Part 4
RIN: 1215-AA98
Service Contract Act; Labor Standards for Federal Service
Contracts
AGENCY: Office of the Secretary, Labor.
ACTION: Notice of proposed rulemaking; request for comments.
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SUMMARY: The Department of Labor (DOL) is proposing to delete the
requirement in Sec. 4.7 of 29 CFR part 4 that any service contract of
the Federal Government in an amount less than $2,500 that is subject to
the McNamara-O'Hara Service Contract Act of 1965, as amended (SCA),
must contain a clause specifying that the contractor or any
subcontractor shall pay the minimum wage under the Fair Labor Standards
Act (FLSA) to employees engaged in the performance of the contract.
This proposed revision is being made to conform the regulations to a
new class of Federal government purchases established by the Federal
Acquisition Streamlining Act of 1994 (FASA). Requirements otherwise
applicable to Federal contracting are eliminated for purchases under
$2,500 for the purpose of facilitating the use of government credit
cards for the making of low dollar value purchases of supplies and
services. The streamlining objectives of the new procurement procedures
contemplated by FASA are impeded by contract clause requirements in
Sec. 4.7, which were intended for use in contracts awarded traditional
procurement procedures.
DATES: Comments are due on or before July 17, 1995.
ADDRESSES: Submit written comments to Maria Echaveste, Administrator,
Wage and Hour Division, Employment Standards Administration, U.S.
Department of Labor, Room S-3502, 200 Constitution Avenue, NW,
Washington, DC 20210. Commenters who wish to receive notification of
receipt of comments are requested to include a self-addressed, stamped
post card, or to submit them by certified mail, return receipt
requested. As a convenience to commenters, comments may be transmitted
by facsimile (``FAX'') machine to (202) 219-5122 (this is not a toll-
free number). If transmitted by facsimile and a hard copy is also
submitted by mail, please indicate on the hard copy that it is a
duplicate copy of the facsimile transmission.
FOR FURTHER INFORMATION CONTACT: Raymond L. Kamrath, Division of
Policy and Analysis, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, Room S-3506, 200
Constitution Avenue, NW, Washington, DC 20210; telephone (202) 219-
8412. This is not a toll-free number.
SUPPLEMENTARY INFORMATION:
I. Paperwork Reduction Act
This proposed rule contains no reporting or recordkeeping
requirements subject to the Paperwork Reduction Act of 1980 (Pub. L.
96-511). The existing information collection requirements contained in
Regulations, 29 CFR part 4 were previously approved by the Office of
Management and Budget under OMB control number 1215-0150. The general
Fair Labor Standards Act (FLSA) recordkeeping requirements which are
restated in Part 4 were approved by the Office of Management and Budget
under OMB control number 1215-0017.
II. Background
The Federal Acquisition Streamlining Act of 1994 (Pub. L. 103-355,
108 Stat. 3243) was enacted into law on October 13, 1994. Section 4001
of this Act amends the Office of Federal Procurement Policy Act (41
U.S.C. 403(11)) to establish a ``simplified acquisition threshold'' of
$100,000. In addition, Sec. 4301 of FASA amends the Office of Federal
Procurement Policy Act to establish a new class of purchases referred
to as ``micro purchases,'' and a micro purchase threshold of $2,500.
Under this section, among other things, purchases not exceeding $2,500
are not subject to the Small Business Act reservation requirement, Buy
American Act, the requirement to secure competitive quotations, and
Federal employees making such purchases are not deemed ``procurement
officials.'' The new micro purchase authority, based on a
recommendation of The National Performance Review (NPR), facilitates
the use of credit cards by Federal agencies on small dollar purchases
of supplies and services. For such purchases, the credit card procedure
becomes both the method of payment and a method of contracting. Because
the inclusion of contract clauses in small purchases hinder
implementation of the new micro purchase authority, the Office of
Federal Procurement Policy in the Office of Management and Budget asked
the Department to review the contract clause requirement in Sec. 4.7 of
29 CFR part 4 for service contracts under $2,500.
[[Page 31661]]
Section 2(b) of the Service Contract Act of 1995 (SCA) (41 U.S.C.
351(b)(1)) generally obligates all contractors and subcontractors who
are awarded contracts principally for the furnishing of services
through the use of service employees, regardless of contract amount, to
pay not less than the Federal minimum wage under Sec. 6(a)(1) of the
Fair Labor Standards Act (FSLA) to the employees engaged in the
performance of such contracts. Unlike Sec. 2(a) of the SCA which
requires every service contract in excess of $2,500 to include
particular stipulations relating to the Act's prevailing wage and
fringe benefit provisions and other labor standard protections,
Sec. 2(b) does not statutorily require a ``clause'' to implement the
obligation of covered service contractors or subcontractors to pay
service employees not less than the minimum wage under Sec. 6(a)(1) of
the FLSA. Because the clause mandated by Sec. 2(a) of the SCA for
covered contracts in excess of $2,500 advises contractors and
subcontractors of the obligation to pay FLSA minimum wages in the
absence of prevailing wage attachment for the contract (see paragraph
(d)(1) of Sec. 4.6), a counterpart minimum wage clause was considered
appropriate for contracts not exceeding $2,500, and the requirement has
been a part of the regulations since their inception.
The Department believes that the deletion of the requirement for a
minimum wage clause in SCA-covered contracts not exceeding $2,500 will
not adversely affect labor standards protections afforded service
employees engaged in the performance of such contracts. Although the
proposal removes the obligation of contractors and subcontractors to
pay not less than minimum wages to their service employees as a
condition of contract, the obligation to pay at least the minimum wage
to any service employee performing on an SCA-covered contract is
specifically contained in Sec. 2(b) of the SCA, and is also set forth
in Sec. 6(e)(1) of the FLSA. This statutory obligation is defined
further in the existing regulations at Sec. 4.2 of 29 CFR part 4.
Accordingly, the proposal is considered necessary and proper to
facilitate the streamlining objectives of FASA's Sec. 4301.
Executive Order 12866/Sec. 202 of the Unfunded Mandates Reform Act of
1995
This proposed rule is not a ``significant regulatory action''
within the meaning of Executive Order 12866, nor does it require a
Sec. 202 statement under the Unfunded Mandates Reform Act of 1995. It
will facilitate the handling of Federal agency purchases of $2,500 or
less. The proposed change eliminates a contract clause, which impedes
the efficiency contemplated by the use of purchase cards on small
purchases authorized by the micro-purchase authority under the Federal
Acquisition Streamlining Act of 1994. The proposed revision, however,
will not eliminate the obligation of contractors and subcontractors to
pay employees on such contracts not less than the minimum wage under
Sec. 6 of the FLSA.
Because the deletion of the contract clause would not affect
contractor's responsibilities, the proposed change is not expected to
result in a rule that may: (1) have an annual effect on the economy of
$100 million or more or adversely affect in a material way the economy,
a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866. Furthermore, deletion of the clause would
facilitate credit card purchases (thereby resulting in savings in
paperwork processing) of services--estimated to be about 12 percent of
all credit card purchases. Therefore, no regulatory impact analysis has
been prepared.
Regulatory Flexibility Analysis
This proposed rule will not have a significant economic impact on a
substantial number of small entities. The rule simplifies the handling
of small purchases of services and will primarily affect Federal
agencies through reductions in burdensome paperwork. While small
entities will benefit from less burdensome procurement procedures, the
impact is believed to be insignificant because the purchase of services
appropriate for credit card use is relatively small, i.e., the bulk of
purchases appropriate for credit card use is supplies. Thus, this
proposal is not expected to have a ``significant economic impact on a
substantial number of small entities'' within the meaning of the
Regulatory Flexibility Act, and the Department has certified to this
effect to the Chief Counsel for Advocacy of the Small Business
Administration. A regulatory flexibility analysis is not required.
Document Preparation
This document was prepared under the direction and control of Maria
Echaveste, Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor.
List of Subjects in 29 CFR Part 4
Administrative practice and procedures, Employee benefit plans,
Government contracts, Investigations, Labor, Law enforcement, Minimum
wages, Penalties, Recordkeeping requirements, Reporting requirements,
Wages.
Signed at Washington, D.C., on this 13th day of June, 1995.
Maria Echaveste,
Administrator, Wage and Hour Division.
For the reasons set forth in the preamble, subtitle A of title 29
is proposed to be amended as follows:
PART 4--LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS
1. Authority citation for part 4 continues to read as follows:
Authority: 41 U.S.C. 351, et seq., 79 Stat. 1034, as amended in
86 Stat. 789, 90 Stat. 2358; 41 U.S.C. 38 and 39; and 5 U.S.C. 301.
Sec. 4.7 [Removed and Reserved]
2. In subpart A, Sec. 4.7 is proposed to be removed and reserved.
[FR Doc. 95-14780 Filed 6-15-95; 8:45 am]
BILLING CODE 4510-27-M
