[Federal Register Volume 77, Number 162 (Tuesday, August 21, 2012)]
[Proposed Rules]
[Pages 50449-50454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-20442]
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DEPARTMENT OF HOMELAND SECURITY
48 CFR Parts 3016 and 3052
[Docket No. DHS-2012-0050]
RIN 1601-AA65
Revision of Department of Homeland Security Acquisition
Regulation; Contractor Billing and Subcontractor Labor Hour Rates Under
Time and Materials Contracts (HSAR Case 2010-001)
AGENCY: Office of the Chief Procurement Officer, DHS.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Department of Homeland Security (DHS) is proposing to
amend its Homeland Security Acquisition Regulation to require contracts
for time and material or labor hours to include separate labor hour
rates for subcontractors and a description of the method that will be
used to record and bill for labor hours for both contractors and
subcontractors.
DATES: Comments and related material submitted electronically must be
submitted to the Federal eRulemaking Portal http://www.regulations.gov
on or before October 22, 2012. Comments and related material submitted
by mail must reach the Department of Homeland Security, Office of the
Chief Procurement Officer, Acquisition Policy and Legislation Branch at
the address shown below on or before October 22, 2012 to be considered
in the formation of the final rule.
ADDRESSES: You may submit comments identified by DHS docket number DHS-
2012-0050, using any one of the following methods:
(1) Via the Internet at the Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments
and use docket number DHS-2012-0050.
(2) By mail to the Department of Homeland Security, Office of the
Chief Procurement Officer, Acquisition Policy and Legislation Branch,
ATTN: Jeremy Olson, 245 Murray Lane, Bldg. 410 (RDS), Washington, DC
20528.
FOR FURTHER INFORMATION CONTACT: Jeremy Olson, Department of Homeland
Security, Office of the Chief Procurement Officer, Acquisition Policy
and Legislation Branch, (202) 447-5197, or by email at
[email protected].
SUPPLEMENTARY INFORMATION:
I. Request for Comments
II. Background
III. Discussion of Proposed Rule
IV. Regulatory Requirements
[[Page 50450]]
A. Executive Order 12866 (Regulatory Planning and Review)
B. Regulatory Flexibility Act
C. Assistance for Small Entities
D. Collection of Information
I. Request for Comments
Interested persons are invited to participate in this rulemaking by
submitting comments and related materials. Comments and related
materials should be organized by HSAR Part, and indicate the specific
section that is being commented on. All comments received will be
posted without change to http://www.regulations.gov, including any
personal information provided. See ADDRESSES above for information on
how to submit comments. If you submit comments by mail, please submit
them in an unbound format, no larger than 8 \1/2\ by 11 inches,
suitable for copying and electronic filing. You may submit comments
either by mail or via the internet as identified in the ADDRESSES
section above; but to avoid duplication, DHS requests that you submit
comments and materials by only one method. If you would like DHS to
acknowledge receipt of comments submitted by mail, please enclose a
self-addressed, stamped postcard or envelope. DHS will consider all
comments and material received during the comment period.
Viewing comments and documents: To view comments and read
background documents related to this rulemaking, go to http://www.regulations.gov, which contains relevant instructions under the
FAQs tab on the home page.
II. Background
This proposed rule augments two existing Federal Acquisition
Regulation (FAR) policies to create a consistent approach within DHS
for awarding Time and Materials/Labor Hours (T&M/LH) contracts. Those
two augmenting policies include the requirement for separate labor hour
rates for T&M/LH subcontractors and the requirement for consistent
practices for contractor labor hour records and labor hour billing.
The first of the two existing FAR policies provides the option to
require separate labor hour rates for each subcontractor under a T&M/LH
contract, in addition to the labor hour rates established for the prime
contractor. See FAR 16.601(e). The current FAR policy authorizes an
agency either to permit individual contracting officers to decide if
separate labor hour rates are necessary or to establish an agency
procedure making separate rates mandatory. This rule proposes to
establish a DHS-wide procedure to make the FAR option for consistent
use of separate rates mandatory for DHS T&M/LH contracts.
Federal Acquisition Regulation (FAR) 16.601(e) further authorizes
agencies to amend the solicitation provision at FAR 52.216-29, Time-
and-Materials/Labor-Hour (T&M/LH) Proposal Requirements-Non-commercial
Item Acquisitions With Adequate Price Competition, to require offerors
to submit offers that include separate labor hour rates for
subcontractors and affiliates. The purpose of requiring offers to
include such separate rates is to ensure the resulting contract or
order will have individual labor hour rate schedules for each
individual subcontractor and affiliate of the prime contractor and not
contain only a single set of rates applicable to the prime contractor
and all subcontractors.
The second of the two augmenting Homeland Security Acquisition
Regulation (HSAR) policies that are included in this proposed rule
refines long-established FAR policies on consistency between contractor
recordkeeping and contractor proposal and billing practices. The
proposed rule establishes policies furthering those existing FAR
policies so that DHS contractors will identify their method of
accounting for labor hours incurred and agree to a price adjustment if
their billing practices under a T&M/LH contract they enter into with
DHS results in overbilling because they had not billed consistently
with their recordkeeping practices. To minimize the burden of
identifying the method of recordkeeping used by a contractor, the
proposed rule includes a solicitation provision in which each offeror
will check one of two blocks to designate which of the two types of
methods its recordkeeping system uses, record only the number of hours
in a standard work period (such as a 40 hour workweek) or record all
hours worked in a work period. This will apply only to hours incurred
by employees who are exempt from the Fair Labor Standards Act (FLSA).
Contractors with a T&M/LH contract would be required to
substantiate the number of hours billed in order to support payment of
a voucher. There would be no mandatory requirement that a contractor
use one method or the other; that would be the contractor's choice.
However, the contractor must consistently follow its chosen practice.
III. Discussion of Proposed Rule
The proposed rule would revise 48 CFR part 3016, Types of Contracts
and part 3052, Solicitation Provisions and Contract Clauses.
Fixed hourly rates--FAR 16.601(e)(1) allows for three approaches in
structuring solicitations for T&M/LH contracts and orders and allows
agencies to make mandatory one of the three approaches identified in
the solicitation provision at FAR 52.216-29(c). The proposed rule would
make the procedure at FAR 52.216-29(c)(1), separate rates for each
labor category, mandatory for DHS T&M/LH contracts and orders. The
proposed rule provides procedures applicable to solicitations and
awards for T&M/LH contracts and orders for non-commercial items using
adequate price competition. The proposed rule would require offerors to
propose separate, individual labor hour rates for each category of
labor to be performed by the prime contractor, each subcontractor, and
other divisions or subsidiaries or affiliates of the prime contractor
under common control. The procedure would apply only to T&M/LH actions
for non-commercial items to be awarded using adequate price
competition.
The purpose of these procedures is to ensure appropriate labor hour
rates are paid under T&M/LH contracts and orders. The procedures are
intended to eliminate unintentional windfall payments to the prime
contractor that might otherwise result from work performed by lower
labor rate subcontracts or affiliates that is billed at a higher prime
contractor labor hour rate.
Recording and billing hours under T&M/LH contracts and orders--The
proposed rule would require all offerors seeking a T&M/LH contract or
order to include a description of their method and their
subcontractors' methods of accounting for uncompensated overtime
performed by employees who are exempt from the Fair Labor Standards Act
(FLSA). It also includes a requirement that billings and payments under
the resulting contracts or orders be made consistent with that
description. The procedure would apply to all T&M/LH contracts and
orders that exceed the Simplified Acquisition Threshold (SAT).
The purpose of this procedure is to eliminate potential disputes
regarding the hours that can be billed under T&M/LH contracts by
clearly stating in the contract whether the contractor and each
subcontractor will be reimbursed based on recording and billing for
only the number of hours worked not in excess of a standard number of
hours in a standard work period (such as a 40 hour workweek) or
recording all hours worked. This procedure will ensure that billings
and payments under T&M/LH contracts do not result in an unintended
[[Page 50451]]
windfall to the contractor by ensuring that the contractor does not
bill the Government for all hours worked when its established practices
are to record only the number of hours in a standard work period (such
as a 40 hour workweek).
IV. Regulatory Requirements
A. Executive Order 12866 (Regulatory Planning and Review) and 13563
(Improving Regulation and Regulatory Review).
This proposed rule is not a significant regulatory action under
section 3(f) of Executive Order 12866, as supplemented by Executive
Order 13563. The Office of Management and Budget has not reviewed it
under those Orders. This proposed rule is not a major rule under 5
U.S.C. 804.
B. Regulatory Flexibility Act
Under the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), we
have considered whether this proposed rule would have a significant
economic impact on a substantial number of small entities. The term
``small entities'' comprises small businesses, not-for-profit
organizations that are independently owned and operated and are not
dominant in their fields, and governmental jurisdictions with
populations of less than 50,000.
This proposed rule, if made final, may impact a substantial number
of small entities within the meaning of the Regulatory Flexibility Act,
5 U.S.C. 601, et seq., and DHS has thus prepared an initial regulatory
flexibility analysis consistent with 5 U.S.C. 604 as follows:
1. Description of the Reasons Why the Action Is Being Considered
This proposed rule augments two existing Federal Acquisition
Regulation (FAR) policies to create a consistent approach within DHS
for awarding Time and Materials/Labor Hours (T&M/LH) contracts. Those
two augmenting policies include the requirement for separate labor hour
rates for T&M/LH subcontractors and the requirement for consistent
practices for contractor labor hour records and labor hour billing.
The first of the two existing FAR policies provides the option to
require separate labor hour rates for each subcontractor under a T&M/LH
contract, in addition to the labor hour rates established for the prime
contractor. See FAR 16.601(e). The current FAR policy authorizes an
agency either to permit individual contracting officers to decide if
separate labor hour rates are necessary or to establish an agency
procedure making separate rates mandatory. This rule proposes to
establish a DHS-wide procedure to make the FAR option for consistent
use of separate rates mandatory for DHS T&M/LH contracts.
Federal Acquisition Regulation (FAR) 16.601(e) further authorizes
agencies to amend the solicitation provision at FAR 52.216-29, Time-
and-Materials/Labor-Hour (T&M/LH) Proposal Requirements-Non-commercial
Item Acquisitions With Adequate Price Competition, to require offerors
to submit offers that include separate labor hour rates for
subcontractors and affiliates. The purpose of requiring offers to
include such separate rates is to ensure the resulting contract or
order will have individual labor hour rate schedules for each
individual subcontractor and affiliate of the prime contractor and not
contain only a single set of rates applicable to the prime contractor
and all subcontractors.
The second of the two augmenting Homeland Security Acquisition
Regulation (HSAR) policies that are included in this proposed rule
refines long-established FAR policies on consistency between contractor
recordkeeping and contractor proposal and billing practices. The
proposed rule establishes policies furthering those existing FAR
policies so that DHS contractors will identify their method of
accounting for labor hours incurred and agree to a price adjustment if
their billing practices under a T&M/LH contract they enter into with
DHS results in overbilling because they had not billed consistently
with their recordkeeping practices.
2. Succinct Statement of the Objectives of, and Legal Basis for, the
Proposed Rule
This proposed rule would establish the DHS procedure to make the
FAR option for consistent use of separate rates mandatory for DHS T&M/
LH contracts. It would also establish a requirement that a contractor
must consistently follow its method of record keeping for labor hours
billed to a DHS contract. The legal bases for this rule are 5 U.S.C.
301-302, 41 U.S.C. 1707, 41 U.S.C. 1702, 48 CFR part 1, subpart 1.3,
and DHS Delegation Number 0702.
3. Description of and, Where Feasible, an Estimate of the Number of
Small Entities To Which the Rule Will Apply
This proposed rule would apply to all entities seeking a DHS
contract or order that would be either a Time and Material or a Labor
Hour type of contract. DHS believes that this proposed rule is not
likely to have a significant economic impact on a substantial number of
small entities because the rule does not require contractors or
subcontractors to make any substantial changes in their normal business
practices nor take any substantial actions under a contract beyond
previously existing government requirements.
Below are tables showing information on FY 2010 DHS awards, based
on data contained in the Federal Procurement Data System, which would
have been subject to this proposed rule had it been in effect at the
time. These tables give a view into the numbers of entities that would
be impacted by this proposed rule if the amount of contracting done by
DHS is consistent with the amount performed during FY 2010.
Numbers and Dollar Values of Awards
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Number of awards to other than small Number of awards to small
FY 2010 DHS awards entities entities
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Labor Hours......................... 808 $401,098,840 971 $250,578,045
Time and Materials.................. 2507 $1,399,245,624 1653 $483,677,645
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Grand Total..................... 3315 $1,800,344,464 2624 $734,255,690
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FY2010 DHS T&M/LH Awards Numbers of firms other than small Small Entities
entities
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382 $1,800,344,464 261 $734,255,690
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[[Page 50452]]
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements of the Proposed Rule, Including an Estimate of
the Classes of Small Entities Which Will Be Subject to the Requirement
and the Type of Professional Skills Necessary for Preparation of the
Report or Record
The proposed rule contains no new information collection or
reporting requirements. Offerors are already required to provide
information in response to DHS solicitations and this is authorized
under an existing, approved information collection. OMB Control No.
1600-0005 (Offeror submissions).
5. Identification, to the Extent Practicable, of all Relevant Federal
Rules Which May Duplicate, Overlap, or Conflict With the Rule
The proposed rule would not duplicate, overlap, or conflict with
any other Federal rules.
6. Description of Any Significant Alternatives to the Proposed Rule
Which Accomplish the Stated Objectives of Applicable Statutes and Which
Minimize Any Significant Economic Impact of the Rule on Small Entities
The requirement proposed in this rulemaking is that the prime
contractor will have to calculate and propose separate rates for each
such subcontractor or affiliate rather than calculating a single set of
rates with all labor hours wrapped into a single set of rates covering
labor provided by the prime contractor as well as labor provided by
subcontractors and affiliates. The FAR provides the option to make this
decision in agency procedures or to leave this decision up to the
offeror or to the contracting officer. DHS has chosen to revise its
agency-wide procedures and is not aware of an alternative to this
proposed requirement that would accomplish the goals of the proposed
requirement.
Likewise, the new requirements addressing contractors' duties to
record and bill for hours under T&M/LH contracts and orders imposes no
new duties or requirements on a contractor other than to identify one
of two methods of record-keeping described in a solicitation provision,
use its current system of recordkeeping and billing, and agree to a
price adjustment if it inappropriately bills for all hours worked when
it disclosed that its normal practice is to bill only for a fixed
number of hours per employee per period. The only significant
alternative options DHS identified were not to issue this portion of
the rule or to apply the rule to all actions, rather than applying it
only to actions over the SAT. Not issuing the rule was rejected because
it would forgo the benefits of the rule. Applying the rule to actions
under the SAT was rejected because the benefits would likely not be
substantial enough under those lower value contracts to warrant the
administrative effort that DHS would have to expend to enforce the
clause.
DHS invites comments from small businesses and other interested
parties. DHS also will consider comments from small entities concerning
the affected HSAR subparts in accordance with 5 U.S.C. 610. Such
comments should be submitted separately and should cite HSAR Case 2010-
001.
C. Assistance for Small Entities
Under Section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding the rule so that they can better evaluate its
effects on them and participate in the rulemaking. Small businesses may
send comments on the actions of Federal employees who enforce, or
otherwise determine compliance with, Federal regulations to the Small
Business and Agriculture Regulatory Enforcement Ombudsman and the
Regional Small Business Regulatory Fairness Boards. The Ombudsman
evaluates these actions annually and rates each agency's responsiveness
to small business. If you wish to comment on actions by DHS employees,
call 1-888-REG-FAIR (1-888-734-3247). The DHS will not retaliate
against small entities that question or complain about this interim
rule or any DHS policy.
D. Collection of Information
This proposed rule contains no new information collection
requirements for which OMB approval is necessary under the Paperwork
Reduction Act of 1995 (Pub. L. 104-13). Offerors are already required
to provide information in response to DHS solicitations and the burden
for this is authorized under an existing, approved information
collection. OMB Control No. 1600-0005 (Offeror submissions).
List of Subjects in 48 CFR Parts 3016 and 3052
Government procurement.
Daniel L. Clever,
Deputy Chief Procurement Officer, Department of Homeland Security.
Accordingly, DHS proposes to amend (HSAR) 48 CFR parts 3016 and
3052 as follows:
1. The authority citation for parts 3016 and 3052 are revised to
read as follows:
Authority: 5 U.S.C. 301-302, 41 U.S.C. 1707, 41 U.S.C. 1702, 48
CFR part 1, subpart 1.3, and DHS Delegation Number 0702.
PART 3016--TYPES OF CONTRACTS
2. Add section 3016.601 to subpart 3016.6 to read as follows:
3016.601 Time-and-materials and labor-hour contracts.
(c)(2)(i) Fixed hourly rates. Each DHS time and materials and labor
hour contract and order for non-commercial items awarded with adequate
price competition (FAR 15.403-1(c)(1)) must include individual,
separate labor hour rates for each category of labor hours for:
(A) The prime contractor;
(B) Each subcontractor; and
(C) Each division, subsidiary and affiliate of the prime
contractor.
In order to require each offeror to propose these separate rates
for each of those labor hour categories, the contracting officer shall
insert the amended FAR solicitation provision as provided in (e)(1) of
this subsection. The contracting officer shall also include such
separate labor hour rates for each such category of labor hours in the
resulting contract(s) or order(s).
(d)(3) Limitations regarding recording hours under time-and-
material and labor hour contracts and orders.
(i) Definitions.
Overtime means the number of hours worked in excess of the standard
number of hours in a standard work period (such as a 40 hour workweek)
by a contractor employee who is exempt from the Fair Labor Standards
Act (FLSA).
Standard work period means the minimum number of hours an FLSA
exempt employee is required to work per week or some other defined
period (e.g., 40 hours per week) in accordance with the contractor's
established policies.
(ii) Policy. A time-and-materials and labor hour contract or order
exceeding the Simplified Acquisition Threshold may be used only if it
includes a description of the method that will be used by the prime
contractor and each subcontractor to record and to bill for hours
worked by employees exempt from the Fair Labor Standards Act (FLSA)
under the contract or order, including overtime. The method used to
record and bill for hours worked must be either to record and bill for
all hours worked, or to record and bill for only the number of hours
worked not in
[[Page 50453]]
excess of a standard number of hours in a standard work period (such as
a 40 hour workweek). The description of the method of recording and
billing for hours worked must be consistent with one of the two
descriptions in (HSAR) 48 CFR 3016.601(d)(3)(iii)(A) or (B), and shall
be incorporated into the contract or order. Whichever method the
contractor states it will employ, those labor hour recording and
billing practices must be consistent with the contractor's disclosed or
established practices at the time of contract award.
(iii) Descriptions of acceptable and unacceptable labor hour
recording and billing practices. Paragraphs (A) and (B) of this
subsection provide descriptions of acceptable practices that may be
incorporated into a covered action. These paragraphs (A) and (B)
correspond to paragraphs (b)(i) and (b)(ii) respectively of the clause
at (HSAR) 48 CFR 3052.216-76, Offeror Selection of Labor Hour Recording
and Billing Practices for Time-and-Materials/Labor-Hour Contracts.
Paragraph (C) of this subsection provides a description of an
unacceptable practice.
(A) Record and Bill for All Hours Worked. It is an acceptable
practice for the contractor (subcontractor) providing labor hours of
employees exempt from the Fair Labor Standards Act (FLSA) to bill the
hours under its contract (or order) based on recording of all hours
worked by those employees, including overtime. The contractor must
state that its established accounting practice is to record all hours
worked by those employees, including overtime.
(1) However, if it is found after award that the contractor's
established accounting practices at the time of award were not based on
recording all hours worked by employees, the Government shall be
entitled to a price adjustment on all payments for labor hours under
the contract or order.
(2) The amount of the price adjustment for payments shall be the
difference between the number of hours billed based on recording all
hours worked and the hours that would have been recorded using the
contractor's established accounting practices at the time of award,
multiplied by the applicable fixed hourly rates.
(B) Record and Bill for a Standard Number of Hours per Standard
Work Period (e.g., 40 hours per week). It is an acceptable practice for
the contractor (subcontractor) to bill the hours worked by employees
exempt from the Fair Labor Standards Act (FLSA) under its contract
based on recording and billing for only the number of hours worked not
in excess of a standard number of hours in a standard work period (such
as a 40 hour workweek). The contractor must state that its established
accounting practice is to record only the standard number of hours in a
standard work period. The contractor's (subcontractor's) method of
recording hours worked must pro-rate the hours among all jobs/functions
performed by an employee when an employee works overtime. For example,
under a standard 40 hour work period, if an employee worked 25 hours on
Contract A and 25 hours on Contract B during a work period, the
contractor would pro-rate those hours to record 20 hours on Contract A
and 20 hours on Contract B so that the total number of hours for the
period did not exceed the number of hours in a standard work period, 40
hours.
(C) Unacceptable accounting and billing practices. It is not an
acceptable practice for a contractor or subcontractor that accounts for
only a standard number of hours worked in a standard work period for
employees exempt from the Fair Labor Standards Act (FLSA) (e.g., 40
hours per week), to account for and bill for only the first 8 hours
worked each day. All hours worked in excess of the standard number of
hours in a standard work period, including overtime hours, must be pro-
rated based on the total hours worked for all jobs/functions performed
by the employee. If an offeror indicates that this is their established
accounting practice, the Contracting Officer shall not award the
contract or order, but instead shall notify the Office of the Chief
Procurement Officer at [email protected] for guidance on how
to proceed. If an offeror provides a clarification to the statement it
checks within the provision at (HSAR) 48 CFR 3016.216-75, and it is not
clear to the contracting officer that the clarification is consistent
with the requirements of the HSAR provision, the contracting officer
shall notify the Office of the Chief Procurement Officer at
[email protected] for guidance on how to proceed.
(e)(1) Solicitations and contracts:
(i) Insert the provision (HSAR) 48 CFR 3052.216-29, Time-and-
Materials/Labor-Hour Proposal Requirements-Non-Commercial Item
Acquisition With Adequate Price Competition, in the place of the
provision at FAR 52.216-29, Time-and-Materials/Labor-Hour Proposal
Requirements-Non-Commercial Item Acquisition With Adequate Price
Competition, in all solicitations contemplating use of a time-and-
materials or labor-hour type of contract for noncommercial items, if
the price is expected to be based on adequate competition (FAR 15.403-
1(c)(1)). This provision is authorized by Federal Acquisition
Regulation (FAR) 16.601(e)(1) which authorizes agency procedures to
require modification of the FAR solicitation provision at FAR 52.216-
29, Time and Materials/Labor-Hour Proposal Requirements-Non-Commercial
Item Acquisitions With Adequate Price Competition. Insert the HSAR
provision whole text into the solicitation to require separate proposed
rates for all subcontractors and divisions, subsidiaries, and
affiliates of the prime contractor.
(ii) Insert the clause (HSAR) 48 CFR 3052.216-75, Offeror Selection
of Labor-Hour Recording and Billing Practices for Time-and-Materials/
Labor-Hour Contracts, into each solicitation expected to result in a
contract or order for (T&M/LH) exceeding the simplified acquisition
threshold (SAT).
(iii) Insert the clause (HSAR) 48 CFR 3052.216-76, Time-and-
Materials/Labor-Hour Overtime Recording and Billing Practices, (or a
clause substantially the same as) into time and material or labor-hour
solicitations, contracts and orders exceeding the SAT and include the
mark or other indication made by the contractor which of the two
methods (recording all hours or prorating the excess over a standard
work period) it will use during the performance of the contract/order
to record and bill for hours worked.
PART 3052--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
3. Amend subpart 3052.2 by adding section 3052.216-29 to read as
follows:
3052.216-29 Time-and-Materials/Labor-Hour Proposal Requirements-Non-
Commercial Item Acquisition With Adequate Price Competition.
As prescribed in (HSAR) 48 CFR 3016.601(e)(1)(i), insert the
following provision:
Time-and-Materials/Labor-Hour Proposal Requirements--Non-
commercial Item Acquisition With Adequate Price Competition
(a) The Government contemplates award of a Time-and-Materials or
Labor-Hour type of contract resulting from this solicitation.
(b) The offeror must specify fixed hourly rates in its offer
that include wages, overhead, general and administrative expenses,
and profit. The offeror must specify whether the fixed hourly rate
for each labor category applies to labor performed by--
(1) The offeror;
(2) Subcontractors; and/or
(3) Divisions, subsidiaries, or affiliates of the offeror under
a common control;
(c) The offeror must establish fixed hourly rates using separate
rates for each category of
[[Page 50454]]
labor to be performed by each subcontractor and for each category of
labor to be performed by the offeror, and for each category of labor
to be transferred between divisions, subsidiaries, or affiliates of
the offeror under a common control.
(End of provision)
4. Amend subpart 3052.2 by adding section 3052.216-75 as follows:
3052.216-75. Offeror Selection of Labor Hour Recording and Billing
Practices for Time-and-Materials/Labor-Hour Contracts.
As prescribed in (HSAR) 48 CFR 3016.601(e)(1)(ii), insert the
following provision:
Labor Hour Recording and Billing Practices for Time-and-Materials/
Labor-Hour Contracts. (XX 2010)
(a) The offeror must identify the practices it intends to employ
to record labor hours worked by employees exempt from the Fair Labor
Standards Act (FLSA) and to bill for those hours under the
prospective contract or order for which it is submitting its offer.
The offeror must select one of the two available descriptions of
acceptable methods as shown in HSAR 3052.216-76, Time-and-Materials/
Labor-Hour Overtime Recording and Billing Practices-Record. The two
available selections are: (i) Record and Bill For All Hours Worked,
or (ii) Record and Bill Based on a Standard Number of Hours Per
Standard Work Period. Whichever of the two descriptions the offeror
selects will be incorporated into any resulting contract or order
awarded to the offeror. By making the selection, the offeror is
indicating to the Government that the selected description of
recording and billing practices is consistent with the contractor's
established accounting practices and this same method will be used
for billing hours under the contract or order.
(b) The offeror will not be eligible for award if either:
(1) The offeror fails to indicate in its offer which of the two
descriptions in paragraphs (c)(i) or (ii) below describe the
offeror's method of recording and billing for labor hours to be
performed under the contract or order; or
(2) The offeror submits a clarification of the clause 3052.216-
76 Time-and-Materials/Labor-Hour Overtime Recording and Billing
Practices, and the Contracting Officer had not agreed prior to
submittal of offers that the offeror's clarification of the clause
substantially meets the requirements of the clause.
(c) The offeror must select one of the two below descriptions of
the offeror's system for recording and billing hours to be worked by
employees exempt from the Fair Labor Standards Act (FLSA) under the
contract that are included in either paragraph (i) or (ii) of the
clause at HSAR 3052.216-76, Time-and-Materials/Labor-Hour Overtime
Recording and Billing Practices. If a contract or order is awarded
to the offeror, the selected description will be incorporated into
the contract or order.
[ ] (Check if the paragraph describes the offeror's system)--
Paragraph (i) Recording and billing Practices--Record and Bill For
All Hours Worked.
[ ] (Check if the paragraph describes the offeror's system)--
Paragraph (ii) Record and Bill For a Standard Number of Hours Per
Standard Work Period.
(End of provision)
5. Amend subpart 3052.2 by adding section 3052.216-76 as follows:
3052.216-76. Time-and-Materials/Labor-Hour Overtime Recording and
Billing Practices.
As prescribed in (HSAR) 48 CFR 3016.601(e)(1)(iii), insert the
following clause and designate either paragraph (i) or (ii), or insert
a paragraph substantially the same as (i) or (ii), in accordance with
the successful offeror's selection from (HSAR) 48 CFR 3052.216-75,
Offeror Selection of Labor Hour Recording and Billing Practices for
Time-and-Materials/Labor-Hour Contracts.
Time-and-Materials/Labor-Hour Overtime Recording and Billing
Practices--(Insert Date)
(a) Definitions:
Overtime means the number of hours worked in excess of the
number of hours in a standard work period by a contractor employee
who is exempt from the Fair Labor Standards Act (FLSA).
Standard work period means the minimum number of hours a FLSA
exempt employee is required to work per week or some other defined
period (e.g., 40 hours per week) in accordance with the contractor's
established policies.
(b) Only the designated paragraph (i) or (ii) applies.
[ ] (i) Recording and Billing Practices--Record and Bill For All
Hours Worked.
The contractor (subcontractor) providing labor hours will bill
the hours worked by employees exempt from the Fair Labor Standards
Act (FLSA) under its contract (or order) based on recording of all
hours worked by employees, including overtime. The contractor states
that its established accounting practices are to record all hours
worked.
(1) If it is found after award that the contractor's established
accounting practices at the time of award were not based on
recording all hours worked by employees, the Government shall be
entitled to a price adjustment on all payments for labor hours under
the contract or order.
(2) The amount of the price adjustment for payments shall be the
difference between the number of hours billed based on recording all
hours worked and the hours that would have been recorded using the
contractor's established accounting practices at the time of award,
multiplied by the applicable fixed hourly rates.
- or -
[ ] (ii) Record and Bill For a Standard Number of Hours Per
Standard Work Period. The contractor (subcontractor) will bill the
hours worked by employees exempt from the Fair Labor Standards Act
(FLSA) under this contract based on recording and billing for only
the number of hours worked not in excess of a standard number of
hours in a standard work period (such as a 40 hour workweek). The
contractor states that its established accounting practice is to
record only the number of hours worked by such an employee not in
excess of a standard number of hours in a standard work period (such
as a 40 hour workweek). The contractor (subcontractor) further
states that the accounting practices are based on pro-rating the
hours among all jobs/functions performed by the employee when the
employee works overtime. For example, under a standard 40 hour work
period, if the employee worked 25 hours on Contract A and 25 hours
on Contract B, the contractor would pro-rate those hours to record
20 hours on Contract A and 20 hours on Contract B so that the total
number of hours recorded for the work period does not exceed the
number of hours in the 40 hour standard work period.
(c) Flow down to Subcontractors. The contractor and each lower
tier subcontractor shall incorporate the substance of this clause,
selecting the pertinent paragraph (i) or (ii), into each subcontract
that exceeds the Simplified Acquisition Threshold and is either a
Time and Materials or a Labor Hour contract/order.
(End of clause)
[FR Doc. 2012-20442 Filed 8-20-12; 8:45 am]
BILLING CODE 9110-10-P