[Federal Register Volume 60, Number 173 (Thursday, September 7, 1995)]
[Proposed Rules]
[Pages 46553-46556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-22139]



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DEPARTMENT OF LABOR

Office of the Secretary
Wage and Hour Division

29 CFR Parts 4 and 5

41 CFR Parts 50-201 and 50-206

RIN 1215-AA96


Amendments to Federal Contract Labor Laws by the Federal 
Acquisition Streamlining Act of 1994

AGENCY: Wage and Hour Division, Employment Standards Administration, 
Labor.

ACTION: Notice of proposed rulemaking, request for comments.

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SUMMARY: The Federal Acquisition Streamlining Act of 1994 amends the 
Contract Work Hours and Safety Standards Act (CWHSSA) and the Walsh-
Healey Public Contracts Act (PCA). This document proposes to conform 
applicable regulations to the statutory amendments that raise the 
coverage threshold of CWHSSA and, among other things, eliminate the 
eligibility requirements of the PCA.

DATES: Comments are due on or before October 10, 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 
postcard, 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:
Richard M. Brennan, Acting Director, 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, (202) 219-8412. This is not a toll-free number.
SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act

    This rule contains no reporting or recordkeeping requirements 
subject to the Paperwork Reduction Act of 1980 (Pub. L. 96-511).

II. Background

    The Federal Acquisition Streamlining Act of 1994 (FASA) (Pub. L. 
103-355, 108 Stat. 3243) was enacted into law on October 13, 1994. 
Section 4104(c) of this Act amends sections 103 and 107 of the Contract 
Work Hours and Safety Standards Act (CWHSSA), 40 U.S.C. 327 et seq., to 
establish a threshold of $100,000 or more for contracts subject to 
CWHSSA's overtime provisions. Prior to this amendment, Federal and 
Federally assisted construction contracts of $2,000 or less, and 
purchases and contracts other than construction contracts of $2,500 or 
less, were exempt from CWHSSA's weekly overtime and related provisions 
pursuant to the variation in Secs. 5.15(b) (1) and (2) of 29 CFR part 
5. The new statutory threshold of $100,000 requires conforming 
revisions to Secs. 5.5(b) and 5.15(b) (1) and (2) of 29 CFR part 5 and 
Sec. 4.181(b) of 29 CFR part 4.
    Contracting agencies and contractors should be aware that 
contractors awarded contracts in amounts less than $100,000 may 
continue to have obligations to pay certain of their employees weekly 
overtime, at one and one-half the regular rate for hours worked in 
excess of forty (40) per week, pursuant to section 7 of the Fair Labor 
Standards Act, 29 U.S.C. 207.
    With respect to amendments affecting the Walsh-Healey Public 
Contracts Act (PCA), sections 3023 and 7201 of FASA (1) repeal 10 
U.S.C. sec. 7299 to eliminate the applicability of the PCA to contracts 
for the construction, alternation, furnishing, or equipping of naval 
vessels; (2) repeal section 1(a) of 

[[Page 46554]]
the PCA to eliminate the requirement that covered contractors must be 
either a ``regular dealer'' or ``manufacturer'' and renumbers 
subsections (b), (c), (d) and (e) to (a), (b), (c) and (d) 
respectively; (3) amend section 10 (b) of the PCA to substitute the 
term ``supplier of'' for the terms ``regular dealer'' and 
``manufacturer;'' (4) amend section 10(c) of the PCA to strike the 
terms ``regular dealer'' and ``manufacturer;'' and (5) adds subsections 
(a) and (b) to section 11 of the PCA to retain the Secretary's 
authority to define the terms ``regular dealer'' and ``manufacturer.''
    This rule proposes to amend applicable PCA regulations to delete a 
``regular dealer'' or ``manufacturer'' eligibility requirement for 
bidders on contracts subject to the Act. Under the Act as amended, an 
eligible bidder includes, in addition to a manufacturer or regular 
dealer, any supplier or distributor of the materials, supplies, 
articles, or equipment to be manufactured or supplied under the 
contract. Specifically, Sec. 50-201.1 of 41 CFR part 50-201 relating to 
contract stipulations is proposed to be renumbered as Sec. 50-201.3, 
the paragraph currently designated as Sec. 50-201.1(a) is proposed to 
be deleted to remove the ``manufacturer of or regular dealer in'' 
requirement, and the subsequent paragraphs of this section are proposed 
to be renumbered. In addition, Sec. 50-201.101 relating to definitions 
of the terms ``manufacturer'' and ``regular dealer'' is proposed to be 
deleted in its entirety, as is Sec. 50-201.604 relating to partial 
administrative exemptions from the manufacturer or regular dealer 
requirement. Also, the entire Part 50-206, which relates primarily to 
the qualifications of contractors and interpretations of the terms 
``manufacturer'' and ``regular dealer,'' is proposed to be deleted 
except that Secs. 50-206.1 and .2 are proposed to be incorporated into 
the general regulations at part 50-201 as new Secs. 50-201.1 and .2, 
respectively.
    With respect to the amendment concerning contracts for the 
construction, alteration, furnishing, or equipping of naval vessels, 
the repeal of 10 U.S.C. sec. 7299 to eliminate PCA coverage of such 
contracts requires no changes in the regulations. Contracting agencies 
and contractors should be aware that such contracts may now be subject 
to the Davis-Bacon Act, which applies to contracts in excess of $2,000 
for the construction, alteration, and/or repair, including painting and 
decorating, of a public building or a public work. Marine vessels have 
historically been regarded as ``public works'' for purposes of the 
Davis-Bacon Act.
    While section 7201(a) of FASA repealed the bidder eligibility 
requirements of PCA, section 7201(b) added a new provision which 
provided that the Secretary of Labor ``* * * may (emphasis added) 
prescribe in regulations the standards for determining whether a 
contractor is a manufacturer of or a regular dealer in materials, 
supplies, articles, or equipment to be manufactured or used in the 
performance of a contract entered into by * * * (the United States).'' 
The new section also provides for judicial review of any legal question 
regarding the interpretation of manufacturer or regular dealer as 
promulgated under this new section. According to the legislative 
history of FASA's section 7201(b), authorizing the Secretary of Labor 
to define the terms ``regular dealer'' and ``manufacturer'' was 
considered appropriate because the terms have been incorporated by 
reference into a number of other statutes. (See H.R. Conf. Rep. No. 
712, 103d Cong., 2d Sess. 225 (1994).)
    In a review of other statutes, however, the Department only found 
one statute which explicitly incorporates PCA's definition of the term 
``manufacturer'' and/or ``regular dealer'' by reference. This statute, 
15 U.S.C. 637, concerns contracting authority of the Small Business 
Administration and the awarding of subcontracts to small businesses 
owned and controlled by socially and economically disadvantaged 
individuals. It provides at 15 U.S.C. 637(a)(17) that a responsible 
business concern may be the actual manufacturer or processor of the 
product to be supplied under a contract or ``* * * be a regular dealer, 
as defined pursuant to section 35(a) of Title 41 (popularly referred to 
as the Walsh-Healey Public Contracts Act), in the product to be offered 
the Government * * *.'' (See 15 U.S.C. 637(a)(17)(B)(iii).) The effect 
of the proposed deletion of the regulatory definitions on this program 
is unclear.
    A review of the Code of Federal Regulations (CFR) disclosed 
numerous regulations with references to the ``manufacturer'' or 
``regular dealer'' provisions of the PCA which, in large part, have the 
purpose of implementing these requirements through the procurement 
process. The Department, nevertheless, is concerned that there may be 
other regulations or programs that may require eligible bidders or 
contractors to be either manufacturers or regular dealers of products 
sold to the Federal government as defined in accordance with the PCA, 
for reasons independent of the PCA requirement.
    It is the Department's belief that the promulgation of special 
rules defining these terms is not necessary, and that the former 
definitions may be adapted, if appropriate, by other Federal agencies. 
The definitions will also be used to resolve questions of PCA 
eligibility in contracts awarded prior to the promulgation of this 
rule. However, the Department, for the reasons discussed above, is 
particularly interested in obtaining public comment on the 
appropriateness and feasibility of its proposal not to issue special 
rules defining the terms ``manufacturer'' or ``regular dealer,'' and 
any adverse effect this might have on any other Federal programs, such 
as those of the Small Business Administration.
    This rule does not address the FASA amendments to certain laws that 
waive the Davis-Bacon Act's (DBA) prevailing wage requirements for 
certain volunteers on Federally-assisted construction projects. 
Subtitle C of Title VII of FASA (sections 7301-7306, cited as the 
``Community Improvement Volunteer Act of 1994) amends the Library 
Services and Construction Act, the Indian Self-Determination and 
Education Act, sections 329 and 330 of the Public Health Services Act, 
the Indian Health Care Improvement Act, and the Housing and Community 
Development Act of 1974 to provide an exception from DBA prevailing 
wage requirements for individuals who volunteer services to State and 
local public entities and to nonprofit entities. The Department expects 
to publish a notice of proposed rulemaking which will address the 
implementation of these provisions during 1995.
    As a point of information, contracting agencies and contractors 
should also be aware that section 4104(b) of FASA amended the Miller 
Act to establish a threshold of $100,000 for construction contracts 
covered by its bonding requirements. While this law is often associated 
with the DBA, the Department has no responsibility for its 
administration.

Executive Order 12866/Section 202 of the Unfunded Mandate 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 
section 202 statement under the Unfunded Mandates Reform Act of 1995. 
The rule merely adopts technical changes in regulations mandated by 
FASA. While the new statutory threshold of $100,000 under the Contract 
Work Hours and 

[[Page 46555]]
Safety Standards Act can be expected to reduce procurement burdens on 
purchases under $100,000, contractors awarded such contracts continue 
to be obligated to pay weekly overtime under the Fair Labor Standards 
Act. Likewise, the repeal of the ``manufacturer'' and ``regular 
dealer'' requirements under PCA may be expected to increase competition 
for certain supply contracts; however, the impact on procurement costs 
resulting from an enlarged pool of eligible bidders is not clearly 
apparent, and could be minimal. Accordingly, these changes are 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 and section 202 of the Unfunded Mandate Reform 
Act of 1995. Therefore, no regulatory impact analysis has been 
prepared.

Regulatory Flexibility Act

    The Department has determined that the proposed rule will not have 
a significant economic impact on a substantial number of small 
entities. The rule implements statutory changes enacted by FASA, and 
furthers its streamlining objectives. The repeal of the 
``manufacturer'' and ``regular dealer'' requirements under PCA will 
likely increase the number of eligible bidders on supply contracts, 
many of whom would be small entities, which would have beneficial 
effects consistent with the purpose of the Regulatory Flexibility Act. 
The elimination of PCA bidder requirements will also simplify the 
processing of eligibility protests on bidder eligibility and will 
otherwise streamline the procurement process. While these and other 
benefits of the rule would be difficult, if not impossible, to 
quantify, the rule 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

29 CFR Part 4

    Administrative practice and procedure, Employee benefit plans, 
Government contracts, Investigations, Labor, Law enforcement, Minimum 
wages, Penalties, Reporting and recordkeeping requirements, Wages.

29 CFR Part 5

    Administrative practice and procedures, Government contracts, 
Investigations, Labor, Minimum wages, penalties, Reporting and 
recordkeeping requirements, Wages.

41 CFR Parts 50-201 and 50-206

    Administrative practice and procedures, Child labor, Government 
contracts, Government procurement, Minimum wages, Penalties, Reporting 
and recordkeeping requirements, Wages.

    For the reasons set forth above, 29 CFR part 4, 29 CFR part 5, 41 
CFR part 50-201, and 41 CFR part 50-206 are proposed to be amended as 
set forth below.


    Signed at Washington, DC., on this 31st day of August, 1995.
Maria Echaveste,
Administrator, Wage and Hour Division.

    Accordingly, the following parts of the Code of Federal Regulations 
are proposed to be amended:
    (a) Part 4, Title 29, Code of Federal Regulations (29 CFR part 4);
    (b) Part 5, Subpart A, Title 29, Code of Federal Regulations (29 
CFR part 5);
    (c) Part 50-201, Chapter 50 of Title 41, Code of Federal 
Regulations (41 CFR part 50-201); and
    (d) Part 50-206, Chapter 50 of Title 41, Code of Federal 
Regulations (41 CFR part 50-206), as set forth below.

Title 29--Labor

SUBTITLE A--OFFICE OF THE SECRETARY

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.


    2. In Sec. 4.181, paragraph (b)(1) is proposed to be revised to 
read as follows:
* * * * *
    (b) Contract Work Hours and Safety Standards Act. (1) The Contract 
Work Hours and Safety Standards Act (40 U.S.C. 327-332) applies 
generally to Government contracts, including services contracts in 
excess of $100,000, which may require or involve the employment of 
laborers and mechanics. Guards, watchmen, and many other classes of 
service employees are laborers or mechanics within the meaning of such 
Act. However, employees rendering only professional services, seamen, 
and as a general rule those whose work is only clerical or supervisory 
or nonmanual in nature, are not deemed laborers or mechanics for 
purposes of the Act. The wages of every laborer and mechanic for 
performance of work on such contracts must include compensation at a 
rate not less than 1\1/2\ times the employee's basic rate of pay for 
all hours worked in any workweek in excess of 40. Exemptions are 
provided for certain transportation and communications contracts, 
contracts for the purchase of supplies ordinarily available in the open 
market, and work, required to be done in accordance with the provisions 
of the Walsh-Healey Act.
* * * * *
PART 5--LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS COVERING 
FEDERALLY FINANCED AND ASSISTED CONSTRUCTION (ALSO LABOR STANDARDS 
PROVISIONS APPLICABLE TO NONCONSTRUCTION CONTRACTS SUBJECT TO THE 
CONTRACT WORK HOURS AND SAFETY STANDARDS ACT)

Subpart A--Davis-Bacon and Related Acts Provisions and Procedures

    3. The authority citation for part 5 continues to read as follows:

    Authority: 40 U.S.C. 276a-176a-7; 40 U.S.C. 276c; 40 U.S.C. 327-
332; Reorganization Plan No. 14 of 1950, 5 U.S.C. Appendix; 5 U.S.C. 
301; 29 U.S.C. 259; and the statutes listed in section 5.1(a) of 
this part.

    4. In Sec. 5.5, paragraph (b) is proposed to be revised to read as 
follows:


Sec. 5.5  Contract provisions and related matters.

* * * * *
    (b) Contract Work Hours and Safety Standards Act. The Agency Head 
shall cause or require the contracting officer to insert the following 
clauses set forth in paragraphs (b)(1), (2), (3), and (4) of 

[[Page 46556]]
this section in full in any contract in an amount in excess of $100,000 
and subject to the overtime provisions of the Contract Work Hours and 
Safety Standards Act. These clauses shall be inserted in addition to 
the clauses required by Sec. 5.5(a) or Sec. 4.6 of part 4 of this 
title. As used in this paragraph, the terms laborers and mechanics 
include watchmen and guards.
* * * * *


Sec. 5.15  [Amended]

    5. In Sec. 5.15, paragraph (b) is proposed to be amended by 
removing paragraphs (b)(1) and (2), and by redesignating paragraphs 
(b)(3), (4), and (5) as paragraphs (b)(1), (2), and (3), respectively.

Title 41--Public Contracting and Property Management

CHAPTER 50--PUBLIC CONTRACTS, DEPARTMENT OF LABOR

PART 50-201--GENERAL REGULATIONS

    6. The authority citation for part 50-201 continues to read as 
follows:

    Authority: Sec. 4, 49 Stat. 2038; 41 U.S.C. 38. Interpret or 
apply sec. 6, 49 Stat. 2038, as amended; 41 U.S.C. 40.

    7. Sections 50-201.1 and 50-201.2 are proposed to be redesignated 
as Secs. 50.201.3 and 50-201.4, respectively, and paragraph (a) of the 
clause in Sec. 50-201.3, as newly redesignated, is proposed to be 
removed, and paragraphs (b) through (j) are proposed to be redesignated 
as paragraphs (a) through (i), respectively, and the title of the 
clause is proposed to be amended to read as follows:

REPRESENTATIONS AND STIPULATIONS PURSUANT TO PUBLIC LAW 846, 74TH 
CONGRESS, AS AMENDED


Sec. 50-201.101  [Removed]


Sec. 50-201.102 through 50-201.106  [Redesignated as Secs. 50-201.101 
through 50-201.105]

    8. Section 50-201.101 is proposed to be removed, and Secs. 50-
201.102 through 50-201.106 are proposed to be redesignated as Secs. 50-
201.101 through 50-201.105, respectively.


Sec. 50-201.604  [Removed]

    9. Section 50-201.604 is proposed to be removed.

PART 50-206--THE WALSH-HEALEY PUBLIC CONTRACTS ACT INTERPRETATIONS

    10. The authority citation for part 50-206 continues to read as 
follows:

    Authority: Sec. 4, 49 Stat. 2038, 41 U.S.C. 38, Secretary of 
Labor's Order No. 16-75, 40 FR 55913, and Employment Standards Order 
2-76, 41 FR 9016.


Secs. 50-206.1 and 50-206.2  [Redesignated as 50-201.1 and 50-201.2]


Secs. 50-206.3 and 50-206.50 through 50-206.56  [Removed]

    11. In part 50-206, Secs. 50-206.1 and 50-206.2 are proposed to be 
redesignated as Secs. 50-201.1 and 50.201.2 in part 50-201, 
respectively, and the remainder of part 50-206 is proposed to be 
removed.

[FR Doc. 95-22139 Filed 9-6-95; 8:45 am]
BILLING CODE 4510-27-M