[Federal Register Volume 80, Number 102 (Thursday, May 28, 2015)]
[Proposed Rules]
[Pages 30548-30572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12560]



[[Page 30547]]

Vol. 80

Thursday,

No. 102

May 28, 2015

Part II





Department of Defense





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General Services Administration





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National Aeronautics and Space Administration





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48 CFR Parts 1, 4, 9, et al.





Federal Acquisition Regulations; Fair Pay and Safe Workplaces; Proposed 
Rule

  Federal Register / Vol. 80 , No. 102 / Thursday, May 28, 2015 / 
Proposed Rules  

[[Page 30548]]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 4, 9, 17, 22, and 52

[FAR Case 2014-025; Docket No. 2014-0025; Sequence No. 1]
RIN 9000-AM81


Federal Acquisition Regulation; Fair Pay and Safe Workplaces

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal 
Acquisition Regulation (FAR) to implement the Executive Order ``Fair 
Pay and Safe Workplaces'', which is designed to improve contractor 
compliance with labor laws and increase efficiency and cost savings in 
Federal contracting. The Executive Order (E.O.) requires that 
prospective and existing contractors disclose certain labor violations 
and that contracting officers, in consultation with labor compliance 
advisors, consider the disclosures, including any mitigating 
circumstances, as part of their decision to award or extend a contract. 
The E.O. directs agencies to include clauses in their contracts that 
require similar disclosures by certain subcontractors so their prime 
contractors can also consider labor violations when determining the 
responsibility of subcontractors. The E.O. further requires that 
processes be established to assist contractors and subcontractors to 
come into compliance with labor laws. To achieve paycheck transparency 
for workers, the E.O. requires contractors and subcontractors to 
provide individuals with information each pay period regarding how they 
are paid and to provide notice to those workers whom they treat as 
independent contractors. The E.O. also addresses arbitration of 
employee claims. This proposed rule, and proposed Guidance being issued 
simultaneously by the Department of Labor (DOL), are intended to 
implement the E.O.'s requirements.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat at one of the addresses shown below on or before 
July 27, 2015 to be considered in the formation of the final rule.

ADDRESSES: Submit comments in response to FAR Case 2014-025 by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by searching for ``FAR Case 
2014-025''. Select the link ``Comment Now'' that corresponds with ``FAR 
Case 2014-025.'' Follow the instructions provided at the ``Comment 
Now'' screen. Please include your name, company name (if any), and 
``FAR Case 2014-025'' on your attached document.
     Mail: General Services Administration, Regulatory 
Secretariat (MVCB), ATTN: Ms. Flowers, 1800 F Street NW., 2nd Floor, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR Case 2014-
025, in all correspondence related to this case. All comments received 
will be posted without change to http://www.regulations.gov, including 
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT: Mr. Edward Loeb, Procurement Analyst, 
at 202-501-0650, for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat at 202-501-4755. Please cite FAR Case 2014-025.

SUPPLEMENTARY INFORMATION: 

I. Overview

    This proposed rule implements E.O. 13673, Fair Pay and Safe 
Workplaces, dated July 31, 2014 (79 FR 45309, August 5, 2014). E.O. 
13673 was amended by E.O. 13683, December 11, 2014 (79 FR 75041, 
December 16, 2014) to correct a statutory citation. The policy of the 
Government is to promote economy and efficiency in procurement by 
awarding contracts to contractors that comply with labor laws. 
Contractors that consistently adhere to labor laws are more likely to 
have workplace practices that enhance productivity and increase the 
likelihood of timely, predictable and satisfactory delivery of goods 
and services to the Federal Government.
    It is a longstanding tenet of Federal procurement that before a 
Federal contract is awarded, a contracting officer must determine that 
the contractor is a responsible source to do business with the Federal 
Government. The FAR makes clear that in order to be determined 
responsible, a prospective contractor must ``have a satisfactory record 
of integrity and business ethics.'' Underlying the FAR's responsibility 
requirements is the basic recognition that the Federal procurement 
process works more efficiently and economically when Federal 
contractors comply with applicable laws, including labor laws. As 
section 1 of the E.O. explains, contractors that consistently adhere to 
labor laws are more likely to have workplace practices that enhance 
productivity and to deliver goods and services to the Federal 
Government in a timely, predictable, and satisfactory fashion.
    In recent years, the Administration and Congress have taken a 
number of steps to strengthen the quality of responsibility 
determinations generally as well as the overall integrity of the 
Federal procurement system. These steps have included:
     Deployment of the Federal Awardee Performance and 
Integrity Information System (FAPIIS)--a one-stop online source for 
data to support contracting officers as they determine whether a 
company has the requisite integrity to do business with the Government;
     Promulgation of a new regulatory requirement that offerors 
state in certain situations whether they have had criminal, civil, or 
administrative violations within the past 5 years; and
     Direction to agencies to take steps to strengthen their 
capability to take suspension and debarment actions when necessary to 
protect the Government from harm.
    These important steps have helped the Government make meaningful 
progress in its efforts to protect taxpayers from waste and abuse and 
reinforce public confidence in the Federal procurement system. However, 
agencies would benefit from additional information about labor 
violations in order to better determine if a potential contractor is a 
responsible source. For example, many labor violations, including ones 
that are serious, willful, repeated, or pervasive, may go unreported 
despite the contractor self-certification described above and found at 
FAR 52.209-7, because (i) the current penalty triggers for reporting 
labor violations in FAPIIS may be higher than the penalties associated 
with individual labor violations; (ii) a contractor is not required to 
report if it doesn't currently have at least $10 million in contract 
actions; and (iii) administrative proceedings required to be reported 
are limited to those in connection with performance of a Federal 
contract or grant. Even if information regarding labor violations is 
made available to the agency, contracting officers lack the expertise 
and tools to efficiently and effectively evaluate the severity of the 
violations brought to their attention and

[[Page 30549]]

therefore cannot easily determine if a contractor's actions show a lack 
of business ethics and integrity.
    Gaps in current regulatory coverage on labor compliance have been 
discussed in several reports issued over the past several years looking 
at labor violations by Federal contractors. GAO issued a report (GAO-
10-1033, ``FEDERAL CONTRACTING: Assessments and Citations of Federal 
Labor Law Violations by Selected Federal Contractors,'' dated September 
2010, http://www.gao.gov/new.items/d101033.pdf) finding that almost 
two-thirds of the 50 largest wage-and-hour violations and almost 40 
percent of the 50 largest workplace health-and-safety penalties issued 
between FY 2005 and FY 2009 were made against companies that went on to 
receive new Government contracts. A separate study conducted by the 
Center for American Progress (``At Our Expense: Federal Contractors 
that Harm Workers Also Shortchange Taxpayers,'' dated December 2013, 
https://www.americanprogressaction.org/issues/labor/report/2013/12/11/80799/at-our-expense/) found that one quarter of the 28 companies with 
the top workplace violations that received Federal contracts had 
significant performance problems--suggesting a strong relationship 
between contractors with a history of labor law violations and those 
with performance problems. While the violations discussed in these 
reports occurred prior to the implementation of the improvements 
described above, a report by the United States Senate Health, 
Education, Labor and Pensions Committee, (``Acting Responsibly? Federal 
Contractors Frequently Put Workers' Lives and Livelihoods at Risk,'' 
dated December, 2013, http://www.help.senate.gov/imo/media/doc/Labor%20Law%20Violations%20by%20Contractors%20Report.pdf), found 
continued awards to contractors with significant health and safety and 
wage-and-hour violations even after at least some of these improvements 
had gone into effect.
    To improve contractor compliance with labor laws and the 
consideration of labor violations of Federal contractors and 
subcontractors, E.O. 13673 directs that the following steps be 
incorporated into existing procurement processes:
     Disclosure of labor violations. The E.O. directs agencies 
to require offerors to report, for contracts over $500,000 whether 
there has been an administrative merits determination, civil judgment, 
or arbitral award or decision rendered against them during the 
preceding three-year period for violations of any of 14 identified 
Federal labor laws and executive orders or equivalent State laws (labor 
laws) -- including those addressing wage and hour, safety and health, 
collective bargaining, family and medical leave, and civil rights 
protections. These disclosures must be made prior to a finding of 
responsibility, and semi-annually during performance of any contract 
containing the requirement, so that contracting officers may consider 
them prior to exercising an option. Prime contractors must also obtain 
from subcontractors with whom they have contracts of more than $500,000 
other than commercially available off-the-shelf items (COTS) the same 
labor compliance history that they must themselves disclose.
     Assessment of disclosures. Prior to a finding of 
responsibility, contracting officers must consider contractor 
disclosures of labor violations as part of their determination of 
whether a contractor has a satisfactory record of integrity and 
business ethics. They must seek and consider the analysis and 
recommendations made by agency labor compliance advisors (ALCAs), a new 
position created by the E.O. Prime contractors must consider the 
violations disclosed by their subcontractors at any tier in making 
responsibility determinations regarding their supply chain. Contracting 
officers and contractors must consider updates to disclosures and 
disclosures of any new violations to determine whether action needs to 
be taken during performance of any contract or subcontract containing 
the disclosure updates requirement.
     Assistance to help contractors and subcontractors with 
labor law violations come into compliance with labor laws. DOL will be 
available to consult with contractors and subcontractors that have 
labor law violations.
    Consistent with the E.O., these changes are being implemented 
through proposed regulations by DoD, GSA and NASA that are informed by 
proposed Guidance issued by DOL entitled ``Guidance for Executive Order 
13673, `Fair Pay and Safe Workplaces' '' (Guidance). DOL's Guidance 
focuses on defining labor violations and how to determine whether a 
labor violation is reportable, what information about labor violations 
must be disclosed, how to analyze the severity of labor violations, and 
the role of ALCAs, and of DOL and other enforcement agencies, in 
addressing violations. The FAR rule incorporates DOL's Guidance and 
further delineates, through policy statements, solicitation provisions, 
and contract clauses how, when, and to whom disclosures are to be made 
and the responsibilities of contracting officers and contractors in 
addressing violations. The FAR rule, consistent with the DOL Guidance, 
describes the role of ALCAs, DOL and other enforcement agencies in 
supporting contracting officers and contractors in making 
responsibility determinations before award and addressing violations 
that occur during contract performance. In addition, the FAR rule 
addresses the ability of contractors and subcontractors to work with 
DOL and enforcement agencies to facilitate remediation measures, such 
as labor compliance agreements, and states that Suspending and 
Debarring Officials should be notified in accordance with agency 
procedures if a contracting officer concludes that a prospective 
contractor does not have a satisfactory record of integrity and 
business ethics.
    Specifically:
     With respect to making disclosures, the DOL Guidance 
defines the terms ``administrative merits determination,'' ``civil 
judgment,'' and ``arbitral award or decision,'' for each of the 
fourteen enumerated labor laws and discusses what information related 
to these determinations must be reported by contractors and 
subcontractors. The FAR rule creates solicitation provisions and 
contract clauses that will include these disclosure triggers and 
explain when the required information described in the DOL Guidance is 
to be submitted, how it is to be submitted, and to whom it is to be 
submitted.
    Offerors must represent for each solicitation whether they have 
covered labor violations. They complete the annual representations and 
certifications in the System for Award Management (SAM), and later in 
each solicitation identify if the SAM representations are still 
current. Offerors need not provide information on specific violations 
(such as the case number, the date rendered, or who made the 
determination or decision) until requested by the contracting officer, 
which will occur when a responsibility determination is being made. 
When asked for the additional required information, the prospective 
contractor will also be invited to provide to the contracting officer 
such additional information as the prospective contractor deems 
necessary to demonstrate its responsibility, e.g., mitigating 
circumstances, remedial measures (including labor compliance 
agreements) and other steps taken to achieve compliance with labor 
laws. Disclosure of basic information about the labor violations will 
be made publicly available in FAPIIS.
     The DOL Guidance also explains when violations should be 
considered serious, willful, repeated, or pervasive,

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as well as how to identify from among the disclosures that fall within 
these categories those violations that may warrant heighted attention 
by ALCAs and contracting officers because of the nature of the 
violations. The FAR rule provides direction to contracting officers in 
making responsibility determinations to take into account any disclosed 
labor violations and advice that ALCAs provide to contracting officers. 
The rule reminds contracting officers that when reviewing disclosures 
and ALCA advice, they must consider factors that may mitigate the 
existence of a labor law violation, such as the extent to which the 
contractor has remediated the violation and taken steps to prevent its 
recurrence.
     Regarding assistance, DOL's Guidance explains how 
contractors and subcontractors can get help from DOL, including the 
opportunity to receive early guidance from DOL and other enforcement 
agencies on whether violations are potentially problematic, as well as 
the opportunity to remedy any problems. The FAR clauses promulgated in 
this rule address the contractor's ability to communicate with DOL and 
the requirement for contracting officers to give appropriate 
consideration to remedial measures or mitigating factors, including any 
agreements by contractors or other corrective action taken to address 
violations.
    By coordinating their actions, DoD, GSA, and NASA, and DOL seek to 
create a comprehensive process that is reasonable and manageable, and 
avoids uncertainty that drives up the cost of doing business with the 
Government. In addition, consistent with the E.O., this proposed rule 
seeks to minimize implementation burden for contractors and 
subcontractors in a number of ways.
     The rule, like the E.O., builds on the existing 
procurement system, and adopts existing processes that help to minimize 
burden, such as by allowing agencies to limit the required disclosure 
of the details of violations to offerors for whom a responsibility 
determination has been initiated.
     Disclosure requirements are limited to contracts over 
$500,000 and subcontracts over $500,000 other than COTS items, which 
excludes the vast majority of transactions (many of which are performed 
by small businesses), while still capturing the vast majority of 
contract dollars.
     As explained in DOL's Guidance, the focus of analysis is 
on those violations that are most concerning and have the greatest 
bearing on an assessment of a contractor's or subcontractor's integrity 
and business ethics. As a result, most disclosures, such as minor 
violations of workplace safety and wage-and-hour requirements, should 
not trigger specific actions beyond those that would otherwise be 
directed by DOL or the contracting agency to correct the violation. 
Where action is required, the focus will be on helping the contractor 
come into compliance, and taking mitigating steps which may include the 
development of a labor compliance agreement.
     As explained in DOL's Guidance, contractors and 
subcontractors will be able to engage with DOL and enforcement agencies 
early in the process when contractors or subcontractors know that they 
have violations that may require remediation, so that the results of 
those engagements can be used by contracting officers to help determine 
responsibility, and used by contractors to help determine 
responsibility of subcontractors, without having these steps 
unnecessarily disrupt the procurement process.
     ALCAs will be appointed by agencies to assist agency 
contracting officers and coordinate with DOL. As indicated in DOL's 
Guidance, DOL will create processes that facilitate coordination 
between ALCAs and DOL so that they may give appropriate consideration 
to determinations and agreements made by DOL and other enforcement 
agencies as well as analyses of disclosures that have previously been 
made by an ALCA. This coordination will help to reduce burden for both 
contractors and agencies by avoiding redundant, inconsistent, and time 
consuming evaluations. In accordance with the express terms of the 
E.O., disclosures are only required for subcontracts with an estimated 
value over $500,000 other than COTS items.
     DoD, GSA, and NASA, and DOL are proposing to implement the 
changes addressing subcontracting in phases and seek public input on a 
phased approach. See section IV. A. Phase-in of Subcontractor 
Requirements.
     Efforts are underway to develop a single Web site for 
Federal contractors to use for Federal contract reporting requirements 
related to labor laws, as well as other reporting requirements as 
practicable so that compliance is as easy and efficient for businesses 
as possible.
    While the focus of the E.O. is on helping contractors come into 
compliance, there may be instances where a contractor's actions show a 
lack of business ethics and integrity that warrants notification to the 
agency's Suspending and Debarring Official. This could include 
situations where a disclosure shows a basic disregard for labor laws 
and an unwillingness to come into compliance, as may be demonstrated by 
a pattern of serious or willful violations, continuing violations, or 
numerous violations (which the proposed DOL Guidance collectively 
labels as ``pervasive violations''), with no effort to remediate. Such 
actions will be subject to careful review. If the Suspending and 
Debarring Official is notified, such actions shall be subject to 
review, and if suspension and debarment is necessary, the contractor 
will be given notice and reasonable opportunity to present facts or 
arguments in support of its position, in accordance with longstanding 
principles of fundamental fairness set forth in the FAR.
    In addition to the new requirements to improve labor compliance, 
the rule addresses requirements in the E.O. to ensure workers are given 
the necessary information each pay period to verify the accuracy of 
what they are paid. The proposed rule recognizes that a contractor 
would be in compliance if it provides a worker with a wage statement 
that complies with a state law whose wage statement laws are 
substantially similar to the E.O's wage statement requirements (as 
specified in DOL's Guidance).
    Finally, the proposed rule would implement the E.O.'s requirement 
that contractors and subcontractors who enter into contracts for non-
commercial items over $1 million agree not to enter into any mandatory 
pre-dispute arbitration agreement with their employees or independent 
contractors on any matter arising under Title VII of the Civil Rights 
Act, as well as any tort related to or arising out of sexual assault or 
harassment.
    Additional detail on the requirements of the E.O. and how the above 
steps are reflected in provisions and clauses in the proposed rule are 
discussed below in section II. ``Background and Implementation of the 
E.O.''

II. Background and Implementation of the E.O.

    E.O. 13673 seeks to increase efficiency and cost savings in the 
work performed by parties that contract with the Federal Government by 
ensuring that they understand and comply with labor laws. A number of 
the E.O.'s requirements are addressed in this proposed rule, including 
the following:
    Section 2 of the E.O. contains contractor disclosure requirements 
designed to provide contracting officers pertinent information to 
consider in making responsibility determinations, which will improve 
contracting officers' ability to award contracts to contractors that 
have a satisfactory record of

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integrity and business ethics. Similar disclosure requirements are 
required at the subcontractor level.
    Section 2(a)(i) of the E.O. establishes that offerors on a contract 
estimated to exceed $500,000 must represent whether there has been any 
administrative merits determination, arbitral award or decision, or 
civil judgment, (as defined in DOL Guidance entitled: ``Guidance for 
Executive Order 13673, `Fair Pay and Safe Workplaces' ''), rendered 
against the offeror, within a three year period preceding the offer, 
for violations of any of the enumerated labor laws.
    Section 2(a)(ii) of the E.O. provides that a contracting officer, 
as part of the contractor responsibility determination, will provide an 
opportunity for a prospective contractor to disclose any steps taken to 
correct the violations of or to improve compliance with the labor laws, 
including any agreements entered into with an enforcement agency.
    Section 3 of the E.O. requires each agency to designate a senior 
agency official to be an agency labor compliance advisor (ALCA) to 
assist contracting officers, contractors, the DOL and other relevant 
enforcement agencies in reviewing and evaluating disclosed information. 
The ALCA, may also assist subcontractors by referring them to the 
appropriate DOL office. DOL, as stated in its ``Guidance for Executive 
Order 13673, `Fair Pay and Safe Workplaces' '', plans to set up a 
structure within DOL to consult with ALCAs in carrying out their 
responsibilities and duties and to be available to consult with 
contractors and subcontractors.
    Section 4 of the E.O. requires DoD, GSA, and NASA, in consultation 
with DOL, the Office of Management and Budget, and enforcement agencies 
to identify considerations for determining whether serious, repeated, 
willful, or pervasive violations of the enumerated labor laws 
demonstrate a lack of integrity or business ethics. DOL is responsible 
for developing guidance to assist agencies in determining whether 
administrative merits determinations, arbitral awards or decisions, or 
civil judgments were issued for serious, repeated, willful, or 
pervasive violations.
    Section 5 of the E.O. addresses paycheck transparency in Federal 
contracts by requiring that contractors provide individuals performing 
work under the contract for whom they must maintain wage records under 
the Fair Labor Standards Act, 40 U.S.C. chapter 31, subchapter IV, Wage 
Rate Requirements (Construction), formerly known as the Davis-Bacon 
Act, 41 U.S.C. chapter 67, Service Contract Labor Standards, formerly 
known as the Service Contract Act, or equivalent state laws with a 
document with basic information about their hours and wages so that 
individuals will know if they are being paid properly for work 
performed. In addition, when contractors are treating an individual as 
an independent contractor, rather than an employee, the contractor must 
provide a document stating this to the individual.
    Section 6 of the E.O. provides that for contracts estimated to 
exceed $1,000,000, employees and independent contractors of contractors 
may not be required to enter into pre-dispute arbitration agreements 
for disputes arising out of Title VII of the Civil Rights Act or from 
torts related to sexual assault or harassment.
    Section 10 of the E.O. states that the E.O. became effective upon 
signature, and applies to solicitations for contracts as set forth in 
the FAR final rule.

A. FAR Implementation

    The rule proposes to add FAR subpart 22.20, Fair Pay and Safe 
Workplaces. FAR 22.2002 adds definitions. FAR 22.2004 summarizes the 
E.O. section 2 disclosure requirements. FAR 22.2005 implements the E.O. 
section 5 paycheck transparency requirements. FAR 22.2006 implements 
the E.O. section 6 complaint and dispute transparency requirements.
    DoD, GSA, and NASA, in formulating the proposed rule and in 
consultation with DOL, considered the Guidance DOL has proposed in 
accordance with Section 4 of the E.O. DoD, GSA, and NASA has identified 
and prescribed in the proposed rule specifically when, and in what 
manner, the DOL Guidance must be read and utilized to effectively 
implement the E.O.
1. Definitions
    FAR 22.2002 adds definitions, which also appear at 52.222-BB 
Compliance with Labor Laws. Definitions of the terms ``administrative 
merits determination,'' ``agency labor compliance advisor,'' ``arbitral 
award or decision,'' ``civil judgment,'' ``DOL Guidance,'' 
``enforcement agency,'' ``labor compliance agreement,'' ``labor laws,'' 
``labor violation,'' ``pervasive violation,'' ``repeated violation,'' 
``serious violation,'' and ``willful violation'' appear in FAR 22.2002 
and in the clause at FAR 52.222-BB, Compliance with Labor Laws.
    The definition of ``labor laws'' is derived from the E.O and 
includes the following statutes and E.O.s:

--The Fair Labor Standards Act, 29 U.S.C. chapter 8.
--The Occupational Safety and Health Act (OSHA) of 1970.
--The Migrant and Seasonal Agricultural Worker Protection Act.
--The National Labor Relations Act.
--40 U.S.C. chapter 31, subchapter IV, formerly known as the Davis-
Bacon Act.
--41 U.S.C. chapter 67, formerly known as the Service Contract Act.
--E.O. 11246 of September 24, 1965 (Equal Employment Opportunity).
--Section 503 of the Rehabilitation Act of 1973.
--The Vietnam Era Veterans' Readjustment Assistance Act of 1972 and the 
Vietnam Era Veterans' Readjustment Assistance Act of 1974.
--The Family and Medical Leave Act.
--Title VII of the Civil Rights Act of 1964.
--The Americans with Disabilities Act of 1990.
--The Age Discrimination in Employment Act of 1967.
--E.O. 13658 of February 12, 2014 (Establishing a Minimum Wage for 
Contractors.
--Equivalent State laws as defined in Guidance issued by the Department 
of Labor. (The only equivalent State laws implemented in the FAR are 
OSHA-approved State Plans).

    The proposed rule definitions of ``administrative merits 
determination,'' ``arbitral award or decision,'' ``civil judgment,'' 
``pervasive violation,'' ``repeated violation,'' ``serious violation,'' 
and ``willful violation'' are based on DOL's Guidance. The definitions 
of these terms may vary based on the labor law to which they apply. 
Therefore, the definitions in the DOL Guidance must be read in their 
entirety in implementing the E.O.
    In addition to defining terms, the DOL Guidance explains how to 
evaluate reported violations (considering whether the violations are 
serious, repeated, willful, or pervasive); review remediation of the 
violation(s) and any other mitigating factors; determine if the 
violations identified warrant remedial measures; and give appropriate 
consideration to determinations and agreements between contractors and 
DOL or other enforcement agencies, such as a labor compliance 
agreement. The DOL Guidance for E.O. 13673, ``Fair Pay and Safe Work 
Places'' must also be read in its entirety to successfully implement 
the E.O. and when finalized, will be available at www_____. The 
proposed DOL Guidance is being published simultaneously with this 
proposed rule.

[[Page 30552]]

2. Duties of the Agency Labor Compliance Advisor (ALCA)
    Section 3 of the E.O. requires each contracting agency to designate 
a senior agency official to be an ALCA to provide consistent guidance 
on whether contractors' actions rise to the level of a lack of 
integrity or business ethics. ALCAs, in consultation with DOL and other 
agencies responsible for enforcing labor laws, will help contracting 
officers to do the following:
     Review information regarding violations reported by 
contractors;
     Assess whether reported violations are serious, repeated, 
willful, or pervasive;
     Review the contractor's remediation of the violation and 
any other mitigating factors; and,
     Determine if the violations identified warrant remedial 
measures, such as a labor compliance agreement--i.e., an agreement 
entered into between an enforcement agency and a contractor or 
subcontractor to address appropriate remedial measures, compliance 
assistance, steps to resolve issues to increase compliance with labor 
laws or other related matters.
    Proposed FAR sections 22.2004-2 and 22.2004-3 implement section 3 
of the E.O. by addressing the newly established role of the ALCA, and 
the relationship of the ALCA with the contracting officer. FAR 22.2004-
2 and 22.2004-3 provide details concerning the ALCA obtaining violation 
information, and furnishing written recommendations to the contracting 
officer.
3. Compliance With Labor Laws: Pre-award Actions
    i. Contractors.
    The proposed FAR 22.2002, 22.2004, 52.222-AA, Representation 
Regarding Compliance with Labor Laws (Executive Order 13673) (and its 
commercial item equivalent at 52.212-3(q)), and 52.222-AB, 
Subcontractor Responsibility Matters Regarding Compliance with Labor 
Laws (Executive Order 13673), implement E.O. section 2(a). These 
requirements emphasize the need to specifically address labor law 
compliance when determining contractor and subcontractor 
responsibility.
    The FAR provision at 52.222-AA, Representation Regarding Compliance 
with Labor Laws (Executive Order 13673), requires an offeror, for 
solicitations estimated to exceed $500,000, to represent whether it has 
any administrative merits determinations, arbitral awards or decisions, 
or civil judgments rendered against it, within the preceding three 
years for violations of the specified labor laws.
    The commercial item equivalent of 52.222-AA will appear as new 
paragraph (q) of 52.212-3, Offeror Representations and Certifications--
Commercial Items.
    ii. Contracting officer pre-award duties.
    The proposed FAR 22.2004-2 implements E.O. section 2(a)(ii), (iii) 
and (vi) by emphasizing the requirement that contracting officers must 
consider information concerning violations of the specified labor laws 
when evaluating contractor responsibility under FAR subpart 9.1. The 
proposed rule requires the contracting officer to confer with the ALCA 
and consider the ALCA's advice in evaluating any disclosed violations, 
but reaffirms that the contracting officer solely has the duty to make 
a responsibility determination of prospective contractors.
    If a contracting officer has initiated a responsibility 
determination for a prospective contractor and the prospective 
contractor disclosed labor law violations in the representation at 
52.222-AA (or its commercial item equivalent at 52.212-3(q)(2)), the 
contracting officer is instructed to--
     Request that the prospective contractor submit information 
into the System for Award Management (SAM) _____ (insert name of 
reporting module) www.sam.gov, (unless the information is already in 
the SAM) and is current and complete, or unless the prospective 
contractor meets an exception to SAM registration (see 4.1102(a)) in 
which case the following information must be furnished to the 
contracting officer:
    [cir] The labor law violated.
    [cir] The case number, inspection number, charge number, docket 
number, or other unique identification number.
    [cir] The date rendered.
    [cir] The name of the court, arbitrator(s), agency, board, or 
commission rendering the determination or decision;
     Ask the contractor for the administrative merits 
determination, arbitral award or decision, or civil judgment document, 
as necessary to make an evaluation and support recommendations, if the 
documents are not otherwise available, and the ALCA has been unable to 
obtain the documents;
     Request that the prospective contractor provide to the 
contracting officer such additional information as the prospective 
contractor deems necessary to demonstrate its responsibility, e.g., 
mitigating circumstances, remedial measures (to include labor 
compliance agreements), and other steps taken to achieve compliance 
with labor laws;
     Provide the additional information to the ALCA; and
     Request the ALCA provide, within three business days of 
the request or another time period required by the contracting officer, 
written advice and recommendation as to the contractor's efforts to 
comply with the specified labor laws. The ALCA is to make one of the 
following recommendations:
    [cir] The prospective contractor could be found to have a 
satisfactory record of integrity and business ethics.
    [cir] The prospective contractor could be found to have a 
satisfactory record of integrity and business ethics if the process to 
enter into or enhance a labor compliance agreement is initiated.
    [cir] The prospective contractor could be found to not have a 
satisfactory record of integrity and business ethics, and the agency 
suspending and debarring official should be notified, in accordance 
with agency procedures as contemplated by current FAR provisions.
    The recommendation shall include the following, based on the DOL 
Guidance for E.O 13673, ``Fair Pay and Safe Workplaces:''
    [cir] Whether any violations should be considered serious, 
repeated, willful, or pervasive.
    [cir] The number of labor violations (depending on the nature of 
the violation, in most cases, a single violation may not necessarily 
give rise to a determination of lack of responsibility).
    [cir] Whether the prospective contractor has initiated its own 
remedial measures.
    [cir] The need for, existence of, or whether the prospective 
contractor is adequately adhering to labor compliance agreements or 
other appropriate remedial measures.
    [cir] Whether the prospective contractor is negotiating in good 
faith a labor compliance agreement.
    [cir] Such supporting information that the ALCA finds to be 
relevant.
    The contracting officer is to make a judgment of contractor 
responsibility, reviewing the DOL Guidance and the ALCA's 
recommendation.
    Finally, the proposed rule preserves and emphasizes the requirement 
at FAR 9.103(b), which states that if a contracting officer finds a 
prospective a small business contractor to be nonresponsible, the 
matter shall be referred to the Small Business Administration (SBA). If 
SBA concludes that the small business is responsible, SBA will issue a 
Certificate of Competency.

[[Page 30553]]

    iii. Duties of contractors before awarding a subcontract.
    Sections 2(a)(iv) and (v) of the E.O. require that for subcontracts 
estimated to exceed $500,000, other than COTS items, the contractor 
shall require its prospective subcontractors to make similar 
disclosures to those that the contractor must make; and before awarding 
a subcontract, the contractor is required to consider the information 
submitted in determining whether the subcontractor is a responsible 
source.
    The contractor has discretion in how it manages this requirement. A 
contractor could decide to evaluate all of its prospective 
subcontractors at all tiers or may manage a process by which 
subcontractors evaluate lower tier subcontractors. The prime contractor 
is responsible for establishing the approach that works best for the 
contractor, based upon factors such as the nature and size of the 
contract requirement.
    The proposed FAR revision sets forth steps that contractors must 
follow when determining the responsibility of subcontractors related to 
labor law compliance. The provision at 52.222-AB, Subcontractor 
Responsibility Matters Regarding Compliance with Labor Laws (Executive 
Order 13673), applies before contract award to subcontracts at any tier 
in excess of $500,000 except for COTS items, and requires the 
contractor to follow the procedures in paragraph (c) of the clause at 
52.222-BB, Compliance with Labor Laws. When contractors are determining 
subcontractor responsibility after award of the prime contract, the 
clause at 52.222-BB, Compliance with Labor Laws applies. Paragraphs 
(c)(3) through (c)(7) of the clause require the following:
     The contractor shall require a prospective subcontractor 
to represent to the best of the subcontractor's knowledge and belief 
whether there have been any administrative merits determinations, 
arbitral awards or decisions, or civil judgments, for violations of 
labor laws rendered against the subcontractor within the three-year 
period preceding the date of the subcontractor's offer.
     If the prospective subcontractor responds affirmatively, 
and the contractor initiates a responsibility determination and 
requests additional information, the prospective subcontractor shall 
provide to the contractor, the administrative merits determinations, 
arbitral awards or decisions, or civil judgments documents that were 
rendered against the subcontractor within the preceding three-year 
period prior to the subcontractor's offer, and any notice the 
subcontractor received from DOL advising that it has not entered into a 
labor compliance agreement within a reasonable period or is not meeting 
the terms of an existing agreement.
     The contractor shall afford a subcontractor an opportunity 
to provide such additional information as the subcontractor deems 
necessary to demonstrate its responsibility, e.g., mitigating 
circumstances, remedial measures (to include labor compliance 
agreements), other steps taken to achieve compliance with labor laws, 
and explanations for delays in entering into a labor compliance 
agreement within a reasonable period or not meeting the terms of an 
existing agreement.
     The contractor shall evaluate information submitted by the 
subcontractor as part of determining subcontractor responsibility and 
complete the evaluation--
    [cir] For subcontracts awarded or that become effective within five 
days of the prime contract execution, no later than 30 days after 
subcontract award; or
    [cir] For all other subcontracts, prior to subcontract award. 
However, in urgent circumstances, the evaluation shall be completed 
within 30 days of subcontract award.
     The contractor shall consider the following in evaluating 
information--
    [cir] The nature of the violations (whether serious, repeated, 
willful, or pervasive);
    [cir] The number of violations (depending on the nature of the 
violation, in most cases, a single violation of law may not necessarily 
give rise to a determination of lack of responsibility;
    [cir] Any mitigating circumstances;
    [cir] Remedial measures taken to address violations, including 
existence of and compliance with any labor compliance agreements, 
including whether the subcontractor is still negotiating in good faith 
a labor compliance agreement; and
    [cir] Any notices the subcontractor received from DOL advising that 
it has not entered into a labor compliance agreement within a 
reasonable period or is not meeting the terms of an existing agreement.
    [cir] Any advice or assistance provided by DOL,
    [cir] Paragraph (e) states that contractors may consult with DOL 
regarding subcontractor labor law compliance.
     The contractor shall notify the contracting officer of the 
following information if the contractor determines that a subcontractor 
is a responsible source after having been informed that DOL has advised 
that the subcontractor has not entered into a compliance agreement 
within a reasonable period or is not meeting the terms of the 
agreement:
    [cir] The name of the subcontractor; and
    [cir] The basis for the decision.
    As explained above, DOL will provide consultation and assistance, 
upon request, in evaluating contractor and subcontractor information 
relevant to disclosed labor violations. The DOL guidance explains that 
DOL will set up a structure within DOL to be available to consult with 
contractors and subcontractors. The proposed rule limits contracting 
officer and the ALCA's role, with respect to subcontractor labor 
violation information, to furnishing assistance such as access to the 
DOL Guidance and the appropriate contacts at DOL.
4. Compliance With Labor Laws: Actions Post-Award
    i. Contractor and subcontractors. Proposed FAR 52.222-BB, 
Compliance with Labor Laws, implements the post-award responsibilities 
identified in EO sections 2(b)(i) and (iii). The procedures for a 
contractor considering subcontractor labor violation information when 
determining the responsibility of subcontractors at 52.222-BB apply to 
subcontracts awarded after the prime contract is executed.
    The contractor and its subcontractors are required to continue to 
disclose, semi-annually, whether there have been any administrative 
merits determinations, arbitral awards or decisions, or civil judgments 
rendered against them for violations of labor laws.
    Semi-annually during subcontract performance, subcontractors must 
determine whether disclosed information is updated, current and 
complete. If the information is not updated, current and complete, 
subcontractors must provide updated information to the contractor. If 
the information is updated, current and complete, no action is 
required. A subcontractor shall also disclose, within 5 business days, 
any notification by DOL that it has not entered into a labor compliance 
agreement within a reasonable period, or is not meeting the terms of an 
existing labor compliance agreement.
    The contractor shall afford subcontractors an opportunity to 
provide any additional information, e.g., mitigating circumstances, 
remedial measures (to include labor compliance agreements), and other 
steps taken to achieve compliance with labor laws. If the subcontractor 
informed the

[[Page 30554]]

contractor that it received DOL notices of delay in entering into or 
non-compliance with the terms of an existing Labor Compliance 
Agreement, or the contractor otherwise obtained this information, the 
contractor shall allow the subcontractor to provide explanations and 
supporting information for such delays and non-compliances. Contractors 
are responsible for considering information submitted by subcontractors 
after contract award, with respect to labor law violations and the need 
for new or enhanced labor compliance agreements. Contractors may 
consult with DOL in evaluating subcontractor labor law violations. The 
contractor shall notify the contracting officer of the name of the 
subcontractor and the basis for the decision if the contractor decides 
to continue the subcontract after having been informed that DOL has 
advised that the subcontractor has not entered into a labor compliance 
agreement within a reasonable period or is not meeting the terms of the 
agreement.
    ii. Contracting officers. Proposed FAR 22.2004-3 and paragraph (b) 
of 52.222-BB implement E.O. section 2(b)(ii). Contracting officers, in 
consultation with the ALCA, are responsible for considering information 
submitted by contractors after contract award, regarding labor law 
violations. Among the actions available to the contracting officer are:
     No action required, continue the contract;
     Refer the matter to DOL for action, which may include a 
new or enhanced labor compliance agreement;
     Do not exercise an option (see FAR 17.207(c)(8));
     Terminate the contract in accordance with the procedures 
set forth in FAR Part 49 or 12.403; or
     Notify the agency Suspending and Debarring Official if 
there are such serious, repeated, willful or pervasive labor 
violation(s) that the violation(s) demonstrate a lack of integrity or 
business ethics of a contractor or subcontractor, in accordance with 
agency procedures.

B. Paycheck Transparency

    FAR 22.2005 and 52.222-XX, Paycheck Transparency, implement section 
5 of the E.O. The proposed rule requires contractors, for contracts 
valued in excess of $500,000, to provide in every pay period a document 
(wage statement, also known as a pay stub) to all individuals 
performing work under the contract subject to certain wage record 
statutes. The wage statement lists the individual's hours worked, 
overtime hours, pay, and additions made to or deductions made from pay. 
Overtime hours contained in the wage statement shall be broken down to 
correspond to the period (which will almost always be weekly) for which 
overtime is calculated and paid. If the contractor does not include the 
hours worked for individuals exempt from the overtime compensation 
requirements of the Fair Labor Standards Act, the contractor must 
inform the individual of the exempt status. In addition, if the 
contractor is treating an individual performing work under a contract 
as an independent contractor, and not as an employee, the contractor 
must provide a document to the individual, informing the individual of 
that status; the document shall be provided prior to commencement of 
work or at the time a contract with the individual is established. The 
wage statement and independent contractor notifications must also be 
provided in languages other than English if a significant portion of 
the workforce is not fluent in English. These requirements also apply 
to subcontracts over $500,000 for other than COTS items.

C. Arbitration of Contractor Employee Claims

    Proposed FAR 22.2006 and the clause at 52.222-YY, Arbitration of 
Contractor Employee Claims, implement section 6 of the E.O. The 
proposed rule requires that contractors agree that the decision to 
arbitrate claims which arise under title VII of the Civil Rights Act of 
1964, or under any tort related to or arising out of sexual assault or 
harassment, be made only with the voluntary consent of employees or 
independent contractors after such disputes arise. Exceptions are as 
follows:

--Contracts and subcontracts of $1,000,000 or less.
--Contracts and subcontracts for the acquisition of commercial items. 
The E.O. excepts the acquisition of COTS items; these are automatically 
included in the exception for commercial items; see the existing FAR 
definition of COTS at 2.101.
--Where employees are covered by a collective bargaining agreement 
negotiated between the contractor and a labor organization representing 
the contractor's employees.
--Certain pre-existing arbitration agreements described at 52.222-
YY(b)(2).

III. Issues Highlighted for Public Comment

    Consistent with section 4 of the E.O. the proposed DOL Guidance and 
proposed FAR rule have been developed to work together to create a 
compliance process that is manageable and reasonable. Given the 
integrated nature of the two documents, they are being published under 
separate notice on the same day so that respondents have the 
opportunity to consider the documents holistically in addition to 
offering comment on the specifics of each document. DoD, GSA, and NASA 
welcome public comment on any aspect of its rule and especially on the 
issues highlighted below. Responses to comments regarding subjects 
covered by DOL guidance will be coordinated with DOL.

A. Equivalent State Laws

    DoD, GSA, and NASA and DOL recognize there will be challenges 
associated with the implementation of section 2 of the E.O. as regards 
the state laws that DOL determines to be equivalent to the Federal laws 
enumerated. Therefore, other than the Occupational Safety and Health 
Administration (OSHA)-approved state plans, the equivalent state law 
requirement will not be implemented through this rulemaking. DOL will 
publish additional guidance for comment, and DoD, GSA, and NASA will 
also publish a subsequent proposed rule to implement the E.O.'s 
requirements as to equivalent state laws. Public comment will be 
welcome upon publication of the subsequent proposed FAR rule.

B. Burden Reduction for Small Businesses

    Section 4(e) of the E.O. requires DOL and DoD, GSA, and NASA to 
minimize, to the extent practicable, the burden of complying with the 
E.O. for Federal contractors and subcontractors and in particular small 
entities, including small businesses. A number of steps have been taken 
in this proposed rule to minimize burden, including the following: (1) 
limiting disclosure requirements to contracts over $500,000, and 
subcontracts over $500,000 excluding COTS items, which excludes the 
vast majority of transactions performed by small businesses; (2) 
limiting initial disclosure from offerors to a simple statement of 
whether the offeror has any covered labor violations and generally 
requiring more detailed disclosures only from the apparent awardee; (3) 
requiring post award updates semi-annually; (4) creating certainty for 
contractors by having ALCAs coordinate through DOL to promote 
consistent responses across Government agencies regarding disclosures 
of violations; (5) considering phasing in requirements for flowdown and 
disclosure of state labor law

[[Page 30555]]

violations so that contractors and subcontractors have an opportunity 
to become acclimated to new processes; and (6) setting up systems that 
centralize and avoid redundant reporting of violations. In addition, 
DOL intends to allow companies to work with DOL and other enforcement 
agencies to remedy potential problems independent of the procurement 
process so companies can give their full attention to the procurement 
process when a solicitation of interest is issued. Comment is sought on 
additional regulatory or other related steps that might specifically 
reduce burden for small businesses and other small entities.

C. Public Disclosure of Violation Information

    The proposed rule requires prospective prime contractors to 
publicly disclose whether they have violations of covered laws within 
the last three years and, for prospective contractors being evaluated 
for responsibility, certain basic information about the violation 
(e.g., the law violated, the docket number, the name of the body that 
made the decision). The rule would not compel public disclosure of 
additional documents the prospective contractor deems necessary to 
demonstrate its responsibility, such as mitigating circumstance, 
remedial measures and other steps taken to achieve compliance with 
labor laws. The rule is silent on the public disclosure of the 
administrative merits determinations, arbitral awards or decisions, or 
civil judgments; some of which are independently available as public 
records, e.g., civil judgments, and on the public disclosure of labor 
compliance agreements. Comment is sought on the scope of documents that 
should be publicly disclosed, and what other changes, if any, should be 
made regarding disclosure to ensure the right balance has been reached 
between transparency and the creation of a reasonable environment for 
contractors to work with enforcement agencies on compliance agreements 
and other appropriate remediation measures.

D. Use of Technology

    Section 4(d) of the E.O. requires the GSA Administrator to develop 
a single Web site for Federal contractors to use for all Federal 
contract reporting requirements related to this order. Interested 
parties may provide feedback through the National Dialogue with 
information available at www.cao.gov on how technology can be used to 
maximize the efficiency of compliance and reduce reporting burden. 
Interested parties are advised that such comments will not be 
considered public comments for the purposes of this proposed rule 
making.

E. Subcontractor Requirements

    The labor compliance requirements of the E.O. apply both to prime 
contractors and to their subcontractors awarded subcontracts over 
$500,000 other than for COTS items. DoD, GSA, and NASA and DOL seek to 
minimize burden for contractors and subcontractors, including small 
businesses, in meeting new responsibilities related to flowdown of 
requirements to subcontractors, while also ensuring improved compliance 
with labor laws by subcontractors within the Federal supply chain.
    Prime contractors are required to obtain from subcontractors with 
whom they have contracts of more than $500,000 the same labor 
compliance history that they must themselves disclose.
    The rule provides that prime contractors may seek assistance from 
DOL in evaluating subcontractor labor violations and making 
determinations of responsibility or, for existing subcontracts, 
evaluating the need for other actions. DoD, GSA, and NASA are also 
considering alternative language addressing the handling of flowdown, 
described in section IV. Comments are welcome on the handling of 
flowdown, both in the proposed rule and in the alternatives described 
below.

F. Recordkeeping

    The recordkeeping burden does not currently include hours for 
prospective contractors or prospective subcontractors to retain records 
of their own labor law violations. These labor law violations are 
significant enough that it is reasonable to assume that a prudent 
business would retain such determination or decision documents as a 
normal business practice. However, contractors and subcontractors may 
choose to set up internal databases to track violations subject to 
disclosure in a more readily retrievable manner--particularly firms 
that are larger and more geographically or organizationally dispersed--
and may incur associated one-time setup costs. Public comment and 
information are sought on the need for and cost of setting up these 
systems, how such costs depend on contractors' size and organizational 
structure, and the extent to which setting up such systems would reduce 
recurring disclosure costs in the following years.

IV. Alternatives to the Proposed Rule Regulatory Text for Consideration 
and Comment

    DoD, GSA, and NASA seek to create processes that are clear and 
manageable, for both prime contractors and their subcontractors, and 
achieve our intent of requiring that compliance with labor laws becomes 
a regular component of a contracting officer's assessment of a prime 
contractor's integrity and business ethics, as well as a prime 
contractor's assessment of a subcontractor's integrity and business 
ethics. Three alternatives are presented below: phase-in of 
subcontractor disclosure requirements, subcontractor disclosures and 
contractor assessments, and contractor and subcontractor remedies.

A. Phase-In of Subcontractor Disclosure Requirements

    Changes proposed through this FAR rule and DOL's Guidance that 
address requirements associated with subcontracting would be applied to 
new contracts in phases so that contractors and subcontractors have 
time to acclimate themselves to their new responsibilities. DoD, GSA, 
NASA, and DOL welcome public input on phase-in approaches. For 
solicitations issued and resultant contracts awarded during the phase-
in period for subcontractors, the rule would apply only to prime 
contractors.

B. Subcontractor Disclosures and Contractor Assessments

    Under the proposed rule, contractors are required to obtain from 
subcontractors with whom they have contracts exceeding $500,000 other 
than COTS items the same labor compliance history that they must 
themselves disclose. The rule provides that prime contractors may seek 
assistance from DOL in evaluating subcontractor labor violations and 
making determinations of responsibility or, for existing subcontracts, 
evaluating the need for other actions.
    As an alternative approach for contractors determining the 
responsibility of their subcontractors, DoD, GSA, and NASA are 
considering a process where the contractor directs the subcontractor to 
consult with DOL on its violations and remedial actions. Under this 
approach, subcontractors would disclose details regarding their 
violations to DOL instead of to the prime contractor. The subcontractor 
would then make a representation back to the prime contractor regarding 
DOL's response to its disclosure. The rule would provide guidance on 
the types of

[[Page 30556]]

subcontractor representations that would serve as a sufficient basis 
for the prime contractor to conclude that the prospective subcontractor 
is a responsible source for purposes of labor compliance, and the 
additional steps the subcontractor and prime contractor would need to 
take when DOL advises the subcontractor (or prime contractor) that 
subcontractor violations have not been adequately remediated.
    To minimize impact on procurement lead time, the alternative would 
allow the prime contractor to make a determination of responsibility if 
DOL did not provide advice within 3 business days of the 
subcontractor's request and did not previously advise the subcontractor 
that the subcontractor needed to enter into a labor compliance 
agreement to address its violations. However, the subcontractor would 
be required to inform the contractor within 5 business days of any 
advice made by DOL concerning the violations at any time during the 
term of the subcontract (including a notification that the contractor 
did not enter into an agreement to remediate violations in a reasonable 
period or did not meet the terms of an existing agreement to mitigate 
violations) and the prime contractor would be required to consider the 
information in a timely manner and determine whether action is 
necessary. If the prime determines that that subcontractor is a 
responsible source or otherwise retains the subcontractor post-award 
after being informed of DOL concerns, the prime would be required to 
inform the contracting officer of its decision and the basis for the 
decision.
    To implement the approach described above, the following language 
is a possible alternative to the language in paragraph (c) and (d) of 
FAR 52.222-BB, Compliance with Labor Laws. The public may also comment 
on whether the final rule should be structured to allow the prime 
contractor the discretion to select either approach. We invite comments 
on these approaches, and whether there are additional or alternative 
procedures that could better achieve the intent of the E.O.
    Beginning of alternative paragraphs (c) and (d) of 52.222-BB:
    (c) Subcontractor responsibility.
    (1) The Contractor shall evaluate subcontractor labor violation 
information when determining subcontractor responsibility.
    (2) This clause applies to subcontracts for other than commercially 
available off-the-shelf items with an estimated value that exceeds 
$500,000.
    (3) The contractor shall require a prospective subcontractor to 
represent to the best of the subcontractor's knowledge and belief 
whether there have been any administrative merits determinations, 
arbitral awards or decisions, or civil judgments, for violation of 
labor laws rendered against the subcontractor within the three-year 
period preceding the date of the subcontractor's offer.
    (4) In evaluating subcontractor responsibility, the contractor 
shall require the subcontractor to disclose all covered labor 
violations to DOL and may conclude that the prospective subcontractor 
is a responsible source for purposes of labor compliance under the 
Executive Order if--
    (i) The prospective subcontractor provides a negative response in 
its representation made pursuant to paragraph (3); or
    (ii) The prospective subcontractor, in response to a request made 
by the Contractor in the context of performing a responsibility 
determination, responds affirmatively, represents to the best of the 
subcontractor's knowledge and belief that it has disclosed to DOL any 
administrative merits determinations, arbitral awards or decisions, or 
civil judgments documents that were rendered against the subcontractor 
within the preceding three-year period prior to the subcontractor's 
offer, and any information that the subcontractor, in its judgment, 
believes is relevant for DOL's consideration, including remedial 
actions taken, and--
    (A) has been advised by DOL that--
    (1) it has no serious, willful, repeated, or pervasive violations; 
or
    (2) it has serious, willful, repeated, and/or pervasive violations 
and has taken sufficient action to remediate its violations;
    (B) the subcontractor is a party to a labor compliance agreement(s) 
with DOL or other enforcement agency to address all disclosed 
violations that have been determined by DOL to be serious, willful, 
repeated and/or pervasive violations and states that it has not been 
notified by DOL that it is not meeting the terms of its agreement;
    (C) the subcontractor has agreed to enter into a labor compliance 
agreement or is considering a labor compliance agreement(s) with DOL or 
other enforcement agency to address all disclosed violations that have 
been determined by DOL to be serious, willful, repeated, and/or 
pervasive violations and has not been notified by DOL that it has not 
entered into an agreement in a reasonable period; or
    (D) the subcontractor has provided the contractor with information 
about all disclosed violations that have been determined by DOL to be 
serious, willful, repeated, and/or pervasive, a description of DOL's 
advice or proposed labor compliance agreement and an explanation for 
the subcontractor's disagreement with DOL where the subcontractor has 
been notified by DOL that it has not entered into an agreement in a 
reasonable period or is not meeting the terms of the agreement, or 
where the subcontractor otherwise disagrees with DOL's advice or 
proposed labor compliance agreement;
    (5) If the contractor determines that the subcontractor is a 
responsible source based on the representation made pursuant to 
paragraph (4)(ii)(D), the contractor must notify the Contracting 
Officer of the decision and provide the following information:
    (i) The name of the subcontractor; and
    (ii) The basis for the decision.
    (6) If DOL does not provide advice to the subcontractor within 
three business days of the subcontractor's disclosure of labor 
violation information pursuant to paragraph (c)(4) and DOL did not 
previously advise the subcontractor that it needed to enter into a 
labor compliance agreement to address labor violations, the contractor 
may proceed with making a responsibility determination using available 
information and business judgment.
    (d) Subcontractor updates.
    (1) The Contractor shall require subcontractors to determine, on a 
semi-annual basis during subcontract performance, whether labor law 
disclosures provided to DOL pursuant to paragraph (c)(4) are current 
and complete. If information is current and complete, no action is 
required. If the information is not current and complete, 
subcontractors must provide revised information to DOL and make a new 
representation to the Contractor pursuant to paragraph (c)(4) to 
reflect any advice provided by DOL or other actions taken by the 
subcontractor.
    (2) The Contractor shall further require the subcontractor to 
disclose during the course of performance of the contract any 
notification by DOL, within 5 business days of such notification, that 
it has not entered into a labor compliance agreement in a reasonable 
period or is not meeting the terms of a labor compliance agreement to 
which it is a party, and shall allow the subcontractor to provide an 
explanation and supporting information for the delay or non-compliance.
    (3) The Contractor shall consider, in a timely manner, information 
obtained from subcontractors pursuant to paragraphs (d)(1) and (2) of 
this clause, and determine whether action is necessary. Action may 
include, but is not limited to, requesting that the

[[Page 30557]]

subcontractor pursue a new or enhanced labor compliance agreement, 
requiring other appropriate remedial measures, compliance assistance, 
resolving issues to avoid further violations, or not continuing with 
the subcontract, if necessary.
    (4) If the Contractor has been informed by the subcontractor or DOL 
of DOL's determination that the subcontractor has not entered into a 
labor compliance agreement in a reasonable period or is not meeting the 
terms of an existing agreement, and the contractor determines to 
continue the subcontract, the contractor must notify the Contracting 
Officer of the decision and provide the following information:
    (i) The name of the subcontractor; and
    (ii) The basis for the decision.
    End of alternative paragraphs (c) and (d) of 52.222-BB.
    DOD, GSA and NASA encourage respondents to comment on this 
alternative clause language in addition to the clause in the regulatory 
text of the proposed rule, including any comments on the relative 
benefits and drawbacks of each approach.

C. Contractor and Subcontractor Remedies

    DOD, GSA, and NASA seek to create accountability for compliance in 
a manner that provides reasonable time and opportunities for prime 
contractors and subcontractors to take remedial actions but also 
results in the application of appropriate steps where remediation is 
not being accomplished in a timely fashion. A number of steps have been 
incorporated into the proposed rule, as well as into the alternative 
approach for evaluating subcontractor responsibility and post-award 
efforts described above, to achieve these dual goals.
    For example, the contracting officer would be made aware of 
situations where DOL has determined that a prospective or existing 
contractor or subcontractor with serious, willful, repeated and/or 
pervasive violations has not entered into a labor compliance agreement 
in a reasonable period or is not meeting the terms of such agreement. 
This information would be provided to the contracting officer through 
the ALCA in the case of violations by the prime contractor and through 
the prime contractor in the case of violations by the subcontractor. In 
the latter case, subcontractors would be required to disclose DOL 
concerns related to entering into or meeting the terms of a compliance 
plan to the prime contractor, or DOL may inform the prime contractor 
directly. The prime contractor would then report this information to 
the contracting officer if the prime contractor selected the 
subcontractor or retained the subcontractor to continue performing the 
subcontract.
    As an additional step, DOD, GSA, and NASA are considering the 
following alternative supplemental FAR language to address 
consideration of compliance with labor laws in the evaluation of 
contractor performance.
    Beginning of alternative supplemental FAR language:


22.2004-5   Consideration of Compliance With Labor Laws in Evaluation 
of Contractor Performance.

    The Contracting Officer, in consultation with the Agency Labor 
Compliance Advisor (ALCA), shall, as part of the Contractor's 
performance evaluation under FAR 42.1503(b), consider concerns raised 
by DOL that the Contractor, or one or more of its subcontractors, has 
not entered into a labor compliance agreement within a reasonable 
period or is not meeting the terms of an existing compliance agreement 
to address serious, willful, repeated and/or pervasive violations of 
covered labor laws. The Contracting Officer's evaluation shall take 
into account--
    (a) The contractor's explanation for any delays in entering into a 
compliance agreement with respect to its own labor violations and other 
remediation steps taken; and
    (b) The contractor's explanation for finding a subcontractor 
responsible or retaining the subcontractor, as set forth in 52.222-
BB(c)(7) and (d)(5), and any remediation steps taken.
    End of alternative supplemental FAR language
    The proposed rule (and alternative language) outline available 
remedies. For example, for subcontracts, remedies include requiring a 
new or enhanced labor compliance agreement, requiring other appropriate 
remedial measures, compliance assistance, and resolving issues to avoid 
further violations, or a decision not to continue with the subcontract, 
if necessary.
    DoD, GSA, and NASA welcome comment on whether these remedies, 
including those in the supplemental language being considered for FAR 
22.2004-5, achieve the appropriate balance between the dual goals of 
providing reasonable time for remedial action and accountability for 
unjustified inaction and what additional or alternative remedies should 
be considered.
Impact and Associated Burden of Alternatives
    Collateral documents, which include the Regulatory Impact Analysis 
(RIA), the Paperwork Reduction Act (PRA) Supporting Statement, and 
Regulatory Flexibility Analysis (RFA), have been prepared reflecting 
the language of the regulatory text as promulgated in this proposed 
rule. Potential impacts and associated burdens of the alternative 
options presented in this section IV were not separately addressed. If, 
in the final rule promulgation, alternative options are selected, 
impacts and associated burdens will be reduced as the alternatives are 
less burdensome and will have a lesser impact.

V. Executive Orders 12866 and 13563

    A. 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. This is a 
significant regulatory action and, therefore, was subject to review 
under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated 
September 30, 1993. This rule is a major rule under 5 U.S.C. 804.
    B. A Regulatory Impact Analysis that includes a detailed discussion 
and explanation about the assumptions and methodology used to estimate 
the cost of this proposed rule and a discussion of alternatives to this 
regulatory action is available in the docket for review. For access to 
the docket to read background material or comments received, go to 
http://www.regulations.gov/. The E.O. contains specific requirements 
pertaining to labor law violation disclosures, paycheck transparency, 
and complaint and dispute transparency. The contractor and 
subcontractor population that may be impacted by this rule is 22,153 
contractors and 3,622 subcontractors for a total of 25,775. Contractors 
and subcontractors subject to the E.O. will incur a cost to comply. A 
summary of the total quantifiable cost is listed below.
    Summary Table of Quantifiable Costs--The table summarizes the 
following costs of the E.O.: Review of DOL Guidance and FAR rule, labor 
law violation disclosure and review, paycheck transparency, and total 
public and Government costs.

[[Page 30558]]



                   Summary Table of Quantifiable Costs
------------------------------------------------------------------------
                                                            Year 2 and
                                              Year 1           after
------------------------------------------------------------------------
Review of DOL Guidance and FAR rule.....     $12,990,600              $0
Initial Representation of Labor Law           70,445,418      70,445,418
 Violations.............................
Labor Law Violation Updates.............       8,524,423       8,524,423
Recordkeeping...........................       1,528,020       1,528,020
                                         -------------------------------
  Subtotal Labor Law Disclosure and           80,497,861      80,497,861
   Review...............................
Paycheck Transparency...................      13,082,561      11,009,461
                                         -------------------------------
  Total Public Costs....................     106,571,022      91,507,322
                                         -------------------------------
  Total Government Costs................       7,599,811       7,599,811
------------------------------------------------------------------------

    Cost of Complaint and Dispute Transparency--DoD, GSA, and NASA and 
DOL are unable to quantify the overall cost of the complaint and 
dispute transparency provision contained in section 6 of the E.O. 
because the potential increase in the number of claimants that would 
elect to go to trial as a result is unknown. However, the impact is 
expected to be limited for two primary reasons. First, impact on the 
Federal contracting community is limited because these requirements are 
already applicable to Federal contracts awarded by DoD, which is 
responsible for the majority of Federal contracts. And second, the 
increase in the size of judgments awarded to employees or independent 
contractors stemming from a shift toward more cases being litigated in 
court is considered a transfer payment, not affecting the total 
resources of the economy.
    Benefits, Transfer Impacts, and Accompanying Costs of Disclosing 
Labor Law Violations--Labor laws are designed to promote safe, healthy, 
fair, and efficient workplaces. The E.O.'s objective is to increase the 
Government's ability to contract with companies that are compliant with 
labor laws, thereby increasing the likelihood of timely, predictable, 
and satisfactory delivery of goods and services. By making contracting 
officers aware of previous violations by potential contractors, the 
E.O. will help the Government identify and work with responsible 
companies. By encouraging and facilitating responsible behavior by 
contractors and subcontractors, and by helping the Federal Government 
identify and contract with responsible firms, the E.O's disclosure 
requirements are expected to have the following benefits: (1) Improved 
contractor performance; (2) safer workplaces with fewer injuries, 
illnesses, and fatalities; (3) reduced employment discrimination; and 
(4) fairer wages, which can lead to less absenteeism, reduced turnover, 
higher productivity, and better quality workers who produce higher 
quality goods and services. For these reasons, it is expected that the 
rule would lead to improved economy and efficiency in Government 
procurement. These effects will be accompanied by a combination of cost 
increases associated with improving compliance with existing legal 
obligations contained in the covered Labor Laws (not assessed in other 
sections of this regulatory impact analysis) and cost savings for 
contractors and society.
    Benefits, Transfer Impacts of the Paycheck Transparency Provision--
The E.O.'s paycheck transparency provision will likely lead to 
transfers of value between members of society due to improved 
compliance with a variety of Federal, state, and local tax and 
employment laws. This analysis focuses primarily on estimating the 
transfers associated with reducing the misclassification of employees 
as independent contractors--one small subset of the likely transfer 
impacts of paycheck transparency--broken down in terms of (a) Federal 
tax revenues, and (b) minimum wage and overtime premium pay required 
under the FLSA.
    As a result of improved transparency, individuals and the Federal 
Government alike will receive money that would otherwise not be earned 
or collected due to misclassification. In this analysis, the number of 
affected workers who are likely misclassified currently is 18,892 (33% 
x 57,249), and at least 20 percent of 18,892, or 3,778, 
misclassifications will be corrected. The annual impact of correcting 
3,778 cases of misclassification is estimated to be at least $11.19 
million ($2,963 x 3,778), an amount that will be transferred from 
employers (and potentially from taxpayers if increased employers' costs 
are passed through in the form of higher bids for Federal contracts) 
and will accrue in part to employees and in part to Federal revenues. 
The most critical factor that determines the size of the transfer 
estimate is the percentage of misclassifications that will be corrected 
by the E.O.'s paycheck transparency provision. As noted above, DoD, 
GSA, and NASA, and DOL estimated that 20 percent of misclassifications 
will be corrected. As explained, the actual percentage is likely to be 
much higher than 20 percent, meaning that the $11.19 million figure is 
likely to be an underestimate of the true annual impact of correcting 
misclassifications.
    Benefits and Transfer Impacts of Complaint and Dispute Transparency 
Provision--The primary net economic benefit to the public that will 
derive from the E.O.'s mandatory-arbitration prohibition is reduced 
discrimination as a result of an increased incentive for employers to 
avoid it. Increased risk of public exposure, class-action suits and 
higher damages awards provides an incentive for employers to comply 
with anti-discrimination laws that arbitration cannot match. As 
described above, it is generally accepted that discrimination on the 
basis of race, gender and other prohibited bases results in economic 
inefficiencies, and reducing such discrimination provides a net 
economic benefit to the public. DoD, GSA, and NASA, and DOL have not 
found sufficient data to quantify the expected reduction in 
discrimination as a result of the E.O.'s mandatory-arbitration 
prohibition and request public comment on potential methods and sources 
of data for reaching such an estimate.
    This rule will promote economy and efficiency in Federal Government 
procurement by ensuring that the Government contracts with responsible 
sources who comply with labor laws. Stability, dependability, 
accountability and transparency are important elements of economy and 
efficiency. Contractors and subcontractors performing under Federal 
contracts that are not compliant with labor laws weaken the contracting 
infrastructure leaving it susceptible to waste, fraud and abuse, and 
risk the health, safety,

[[Page 30559]]

and well-being of workers in workplaces. Requiring contractors to 
comply or come into compliance with labor laws will eliminate 
distractions and complications that arise when the Federal Government 
contracts with contractors that have a history of noncompliance.

VI. Regulatory Flexibility Act

    The proposed revisions 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. The Initial 
Regulatory Flexibility Analysis (IRFA) is summarized as follows:

    1. Description of the reasons why action by the agency is being 
taken.
    This proposed rule implements Executive Order (E.O.) 13673, Fair 
Pay and Safe Workplaces, dated July 31, 2014 and amended by E.O. 
13683, December 11, 2014. The policy of the Government is to promote 
economy and efficiency in procurement by awarding contracts to 
contractors that comply with labor laws. Contractors that 
consistently adhere to labor laws are more likely to have workplace 
practices that enhance productivity and increase the likelihood of 
timely, predictable and satisfactory delivery of goods and services 
to the Federal Government. The E.O. creates requirements for Federal 
contractors and subcontractors in three areas: (1) Disclosure of 
administrative merits determinations, arbitral awards or decisions, 
or civil judgments, of certain labor laws and Executive Orders 
(labor laws); (2) notice to individuals of certain pay-related 
information or their status as independent contractors; and (3) a 
prohibition on contractor use of pre-dispute arbitration agreements 
or claims arising under Title VII of the Civil Rights Act of 1964, 
or any tort related to or arising out of sexual assault or 
harassment. These actions are taken to reinforce protections for 
workers under Federal contracts and to ensure the Government 
contracts with companies that have a satisfactory record of business 
ethics and integrity relating to labor laws governing workplace 
health and safety, prevention of discrimination, or fair employment 
and wage practices.
    For contracts over $500,000, each prospective offeror must 
represent whether there have been any administrative merits 
determinations, arbitral awards or decisions, or civil judgments 
(referred to herein as a labor violation) rendered against the 
offeror, within a 3 year period preceding the offer, for violations 
of any of the enumerated labor laws. (The definitions of 
``administrative merits determinations,'' ``arbitral awards or 
decisions,'' and ``civil judgments'' are established in the 
Department of Labor (DOL)'s Guidance for E.O. 13673, Fair Pay and 
Safe Work Places which will be published for public comment under 
separate notice.) Likewise, the contractor will require potential 
subcontractors to disclose whether there have been any labor 
violations.
    Prior to making an award, as part of the responsibility 
determination, the contracting officer, will request prospective 
contractors who have had labor violations to identify which of the 
listed labor laws were violated and provide certain information 
about the specific violations. The information provided includes--
     The labor law violated;
     The case number, inspection number, charge number, 
docket number, or other unique identification number;
     The date rendered; and
     The name of the court, arbitrator(s), agency, board, or 
commission rendering the determination or decision.
    Additionally, the contracting officer will provide prospective 
contractors who have had labor violations an opportunity to provide 
such additional information the contractor deems necessary to 
demonstrate its responsibility, e.g., mitigating circumstances, 
remedial measures (to include labor compliance agreements), and 
other steps taken to achieve compliance with labor laws. Likewise, 
contractors when determining the responsibility of prospective 
subcontractors who have disclosed labor violations must afford this 
same opportunity to provide additional information to the 
prospective subcontractors. To assist contracting officers in the 
review of the labor violations, the E.O. requires each Agency to 
designate a senior agency official to be an agency labor compliance 
advisor (ALCA) who will work in consultation with contracting 
officers and the Department of Labor (DOL) in reviewing and 
evaluating disclosed information. The purpose of this pre-award 
review is to provide contracting officers pertinent information to 
consider in making responsibility determinations, which will improve 
their ability to make contract awards to contractors who have a 
satisfactory record of integrity and business ethics in terms of 
complying with labor laws. It will also allow for screening of 
contractors who need assistance in complying with labor laws. DOL 
will be available to assist contractors with entering into labor 
compliance agreements prior to being considered for contracts. After 
contract award, the contractor will continue to update the firm's 
representation that there has been no administrative merits 
determination, arbitral award or decision, or civil judgment, 
rendered against it. Likewise, the contractor will require its 
subcontractors to disclose and update the subcontractor's 
representation. The DOL is working to provide contractors with the 
tools they need to operate in compliance with the variety of labor 
laws enforced by the Agency. By working with firms who report labor 
violations, the Government is providing assistance to educate 
employers on Federal labor requirements and practices they must 
follow to ensure compliance.
    The E.O. improves on paycheck transparency in Federal contracts 
by requiring that contractors provide individuals with a wage 
statement, also called a pay stub with basic information about their 
hours and wages so that workers will know if they are being paid 
properly for work performed. In addition, when contractors are 
treating an individual as an independent contractor, rather than an 
employee, the contractor must provide a document stating this to the 
individual.
    The E.O. provides that, for contracts estimated to exceed 
$1,000,000, contractor employees and independent contractors may not 
be required to enter into pre-dispute arbitration agreements for 
disputes arising out of Title VII of the Civil Rights Act or from 
torts related to sexual assault or harassment.
    2. Succinct statement of the objectives of, and legal basis for, 
the rule.
    The President issued Executive Order 13673, Fair Pay and Safe 
Workplaces, dated July 31, 2014 and amended by E.O. 13683, December 
11, 2014. The Constitution and the laws of the United States of 
America authorize the President to issue Executive Orders pursuant 
to his authority under ``the Constitution and the laws of the United 
States,'' expressly including the Federal Property and 
Administrative Services Act (Procurement Act), 40 U.S.C. 101 et seq. 
The Procurement Act authorizes the President to ``prescribe policies 
and directives that the President considers necessary to carry out'' 
the statutory purposes of ensuring ``economical and efficient'' 
Government procurement and administration of Government property. 40 
U.S.C. 101, 121(a). The E.O. establishes that the President 
considers the requirements included in the E.O. to be necessary to 
economy and efficiency in Federal contracting (noting that 
``contractors that consistently adhere to labor laws are more likely 
to have workplace practices that enhance productivity and increase 
the likelihood of timely, predictable, and satisfactory delivery of 
goods and services to the Federal Government'' and that ``helping 
executive departments and agencies (agencies) to identify and work 
with contractors with track records of compliance will reduce 
execution delays and avoid distractions and complications that arise 
from contracting with contractors with track records of 
noncompliance'').
    The overall objective of the proposed rule is to increase the 
Government's ability to contract with companies that are compliant 
with labor laws, thereby increasing the likelihood of timely, 
predictable, and satisfactory delivery of goods and services.
    Generally, the proposed rule applies to contracts estimated to 
exceed $500,000. The specific objectives of the proposed rule for 
consideration in this analysis are to--
    a. Ensure that when the responsibility process is initiated, 
contracting officers know whether a prospective contractor has, 
within the three years preceding the offer, had any administrative 
merits, arbitral awards or decisions, or civil judgments rendered 
against the prospective contractor for any of the statutes or 
Executive Orders listed in the E.O. and in the definition of labor 
laws at FAR 22.2002 and if so, to list the labor violations. This is 
done to inform the contracting officer if the offerors consistently 
adhere to labor laws and is necessary to making a responsibility 
determination;
    b. Assist contracting officers in the review of the labor 
violations by designating a senior agency official to be an Agency 
Labor Compliance Advisor (ALCA) who will work in consultation with 
contracting officers and DOL in reviewing and evaluating disclosed

[[Page 30560]]

information. The ALCA will advise the contracting officer whether 
the contractor's disclosed violations are ``serious,'' ``repeated,'' 
``willful,'' and/or ``pervasive,'' (as defined in the DOL Guidance). 
For prospective contractors during responsibility determination and 
post-award for updated disclosures, the ALCA will also assist with 
reviewing remediation of the violation(s), any other mitigating 
factors, and determining whether a labor compliance agreement 
between contractors and enforcement agencies is in place or is 
otherwise needed to address appropriate remedial measures, 
compliance assistance, and steps to resolve issues and to avoid 
further violations. DOL only, not Contracting Officers or ALCA's, 
are available to consult with Contractors regarding subcontractor 
information. Any contracting officer determination that a 
prospective small business contractor lacks certain elements of 
responsibility will be referred to the Small Business Administration 
for a Certificate of Competency; if they are being paid properly for 
work performed;
    c. Provide prospective contractors, as part of the 
responsibility determination, an opportunity to disclose any steps 
taken to correct the labor violations and include any agreements 
entered into with an enforcement agency. The contracting officer, in 
consultation with the ALCA, and relevant enforcement agencies will 
review this information to determine if agreements are in place or 
are otherwise needed to address appropriate remedial measures, 
compliance assistance, steps to resolve issues to avoid further 
violations, or other related matters. The objective of this step is 
to help firms improve their labor law compliance;
    d. Ensure that, post-award, the contractor updates disclosed 
information about labor violations semi-annually for contracting 
officer's continued consideration of contract performance and 
decisions regarding exercise of options;
    e. Ensure that contractors know whether a prospective 
subcontractor, for subcontracts estimated to exceed $500,000 for 
other than commercially available off-the-shelf (COTS) items, has 
within the three years preceding the offer, had any administrative 
merits, arbitral awards or decisions, or civil judgments rendered 
against the prospective subcontractor for any of the statutes or 
Executive Orders listed in Executive Order 13673 and in the 
definition of labor laws at FAR 22.2002 and if so, that the 
potential subcontractor is provided an opportunity to provide such 
additional information the subcontractor deems necessary to 
demonstrate its responsibility, e.g., mitigating circumstances, 
remedial measures (to include labor compliance agreements), and 
other steps taken to achieve compliance with labor laws.
    f. Ensure that, for subcontracts estimated to exceed $500,000, 
for other than COTS items, subcontractors update information 
disclosed to their prime contractor about labor violations semi-
annually and that contractors continue consideration of this 
information during subcontract performance;
    g. Ensure that contractors and subcontractors, for subcontracts 
estimated to exceed $500,000 other than COTS items, provide 
individuals, in every pay period, a wage statement (also known as a 
pay stub) containing the basic information about their such as hours 
worked, overtime hours, pay, and any additions made to or deductions 
made from pay, as detailed in the wage statement requirements of 
DOL's ``Guidance for Executive Order 13673'', Fair Pay and Safe 
Workplaces;
    h. Ensure that individuals who are treated as independent 
contractors, rather than as employees, are provided documentation of 
this status by the contractor or subcontractor, for subcontracts 
estimated to exceed $500,000;
    i. Ensure, where a significant portion of the workforce is not 
fluent in English, the contractor provides the wage statement and 
the independent contractor notification in English and the 
language(s) with which the workforce is more familiar; and
    j. Ensure that employees and independent contractors of 
contractors with contracts estimated to exceed $1,000,000 are not 
required to enter into predispute arbitration agreements for 
disputes arising out of Title VII of the Civil Rights Act or from 
torts related to sexual assault or harassment (except when the 
employee is subject to a collective bargaining agreement negotiated 
between the contractor and a labor union representing them, and when 
valid contracts already exist).
    3. Description of and, where feasible, estimate of the number of 
small entities to which the rule will apply.
    The E.O. requires that, in developing the guidance and proposing 
to amend the FAR, the Secretary of Labor and the FAR Council shall 
minimize, to the extent practicable, the burden of complying with 
the E.O. for Federal contractors and subcontractors and in 
particular small entities, including small businesses, as defined in 
section 3 of the Small Business Act (15 U.S.C. 632), and small 
nonprofit organizations. See Sec.  4(e). The intent of the E.O. is 
to minimize additional compliance burdens and to increase economy 
and efficiency in Federal contracting by helping more contractors 
and subcontractors come into compliance with workplace protections, 
not by denying them contracts.
    Compliance with Labor Laws. This rule will impact all small 
entities who propose as contractors or subcontractors under Federal 
contracts. An initial representation is required for offerors 
responding to solicitations estimated to exceed $500,000. Fiscal 
Year 2013 Federal Procurement Data System (FPDS) data shows that, 
for actions that would be subject to this requirement (including 
contracts and purchase orders, but excluding actions that would not 
be subject to responsibility determination, e.g., task and delivery 
orders and calls) there were 12,382 awards greater than $500,000 to 
unique small businesses with an average of five offers per 
solicitation. The total estimate of small business offerors to which 
this representation will apply is 61,910 (12,382 x an average of 5 
offers per solicitation = 61,910).
    Disclosure. The requirement to provide information about labor 
violations applies to prospective contractors for whom the 
contracting officer has initiated a responsibility determination, 
where the prospective contractor represented that it has had labor 
violation(s). Using FY13 FPDS and the advice of subject matter 
experts, we estimate 24,477 small businesses will have 
responsibility determinations initiated and of those, we estimate 
that 4.05% of these have labor violations for a total estimate of 
991 small businesses prospective contractors to which the disclosure 
requirement will apply. (The number of affirmative responses is 
estimated from DOL data, which provided an upper and lower bound 
percentage. The upper bound percentage of 4.05% was applied in order 
to arrive at a conservative estimate).
    Semi-annual Reporting. The requirement for contractors to update 
their disclosures of (labor) violations semi-annually only applies 
to those offerors receiving a contract.
    Subcontractor Flowdown Disclosure. The requirement for 
contractors to require potential subcontractors to disclosure 
whether they have labor violations applies to any subcontract in 
excess of $500,000 for other than COTS items. Using data reported in 
Federal Subaward Reporting System (FSRS) on subcontracts over 
$500,000 and applying the same methodology for calculating as was 
used for contractors above, we estimate that prospective contractors 
or contractors will start a responsibility determination on 9,831 
offerors. We estimate that 4.05% or 398 small business 
subcontractors will be required to provide information about the 
violations they disclosed. Comments are solicited on whether a 
phased implementation of the rule with respect to application of the 
rule to subcontracts would be helpful to small businesses. This 
approach would allow contractors to benefit from the Government 
implementation and lessons learned. For example, there could be a 
later applicability date for the requirements for potential 
subcontractors to disclose labor violations, as well as reviewing 
and evaluating disclosed labor violations when determining the 
responsibility of potential subcontractors. Commenters favoring a 
phased implementation are requested to provide suggested reasonable 
timeframes with supporting rationale for the recommended timeframe.
    State Law Application. Additionally, the FAR Council plans a 
phased implementation of application of the rule to the Executive 
Order equivalent state laws (See Sec. 2(a)(i)(O)). As cited in the 
DOL ``Guidance for Executive Order 13673,'' Fair Pay and Safe 
Workplaces, DOL plans to publish a second proposed guidance in the 
Federal Register addressing which State laws are equivalent to the 
14 Federal labor laws and E.O.s identified in E.O. 13673 and what 
constitutes an administrative merits determination under each. 
Currently, per the DOL guidance, only State plans approved by DOL's 
Occupational Safety and Health Administration (OSHA-approved State 
plans) are equivalent State laws. A subsequent proposed FAR rule 
would be published for public comment to implement the second DOL 
guidance document.
    Paycheck Transparency. The Fair Labor Standards Act (FLSA) 
requires contractors

[[Page 30561]]

keep accurate records of hours worked and wages paid to individuals, 
but the FLSA does not require a contractor to provide individuals a 
wage statement. However, most states have laws that require 
employers to provide workers with some form of wage statement. The 
type of information required varies by state, with some states 
requiring only a list of deductions and others requiring 
significantly more information. The document provided to individuals 
exempt from the overtime compensation requirements of the Fair Labor 
Standards Act need not include a record of hours worked if the 
contractor informs the employees of their overtime exempt status. 
The additional effort required under a contract is that information 
already required to be recorded at a corporate level must now be 
provided to individuals in a separate document for each pay period. 
The rule does not preclude the contractor from providing this 
information electronically.
    Additionally, this rule requires a contractor treating an 
individual performing work under the contract as independent 
contractors, and not as an employee, to provide a document to these 
individual informing them of that status. This is a one-time 
documentation requirement which will be accomplished prior to 
commencement of work or at the time a contract with the individual 
is established. The rule does not preclude the contractor from 
providing this information electronically. It is estimated that 
14,059 small businesses will be impacted by these paycheck 
transparency requirements.
    Arbitration. The number of small businesses with contracts over 
$1,000,000 is estimated to be 9,822 for prime contractors; 1,964 for 
first tier subcontractors, 982 for 2nd tier subcontractors; and 491 
for third tier subcontractors. However, it should be noted that this 
limitation on arbitration is already applicable to Department of 
Defense (DOD) contracts valued at over $1 million, except for 
commercial items, and that DOD awards the majority of Federal 
procurement contracts. At this time, there is no data available to 
estimate the number of small entities who may have arbitral 
agreements to which this rule will apply. DoD, GSA and NASA invite 
comments from small business concerns and other interested parties 
on the expected impact of this rule on small entities.
    4. Description of projected reporting, recordkeeping, and other 
compliance requirements of the 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.
    Compliance with Labor Laws. Two provisions, 52.222-AA, 
Representation Regarding Compliance with Labor Laws (Executive Order 
13673) and 52.222-AB, Subcontractor Responsibility Regarding 
Compliance with Labor Laws (Executive Order 13673), require small 
businesses responding to a solicitation (for 52.222-AA) or 
responding to a contractor for a subcontracting opportunity (for 
52.222-AB) to disclose whether it has or has not had any 
administrative merits determinations, arbitral awards or decisions, 
or civil judgments, of the enumerated list of labor laws within the 
three-year period preceding the date of their offer. Additionally, 
under the provisions, if the contracting officer (for 52.222-AA) or 
the contractor (for 52.222-AB) is making a responsibility 
determination and the offeror disclosed it had a labor violation, 
then the offeror will be requested to provided additional 
information about the disclosed labor violation(s). For the 
provision at 52.222-AA paragraph (d) requires the contractor, upon 
request of the contracting officer, to identify which of the listed 
labor laws were violated and provide certain information about the 
specific violations. The information provided includes--
     The labor law violated;
     The case number, inspection number, charge number, 
docket number, or other unique identification number;
     The date rendered; and
     The name of the court, arbitrator(s), agency, board, or 
commission rendering the determination or decision.
    This information allows the agency to obtain the labor violation 
document from DOL. If the agency is unable to obtain the violation 
document, the agency will ask the offeror for the document.
    The provision affords an opportunity for offerors to provide all 
other such information that the offeror deems necessary to 
demonstrate its responsibility to the contracting officer. Such 
information may be related to mitigating circumstances, remedial 
measures (to include labor compliance agreements), and other steps, 
taken to achieve compliance with labor laws.
    For the provision at 52.222-AB, paragraph (b) requires that, for 
subcontracts where the estimated subcontract value exceeds $500,000 
for other than COTS items, the contractor shall require all 
prospective subcontractors to represent whether there have been any 
administrative merits determinations, arbitral awards or decisions, 
or civil judgments rendered against them for violations of labor 
laws within the three-year period preceding the date of their offer.
    The 52.222-AB provision requires that clause 52.222-BB(c) 
procedures be followed if the contractor initiates a responsibility 
determination on the prospective subcontractor. During the 
responsibility process, if the subcontractor had responded 
affirmatively to the representation, the contractor shall require 
the prospective subcontractor to submit the administrative merits 
determinations, arbitral awards or decisions, and/or civil judgments 
and any notice the subcontractor received from DOL advising that it 
has not entered into a labor compliance agreement within a 
reasonable period or is not meeting the terms of an existing 
agreement.
    Additionally, contractors shall afford prospective 
subcontractors an opportunity to provide such information the 
prospective subcontractor deems necessary to demonstrate its 
responsibility to the contractor. Such information may be related to 
mitigating circumstances, remedial measures such as labor compliance 
agreements and other steps taken to achieve compliance with labor 
laws and explanations for delays in entering into a labor compliance 
agreement within a reasonable period or not meeting the terms of an 
existing agreement.
    The contractor is required to notify the contracting officer of 
the name of the subcontractor and the basis for the decision if the 
contractor determines that a subcontractor is a responsible source 
after having been informed that DOL advised the subcontractor that 
it has not entered into a labor compliance agreement within a 
reasonable period or is not meeting the terms of such agreement.
    Providing information about the labor violations and mitigating 
information will require businesses to search records for each labor 
violation, determine how the violation was addressed, and disclose 
the information. The provision requires contractors to consider the 
DOL Guidance in making a subcontractor responsibility determination. 
The provision provides that the contractor may consult with DOL.
    The clause at 52.222-BB, Compliance with Labor Laws, requires 
contractors to, semi-annually update information pursuant to the 
provision at 52.222-AA. As in the 52.222-AA provision, the clause 
requires the contractor to furnish a copy of the violation if the 
contracting officer asks, and gives contractors the opportunity to 
furnish information on mitigating circumstances.
    The clause requires contractors to require subcontractors to 
update information provided pursuant to provision 52.222-AB semi-
annually and give subcontractors the opportunity to provide 
information on mitigating circumstances. In addition to the semi-
annual updates, a subcontractor shall also disclose, within 5 
business days, any notification by DOL that it has not entered into 
a labor compliance agreement within a reasonable period, or is not 
meeting the terms of an existing labor compliance agreement. The 
contractor shall notify the contracting officer of the name of the 
subcontractor and the basis for the decision if the contractor 
decides to continue the subcontract after having been informed that 
DOL advised the subcontractor it has not entered into a labor 
compliance agreement within a reasonable period or is not meeting 
the terms of an existing labor compliance agreement.
    The clause requires that contractors consider the information 
provided and the DOL Guidance in determining whether action is 
necessary. Such action may include requesting that the subcontractor 
pursue a new or enhanced labor compliance agreement, requiring other 
appropriate remedial measures, compliance assistance, resolving 
issues to avoid further violations, or not continuing with the 
subcontract, if necessary.
    The clause requires contractors to flowdown the clause to 
subcontracts at all tiers with an estimated value exceeding $500,000 
for other than COTS items.
    Small business subcontractors may be negatively affected by this 
proposed rule. A prime contractor or higher tier subcontractor may 
have difficulty evaluating labor violations, and may find it 
problematic to find time to learn. This may lead to behaviors such 
as choosing not to subcontract with a small business which has labor 
violations, especially if the small business has not initiated the 
process to negotiate a labor compliance agreement.

[[Page 30562]]

    Alternatively, a positive impact is that small businesses with a 
strong record of labor law compliance may receive a greater number 
of subcontracts, and develop strong relationships with contractors 
and DOL.
    Paycheck Transparency. The clause at 52.222-XX, Paycheck 
Transparency, requires contractors to provide a document (wage 
statement) to individuals subject to certain wage record 
requirements in each pay period. The wage statement must which 
include hours worked, overtime hours, pay, and any additions made to 
or deductions made from pay. If the wage statement is not provided 
weekly and is instead provided bi-weekly or semi-monthly (because 
the pay period is bi-weekly or semi-monthly), the hours worked and 
overtime hours contained in the wage statement shall be broken down 
to correspond to the period (which will almost always be weekly) for 
which overtime is calculated and paid.
    If contractors choose not to include a record of hours worked 
for individuals exempt from the overtime compensation requirements 
of the Fair Labor Standards Act, the contractor must inform the 
individual of their overtime exempt status. There is no requirement 
that the contractor inform the individual of the exempt status by 
means of an additional or separate document or notification.
    The clause requires contractors to provide to individuals it is 
treating as independent contractors with a document so informing the 
individual.
    The clause requires that if a significant portion of the 
workforce is not fluent in English, the contractor shall provide the 
wage statement and the independent contractor notification in 
English and the language(s) with which the workforce is more 
familiar.
    The clause requires contractors to flowdown to all subcontracts 
exceeding $500,000, for other than COTS items, at any tier, the 
requirements of the clause.
    Arbitration. The clause at 52.222-YY, Arbitration of Contractor 
Employee Claims, states contractors and subcontractors must agree 
that the decision to arbitrate claims arising under title VII of the 
Civil Rights Act of 1964, or any tort related to or arising out of 
sexual assault or harassment, shall only be made with the voluntary 
consent of employees or independent contractors after such disputes 
arise. This does not apply to:
    (1) Employees covered by a collective bargaining agreement 
negotiated between the contractor and a labor organization 
representing the employees;
    (2) Employees or independent contractors who entered into a 
valid contract to arbitrate prior to the contractor bidding on a 
contract containing the clause, implementing Executive Order 13673 
the Government contract. This exception does not apply i) if the 
contractor is permitted to change the terms of the contract with the 
employee or independent contractor; or ii) when the contract with 
the employee or independent contractor is renegotiated or replaced.
    We estimate that the average contractor will utilize a general 
manager equivalent to a mid-range GS-14 to review the firms' 
policies and procedures to ensure they comply with the requirements 
of the clause. It is estimated this would take approximately thirty 
minutes.
    5. Identification, to the extent practicable, of all relevant 
Federal rules which may duplicate, overlap, or conflict with the 
rule.
    DOL will issue guidance to assist Federal agencies in the 
implementation of the E.O. DOL is working to provide contractors 
with guidance and the tools they need to operate in compliance with 
the variety of labor laws enforced by DOL. By working with firms who 
report labor violations, the Government is providing assistance to 
educate employers on Federal labor requirements and practices they 
must follow to ensure compliance.
    6. Description of any significant alternatives to the rule which 
accomplish the stated objectives of applicable statutes and which 
minimize any significant economic impact of the rule on small 
entities.
    The E.O. contains two distinct requirements for contractors and 
subcontractors seeking or performing covered contracts to provide 
information. First, contractors will disclose to contracting 
agencies (and subcontractors will disclose to contractors) certain 
violations of any of the 14 Federal labor laws identified in the 
E.O. or any equivalent State laws (the Labor Laws), as well as 
additional information regarding the disclosed violations. The 
proposed rule does not implement the equivalent state laws component 
of the E.O., except for OSHA-approved State Plans. DOL will publish 
in the Federal Register at a later date a second proposed guidance 
addressing which State laws are equivalent to the 14 Federal labor 
laws and executive orders identified in the E.O. for which 
contractors and subcontractors must report violations, and DOD, GSA 
and NASA will issue a second proposed rule implementing the E.O's 
requirements with respect to those State laws. Second, they will 
disclose certain information to their workers performing work under 
covered contracts to provide the workers greater transparency 
regarding compensation and employment status. Each requirement will 
cause contractors and subcontractors to incur a cost of compliance. 
The E.O. also contains a provision that prohibits contractors and 
subcontractors with Federal contracts exceeding $1,000,000 from 
requiring employees and independent contractors to arbitrate certain 
discrimination and harassment claims. With regard to prospective 
contractors' disclosure of labor violations, the following 
alternatives are discussed:
    Disclosure of Violations. One alternative to the E.O as 
implemented by the proposed rule would be to require contracting 
officers to consider prospective contractors' labor compliance 
records without the assistance of ALCAs, and without disclosure by 
contractors of their labor violations. This alternative would avoid 
any burden on contractors associated with disclosure. It would also 
eliminate the hiring of ALCAs by contracting agencies. However, the 
E.O and the proposed rule provide for contractor disclosure and for 
ALCAs to assist contracting officers because these tools are deemed 
necessary in order for contracting officers to effectively consider 
firms' labor compliance records. Without timely information 
regarding firms' labor violations, and without the support and 
expert advice of ALCAs, it would not be feasible to expect 
contracting officers to consider labor violations in an expeditious 
way, nor would it be possible to achieve consistency across the 
Government in their consideration of contractors' labor compliance 
records. A related alternative would be to remove the requirement 
that prospective contractors disclose their labor violations while 
leaving the rest of the E.O. and proposed rule intact. In some 
senses, this is an attractive alternative. In an ideal scenario, a 
contracting agency's ALCA would be connected to a database that 
would provide instant access to all of a prospective contractor's 
labor violations. However, such a system is not feasible in the near 
future in light of budget and other constraints. Moreover, even if 
such a system had efficient access to all information housed within 
any agency of the Government and all publicly available information, 
it would still not have access to privately conducted arbitration 
decisions, actions arising from state laws deemed equivalent to 
Federal statutes enumerated in the E.O., or all civil judgments. The 
system of disclosure created under the E.O. is the most efficient, 
least burdensome method of making information about labor violations 
available currently. OMB, GSA and other Federal agencies are working 
on systems that will improve the availability of relevant data in 
the longer term.
    Having determined that disclosure of information by contractors 
and subcontractors is necessary, however, the disclosure provisions 
contained in the E.O. and the proposed rule are designed to minimize 
the burden on them. For example, one alternative to the approach 
taken in the proposed rule would be to require all contractors for 
which a responsibility determination is undertaken to provide the 
following nine categories of information regarding their labor 
violations:
     The date that the violation was rendered;
     The name of the court, arbitrator(s), agency, board, or 
commission that rendered it;
     The Labor Law that was violated;
     The name of the case, arbitration, or proceeding, if 
applicable;
     The street address of the worksite where the violation 
took place (or if the violation took place in multiple worksites, 
then the address of each worksite);
     The case number, inspection number, charge number, 
docket number, or other unique identification number;
     Whether the proceeding was ongoing or closed;
     Whether there was a settlement, compliance, or 
remediation agreement related to the violation; and
     The amount(s) of any penalties or fines assessed and 
any back wages due as a result of the violation.
    This approach would have made the process of considering labor 
violations more efficient from the perspective of contracting 
agencies. However, this list was narrowed to the following four 
categories of information

[[Page 30563]]

in order to reduce the burden on contractors while still providing 
the minimally necessary information:
     The Labor Law that was violated;
     The case number, inspection number, charge number, 
docket number, or other unique identification number;
     The date that the determination, judgment, award, or 
decision was rendered; and
     The name of the court, arbitrator(s), agency, board, or 
commission that rendered it.
    Another alternative would be to have all prospective contractors 
bidding on contracts--not just those for which a contracting officer 
undertakes a responsibility determination--disclose the information 
provided above. This would make the procurement process simpler and 
more expeditious from the perspective of contracting agencies. 
However, this alternative would increase the burden on contractors 
relative to the requirement contained in the proposed rule, and it 
was determined that the proposed rule's more narrowly tailored 
requirement would retain its effectiveness while minimizing the 
burden on contractors.
    Disclosure Timing for Prime Contractors. With regard to the E.O. 
and proposed rule provisions, for contracts over $500,000, each 
prospective offeror must represent whether there have been any 
administrative merits determinations, arbitral awards or decisions, 
or civil judgments (referred to herein as a labor violation) 
rendered against the offeror, within a 3 year period preceding the 
offer, for violations of any of the enumerated labor laws. Likewise, 
the contractor will require potential subcontractors to disclose 
whether there have been any labor violations. Prior to making an 
award, as part of the responsibility determination, the contracting 
officer, will request prospective contractors who have had labor 
violations to identify which of the listed labor laws were violated 
and provide certain information about the specific violations. 
Alternatives to this requirement would be to have contractors and 
subcontractors disclose at the time of registration (e.g. details of 
violations and mitigating factors). This alternative would capture 
information on many contractors upfront but causes all contractors 
to comply whether or not they are a prospective contractor and will 
be unnecessarily burdensome to company that are not potential 
candidates for award. Another alternative is to require disclosure 
only of prospective contractor and subcontractor. This narrows the 
burden but does not meet the requirements of the EO.
    Subcontractor Flow-down/Reporting. With regard to the E.O.'s and 
proposed rule's provisions regarding subcontractors, one alternative 
would be to simply exempt subcontractors from any obligations under 
the E.O. and focus only on prime contractors' records of labor 
compliance. This alternative would eliminate any burden on 
subcontractors. It would also reduce the burden on contractors 
associated with evaluating their prospective subcontractors' labor 
compliance histories. However, contractors are already required to 
evaluate their prospective subcontractors' integrity and business 
ethics, and disregarding subcontractors' labor compliance records in 
the course of making that determination would undermine the core 
goals of the E.O. A significant portion of the work performed on 
Federal contracts is performed by subcontractors, and ensuring their 
integrity and business ethics is a crucial part of ensuring that 
taxpayer's money is spent on firms that will do reliable work for 
the Federal Government and not on rewarding corporations that break 
the law.
    Similarly, the E.O.'s requirements could be limited to first-
tier subcontractors. However, for the same reasons as the previous 
alternative, this alternative would also undermine the core goals of 
the E.O., given that a significant portion of the work on Federal 
contracts is performed by subcontractors below the first tier.
    Another alternative would be to have the subcontractor report 
the information to DOL and inform the prime. However, the prime has 
to make a subcontractor responsibility determination and without 
this information may not be able to complete their analysis for the 
determination.
    Other alternatives around the implementation date for 
subcontractor disclosure may minimize the reporting burden upfront 
to provide contractors an opportunity to familiarize themselves with 
the process and establish a process to comply with the E.O. For 
example, instead of requiring subcontractors to immediately comply 
with the E.O. requirements, these requirements could be phased in 
(e.g., 1 year phase-in, 3 to 6 month phase-in, or some other 
realistic timeframe).
    Section IV, Alternatives to the proposed rule regulatory text, 
provides discussion of additional alternatives for consideration and 
public comment.

    The Regulatory Secretariat has submitted a copy of the IRFA to the 
Chief Counsel for Advocacy of the Small Business Administration. A copy 
of the IRFA may be obtained from the Regulatory Secretariat. DoD, GSA, 
and NASA invite comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2014-025), 
in correspondence.

VII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. The 
proposed rule contains information collection requirements. 
Accordingly, the Regulatory Secretariat has submitted a request for 
approval of a new information collection requirement concerning FAR 
case 2014-025, Fair Pay and Safe Workplaces, to the Office of 
Management and Budget.
    A. Annual public reporting burden for this collection of 
information is estimated at 6.26 hours per response, including the time 
for reviewing instructions, searching existing data sources, gathering 
the data needed, reviewing, and submitting the information.

   Estimated Summary of Annual Total Cost to the Public of Information
                       Collection Reporting Burden
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of respondents...................................          25,775
Responses per respondent................................             9.9
Total annual responses..................................         254,668
Hours per response......................................            6.26
Total hours.............................................       1,594,171
Rate per hour (average).................................             $55
                                                         ---------------
  Total annual cost to public...........................     $87,389,423
------------------------------------------------------------------------

    B. Annual public recordkeeping burden for this proposed rule is 
estimated at 52 hours per recordkeeping action to retain submitted 
subcontractor information.

      Estimated Summary of Annual Total Cost to the Public for the
                          Recordkeeping Burden
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of recordkeeping actions.........................             653
Hours per action........................................              52
Total hours.............................................          33,956
Hourly rate.............................................             $45
                                                         ---------------
  Total annual cost.....................................      $1,528,020
------------------------------------------------------------------------

    C. Total estimated summary of the annual cost to the public for 
information collection reporting and recordkeeping burdens.

  Estimated Summary of Annual Total Cost to the Public for Information
             Collection Reporting and Recordkeeping Burdens
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total hours.............................................       1,628,127
Total annual cost to public.............................     $88,917,443
------------------------------------------------------------------------

    D. In order to successfully comply with the requirements of the 
rule, contractors and subcontractors will initially need to review and 
become familiar with the FAR rule and the DOL Guidance. We estimate 
that for this initial requirements review the average contractor will 
utilize a general manager equivalent to a mid-range GS-14 ($63 hourly 
rate) and spend approximately eight hours. Therefore, the total cost to 
contractors and subcontractors for this

[[Page 30564]]

effort is estimated to be 25,775 x 8 x $63 = $12,990,600.
    E. Request for Comments Regarding Paperwork Burden. Submit 
comments, including suggestions for reducing this burden, not later 
than July 27, 2015 to: FAR Desk Officer, OMB, Room 10102, NEOB, 
Washington, DC 20503, and a copy to the General Services 
Administration, Regulatory Secretariat Division (MVCB), ATTN: ATTN: Ms. 
Flowers, 1800 F Street NW., 2nd Floor, Washington, DC 20405-0001.
    Public comments are particularly invited on: whether this 
collection of information is necessary for the proper performance of 
functions of the FAR, and will have practical utility; whether our 
estimate of the public burden of this collection of information is 
accurate, and based on valid assumptions and methodology; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways in which we can minimize the burden of the 
collection of information on those who are to respond, through the use 
of appropriate technological collection techniques or other forms of 
information technology.
    Requesters may obtain a copy of the supporting statement from the 
General Services Administration, Regulatory Secretariat (MVCB), ATTN: 
Hada Flowers, 1800 F Street NW., 2nd floor, Washington, DC 20405. 
Please cite OMB Control Number 9000-00XX, Title, in all correspondence.

List of Subjects in 48 CFR Parts 1, 4, 9, 17, 22, and 52

    Government procurement.

    Dated: May 19, 2015.
William Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 1, 4, 
9, 17, 22, and 52 as set forth below:

0
1. The authority citation for 48 CFR parts 1, 4, 9, 17, 22, and 52 
continues to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM


1.106  [Amended]

0
2. Amend section 1.106 in the table following the introductory text, by 
adding in numerical sequence, FAR segments ``52.222-AA'', ``52.222-
AB'', ``52.222-BB'', and ``52.222-XX'' and their corresponding OMB 
Control Number ``9000-XXXX''.

PART 4--ADMINISTRATIVE MATTERS

0
3. Amend section 4.1202 by redesignating paragraphs (a)(19) through 
(a)(29) as paragraphs (a)(20) through (a)(30), respectively; and adding 
a new paragraph (a)(19) to reads as follows:


4.1202  Solicitation provision and contract clause.

    (a) * * *
    (19) 52.222-AA, Representation Regarding Compliance with Labor Laws 
(Executive Order 13673).
* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

0
4. Amend section 9.104-4 by redesignating paragraph (b) as paragraph 
(c); and adding a new paragraph (b) to reads as follows:


9.104-4  Subcontractor responsibility.

* * * * *
    (b) For Executive Order (E.O.) 13673, Fair Pay and Safe Workplaces, 
requirements pertaining to labor violations, see subpart 22.20.
* * * * *
0
5. Amend section 9.104-5 by--
0
a. Revising the section heading;
0
b. Removing from paragraphs (a)(1) and (a)(2) ``see 9.405); and'' and 
``exceeds $3,000.'' and adding ``see 9.405);'' and ``exceeds $3,000; 
and'', respectively;
0
c. Adding paragraph (a)(3); and
0
d. Revising paragraph (b).
    The revised and added text reads as follows:


9.104-5  Representation and certification regarding responsibility 
matters.

    (a) * * *
    (3) Provide an offeror who does not furnish the certification or 
such information as may be requested by the contracting officer an 
opportunity to remedy the deficiency. Failure to furnish the 
certification or such information may render the offeror 
nonresponsible.
    (b) When an offeror provides an affirmative response to the 
provision at 52.222-AA, Representation Regarding Compliance with Labor 
Laws (Executive Order 13673), or its commercial item equivalent at 
52.212-3(q), the contracting officer shall follow the procedures in 
subpart 22.20.
* * * * *
0
6. Amend section 9.105-1 by adding paragraph (b)(4) to read as follows:


9.105-1  Obtaining information.

* * * * *
    (b) * * *
    (4) Information provided pursuant to 52.222-AA, Representation 
Regarding Compliance with Labor Laws (Executive Order 13673), or its 
commercial item equivalent at 52.212-3(q), shall be considered in 
accordance with the procedures described at subpart 22.20.


9.105-3  [Amended]

0
7. Amend section 9.105-3 by removing from paragraph (a) ``provided in 
Subpart 24.2'' and adding ``provided in 9.105-2(b)(2)(iii) and subpart 
24.2'' in its place.

PART 17--SPECIAL CONTRACTING METHODS

0
8. Amend section 17.207 by--
0
a. Removing from paragraphs (c)(6) and (c)(7) ``considered; and'' and 
``satisfactory ratings.'' and adding ``considered;'' and ``satisfactory 
ratings; and'' in their places, respectively; and
0
b. Adding paragraph (c)(8).
    The added text reads as follows:


17.207  Exercise of options.

* * * * *
    (c) * * *
    (8) If the contract contains the clause 52.222-BB, Compliance with 
Labor Laws, and labor law violations were disclosed pursuant to the 
clause, the contractor's labor law violations and remedial actions and 
the agency labor compliance advisor recommendations have been 
considered.
* * * * *

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS


22.000  [Amended]

0
9. Amend section 22.000 by removing from paragraphs (b) and (c) ``labor 
laws'' and ``labor law'' and adding ``labor laws and Executive orders'' 
and ``labor law and Executive orders'' in their places, respectively.
0
10. Amend section 22.102-2 by--
0
a. Revising the section heading and paragraphs (c)(1)(i) through 
(c)(1)(v); and
0
b. Adding paragraph (c)(3).
    The revised and added text reads as follows:


22.102-2  Administration and enforcement.

* * * * *
    (c)(1) * * *
    (i) 40 U.S.C. chapter 31, subchapter IV, Wage Rate Requirements 
(Construction)(see subpart 22.4);
    (ii) 40 U.S.C. chapter 37, Contract Work Hours and Safety Standards 
(see subpart 22.3);
    (iii) The Copeland Act (18 U.S.C. 874 and 40 U.S.C. 3145) (see 
22.403-2);
    (iv) 41 U.S.C. chapter 65, Contracts for Materials, Supplies, 
Articles, and

[[Page 30565]]

Equipment Exceeding $15,000 (see subpart 22.6); and
    (v) 41 U.S.C. chapter 67, Service Contract Labor Standards (see 
subpart 22.10).
    (2) * * *
    (3) Department of Labor's (DOL) administration and enforcement 
authorities under the aforementioned statutes and under Executive 
orders implemented in this part do not limit the authority of 
contracting agencies to otherwise administer and enforce the terms and 
conditions of agency contracts.
* * * * *
0
11. Add section 22.104 to read as follows:


22.104  Agency Labor Advisors.

    (a) Appointment of agency labor advisors. Agencies may designate or 
appoint labor advisors, according to agency procedures.
    (b) Duties. Agency labor advisors are generally responsible for the 
following:
    (1) Interface with DOL, agency labor compliance advisors, outside 
agencies, and other parties in matters concerning interpretation, 
guidance and enforcement of labor statutes applicable to Federal 
contracts.
    (2) Provide advice and guidance to the contracting agency, 
contractors, and labor community regarding application of labor 
statutes, Executive Orders, and implementing regulations in Federal 
contracts.
    (3) Serve as labor subject matter experts on all issues specific to 
part 22 and its prescribed contract clauses and provisions.
    (c) Agency labor advisors are listed at www.wdol.gov.
0
12. Add subpart 22.20 to read as follows:
Subpart 22.20--Fair Pay and Safe Workplaces
Sec.
22.2000 Scope of subpart.
22.2001 Reserved.
22.2002 Definitions.
22.2003 Policy.
22.2004 Compliance with labor laws.
22.2004-1 Contract requirements.
22.2004-2 Pre-award evaluation of an offeror's labor violations.
22.2004-3 Post-award evaluation of a prime contractor's labor 
violations.
22.2004-4 Contractor pre-award and post-award evaluation of a 
subcontractor's labor violations.
22.2005 Paycheck transparency.
22.2006 Arbitration of contractor employee claims.
22.2007 Solicitation provisions and contract clauses.

Subpart 22.20--Fair Pay and Safe Workplaces


22.2000  Scope of subpart.

    This subpart prescribes policies and procedures to implement 
Executive Order (E.O.) 13673, Fair Pay and Safe Workplaces, dated July 
31, 2014.


22.2001  Reserved.


22.2002  Definitions.

    As used in this subpart--
    Administrative merits determination means certain notices or 
findings of labor law violations issued by an enforcement agency 
following an investigation. The notices or findings may be final or be 
subject to appeal or further review. To determine whether a particular 
notice or finding is covered by this definition, it is necessary to 
read section II. B. in the DOL guidance.
    Agency labor compliance advisor (ALCA) means the senior official 
designated in accordance with Executive Order 13673. ALCAs are listed 
at www._____.
    Arbitral award or decision means an arbitrator or arbitral panel 
determination that a labor law violation occurred, or that enjoined or 
restrained a violation of labor law. It includes one that is not final 
or is subject to being confirmed, modified, or vacated by a court, and 
includes one resulting from private or confidential proceedings. To 
determine whether a particular arbitral award or decision is covered by 
this definition, it is necessary to read section II. B. in the DOL 
guidance.
    Civil judgment means any judgment or order entered by any Federal 
or State court in which the court determined that a labor law violation 
occurred, or enjoined or restrained a violation of labor law. It 
includes a judgment or order that is not final or is subject to appeal. 
To determine whether a particular civil judgment is covered by this 
definition, it is necessary to read section II. B. in the DOL guidance.
    DOL guidance means the Department of Labor (DOL) guidance entitled: 
``Guidance for Executive Order 13673, `Fair Pay and Safe Workplaces','' 
which can be obtained from www._____.
    Enforcement agency means any agency granted authority to enforce 
Federal labor laws. It includes DOL, the Equal Employment Opportunity 
Commission, the Occupational Safety and Health Review Commission, and 
the National Labor Relations Board. It includes a State agency 
designated to administer an OSHA-approved State Plan, but only to the 
extent that the State agency is acting in its capacity as administrator 
of such plan. It does not include other Federal agencies which, in 
their capacity as contracting agencies, undertake an investigation of 
potential labor violations.
    Labor compliance agreement means an agreement entered into with a 
Federal enforcement agency, or a State agency designated to administer 
an OSHA-approved State Plan, to address appropriate remedial measures, 
compliance assistance, steps to resolve issues to increase compliance 
with the labor laws, or other related matters.
    Labor laws means the following labor laws and Executive Orders--
    (1) The Fair Labor Standards Act, 29 U.S.C. chapter 8.
    (2) The Occupational Safety and Health Act (OSHA) of 1970.
    (3) The Migrant and Seasonal Agricultural Worker Protection Act.
    (4) The National Labor Relations Act.
    (5) 40 U.S.C. chapter 31, subchapter IV, formerly known as the 
Davis-Bacon Act.
    (6) 41 U.S.C. chapter 67, formerly known as the Service Contract 
Act.
    (7) Executive Order 11246 of September 24, 1965 (Equal Employment 
Opportunity).
    (8) Section 503 of the Rehabilitation Act of 1973.
    (9) The Vietnam Era Veterans' Readjustment Assistance Act of 1972 
and the Vietnam Era Veterans' Readjustment Assistance Act of 1974.
    (10) The Family and Medical Leave Act.
    (11) Title VII of the Civil Rights Act of 1964.
    (12) The Americans with Disabilities Act of 1990.
    (13) The Age Discrimination in Employment Act of 1967.
    (14) Executive Order 13658 of February 12, 2014 (Establishing a 
Minimum Wage for Contractors).
    (15) Equivalent State laws as defined in guidance issued by the 
Department of Labor. (The only equivalent State laws implemented in the 
FAR are OSHA-approved State Plans).
    Labor violation means a violation of a labor law that resulted in 
an administrative merits determination, arbitral award or decision, or 
civil judgment.
    Pervasive violation means a standard for a labor violation(s), 
e.g., the number of violations of a requirement or the aggregate number 
of violations in relation to the size of the prospective contractor. To 
determine whether a particular violation(s) is pervasive it is 
necessary to read section III. D. in the DOL guidance.
    Repeated violation means a standard for a labor violation(s), e.g., 
one or more additional labor violations of

[[Page 30566]]

substantially similar requirements. To determine whether a particular 
violation(s) is repeated it is necessary to read section III. C. in the 
DOL guidance.
    Serious violation means a standard for a labor violation(s), e.g., 
the number of employees affected, the degree of risk imposed, or actual 
harm done by the violation. To determine whether a particular 
violation(s) is serious it is necessary to read section III. A. in the 
DOL guidance.
    Willful violation means a standard for a labor violation(s), e.g., 
whether there was knowledge of, reckless disregard for, or plain 
indifference to the labor violation. To determine whether a particular 
violation(s) is willful it is necessary to read section III. B. in the 
DOL guidance.


22.2003   Policy.

    It is the policy of the Federal Government to promote economy and 
efficiency in procurement by awarding contracts to contractors who 
promote safe, healthy, fair, and effective workplaces through 
compliance with labor laws. Contractors that consistently adhere to 
labor laws are more likely to have workplace practices that enhance 
productivity and increase the likelihood of timely, predictable, and 
satisfactory delivery of goods and services. This policy is promoted by 
E.O. 13673, Fair Pay and Safe Workplaces.


22.2004   Compliance with labor laws.


22.2004-1   Contract requirements.

    (a) Contracts. An offeror on a solicitation estimated to exceed 
$500,000 must represent whether, in the past three years, it was found 
to have violated labor laws. If an offeror represents it has a 
violation(s), and if the contracting officer has initiated a 
responsibility determination, the contracting officer will require the 
offeror to submit information on the violation(s) and afford the 
offeror an opportunity to provide information on mitigating 
circumstances and remedial measures such as labor compliance 
agreements. The contractor must update the information semi-annually. 
For further information see the provision and clause prescribed at 
22.2007(a) and (c).
    (b) Subcontracts. Similar requirements apply to contractors as they 
make responsibility determinations on their prospective subcontractors 
for subcontracts at any tier estimated to exceed $500,000, except for 
subcontracts for commercially available off-the-shelf items. For 
further information see the provision and clause prescribed at 
22.2007(b) and (c).


22.2004-2   Pre-award evaluation of an offeror's labor violations.

    (a) General. (1) Before awarding a contract in excess of $500,000, 
the contracting officer shall consider information concerning labor 
violations when determining whether a prospective contractor is a 
responsible source that has a satisfactory record of integrity and 
business ethics. The contracting officer duty to consider labor 
violations under this paragraph is in addition to the contracting 
officer duties under 9.104-5 and 9.104-6.
    (2) The ALCA provides assistance to the contracting officer by 
obtaining labor violation documents, by using DOL guidance to evaluate 
the violations and contractor actions taken to address the violations, 
and by providing a supported recommendation, e.g., whether to pursue a 
labor compliance agreement.
    (b) Labor law violation evaluation. When the contracting officer 
initiates a responsibility determination and a prospective contractor 
had provided an affirmative response to the representation at paragraph 
(c) of the provision at 52.222-AA, Representation Regarding Compliance 
with Labor Laws (Executive Order 13673), or its equivalent for 
commercial items at 52.212-3(q)(2)--
    (1) The contracting officer shall request that the prospective 
contractor, for each labor violation--
    (i) Enter the following information in SAM _____ (insert name of 
reporting module) www.sam.gov, unless the information is already 
current and complete in SAM:
    (A) The labor law violated.
    (B) The case number, inspection number, charge number, docket 
number, or other unique identification number.
    (C) The date rendered.
    (D) The name of the court, arbitrator(s), agency, board, or 
commission rendering the determination or decision;
    (ii) Provide the information in paragraph (b)(1)(i) of this section 
to the contracting officer if the prospective contractor meets an 
exception to SAM registration (see 4.1102(a)); or
    (iii) Provide to the contracting officer such additional 
information as the prospective contractor deems necessary to 
demonstrate its responsibility, e.g., mitigating circumstances, 
remedial measures (to include labor compliance agreements), and other 
steps taken to achieve compliance with labor laws.
    (2) The contracting officer shall--
    (i) Request that the ALCA provide written advice and 
recommendations within three business days of the request, or another 
time period required by the contracting officer;
    (ii) Furnish to the ALCA all relevant information provided to the 
contracting officer by the prospective contractor;
    (iii) Request the ALCA obtain the administrative merits 
determination(s), arbitral award(s) or decision(s), or civil 
judgment(s), as necessary to support recommendations, and for each 
recommendation of an unsatisfactory record of integrity and business 
ethics. (The ALCA shall notify the contracting officer if the ALCA is 
unable to obtain any of the necessary document(s). The contracting 
officer shall request the prospective contractor provide the 
document(s) to the contracting officer.)
    (3)(i) The ALCA shall make one of the following recommendations--
    (A) The prospective contractor could be found to have a 
satisfactory record of integrity and business ethics;
    (B) The prospective contractor could be found to have a 
satisfactory record of integrity and business ethics if the process to 
enter into or enhance a labor compliance agreement is initiated; or
    (C) The prospective contractor could be found to not have a 
satisfactory record of integrity and business ethics, and the agency 
Suspending and Debarring Official should be notified in accordance with 
agency procedures.
    (ii) The recommendation shall include the following, using the DOL 
guidance:
    (A) Whether any violations should be considered serious, repeated, 
willful, or pervasive.
    (B) The number of labor violations (depending on the nature of the 
violation, in most cases, a single violation may not necessarily give 
rise to a determination of lack of responsibility).
    (C) Whether the prospective contractor has initiated its own 
remedial measures.
    (D) The need for, existence of, and whether the prospective 
contractor is adequately adhering to labor compliance agreements or 
other appropriate remedial measures.
    (E) Whether the prospective contractor is still negotiating in good 
faith a labor compliance agreement that was recommended as necessary.
    (F) Such additional supporting information that the ALCA finds to 
be relevant.
    (4) The contracting officer shall--
    (i) Ensure, using DOL guidance and the ALCA's advice and 
recommendations, that the following have been considered in evaluating 
prospective contractors:
    (A) The nature of the labor violations (whether serious, repeated, 
willful, or pervasive).

[[Page 30567]]

    (B) The number of labor violations (depending on the nature of the 
violation, in most cases, a single violation may not necessarily give 
rise to a determination of lack of responsibility).
    (C) Any mitigating circumstances.
    (D) Remedial measures taken to address labor violations, including 
existence of and compliance with any labor compliance agreements, or 
whether the prospective contractor is still in good faith negotiating 
such an agreement;
    (ii) Proceed with making a responsibility determination using 
available information and business judgment if a timely written 
recommendation is not received from an ALCA; and
    (iii) Comply with 9.103(b) when making a determination that a 
prospective small business contractor is nonresponsible and refer to 
Small Business Administration for a Certificate of Competency.


22.2004-3   Post-award evaluation of a prime contractor's labor 
violations.

    (a) Contract requirements. The contractor is required to continue 
to disclose in SAM _____ (insert name of reporting module) www.sam.gov, 
semi-annually during performance of the contract, whether there have 
been labor violations or updates to previously disclosed labor 
violations, pursuant to the clause at 52.209-BB, Compliance with Labor 
Laws. The contractor must provide the specified information about each 
labor violation.
    (b) Labor law violation information.
    (1) The ALCA shall monitor the SAM _____ (insert name of reporting 
module) for updated information pursuant to paragraph (a) of this 
section; if the ALCA is unable to obtain any needed relevant documents, 
the ALCA may request the contracting officer to obtain the documents 
from the contractor. If the contractor had previously agreed to enter 
into a labor compliance agreement, the ALCA shall verify, consulting 
with DOL as needed, whether the contractor is making progress toward, 
or has entered into the labor compliance agreement. If a labor 
compliance agreement has been entered into, the ALCA shall verify, 
consulting with DOL as needed, whether the contractor is meeting the 
terms of the agreement. If the information indicates that further 
consideration or action may be warranted, the ALCA shall notify the 
contracting officer in accordance with agency procedures;
    (2) If the contracting officer was notified pursuant to paragraph 
(1) of this section, the contracting officer shall afford the 
contractor an opportunity to provide any additional information the 
contractor may wish to provide for the contracting officer's 
consideration, e.g., remedial measures and mitigating factors or 
explanations for delays in entering into or for not meeting the terms 
of an existing labor compliance agreement. Upon receipt of information 
under paragraph (1) or this paragraph (2), the contracting officer 
shall provide the information to the ALCA.
    (3) The ALCA shall evaluate the information and provide advice and 
recommendation regarding appropriate actions for the contracting 
officer's consideration. The recommendation shall include the following 
using the DOL guidance:
    (i) Whether any violations should be considered serious, repeated, 
willful, or pervasive.
    (ii) The number of labor violations (depending on the nature of the 
violation, in most cases, a single violation may not necessarily give 
rise to a determination of lack of responsibility).
    (iii) Whether the contractor has initiated its own remedial 
measures.
    (iv) The need for, existence of, and whether the contractor is 
adequately adhering to labor compliance agreements or other appropriate 
remedial measures.
    (v) Whether the contractor is still negotiating in good faith a 
labor compliance agreement that was recommended.
    (vi) Such other supporting information that the ALCA finds to be 
relevant.
    (4) The contracting officer shall consider such information, 
including advice and recommendations of the ALCA to determine whether 
action may be warranted. Appropriate actions may include--
    (i) No action required, continue the contract;
    (ii) Refer the matter to DOL for action, which may include a new or 
enhanced labor compliance agreement;
    (iii) Do not exercise an option (see 17.207(c)(8));
    (iv) Terminate the contract in accordance with the procedures set 
forth in Part 49 or 12.403; or
    (v) Notify the agency Suspending and Debarring Official if there 
are such serious, repeated, willful or pervasive labor violation(s) 
that the violation(s) demonstrate a lack of integrity or business 
ethics of a contractor or subcontractor, in accordance with agency 
procedures.


22.2004-4   Contractor pre-award and post-award evaluation of a 
subcontractor's labor violations.

    The provision at 52.222-AB, Subcontractor Responsibility Matters 
Regarding Compliance with Labor Laws (Executive Order 13763), and the 
clause at 52.222-BB, Compliance with Labor Laws, have requirements for 
pre-award subcontractor labor violation disclosures and semi-annual 
post-award updates during subcontract performance, and evaluations 
thereof. This applies to subcontracts at any tier estimated to exceed 
$500,000, other than for commercially available off-the-shelf items.


22.2005   Paycheck transparency.

    Executive Order 13673 requires contractors to provide, on contracts 
that exceed $500,000--
    (a) A document (wage statement, also known as a pay stub) in every 
pay period to all individuals performing work under the contract, for 
which contractors are required to maintain wage records under the Fair 
Labor Standards Act (FLSA), Wage Rate Requirements (Construction), 
Service Contract Labor Standards, and equivalent state laws (see DOL 
guidance section IV paragraph A for the list of equivalent state laws); 
and
    (b) A document to individuals treated as independent contractors 
informing them of that status.


22.2006   Arbitration of contractor employee claims.

    Executive Order 13673 requires contractors, on contracts exceeding 
$1,000,000, to agree that the decision to arbitrate claims arising 
under title VII of the Civil Rights Act of 1964 or any tort related to 
or arising out of sexual assault or harassment, be made only with the 
voluntary consent of employees or independent contractors after such 
disputes arise, subject to certain exceptions.


22.2007   Solicitation provisions and contract clauses.

    (a) The contracting officer shall insert the provision at 52.222-
AA, Representation Regarding Compliance with Labor Laws (Executive 
Order 13673), in solicitations that contain the clause at 52.222-BB.
    (b) The contracting officer shall insert the provision at 52.222-
AB, Subcontractor Responsibility Matters Regarding Compliance with 
Labor Laws (Executive Order 13673), in solicitations that contain the 
clause at 52.222-BB.
    (c) The contracting officer shall insert the clause at 52.222-BB, 
Compliance with Labor Laws, in solicitations and

[[Page 30568]]

contracts that are estimated to exceed $500,000.
    (d) The contracting officer shall insert the clause at 52.222-XX, 
Paycheck Transparency, in solicitations and contracts if the estimated 
value exceeds $500,000.
    (e) The contracting office shall insert the clause at 52.222-YY, 
Arbitration of Contractor Employee Claims, in solicitations and 
contracts if the estimated value exceeds $1,000,000, other than those 
for commercial items.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
12. Amend section 52.204-8 by--
0
a. Revising the date of the provision;
0
b. Redesignating paragraphs (c)(1)(xiv) through (c)(1)(xxi) as 
paragraphs (c)(1)(xv) through (c)(1)(xxii), respectively; and
0
c. Adding a new paragraph (c)(1)(xiv).
    The revised and added text reads as follows:


52.204-8   Annual Representations and Certifications.

* * * * *

Annual Representations and Certifications (Date)

* * * * *
    (c)(1) * * *
    (i) * * *
    (xiv) 52.222-AA, Representation Regarding Compliance with Labor 
Laws (Executive Order 13673). This provision applies to 
solicitations expected to exceed $500,000.

* * * * *
0
13. Amend section 52.212-3 by--
0
a. Revising the date of the provision;
0
b. Removing from the introductory text ``(c) through (p)'' and adding 
``(c) through (q)'' in its place;
0
c. Adding to paragraph (a), in alphabetical order, definitions 
``Administrative merits determination'', ``Arbitral award or 
decision'', ``Civil judgment'', ``DOL guidance'', ``Enforcement 
agency'', ``Labor compliance agreement'', ``Labor laws'' and ``Labor 
violation'';
0
d. Removing from paragraph (b)(2) ``(c) through (p)'' and adding ``(c) 
through (q)'' in its place; and
0
e. Adding a new paragraph (q).
    The revised and added text reads as follows:


52.212-3   Offeror Representations and Certifications--Commercial 
Items.

* * * * *

Offeror Representations and Certifications--Commercial Items (Date)

* * * * *
    (a) * * *
    Administrative merits determination means certain notices or 
findings of labor law violations issued by an enforcement agency 
following an investigation. The notices or findings may be final or 
be subject to appeal or further review. To determine whether a 
particular notice or finding is covered by this definition, it is 
necessary to read Section II. B. in the DOL guidance.
    Arbitral award or decision means an arbitrator or arbitral panel 
determination that a labor law violation occurred, or that enjoined 
or restrained a violation of labor law. It includes one that is not 
final or is subject to being confirmed, modified, or vacated by a 
court, and includes one resulting from private or confidential 
proceedings. To determine whether a particular arbitral award or 
decision is covered by this definition, it is necessary to read 
section II. B. in the DOL guidance.
    Civil judgment means--
    (1) In paragraph (h): A judgment or finding of a civil offense 
by any court of competent jurisdiction.
    (2) In paragraph (q): Any judgment or order entered by any 
Federal or State court in which the court determined that a labor 
law violation occurred, or enjoined or restrained a violation of 
labor law. It includes a judgment or order that is not final or is 
subject to appeal. To determine whether a particular civil judgment 
is covered by this definition, it is necessary to read section II. 
B. in the DOL guidance.
    DOL guidance means the Department of Labor (DOL) guidance 
entitled: ``Guidance for Executive Order 13673, `Fair Pay and Safe 
Workplaces','' which can be obtained from www._____.
* * * * *
    Enforcement agency means any agency granted authority to enforce 
Federal labor laws. It includes DOL, the Equal Employment 
Opportunity Commission, the Occupational Safety and Health Review 
Commission, and the National Labor Relations Board. It includes a 
State agency designated to administer an OSHA-approved State Plan, 
but only to the extent that the State agency is acting in its 
capacity as administrator of such plan. It does not include other 
Federal agencies which, in their capacity as contracting agencies, 
undertake an investigation of potential labor violations.
* * * * *
    Labor compliance agreement means an agreement entered into with 
a Federal enforcement agency, or a State agency designated to 
administer an OSHA-approved State Plan, to address appropriate 
remedial measures, compliance assistance, steps to resolve issues to 
increase compliance with the labor laws, or other related matters.
    Labor laws means the following labor laws and Executive Orders--
    (1) The Fair Labor Standards Act, 29 U.S.C. chapter 8.
    (2) The Occupational Safety and Health Act (OSHA) of 1970.
    (3) The Migrant and Seasonal Agricultural Worker Protection Act.
    (4) The National Labor Relations Act.
    (5) 40 U.S.C. chapter 31, subchapter IV, formerly known as the 
Davis-Bacon Act.
    (6) 41 U.S.C. chapter 67, formerly known as the Service Contract 
Act.
    (7) Executive Order 11246 of September 24, 1965 (Equal 
Employment Opportunity).
    (8) Section 503 of the Rehabilitation Act of 1973.
    (9) The Vietnam Era Veterans' Readjustment Assistance Act of 
1972 and the Vietnam Era Veterans' Readjustment Assistance Act of 
1974.
    (10) The Family and Medical Leave Act.
    (11) Title VII of the Civil Rights Act of 1964.
    (12) The Americans with Disabilities Act of 1990.
    (13) The Age Discrimination in Employment Act of 1967.
    (14) Executive Order 13658 of February 12, 2014 (Establishing a 
Minimum Wage for Contractors).
    (15) Equivalent State laws as defined in guidance issued by the 
Department of Labor. (The only equivalent State laws implemented in 
the FAR are OSHA-approved State Plans).
    Labor violation means a violation of a labor law that resulted 
in an administrative merits determination, arbitral award or 
decision, or civil judgment.
* * * * *
    (q)(1) The Offeror [] does [] does not anticipate submitting an 
offer for a solicitation with an estimated contract value of greater 
than $500,000.
    (2) If the Offeror checked ``does'' in paragraph (q)(1) of this 
provision, the Offeror represents to the best of the Offeror's 
knowledge and belief [Offeror to check appropriate block]:
    [ ](i) There has been no administrative merits determination, 
arbitral award or decision, or civil judgment, rendered against the 
offeror within the three-year period preceding the date of the offer 
for violations of labor laws (see definitions in paragraph (a)); or
    [ ](ii) There has been an administrative merits determination, 
arbitral award or decision, or civil judgment, rendered against the 
Offeror within the three-year period preceding the date of the offer 
for violations of labor laws.
    (3) Responsibility determination. (i) If the box at paragraph 
(q)(2)(ii) of this clause is checked and the Contracting Officer has 
initiated a responsibility determination and has requested 
additional information, the Offeror shall provide the following--
    (A) In the SAM _____ (insert name of reporting module) 
www.sam.gov, the following specific information, unless the 
information is already in the SAM _____ (insert name of reporting 
module) and is current and complete:
    (1) The labor law violated.
    (2) The case number, inspection number, charge number, docket 
number, or other unique identification number.
    (3) The date rendered.
    (4) The name of the court, arbitrator(s), agency, board, or 
commission that rendered the determination or decision.
    (B) The information in paragraph (A) to the Contracting Officer, 
if the Offeror meets an exception to SAM registration (see FAR 
4.1102(a)).
    (C) The administrative merits determination, arbitral award or 
decision, or civil judgment document, to the Contracting Officer, if 
the Contracting Officer requires it.

[[Page 30569]]

    (D) To the Contracting Officer such additional information as 
the Offeror deems necessary to demonstrate its responsibility, e.g., 
mitigating circumstances, remedial measures (to include labor 
compliance agreements), and other steps taken to achieve compliance 
with labor laws.
    (ii)(A) The Contracting Officer will consider all information 
provided under (q)(3)(i) as part of making a responsibility 
determination.
    (B) A representation that any violations of labor laws exist 
will not necessarily result in withholding of an award under this 
solicitation. Failure of the Offeror to furnish a representation or 
provide such additional information as requested by the Contracting 
Officer may render the Offeror nonresponsible.
    (C) The representation in paragraph (q)(2) of this provision is 
a material representation of fact upon which reliance was placed 
when making award. If it is later determined that the Offeror 
knowingly rendered an erroneous representation, in addition to other 
remedies available to the Government, the Contracting Officer may 
terminate the contract resulting from this solicitation in 
accordance with the procedures set forth in FAR 12.403.
    (iii) The Offeror shall provide immediate written notice to the 
Contracting Officer if at any time prior to contract award the 
Offeror learns that its representation was erroneous when submitted 
or by reason of changed circumstances.

0
14. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (b)(35) through (b)(54) as paragraphs 
(b)(38) through (b)(57);
0
c. Adding new paragraphs (b)(35), (b)(36) and (b)(37);
0
d. Redesignating paragraphs (e)(1)(xvi) through (e)(1)(xviii) as 
paragraphs (e)1)(xviii) through (e)(1)(xx);
0
e. Adding new paragraphs (e)(1)(xvi) and (e)(1)(xvii); and
0
f. Amending alternate II by--
0
1. Revising the date of the Alternate;
0
2. Redesignating paragraphs (e)(1)(ii)(O) and (e)(1)(ii)(P) as 
paragraphs (e)(1)(ii)(Q) and (e)(1)(ii)(R); and
0
3. Adding new paragraphs (e)(1)(ii)(O) and (e)(1)(ii)(P).
    The revised and added text reads as follows:


52.212-5   Contract Terms and Conditions Required to Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items (DATE)

* * * * *
    (b) * * *
    __(1) * * *
    __(35) 52.222-BB, Compliance with Labor Laws (DATE) (Executive 
Order 13673).
    __(36) 52.222-XX, Paycheck Transparency (DATE) (Executive Order 
13673).
    __(37) 52.222-YY, Arbitration of Contractor Employee Claims 
(DATE). (Executive Order 13673).
* * * * *
    (e)(1) * * *
    (xvi) 52.222-BB, Compliance with Labor Laws (DATE) (Executive 
Order 13673).
    (xvii) 52.222-XX, Paycheck Transparency (DATE) (E.O. 13673).
* * * * *
    Alternate II (DATE). * * *
    (e)(1) * * *
    (ii) * * *
    (O) 52.222-BB, Compliance with Labor Laws (DATE) (Executive 
Order 13673)
    (P) 52.222-XX, Paycheck Transparency (DATE) (E.O. 13673)

* * * * *
0
15. Amend section 52.213-4 by revising the date of the clause; and 
paragraph (a)(2)(viii) to read as follows:


52.213-4   Terms and Conditions--Simplified Acquisitions (Other Than 
Commercial Items).

* * * * *

Terms and Conditions-Simplified Acquisitions (Other Than Commercial 
Items)(DATE)

    (a) * * *
    (2) * * *
    (viii) 52.244-6, Subcontracts for Commercial Items (DATE).

* * * * *
0
16. Add section 52.222-AA to read as follows:


52.222-AA   Representation Regarding Compliance with Labor Laws 
(Executive Order 13673).

    As prescribed in 22.2007(a), insert the following provision:

Representation Regarding Compliance With Labor Laws (Executive Order 
13673) (DATE)

    (a) Definitions.
    Administrative merits determination, arbitral award or decision, 
civil judgment, DOL guidance, enforcement agency, labor compliance 
agreement, labor laws, and labor violation as used in this provision 
have the meaning given in the clause in this contract entitled 
52.222-BB, Compliance with Labor Laws.
    (b) The Offeror [ ] does [ ] does not anticipate submitting an 
offer for a solicitation with an estimated contract value of greater 
than $500,000.
    (c) If the Offeror checked ``does'' in paragraph (b) of this 
provision, the Offeror represents to the best of the Offeror's 
knowledge and belief [Offeror to check appropriate block]:
    [ ](1) There has been no administrative merits determination, 
arbitral award or decision, or civil judgment, rendered against the 
offeror within the three-year period preceding the date of the offer 
for violations of labor laws; or
    [ ](2) There has been an administrative merits determination, 
arbitral award or decision, or civil judgment, rendered against the 
Offeror within the three-year period preceding the date of the offer 
for violations of labor laws.
    (d) Responsibility determination. (1) If the box at paragraph 
(c)(2) of this provision is checked and the Contracting Officer has 
initiated a responsibility determination and has requested 
additional information, the Offeror shall provide the following--
    (i) In the SAM _____ (insert name of reporting module) 
www.sam.gov, the following specific information, unless the 
information is already in the SAM_____ (insert name of reporting 
module) and is current and complete:
    (A) The labor law violated.
    (B) The case number, inspection number, charge number, docket 
number, or other unique identification number.
    (C) The date rendered.
    (D) The name of the court, arbitrator(s), agency, board, or 
commission that rendered the determination or decision.
    (ii) The information in paragraph (i) to the Contracting 
Officer, if the Offeror meets an exception to SAM registration (see 
FAR 4.1102(a)).
    (iii) The administrative merits determination, arbitral award or 
decision, or civil judgment document to the Contracting Officer, if 
the contracting agency is unable to obtain the document.
    (iv) To the Contracting Officer such additional information as 
the Offeror deems necessary to demonstrate its responsibility, e.g., 
mitigating circumstances, remedial measures (to include labor 
compliance agreements), and other steps taken to achieve compliance 
with labor laws.
    (2)(i) The Contracting Officer will consider all information 
provided under (d)(1) as part of making a responsibility 
determination.
    (ii) A representation that any violations of labor laws exist 
will not necessarily result in withholding of an award under this 
solicitation. Failure of the Offeror to furnish a representation or 
provide such additional information as requested by the Contracting 
Officer may render the Offeror nonresponsible.
    (iii) The representation in paragraph (c) of this provision is a 
material representation of fact upon which reliance was placed when 
making award. If it is later determined that the Offeror knowingly 
rendered an erroneous representation, in addition to other remedies 
available to the Government, the Contracting Officer may terminate 
the contract resulting from this solicitation in accordance with the 
procedures set forth in Part 49.
    (3) The Offeror shall provide immediate written notice to the 
Contracting Officer if at any time prior to contract award the 
Offeror learns that its representation was erroneous when submitted 
or by reason of changed circumstances.


(End of provision)
0
17. Add section 52.222-AB to read as follows:


52.222-AB  Subcontractor Responsibility Matters Regarding Compliance 
with Labor Laws (Executive Order 13673).

    As prescribed in 22.2007(b), insert the following provision:

[[Page 30570]]

Subcontractor Responsibility Matters Regarding Compliance With Labor 
Laws (Executive Order 13673) (DATE)

    (a) Definitions.
    Administrative merits determination, arbitral award or decision, 
civil judgment, DOL guidance, enforcement agency, labor compliance 
agreement, labor laws, and labor violation as used in this provision 
have the meaning given in the clause in this contract FAR 52.222-BB, 
Compliance with Labor Laws.
    (b) Subcontractor representation. The requirements of this 
provision apply to all prospective subcontractors at any tier 
submitting an offer for subcontracts where the estimated subcontract 
value exceeds $500,000 for other than commercially available off-
the-shelf items. The Offeror shall require these prospective 
subcontractors to represent to the best of the subcontractor's 
knowledge and belief whether there have been any administrative 
merits determinations, arbitral awards or decisions, or civil 
judgments, rendered against the prospective subcontractor within the 
three-year period preceding the date of the offer for a labor 
violation(s).
    (c) Subcontractor responsibility determination. If the 
subcontractor responded affirmatively to paragraph (b) of this 
provision and the Offeror initiates a responsibility determination, 
the Offeror shall follow the procedures in paragraph (c) of 52.222-
BB, Compliance with Labor Laws.


(End of provision)
0
18. Add section 52.222-BB to read as follows:


52.222-BB  Compliance with Labor Laws.

    As prescribed in 22.2007(c), insert the following clause:

Compliance With Labor Laws (Date)

    (a) Definitions. As used in this clause--
    Administrative merits determination means certain notices or 
findings of labor law violations issued by an enforcement agency 
following an investigation. The notices or findings may be final or 
be subject to appeal or further review. To determine whether a 
particular notice or finding is covered by this definition, it is 
necessary to read section II. B. in the DOL guidance.
    Agency labor compliance advisor (ALCA) means the senior official 
designated in accordance with Executive Order 13673. ALCAs are 
listed at www._____.
    Arbitral award or decision means an arbitrator or arbitral panel 
determination that a labor law violation occurred, or that enjoined 
or restrained a violation of labor law. It includes one that is not 
final or is subject to being confirmed, modified, or vacated by a 
court, and includes one resulting from private or confidential 
proceedings. To determine whether a particular arbitral award or 
decision is covered by this definition, it is necessary to read 
section II. B. in the DOL guidance.
    Civil judgment means any judgment or order entered by any 
Federal or State court in which the court determined that a labor 
law violation occurred, or enjoined or restrained a violation of 
labor law. It includes a judgment or order that is not final or is 
subject to appeal. To determine whether a particular civil judgment 
is covered by this definition, it is necessary to read section II. 
B. in the DOL guidance.
    DOL guidance means the Department of Labor (DOL) guidance 
entitled: ``Guidance for Executive Order 13673, `Fair Pay and Safe 
Workplaces','' which can be obtained from www._____.
    Enforcement agency means any agency granted authority to enforce 
Federal labor laws. It includes DOL, the Equal Employment 
Opportunity Commission, the Occupational Safety and Health Review 
Commission, and the National Labor Relations Board. It includes a 
State agency designated to administer an OSHA-approved State Plan, 
but only to the extent that the State agency is acting in its 
capacity as administrator of such plan. It does not include other 
Federal agencies which, in their capacity as contracting agencies, 
undertake an investigation of potential labor violations.
    Labor compliance agreement means an agreement entered into with 
a Federal enforcement agency, or a State agency designated to 
administer an OSHA-approved State Plan, to address appropriate 
remedial measures, compliance assistance, steps to resolve issues to 
increase compliance with the labor laws, or other related matters.
    Labor laws means the following labor laws and Executive Orders--
    (1) The Fair Labor Standards Act, 29 U.S.C. chapter 8.
    (2) The Occupational Safety and Health Act (OSHA) of 1970.
    (3) The Migrant and Seasonal Agricultural Worker Protection Act.
    (4) The National Labor Relations Act.
    (5) 40 U.S.C. chapter 31, subchapter IV, formerly known as the 
Davis-Bacon Act.
    (6) 41 U.S.C. chapter 67, formerly known as the Service Contract 
Act.
    (7) Executive Order 11246 of September 24, 1965 (Equal 
Employment Opportunity).
    (8) Section 503 of the Rehabilitation Act of 1973.
    (9) The Vietnam Era Veterans' Readjustment Assistance Act of 
1972 and the Vietnam Era Veterans' Readjustment Assistance Act of 
1974.
    (10) The Family and Medical Leave Act.
    (11) Title VII of the Civil Rights Act of 1964.
    (12) The Americans with Disabilities Act of 1990.
    (13) The Age Discrimination in Employment Act of 1967.
    (14) Executive Order 13658 of February 12, 2014 (Establishing a 
Minimum Wage for Contractors).
    (15) Equivalent State laws as defined in guidance issued by the 
Department of Labor. (The only equivalent State laws implemented in 
the FAR are OSHA-approved State Plans).
    Labor violation means a violation of a labor law that resulted 
in an administrative merits determination, arbitral award or 
decision, or civil judgment.
    Pervasive violation means a standard for a labor violation(s), 
e.g., the number of violations of a requirement or the aggregate 
number of violations in relation to the size of the prospective 
contractor. To determine whether a particular violation(s) is 
pervasive it is necessary to read section III. D. in the DOL 
guidance.
    Repeated violation means a standard for a labor violation(s), 
e.g., one or more additional labor violations of substantially 
similar requirements. To determine whether a particular violation(s) 
is repeated it is necessary to read section III. C. in the DOL 
guidance.
    Serious violation means a standard for a labor violation(s), 
e.g., the number of employees affected, the degree of risk imposed, 
or actual harm done by the violation. To determine whether a 
particular violation(s) is serious it is necessary to read section 
III. A. in the DOL guidance.
    Willful violation means a standard for a labor violation(s), 
e.g., whether there was knowledge of, reckless disregard for, or 
plain indifference to the labor violation. To determine whether a 
particular violation(s) is willful it is necessary to read section 
III. B. in the DOL guidance.
    (b) Prime contractor updates. (1) The Contractor shall update, 
on a semi-annual basis throughout the life of the contract, the 
information regarding administrative merits determinations, arbitral 
awards or decisions, or civil judgments rendered against the 
contractor for a labor violation(s)--
    (i) In the System for Award Management (SAM), _____ (insert name 
of reporting module) www.sam.gov, or
    (ii) Directly to the Contracting Officer, if the Contractor 
meets an exception to SAM registration at 4.1102(a).
    (2) The Contracting Officer may require the Contractor provide 
the administrative merits determination, arbitral award or decision, 
or civil judgment document, if the contracting agency is unable to 
obtain the document.
    (3) The Contracting Officer will afford the Contractor an 
opportunity to provide any additional information, e.g., mitigating 
circumstances, remedial measures (to include labor compliance 
agreements), other steps taken to achieve compliance with labor 
laws, and explanations for delays in entering into or for not 
meeting the terms of an existing labor compliance agreement before 
the Contracting Officer decides on any needed action.
    (4) The Contracting Officer will consider whether action is 
necessary. Such action may include a new or enhanced labor 
compliance agreement, requiring other appropriate remedial measures, 
compliance assistance, and resolving issues to avoid further 
violations, as well as remedies such as decisions not to exercise an 
option, contract termination, or notification to the agency 
Suspending and Debarring Official.
    (c) Subcontractor responsibility.
    (1) The Contractor shall evaluate subcontractor labor violation 
information when determining subcontractor responsibility.
    (2) This applies to subcontracts for other than commercially 
available off-the-shelf items with an estimated value that exceeds 
$500,000.
    (3) The Contractor shall require a prospective subcontractor to 
represent to the best of the subcontractor's knowledge and belief 
whether there have been any

[[Page 30571]]

administrative merits determinations, arbitral awards or decisions, 
or civil judgments, for violation of labor laws rendered against the 
subcontractor within the three-year period preceding the date of the 
subcontractor's offer.
    (4) If the prospective subcontractor responds affirmatively, and 
the Contractor initiates a responsibility determination and requests 
additional information, the prospective subcontractor shall provide 
to the Contractor the following information:
    (i) Administrative merits determinations, arbitral awards or 
decisions, or civil judgments documents that were rendered against 
the subcontractor within the preceding three-year period prior to 
the subcontractor's offer; and
    (ii) Any notice from DOL advising that the subcontractor has not 
entered into a labor compliance agreement within a reasonable period 
or is not meeting the terms of an existing agreement.
    (5) The Contractor shall afford a subcontractor an opportunity 
to provide such additional information as the subcontractor deems 
necessary to demonstrate its responsibility, e.g., mitigating 
circumstances, remedial measures (to include labor compliance 
agreements), other steps taken to achieve compliance with labor 
laws, and explanations for delays in entering into or for not 
meeting the terms of an existing labor compliance agreement.
    (6) The Contractor shall evaluate subcontractor information 
using the DOL guidance as part of a responsibility determination.
    (i) The Contractor shall complete the evaluation--
    (A) For subcontracts awarded or that become effective within 
five days of the prime contract execution, no later than 30 days 
after subcontract award; or
    (B) For all other subcontracts, prior to subcontract award. 
However, in urgent circumstances, the evaluation shall be completed 
within 30 days of subcontract award.
    (ii) The Contractor shall consider the following in evaluating 
information:
    (A) The nature of the violations (whether serious, repeated, 
willful, or pervasive).
    (B) The number of violations (depending on the nature of the 
violation, in most cases, a single violation may not necessarily 
give rise to a determination of lack of responsibility).
    (C) Any mitigating circumstances.
    (D) Remedial measures taken to address labor violations, 
including existence of and compliance with any labor compliance 
agreements, or whether the prospective subcontractor is still in 
good faith negotiating such an agreement.
    (E) Any advice or assistance provided by DOL.
    (7) The Contractor shall notify the Contracting Officer of the 
following information if the contractor determines that a 
subcontractor is a responsible source after having been informed 
that DOL has advised that the subcontractor has not entered into a 
compliance agreement within a reasonable period or is not meeting 
the terms of the agreement:
    (i) The name of the subcontractor; and
    (ii) The basis for the decision.
    (d) Subcontractor updates.
    (1)(i) The Contractor shall require subcontractors to determine, 
on a semi-annual basis during subcontract performance, whether labor 
law disclosures provided pursuant to paragraph (c) of this clause 
and pursuant to 52.222-AB, Subcontractor Responsibility Matters 
Regarding Compliance with Labor Laws (Executive Order 13673), are 
updated, current and complete. If the information is not updated, 
current and complete, subcontractors must provide revised 
information to the Contractor. If it is updated, current and 
complete, no action is required.
    (ii) The Contractor shall further require the subcontractor to 
disclose during the course of performance of the contract any 
notification by DOL, within 5 business days of such notification, 
that it has not entered into a labor compliance agreement within a 
reasonable period, or is not meeting the terms of an existing labor 
compliance agreement, and allow the subcontractor to provide an 
explanation and supporting information for the delay or non-
compliance.
    (2) The contractor shall afford subcontractors an opportunity to 
provide to the contractor any additional information, e.g., 
mitigating circumstances, remedial measures (to include labor 
compliance agreements), other steps taken to achieve compliance with 
labor laws.
    (3) The Contractor shall, in a timely manner, consider 
information obtained from subcontractors pursuant to paragraphs 
(d)(1) and (2) of this clause, and determine whether action is 
necessary, e.g., requesting that the subcontractor pursue a new or 
enhanced labor compliance agreement, requiring other appropriate 
remedial measures, compliance assistance, resolving issues to avoid 
further violations, or not continuing with the subcontract, if 
necessary. The Contractor is encouraged to consult with DOL as 
necessary to determine an appropriate timeframe for action.
    (4) Using DOL guidance, the Contractor shall evaluate 
subcontractor information to determine if action is necessary. 
Contractors shall consider the following:
    (i) The nature of the violations (whether serious, repeated, 
willful, or pervasive).
    (ii) The number of violations.
    (iii) Any mitigating circumstances.
    (iv) Remedial measures taken to address labor violations, 
including existence of and compliance with any labor compliance 
agreements with DOL or other enforcement agency, or whether the 
subcontractor is still in good faith negotiating such an agreement.
    (v) Any advice or assistance provided by DOL.
    (5) The Contractor shall notify the Contracting Officer of the 
following information if the Contractor decides to continue the 
subcontract after having been informed that DOL has advised that the 
subcontractor has not entered into a labor compliance agreement 
within a reasonable period or is not meeting the terms of the 
agreement:
    (i) The name of the subcontractor; and
    (ii) The basis for the decision.
    (e) Consultation with DOL.
    (1) The Contractor may consult with DOL representatives for 
advice and assistance regarding evaluation of subcontractor labor 
law violation(s), including the need for new or enhanced labor 
compliance agreements. (Only DOL representatives are available to 
consult with Contractors regarding subcontractor information. 
Contracting Officers or Agency Labor Compliance Advisors may assist 
with identifying the appropriate DOL representatives.).
    (2) Absent advice or assistance from DOL, Contractors may 
proceed with determining responsibility, or during subcontract 
performance, if action is necessary using available information and 
business judgment.
    (f) Subcontractor flowdown. The Contractor shall include the 
substance of paragraphs (a), (c), (d), (e), and (f) of this clause, 
in subcontracts with an estimated value exceeding $500,000, for 
other than commercially available off-the-shelf items.


(End of clause)
0
19. Add section 52.222-XX to read as follows:


52.222-XX  Paycheck Transparency.

    As prescribed in 22.2007(d), insert the following clause:

Paycheck Transparency (Date)

    (a) In each pay period, the Contractor shall provide a document 
(wage statement also known as pay stub) to all individuals 
performing work under the contract subject to the wage records 
requirements under the following statutes:
    (1) The Fair Labor Standards Act, 29 U.S.C chapter 8.
    (2) 40 U.S.C. chapter 31, subchapter IV, Wage Rate Requirements 
(Construction) (formerly known as the Davis Bacon Act).
    (3) 41 U.S.C. chapter 67, Service Contract Labor Standards 
(formerly known as the Service Contract Act of 1965).
    (4) Equivalent state laws identified in DOL Guidance for E.O. 
13673, which can be found at www._____.
    (b) The wage statement shall list hours worked, overtime hours, 
pay, and any additions made to or deductions made from pay. The wage 
statement provided to individuals exempt from the overtime 
compensation requirements of the Fair Labor Standards Act need not 
include a record of hours worked if the Contractor informs the 
individuals of their overtime exempt status. The wage statement 
shall be issued every pay period and contain the total number of 
hours worked in the pay period and the number of those hours that 
were overtime hours. If the wage statement is not provided weekly 
and is instead provided bi-weekly or semi-monthly (because the pay 
period is bi-weekly or semi-monthly), the hours worked and overtime 
hours contained in the wage statement shall be broken down to 
correspond to the period (which will almost always be weekly) for 
which overtime is calculated and paid.
    (c) These paycheck transparency requirements shall be deemed to 
be fulfilled if the Contractor is complying with State or local 
requirements that the United States

[[Page 30572]]

Secretary of Labor has determined are substantially similar to those 
required by this clause. These determinations of substantially 
similar wage payment states may be found at www._____.
    (d) If the Contractor is treating an individual performing work 
under a contract as an independent contractor, and not as an 
employee, the Contractor shall provide a document to the individual. 
The document will inform the individual of this status. The 
contractor shall provide the document to the individual prior to 
commencement of work or at the time a contract is established with 
the individual.
    (e) Where a significant portion of the workforce is not fluent 
in English, the Contractor shall provide the wage statement required 
in paragraph (b) of this clause and the independent contractor 
notification required in paragraph (d) of this clause in English and 
the language(s) with which the workforce is more familiar.
    (f) The Contractor shall insert the substance of this clause, 
including this paragraph (f), in all subcontracts that exceed 
$500,000, for other than commercially available off-the-shelf items.


(End of clause)
0
20. Add section 52.222-YY to read as follows:


52.222-YY   Arbitration of Contractor Employee Claims.

    As prescribed in 22.2007(e), insert the following clause:

Arbitration of Contractor Employee Claims (DATE)

    (a) The Contractor hereby agrees that the decision to arbitrate 
claims arising under title VII of the Civil Rights Act of 1964, or 
any tort related to or arising out of sexual assault or harassment, 
shall only be made with the voluntary consent of employees or 
independent contractors after such disputes arise.
    (b) This does not apply to--
    (1) Employees covered by a collective bargaining agreement 
negotiated between the Contractor and a labor organization 
representing the employees; or
    (2) Employees or independent contractors who entered into a 
valid contract to arbitrate prior to the Contractor bidding on a 
contract containing this clause, implementing Executive Order 13673. 
This exception does not apply:
    (i) If the contractor is permitted to change the terms of the 
contract with the employee or independent contractor; or
    (ii) When the contract with the employee or independent 
contractor is renegotiated or replaced.
    (c) The Contractor shall insert the substance of this clause, 
including this paragraph (c), in subcontracts that exceed 
$1,000,000. This paragraph does not apply to subcontracts for the 
acquisition of commercial items.


(End of clause)
0
21. Amend section 52.244-6 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (c)(1)(xii) through (c)(1)(xiv) as 
paragraphs (c)(1)(xiv) through (c)(1)(xvi), respectively; and
0
c. Adding new paragraphs (c)(1)(xii) and (c)(1)(xiii).
    The revised and added text reads as follows:


52.244-6   Subcontracts for Commercial Items.

* * * * *

Subcontracts for Commercial Items (DATE)

* * * * *
    (c)(1) * * *
    (xii) 52.222-BB, Compliance with Labor Laws (DATE) (E.O. 13673), 
if the estimated subcontract value exceeds $500,000, and is for 
other than commercially available off-the-shelf items.
    (xiii) 52.222-XX, Paycheck Transparency (DATE) (E.O. 13673), if 
the estimated subcontract value exceeds $500,000, and is for other 
than commercially available off-the-shelf items.

* * * * *
[FR Doc. 2015-12560 Filed 5-27-15; 8:45 am]
BILLING CODE 6820-EP-P