Federal Register, Volume 81 Issue 165 (Thursday, August 25, 2016)

[Federal Register Volume 81, Number 165 (Thursday, August 25, 2016)]
[Rules and Regulations]
[Pages 58562-58651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19676]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 4, 9, 17, 22, 42, and 52

[FAC 2005-90; 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: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the
Federal Acquisition Regulation (FAR) to implement Executive Order
13673, Fair Pay and Safe Workplaces, which is designed to increase
efficiency and cost savings in Federal contracting by improving
contractor compliance with labor laws. The Department of Labor is
simultaneously issuing final Guidance to assist Federal agencies in

[[Page 58563]]

implementation of the Executive Order in conjunction with the FAR final
rule.

DATES: Effective October 25, 2016.

FOR FURTHER INFORMATION CONTACT: Ms. Zenaida Delgado, Procurement
Analyst, at 202-969-7207 for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at 202-501-4755. Please cite FAC 2005-90, FAR Case 2014-
025.

SUPPLEMENTARY INFORMATION:
This rule comprises the following contents:

I. Table of Contents
II. Overview
A. Background
B. The Proposed FAR Rule
III. Discussion and Analysis of Public Comments
A. Summary of Significant Issues
1. Summary of Significant Changes to the Proposed Rule
a. Phase-in
b. Subcontracting
c. Public Disclosure of Labor Law Decision Information
d. Contract Remedies
e. Regulatory Impact
2. Summary of Changes by Provision
3. Additional Issues
a. Legal Entity
b. Other Equivalent State Laws
B. Analysis of Public Comments
1. Challenges to Legality and Authority of the Executive Order
and Implementing Regulatory Action
a. Administrative Procedure Act (APA)
b. Due Process and Procedural Considerations
c. False Claims Act
d. Other Issues
2. Various Alternatives to the Proposed Rule
a. Alternatives That Were Presented in the Proposed Rule
i. Phase-in (of Disclosure Requirements)
Phase-in of Subcontractor Review
Phase-in of Subcontractor Disclosures by Subcontracting
Tiers
Phase-in for Small Businesses
Phase-in for Other-Than-Small Businesses
Length of Phase-in Period
ii. Subcontractor Disclosures and Contractor Assessments
iii. Contractor and Subcontractor Remedies
b. Alternatives for Implementation of Disclosures That Were Not
Presented in the Proposed Rule
c. Recommendations for Use of Existing Data or Employing
Existing Remedies
d. Alternatives Suggested for the Threshold for Dollar Coverage
for Prime Contracts
e. Threshold for Subcontracts
f. Applicability to Prime Contracts for Commercial Items
g. Miscellaneous Public Comments Concerning Alternatives
3. Requirements for Disclosures of Labor Law Decisions
a. General Comments
b. Semiannual Updates
c. Burden of Disclosing Labor Law Decisions
d. Risk of Improper Exclusion
e. Request for Clarification on Scope of the Reporting Entity
4. Labor Law Decision Disclosures as Relates to Prime
Contractors
a. General Comments
b. Public Display of Disclosed Information
c. Violation Documents
d. Use of DOL Database
e. Remedial and Mitigating Information
5. Labor Law Decision Disclosures as Relates to Subcontractors
a. General Comments
b. Definition of Covered Subcontractors
c. Authority for Final Determination of Subcontractor
Responsibility
d. Governmental Planning
e. Subcontractor Disclosures (Possession and Retention of
Subcontractor Information)
f. Potential for Conflicts When Subcontractors Also Perform as
Prime Contractors
g. Not Workable Approach for Prime Contractors To Assess
Subcontractors' Disclosures
h. Suggestions To Assess Subcontractor Disclosures During
Preaward of the Prime Contractor
i. Suggestion for the Government To Assess Subcontractor
Responsibility
j. Miscellaneous Comments About Subcontractor Disclosures
6. ALCA Role and Assessments
a. Achieving Consistency in Applying Standards
b. Public Disclosure of Information
c. Sharing Information Between ALCA and Contracting Officer
d. Respective Roles of Contracting Officers and ALCAs in Making
Responsibility Determinations
e. Number of Appointed ALCAs, ALCA Expertise, and ALCA Advice/
Analysis Turn-Around Time Insufficient
7. Labor Compliance Agreements
a. Requirements for Labor Compliance Agreements
b. Negotiating Labor Compliance Agreements
c. Settlement Agreements and Administrative Agreements
d. Third Party Input
e. Consideration of Labor Compliance Agreements in Past
Performance Evaluations
f. Public Disclosure of Labor Compliance Agreements and Relevant
Labor Law Violation Information
g. Labor Compliance Agreement--Suggested Improvements, Including
Protections Against Retaliation
h. Weight Given to Labor Compliance Agreements in Responsibility
Determinations
i. Concern Regarding Improper Discussions
j. Process for Enforcement of Labor Compliance Agreements
k. Pressure or Leverage To Negotiate a Labor Compliance
Agreement
l. False or Without Merit Allegations/Citations
m. Interference With Due Process
8. Paycheck Transparency
a. Wage Statement Provision
i. Rate of Pay
ii. Itemizing Additions Made to and Deductions Taken From Wages
iii. Weekly Accounting of Overtime Hours Worked
iv. Substantially Similar State Laws
v. Request To Delay Effective Date
b. Fair Labor Standards Act (FLSA) Exempt-Status Notification
i. Type and Frequency of the Notice
ii. Differing Interpretations by the Courts of an Exemption
Under the FLSA
iii. Request To Delay Implementation of the Exempt-Status Notice
c. Independent Contractor Notice
i. Clarifying the Information in the Notice
ii. Independent Contractor Determination
iii. Frequency of the Independent Contractor Notice
iv. Workers Employed by Staffing Agencies
d. Requirements That Apply to All Three Documents (Wage
Statement, FLSA Exempt-Status Notice, Independent Contractor Notice)
i. Translation Requirements
ii. Electronic Wage Statements
9. Arbitration of Contractor Employee Claims
10. Information Systems
a. The Government Should Have a Public Data Base of All Labor
Law Violations
b. Data Base for Subcontractor Disclosures
c. Posting Names of Prospective Contractors Undergoing a
Responsibility Determination and Contractor Mitigating Information.
d. Method To Protect Sensitive Information Needed
e. Information in System for Award Management (SAM) and Federal
Awardee Performance and Integrity Information System (FAPIIS)
f. Contractor Performance Assessment Reporting System (CPARS)
g. Chief Acquisition Officer Council's National Dialogue on
Information Technology
h. Difficulty for Contractors To Develop Their own Information
Technology System
11. Small Business Concerns
12. State Laws
a. OSHA-Approved State Plans
b. Phased Implementation of Equivalent State Laws
13. DOL Guidance Content Pertaining to Disclosure Requirements
a. General Comments
b. Defining Violations: Administrative Merits Determinations,
Arbitral Awards, and Civil Judgments
c. Defining the Nature of Violations
i. Serious, Repeated, Willful, and/or Pervasive Violations
ii. Serious Violations
iii. Repeated Violations
iv. Willful Violations
v. Pervasive Violations
d. Considering Mitigating Factors in Weighing Violations
14. General and Miscellaneous Comments
a. Out of Scope of Proposed Rule
b. Extension Request
c. Miscellaneous
d. General Support for the Rule

[[Page 58564]]

e. General Opposition to the Rule
IV. Executive Orders 12866 and 13563
Regulatory Impact Analysis
V. Regulatory Flexibility Act
VI. Paperwork Reduction Act

II. Overview

A. Background

This final rule implements Executive Order 13673, Fair Pay and Safe
Workplaces, dated July 31, 2014 (79 FR 45309, August 5, 2014), amended
by Executive Order 13683, (December 11, 2014) (79 FR 75041, December
16, 2014) to correct a statutory citation, and further amended by an
Executive Order to modify the handling of subcontractor disclosures and
clarify the requirements for public disclosure of documents.
A FAR proposed rule was published on May 28, 2015 (80 FR 30548) to
implement Executive Order 13683 (hereinafter designated as the
``E.O.''). Public comments were due July 27, 2015. The Department of
Labor (DOL) also published its proposed Guidance on May 28, 2015 (80 FR
30574).
A first extension of the period for public comments on the FAR
rule, to August 11, 2015, was published on July 14, 2015. A second
extension, to August 26, 2015, was published on August 5, 2015. There
were 927 respondents that made comments on the FAR proposed rule.
Including mass mailings, about 12,600 responses were received on the
FAR proposed rule. Respondent organizations typically submitted their
responses to both DOL and FAR dockets. DOL, DoD, GSA, and NASA worked
together and closely coordinated review and disposition of the
comments.
The purpose of E.O. 13673 is to improve contractor compliance with
labor laws in order to increase economy and efficiency in Federal
contracting. As section 1 of E.O. 13673 explains, ensuring compliance
with labor laws drives economy and efficiency by promoting ``safe,
healthy, fair, and effective workplaces. 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 Government contracting that
economy and efficiency is driven, in part, by contracting only with
responsible contractors that abide by the law, including labor laws.
However, as explained in the preamble to the proposed rule, many labor
violations that are serious, repeated, willful, and/or pervasive are
not being considered in procurement decisions, in large part because
contracting officers are not aware of them. Even if information
regarding labor law decisions is made available, contracting officers
generally lack the expertise and tools to assess the severity of the
labor law violations brought to their attention and therefore cannot
easily determine if a contractor's actions show a lack of integrity and
business ethics. See 80 FR 30548-49 (May 28, 2015).
While the vast majority of Federal contractors abide by labor laws,
a number of studies suggest a significant percentage of the most
egregious labor law violations identified in recent years have involved
companies that received Federal contracts. In the mid-1990s, the
Government Accountability Office (GAO) (then known as the General
Accounting Office) issued two reports finding that Federal contracts
worth more than 60 billion dollars had been awarded to companies that
had violated the National Labor Relations Act (NLRA) and the
Occupational Safety and Health Act (the OSH Act). See U.S. General
Accounting Office, GAO/HEHS-96-8, Worker Protection: Federal
Contractors and Violations of Labor Law, Report to Senator Paul Simon
(1995), available at http://www.gao.gov/assets/230/221816.pdf; U.S.
General Accounting Office, GAO/HEHS-96-157, Occupational Safety and
Health: Violations of Safety and Health Regulations by Federal
Contractors, Report to Congressional Requesters (1996), available at
http://www.gao.gov/assets/230/223113.pdf. The GAO stated that
contracting agencies already had the authority to consider these
violations when awarding Federal contracts under the existing
regulations, but were not doing so because they lacked adequate
information about contractors' noncompliance. See U.S. General
Accounting Office, GAO/T-HEHS-98-212, Federal Contractors: Historical
Perspective on Noncompliance With Labor and Worker Safety Laws,
Statement of Cornelia Blanchette before the Subcommittee on Oversight
and Investigations, Committee on Education and the Workforce, House of
Representatives, 2 (July 14, 1998), available at http://www.gao.gov/assets/110/107539.pdf.
More than ten years later, the GAO again found a similar pattern.
As discussed in the preamble to the proposed rule, the GAO found 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. See U.S. Government
Accountability Office, GAO-10-1033, FEDERAL CONTRACTING: Assessments
and Citations of Federal Labor Law Violations by Selected Federal
Contractors, Report to Congressional Requesters (2010), available at
http://www.gao.gov/new.items/d101033.pdf. A 2013 report by the Senate
Health, Education, Labor, and Pensions (HELP) Committee corroborated
these findings. See Majority Staff of Senate Committee on Health,
Education, Labor, and Pensions, Acting Responsibly? Federal Contractors
Frequently Put Workers' Lives and Livelihoods at Risk, 1 (2013)
(hereinafter HELP Committee Report), available at http://www.help.senate.gov/imo/media/doc/Labor%20Law%20Violations%20by%20Contractors%20Report.pdf.
Equally important, a number of studies suggest a strong
relationship between labor law compliance and performance. One 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 between FY 2005 and FY 2009 had significant
performance problems. As cited in the preliminary regulatory impact
analysis (RIA), a report by the U.S. Department of Housing and Urban
Development's Office of Inspector General, Internal Audit--Monitoring
and Enforcement of Labor Standards, January 16, 1985, found a ``direct
relationship between labor standards violations and construction
deficiencies'' on the Department of Housing and Urban Development (HUD)
projects and revealed that poor quality work contributed to excessive
maintenance costs. Similarly, a Fiscal Policy Institute report, which
analyzed a random sample of 30 New York City construction contractors,
concluded that a contractor with labor law violations is more than five
times as likely to receive a low performance rating than a contractor
with no labor law violations. See Adler Moshe, ``Prequalification of
Contractors: The Importance of Responsible Contracting on Public Works
Projects,'' Fiscal Policy Institute, May 2003. In addition, in the
``Background'' section of the Preamble to its final Guidance, DOL cites
to a number of studies describing how strengthening contractor labor-
law compliance policies ``can improve the

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quality of competition by encouraging bids from more responsible
contractors that might otherwise abstain from bidding out of concern
about being able to compete with less scrupulous corner-cutting
companies.''
E.O. 13673 is designed to address the longstanding deficiencies
highlighted in the GAO reports and thereby to increase economy and
efficiency in Federal procurement by providing, to Federal contracting
officers, additional relevant information and guidance with which to
consider that information. To achieve this goal, the E.O. requires that
prospective and existing contractors on covered contracts disclose
decisions regarding violations of certain labor laws, and that
contracting officers, in consultation with agency labor compliance
advisors (ALCAs), a new position created by the E.O., consider the
decisions, (including any mitigating factors and remedial measures), as
part of the contracting officer's decision to award or extend a
contract. See sections 2 and 3 of the E.O. In addition, the E.O.
creates new paycheck transparency protections, among other things, to
ensure that workers on covered contracts are given the necessary
information each pay period to verify the accuracy of what they are
paid. See section 5 of the E.O. Finally, the E.O. limits the use of
predispute arbitration clauses in employment agreements on covered
Federal contracts. See section 6 of the E.O.

B. The Proposed FAR Rule

On May 28, 2015, DoD, GSA, and NASA published a proposed rule at 80
FR 30548, to implement E.O. 13673. The proposed rule delineated,
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
labor law violations. Specifically, a new FAR subpart 22.20 was
proposed to provide direction to contracting officers on how they are
to obtain disclosures from contractors on labor law decisions
concerning their labor law violations; how to consider disclosures when
making responsibility determinations, and decisions whether to exercise
options; and how to work with ALCAs, who will advise contracting
officers in assessing labor law violations, mitigating factors, and
remedial measures. New solicitation provisions and contract clauses
were proposed in FAR part 52 to incorporate into contracts whose
estimated value exceeds $500,000, and into subcontracts over this
value, other than subcontracts for commercially available off-the-shelf
(COTS) items. Conforming changes were proposed to FAR subpart 9.1 to
address the consideration of labor law violation information in the
Federal Awardee Performance and Integrity Information System (FAPIIS)
during a responsibility determination, to FAR 17.207 to address
consideration of labor law decisions, mitigating factors, and remedial
measures prior to the exercise of an option, and to FAR subpart 22.1 to
address the appointment and duties of ALCAs.
Simultaneously, DOL issued proposed Guidance entitled ``Guidance
for Executive Order 13673, Fair Pay and Safe Workplaces'' that was
designed to work hand-in-hand with the FAR rule. DOL's proposed
Guidance provided proposed definitions and Guidance regarding labor law
decisions; how to determine whether a labor law decision is reportable;
what information about labor law decisions must be disclosed; how to
analyze the severity of labor law violations; and the role of ALCAs,
DOL, and other enforcement agencies in addressing labor law violations.
The proposed Guidance defined the term labor compliance agreement as an
agreement between a contractor and an enforcement agency, and it
identified the existence of such an agreement as an important
mitigating factor when an ALCA assesses the contractor's labor law
violations. DOL's proposed Guidance at section IV also included
discussion of the E.O.'s provisions related to paycheck transparency.
These requirements include satisfaction by complying with substantially
similar State laws, information to be included on required wage
statements, FLSA exempt-status notices, and independent contractor
notifications. The proposed FAR rule incorporated DOL's Guidance,
including DOL's proposed interpretations of the E.O's reference to
serious, repeated, willful, pervasive and other key terms; and, as
already discussed, the proposed FAR rule addressed when and how
contracting officers are to consider this Guidance.
In addition to the new requirements to improve labor compliance,
the proposed FAR rule required contracting agencies to ensure that
certain workers on covered Federal contracts receive a wage statement
document that contains information concerning that individual's hours
worked, overtime hours, pay, and any additions made to or deductions
taken from pay. The proposed rule also instructed contractors to inform
individuals in writing if the individual is being treated as an
independent contractor and not an employee. Finally, the proposed rule
required that contractors and subcontractors entering into contracts
and subcontracts for non-commercial items over $1 million agree not to
enter into any mandatory predispute arbitration agreement with their
employees or independent contractors on any matter arising under Title
VII of the Civil Rights Act of 1964, as well as any tort related to or
arising out of sexual assault or harassment.
For additional background, refer to the preamble for the proposed
rule.

III. Discussion and Analysis of Public Comments

The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the disposition of public
comments in the development of the final rule. A discussion of the
comments and of the changes made to the rule as a result of those
comments is provided below.

A. Summary of Significant Issues

1. Summary of Significant Changes to the Proposed Rule
DoD, GSA, and NASA seek to ensure that this FAR rulemaking, like
any other, results in regulatory changes that are clear, manageable,
and effective. To this end, in soliciting public comment on the
proposed rule, DoD, GSA, and NASA highlighted a number of issues whose
shape in the final rule will play a particularly important role in the
effective implementation of the E.O. These issues included: (i) How the
new requirements might be phased in to give affected parties time to
acclimate themselves to their new responsibilities, (ii) how disclosure
requirements are best shaped to achieve a balance between transparency
and a reasonable environment for contractors to work with enforcement
agencies, (iii) how to avoid challenges contractors may face in
evaluating labor law violations disclosed by their subcontractors, and
(iv) how to craft remedies that create accountability for compliance
while providing reasonable time and opportunity for contractors and
subcontractors to take action. See 80 FR 30555 to 30557.
Based on the extensive and detailed public comments received in
response to the proposed rule (discussed in greater detail below) and
additional deliberations, DoD, GSA, and NASA have agreed on the
following key actions to minimize burden for contractors and
subcontractors, small and large, which include a number of changes to
the proposed rule, as follows:
a. Phase-in. The final rule provides a measured phase-in process
for the

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disclosure of labor law decisions to recognize that contractors and
subcontractors were not previously required to track and report labor
law decisions and to provide the time affected parties may need to
familiarize themselves with the rule, set up internal protocols, and
create or modify internal databases to track labor law decisions in a
more readily retrievable manner.
Accordingly, when the rule first takes effect, the disclosure
reporting period will be limited to one year and gradually increase to
three years by October 25, 2018. Moreover, no disclosures will be
required from prospective prime contractors during the first six months
that the rule is effective (from October 25, 2016 through April 24,
2017), except from prospective contractors bidding on solicitations
issued on or after October 25, 2016 for contracts valued at $50 million
or more. Because of the time typically required for contractors to
prepare proposals, the Government to evaluate the proposals, and the
Government to select a prospective contractor for major acquisitions of
this size, such entities should have adequate time to perform the more
limited disclosure representation set forth in the rule.
Subcontractor disclosure is also phased in, and subcontractors will
not be required to begin making disclosures until one year after the
rule becomes effective. More specifically, subcontractors will be
required to report labor law decisions in accordance with this rule if
they are seeking to perform covered work for prospective contractors
under Federal contracts awarded pursuant to solicitations issued on or
after October 25, 2017.
DOL and other enforcement agencies are actively working to upgrade
their tracking systems so that the need for contractor disclosures of
labor law decisions may be reduced over time. DoD, GSA, NASA, and the
Office of Management and Budget (OMB) intend to work closely with DOL,
as part of the renewal process required under the Paperwork Reduction
Act (PRA), to review progress made on system upgrades and evaluate the
feasibility of phasing out disclosure requirements set forth in this
rule.
Nothing in the phase-in relaxes the ongoing and long-standing
requirement for agencies to do business only with contractors who are
responsible sources and abide by the law, including labor laws.
Accordingly, if an agency has information indicating that a prospective
prime contractor has been found within the last three years to have
labor law violations that warrant heightened attention in accordance
with DOL's Guidance (i.e., serious, repeated, willful, and/or pervasive
violations), the contractor should be prepared to be asked about the
violations and expect to be given an opportunity to address any
remediation steps it has taken to address the violations. For this
reason, entities seeking to do business with the Government are
strongly encouraged to work with DOL in their early engagement
preassessment process to obtain compliance assistance if they identify
covered labor law decisions involving violations that they believe may
be serious, repeated, willful, and/or pervasive. This assistance is
available to entities irrespective of whether they are responding to an
active solicitation. Working with DOL prior to competing for Government
work is not required by this rule, but will allow the entity to focus
its attention on developing the best possible offer when the
opportunity arises to respond to a solicitation.
b. Subcontracting. To minimize burden on, and overall risk to,
prime contractors and to create a manageable and executable process for
both prime contractors and subcontractors, the final rule requires
subcontractors to disclose details regarding their labor law violations
(the decisions, mitigating factors and remedial measures) directly to
DOL for review and assessment instead of to the prime contractor. The
subcontractor then makes a statement to the prime contractor regarding
DOL's response to its disclosure. The prime contractor will then
consider any response from DOL in evaluating the integrity and business
ethics of subcontractors. See FAR 22.2004-1(b), 22.2004-4, and 52.222-
59(c) and (d) of the final rule. This approach was detailed in the
preamble to the proposed rule (at 80 FR 30555 to 30557) as an
alternative to the regulatory text addressing this matter. It has now
been adopted after careful consideration of concerns raised by numerous
respondents which would have required contractors to obtain from
subcontractors with whom they have contracts exceeding $500,000 other
than COTS items, the same labor compliance information that they must
themselves disclose.
Respondents stated that these subcontractor disclosures would be
costly, burdensome, and difficult for prime contractors to assess. They
explained that contractors do not have sufficient expertise and
capacity to assess subcontractor labor law violation disclosures and
indicated that subcontractors working for multiple prime contractors
may receive inconsistent assessments. They further explained that these
disclosures would add to systems costs, both to track and properly
protect the information, and could strain business relationships as
companies may be reluctant to share information that they may believe
is proprietary or otherwise harmful to their competitive interests.
Under the final rule, subcontractors will be required to provide
information about their labor law violations to the prime only when the
subcontractor is not in agreement with, or has concerns with, DOL's
assessment (see FAR 52.222-59(c)(4)(ii)(C)(3)). DoD, GSA, and NASA
believe that the flowdown processes set forth in the final rule should
minimize the challenges identified with the proposed rule, including
the need for prime contractors to obtain additional resources and
expertise to track and assess subcontractor labor law violation
disclosures. Equally important, DOL's review and assessment of
subcontractor labor law decision information, mitigating factors, and
remedial measures should help to promote consistent assessments of
labor law violations and the need for further action. The E.O. has been
amended to adopt this process in lieu of disclosure to the prime
contractor to ensure that processes are as manageable and minimally
burdensome as possible.
c. Public Disclosure of Labor Law Decision Information. The final
rule, like the proposed rule, requires prospective prime contractors to
publicly disclose certain basic information about covered violations--
namely, the law violated, the case identification number, the date of
the decision finding a violation, and the name of the body that made
the decision. The final rule reiterates that the requirement to provide
information on the existence of covered violations applies not only to
civil judgments and administrative merits determinations, but also
arbitral awards, including awards that are not final or still subject
to court review. This is consistent with section 2(a)(i) of the E.O.,
which specifically requires the disclosure of arbitral awards or
decisions without exception. DoD, GSA, and NASA refer readers to the
Preamble of DOL's final Guidance, which explains that confidentiality
provisions generally have exceptions for disclosures required by law.
Moreover, there is nothing particularly sensitive about the four pieces
of basic information that contractors must publicly disclose about each
violation--the labor law that was violated, the case number, the date
of the award or decision, and the name of arbitrator. See FAR 22.2004-
2(b)(1)(i). Parties routinely disclose more

[[Page 58567]]

information about an arbitral award when they file a court action
seeking to have the award vacated, confirmed, or modified.
That said, the final rule does not compel public disclosure of
additional documents the prospective contractor deems necessary to
demonstrate its responsibility, such as documents demonstrating
mitigating factors, remedial measures, and other steps taken to achieve
compliance with labor laws. The rule states this information will not
be made public unless the Contractor determines that it wants this
information to be made public (see FAR 22.2004-2(b)(1)(ii)).
d. Contract Remedies. Consistent with the E.O.'s goal of bringing
contractors into compliance the final rule adopts additional language
regarding use of remedies, with the intent of reinforcing the
availability and consideration of remedies, such as documenting
noncompliance in past performance or negotiating a labor compliance
agreement, prior to the consideration of more severe remedies (e.g.,
terminating a contract, notifying the suspending and debarring
officials).
Of particular note, the final rule enumerates the ALCA's
responsibility to encourage prospective contractors and contractors
that have labor law violations that may be serious, repeated, willful,
and/or pervasive to work with DOL or other relevant enforcement
agencies to discuss and address the violations as soon as practicable.
See FAR 22.2004-1(c)(1). Early engagement with DOL through the
preassessment process can give entities with violations an opportunity
to understand and address concerns, as appropriate, before bidding on
work so that they may focus their attention on developing the best
possible offer during competition. The Office of Federal Procurement
Policy (OFPP) is working with DOL, members of the FAR Council (DoD,
GSA, NASA, and OFPP) and other acquisition executives, the Small
Business Administration (SBA), and the SBA Office of Advocacy to
highlight language in DOL's Guidance that explains how entities may
avail themselves of assistance at DOL (i.e., Section VI Preassessment)
and, more generally, the best ways to promote understanding and early
engagement whenever it makes sense.
The rule also amends the policies addressing the assessment of past
performance when the contract includes the clause at 52.222-59, to
recognize consideration of a contractor's relevant labor law violation
information, e.g., timely implementation of remedial measures, and
compliance with those remedial measures (including related labor
compliance agreements), and the extent to which the prime contractor
addressed labor law decisions of its subcontractors. See FAR
42.1502(j). The rule calls on agencies to seek input from ALCAs for
these purposes when assessing the contractor's performance. See
42.1503(a)(1)(i). Further, the rule requires contracting officers to
consider compliance with labor laws when past performance is an
evaluation factor (see FAR 22.2004-2(a)). This language was shaped by
public comment received in response to language in the preamble of the
proposed rule addressing the consideration of compliance with labor
laws in evaluating contractor performance. See 80 FR 30557. DoD, GSA,
and NASA note that the Councils opened FAR Case 2015-027, Past
Performance Evaluation Requirements, to separately develop regulatory
guidance around the consideration of contractor compliance issues more
generally.
In addition, the final rule addresses the use of labor compliance
agreements. The rule clarifies how the timeframe for developing a labor
compliance agreement, which involves parties outside the contracting
agency, is intended to interact with the acquisition process. It also
speaks to basic obligations between the contractor and the contracting
officer where the need for a labor compliance agreement has been
identified by the ALCA. Labor compliance agreements are bilateral.
Parties to the agreement (i.e., a contractor or subcontractor and the
enforcement agency) will need time to negotiate an appropriate
agreement--time which ordinarily will go beyond that which a
contracting agency would typically give to completing a responsibility
determination. The contracting officer notifies the contractor if a
labor compliance agreement is warranted, and states the name of the
enforcement agency. Unless the contracting officer requires the labor
compliance agreement to be entered into before award, the contractor is
then required to state an intent to negotiate a labor compliance
agreement, or explain why not.
Where a contracting officer has premised a responsibility
determination (or exercise of an option postaward) on the prospective
contractor's present or future commitment to a labor compliance
agreement, the prospective contractor (or existing contractor) must
take certain steps; the failure to do so will be taken into account and
could have postaward consequences with respect to the instant contract
or future contracts.
The rule promotes economy and efficiency by ensuring that the most
severe labor law violations that have not yet been adequately remedied
(serious, repeated, willful, and/or pervasive violations) are dealt
with in a timely manner. Labor compliance agreements are designed to
address these severe labor law violations. As section 1 of the E.O.
states, ``[c]ontractors 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 rule
provides a mechanism to allow for the time needed to negotiate an
agreement reasonable to both sides. This approach should avoid
situations where instant contract actions are unnecessarily delayed or
prospective contractors passed over in favor of other offerors before
having had reasonable time to work with the enforcement agency to
address their problems, while also making sure that the contractor is
taking reasonable steps after award to negotiate an appropriate
agreement.
Nothing in the rule seeks to limit a contractor's ability to choose
how it will remediate labor law violations or to negotiate settlement
agreements. To the contrary, the rule and DOL Guidance fully anticipate
that contractors will often take action on their own, or enter into
settlement agreements, to remediate their labor law violations. For
this reason, the rule, as well as DOL's Guidance, emphasize that
contracting officers must carefully consider these actions in deciding
if a contractor is a responsible source.
It is only in a limited number of situations--where the severity of
labor law violations warrants heightened attention and remediation
efforts taken to date are inadequate--that a contractor should expect
to be advised of the need to enter into a labor compliance agreement.
The agreement may address appropriate remedial measures, compliance
assistance, steps to resolve issues to increase compliance with labor
laws, measures to ensure improved future compliance, and other related
matters. Except for unusual circumstances where the ALCA recommends and
the contracting officer agrees that the prospective contractor must
enter into a labor compliance agreement before award, prospective
contractors and existing contractors will be given a reasonable
opportunity to negotiate an appropriate agreement. If an entity, at its
own choosing, does not take action, through a labor compliance
agreement or otherwise, it will be incumbent on the agency to determine

[[Page 58568]]

the appropriate action in light of the noncompliance. A
nonresponsibility determination or exclusion action would be considered
where previous attempts to secure adequate remediation by the
contractor have been unsuccessful and it is necessary to protect the
Government's interest. With respect to the latter, consistent with
long-standing policy and practice, an entity would be given an
opportunity to be heard before an agency suspension and debarment
official debars the contractor in order to protect the Government's
interest.
e. Regulatory impact. See the summary of the RIA at Section IV
below.
2. Summary of Changes by Provision
The following summary highlights changes made from the proposed to
final rule by section:
FAR 22.2002 Definitions
Added within the definition of ``enforcement agency'' the
agencies associated with each labor law.
Deleted the definition of ``labor violation'' and
substituted the definition of ``labor law decision''.
Clarified the definition of ``pervasive violations''.
FAR 22.2004-1 General
In paragraph (b) added language on subcontractors
disclosing to DOL.
Added paragraph (c) on duties of the Agency Labor
Compliance Advisor (ALCA), such as providing input to the individual
responsible for past performance so that the input can be considered
during source selection, and making a notation in FAPIIS of the
existence of a labor compliance agreement.
FAR 22.2004-2 Preaward Assessment of an Offeror's Labor Law Violations
In paragraph (a) included contracting officer
consideration of compliance with labor laws when past performance is an
evaluation factor.
Added language in paragraph (b)(1)(ii) directing that
disclosures of mitigating factors and remedial measures will be made in
SAM, and will not be made public unless the contractor determines that
it wants this information to be made public.
Added language in paragraph (b)(3) on the recommendations
that the ALCA will make to the contracting officer.
Clarified language in paragraph (b)(4) that identifies
what the ALCA analysis shall contain.
Added a requirement in (b)(5)(ii) for the contracting
officer to document the contract file and explain how the ALCA's
written analysis was considered.
Added language in paragraph (b)(6) that disclosure of a
labor law decision does not automatically render the prospective
contractor nonresponsible.
Added procedures in (b)(7) for notifying the prospective
contractor if a labor compliance agreement is warranted.
Added paragraph (c) that the contracting officer may rely
on the offeror's representation, unless the contracting officer has
reason to question it.
FAR 22.2004-3 Postaward Assessment of a Prime Contractor's Labor Law
Violations
Added language in paragraph (a)(2) to clarify the
semiannual update requirement and minimize the disclosure burden.
Retained wording making the ALCA responsible for
monitoring SAM and FAPIIS and identifying updated information that
needs to be brought to the contracting officer's attention for
consideration.
Made various conforming changes to align preaward and
postaward sections, including that disclosures to the contracting
officer of mitigating information in SAM will not be publicly disclosed
unless the contractor determines that it wants this information to be
made public.
FAR 22.2007 Solicitation Provisions (Two) and Contract Clauses (Three)
Added date and threshold phase-in language for the FAR
52.222-59 clause. It is inserted in solicitations with an estimated
value of $50 million or more, issued from October 25, through April 24,
2017, and resultant contracts, and is inserted in solicitations that
are estimated to exceed $500,000 issued after April 24, 2017. (The FAR
52.222-57 and 52.222-58 provisions are not used unless this clause is
used.)
Added date phase-in language for the FAR 52.222-58 clause,
which covers subcontractor disclosures. It is inserted in solicitations
issued on or after October 25, 2017.
FAR Part 42
Added text at FAR subpart 42.15 to require consideration
of labor law compliance during past performance evaluations.
Added a new paragraph 42.1503(h)(5) consolidating
references to agencies entering information into FAPIIS.
FAR 52.212-3
Conformed the definitions to changes made in FAR 22.2002,
and conformed the rest of the representation to changes made in FAR
52.222-57.
FAR 52.222-57
Added a paragraph (a)(2) on joint ventures.
Added date and threshold phase-in language in paragraph
(b).
Added phase-in language for the decision disclosure period
in paragraph (c): ``rendered against the offeror during the period
beginning on October 25, 2015 to the date of the offer, or for three
years preceding the date of the offer, whichever period is shorter''.
Added a new paragraph (f) that the representation whether
there are labor law decisions rendered against the offeror will be in
FAPIIS
FAR 52.222-58
Added phase-in language for the decision disclosure
period.
Added paragraph (b)(2) about nonliability for
subcontractor misrepresentations, similar to the language at FAR
52.222-59(f).
FAR 52.222-59
Conformed the definitions to changes made in FAR 22.2002.
Added language in paragraph (b) to conform to FAR 22.2004-
3 on the semiannual update.
Moved the discussion at former (b)(4) on contract remedies
to only be at FAR 22.2004-3(b)(4).
Revised paragraph (c) to implement the alternative from
the proposed rule where the subcontractor discloses to DOL. A
description of the steps followed include--
[cir] Subcontractors make a representation regarding labor law
decisions;
[cir] If the representation was affirmative, disclosures will be
made to DOL; the subcontractor will provide information to the
contractor regarding DOL's assessment;
[cir] If the subcontractor disagrees with DOL's assessment, it will
inform the prime contractor and provide rationale; if the subcontractor
is found responsible, the prime contractor must provide an explanation
to the contracting officer; and
[cir] A similar process is followed for subcontractor updates
during contract performance (see paragraph (d)).
Added a statement in paragraph (c)(2) that disclosure of a
labor law decision(s) does not automatically render the prospective
subcontractor nonresponsible; the contractor shall consider the
prospective subcontractor for award notwithstanding disclosure of a
labor law decision. Added language that the contractor should encourage

[[Page 58569]]

prospective subcontractors to contact DOL for a preassessment of their
record of labor law compliance.
Added a new paragraph (f) that a contractor or
subcontractor, acting in good faith, is not liable for
misrepresentations made by its subcontractors about labor law decisions
or about labor compliance agreements.
FAR 52.222-60
Expanded the required elements of the wage statement, FLSA
exempt-status notices, and independent contractor notices.
3. Additional Issues
a. Legal entity.
DoD, GSA, and NASA emphasize that the scope of representations and
disclosures required by the final rule follows existing general
principles and practices. Specifically, the requirement to represent
and disclose applies to the legal entity whose name and address is
entered on the bid/offer and that will be legally responsible for
performance of the contract. The legal entity that is the offeror does
not include a parent corporation, a subsidiary corporation, or other
affiliates (see definition of affiliates in FAR 2.101). A corporate
division is part of the corporation. Consistent with current FAR
practice, representation and disclosures do not apply to a parent
corporation, subsidiary corporation, or other affiliates, unless a
specific FAR provision (e.g., FAR 52.209-5) requires that additional
information. Therefore, if XYZ Corporation is the legal entity whose
name appears on the bid/offer, covered labor law decisions concerning
labor law violations by XYZ Corporation at any location where that
legal entity operates would need to be disclosed. The fact that XYZ
Corporation is a subsidiary of XXX Corporation and the immediate parent
of YYY Corporation does not change the scope of the required
disclosure. Only XYZ Corporation's violations must be disclosed. (See
also Section III.B.3.e. below).
b. Other Equivalent State Laws
Consistent with the proposed rule, the final rule limits the scope
of initial implementation to decisions concerning violations of the
Federal labor laws enumerated in the E.O. and violations of State Plans
approved by the Occupational Safety and Health Administration (OSHA).
Disclosure and consideration of decisions concerning other equivalent
State law violations will not go into effect until DOL and the FAR
Council seek public comment on additional Guidance and rulemaking. As a
result, the number of labor law decisions that contractors and
subcontractors will need to disclose for the immediate future will be
significantly reduced and these entities will have additional
opportunity to engage with the Federal Government on the best and least
burdensome approaches for meeting those requirements before such
additional requirements take effect.

B. Analysis of Public Comments

1. Challenges to Legality and Authority of the Executive Order and
Implementing Regulatory Action
a. Administrative Procedure Act (APA)
Comment: Several respondents stated that the costs associated with
the proposed rule (which the respondents stated are largely
unquantified in the proposed rule and which the public had insufficient
time to quantify during its public comment period) so greatly outweigh
the benefits (which the respondents stated there is insufficient
evidence to support) that there is a great decrease in economy and
efficiency, and the rulemaking is not a rational exercise of Government
power. They asserted that under the APA, an agency action that is
``arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law'' will be held unlawful and set aside. See 5 U.S.C.
706(2)(A).
Response: It is a longstanding tenet of Government contracting that
economy and efficiency is driven, in part, by dealing only with
responsible contractors that abide by the law, including labor laws. As
section 1 of E.O. 13673 explains, compliance with labor law drives
economy and efficiency by promoting ``safe, healthy, fair, and
effective workplaces. 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.''
Many labor law violations that are serious, repeated, willful, and/
or pervasive are not considered in awarding contracts, in large part
because contracting officers are not aware of them. Even if information
regarding labor law violations is made available, contracting officers
generally lack the expertise and tools to assess the severity of the
labor law violations brought to their attention and therefore cannot
easily determine if a contractor's actions show a lack of integrity and
business ethics. The FAR rule, in concert with DOL's Guidance, is
designed to close these gaps so that the intended benefits of labor
laws and the economy and efficiency they promote in Federal procurement
can be more effectively realized. The Councils acknowledge that many of
these benefits are difficult to expressly quantify, but point out that
E.O. 13563, Improving Regulation and Regulatory Review, provides that,
where appropriate and permitted by law, agencies may consider and
discuss qualitative values that are difficult or impossible to
quantify, including equity, human dignity, fairness, and distributive
impacts.
Respondents assert that the costs that would be imposed by the
proposed rule greatly outweigh the benefits and, on this basis,
conclude that the rule is arbitrary. The Councils refer respondents to
the RIA which was developed, in close consultation with DOL, to
evaluate the effect of the rule. As the RIA explains, the Government,
consistent with E.O. 13563, has made a reasoned determination that the
benefits justify the costs, as the regulation has been tailored to
impose the least burden, consistent with achieving the objectives of
the Fair Pay and Safe Workplaces E.O.
Of particular note, the final rule, as required by the express
provisions of the E.O., limits costs by building processes within the
existing Federal acquisition system with which contractors are
familiar. The final rule limits the E.O.'s labor law decision
disclosure requirements to contracts and subcontracts over $500,000,
and excludes flowdown for contracts of COTS items--limitations which
will result in excluding the majority of transactions performed by
small businesses.
The final rule makes a number of important additional refinements
that will work to contain costs and create a compliance process that is
manageable and fair. These refinements were made after considering
public comments on the proposed rule--including comments addressing
specific issues that the Councils highlighted to enable further
tailoring of the rule so that it imposes the least burden possible. For
example:
The final rule adopts an alternative proposal outlined in
the proposed rule preamble that directs disclosure of subcontractor
labor law decision information directly to DOL, rather than to the
prime contractor, in order to minimize the burden and business
challenges for both prime contractors and subcontractors that might
arise through direct disclosure of a subcontractor's violations to the
prime.

[[Page 58570]]

The final rule adopts a measured phase-in process for the
disclosure of labor law decisions. When the rule first takes effect,
the disclosure period will be limited to one year and no disclosure
will be required during the first six months, except for contractors
bidding on contracts valued at $50 million or more. Subcontractors will
not begin making disclosures until one year after the rule becomes
effective. These steps will enable affected parties to acclimate
themselves to the new processes and develop internal protocols, as
necessary, without having to undertake costly measures within tight
timeframes to meet compliance requirements.
The final rule limits the scope of initial implementation
to decisions concerning violations of the Federal labor laws enumerated
in the E.O. and OSHA-approved State Plans. Disclosure and consideration
of decisions concerning other equivalent State law violations will not
go into effect until DOL and the FAR Council seek public comment on
additional Guidance and rulemaking. As a result, the number of labor
law decisions that contractors and subcontractors will need to report
for the immediate future will be significantly reduced and these
entities will have additional opportunity to engage with the Federal
Government on the best and least burdensome approaches for meeting
those requirements before such additional requirements take effect.
For a more comprehensive discussion on benefits and costs, see the
RIA. For discussions of the publication requirements of the APA see
below at Section III.B.2.a.i., at Length of Phase-in Period, and at
Section III.B.13.a.
Comment: Some respondents asserted that the rule is imprecise
regarding the way in which contractor labor law violations are to be
assessed. The respondents stated that this imprecision invites
inconsistent application across agencies, and arbitrary actions by the
Government.
Response: Consistent with well-established contracting principles
and practices, the rule requires that determinations regarding a
prospective contractor's responsibility be made by the particular
contracting officer responsible for the procurement, on a case-by-case
basis. This approach helps to ensure that actions are taken in proper
context. While contracting officers may reach different conclusions,
steps have been taken in the context of this rulemaking that will help
to promote consistency in the assessment of labor law violation
information by ALCAs and the resultant advisory input to contracting
officers and promote greater certainty for contractors. In particular,
ALCAs will coordinate with DOL and share their independent analyses for
consideration by other ALCAs. This collaboration should help to avoid
inconsistent advice being provided to the contractor from different
agencies. DOL has developed Guidance to assist ALCAs in meeting their
requirements under the E.O. and to further enhance both inter-agency
and intra-agency understanding of the process and uniformity in
implementation practices. (See also discussion at Section III.B.6.a.
below.)
Comment: Respondents asserted that the regulation requires State
law enforcement agencies to dictate whether remediation is properly
taking place. According to these respondents, this placement of power
in the hands of a State for a Federal procurement is at odds with
Federalism principles and improperly places contractor responsibility--
a Federal determination--in the hands of a State agency, whose
workplace laws may conflict with their Federal counterparts. They
concluded that the rulemaking is ``contrary to constitutional right,
power, privilege, or immunity'' and must be held unlawful and set
aside. See 5 U.S.C. 706(2)(B).
Response: The only State enforcement agencies engaged under the
rule are the State enforcement agencies for the OSHA-approved State
Plans. Under the proposed and final rules, contracting officers, not
enforcement agencies, are solely empowered to make responsibility
determinations. Contracting officers have broad discretion in making
responsibility determinations, and in determining the amount of
information needed to make that determination, including whether
conduct is being remediated. See Impresa Construzioni Geom. Domenico
Garufi v. U.S., 238 F.3d 1324, 1334-35 (Fed. Cir. 2001). Contractors
are already required to report numerous types of improper conduct,
including conduct that in some cases violated State laws, and
contracting officers must use this information in determining whether a
contractor is a responsible source. See FAR 52.209-5(a)(1)(i)(B)-(D).
While contracting officers and ALCAs will carefully consider
information about remediation from Federal or State enforcement
agencies, a contracting officer's responsibility determination is
independent of the finding of an enforcement agency--whether Federal or
State--regarding whether the labor law violation has been sufficiently
remediated.
Comment: Respondents contended that the FAR Council and DOL,
through their regulation and Guidance respectively, are effectively
amending Federal labor and employment law by creating a new enforcement
scheme, with different classes of violations (e.g., ``serious,''
``repeated,'' ``willful,''), and with new punitive sanctions that
contravene Congressional intent. They believed this action is ``in
excess of statutory jurisdiction, authority, or limitations, or short
of statutory right,'' and must be held unlawful and set aside. See 5
U.S.C. 706(2)(C). They stated that agency action is pre-empted by
established statutory schemes. Respondents cited the Davis-Bacon Act
and the Service Contract Act, where Congress explicitly made suspension
and debarment an available remedy, and did not make this remedy
available under any of the other labor laws cited in the rule. They
note that labor compliance agreements are not required or authorized
for labor law violations.
Response: Neither the FAR Council's rule nor DOL's Guidance amend
any Federal labor and employment laws. Instead, the rule will require
contractors and subcontractors to disclose decisions concerning certain
violations of some of those laws so that those decisions, if any, can
be taken into account to determine whether the contractor or
subcontractor has a satisfactory record of integrity and business
ethics. Determining whether a contractor is a responsible source is a
long-standing tenet of Federal contracting and a prerequisite to
receiving a contract award. See 41 U.S.C. 3702(b), 41 U.S.C. 3703(c),
and FAR subpart 9.1. Contracting officers already may consider
violations of the labor laws and other laws when making responsibility
determinations. Indeed, it is the very nature of the existing FAR
responsibility determination to assess conduct that may be remediable
or punishable under other statutes. The E.O.'s direction to require a
prospective contractor to disclose certain labor law decisions so that
the contracting officers can more effectively determine if that source
is responsible falls well within the established legal bounds of
presidential directives regarding procurement policy.
The Federal Property and Administrative Services Act (FPASA) (also
known as the Procurement Act), was codified into positive law in titles
40 and 41 of the United States Code. 40 U.S.C. 101 and 121 authorize
the President to craft and implement procurement policies that further
the statutory goals of that Act of promoting ``economy'' and
``efficiency'' in Federal procurement. The Office of Federal
Procurement Policy Act (41 U.S.C. 1101)

[[Page 58571]]

also has the goal of promoting ``economy'' and ``efficiency'' in
Federal Procurement.
By asking contractors to disclose past labor law decisions the
Government is better able to determine if the contractor is 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. See, e.g., UAW-Labor Employment
& Training Corp. v. Chao, 325 F.3d 360, 366 (D.C. Cir. 2003) (affirming
authority of the President under the Procurement Act to require Federal
contractors, as a condition of contracting, to post notices informing
workers of certain labor law rights).
Moreover, contractors are already required to report numerous types
of conduct--including fraud, anti-competitive conduct, embezzlement,
theft, forgery, bribery, falsification or destruction of records,
making false statements, tax evasion, and receiving stolen property--
that is unlawful and separately punishable under existing Federal and
State laws. See FAR 52.209-5(a)(1)(i)(B)-(C). Thus, contractors and
subcontractors are not being punished twice (or in any manner
inconsistent with Congressional intent) for any labor law decisions
that they report; instead, the reported decisions, along with other
reported information, will be part of the existing responsibility
determination process.
Neither the FAR Council's rule nor DOL's Guidance expand or change
the availability of suspension or debarment as a statutory remedy under
the labor laws. Under the existing FAR subpart 9.4, agencies are given
the administrative discretion to exercise suspension and debarment to
protect the Government from harm in doing business with contractors
that are not responsible sources--without regard for whether other
statutes specify suspension or debarment as a consequence. The rule and
Guidance require contractors and subcontractors to disclose certain
labor law decisions so that those decisions, if any, can be taken into
account as part of responsibility determinations. The rule has been
constructed to help contractors come into compliance with labor laws,
and consideration of suspension and debarment is only considered when
previous attempts to secure adequate remediation by the contractor have
been unsuccessful and it is necessary to protect the Government's
interest. The rule provides for contracting officers to take into
consideration a number of mechanisms that contractors may use to come
into compliance, including labor compliance agreements, that derive
from labor enforcement agencies' inherent authority to implement labor
laws and to work with covered parties to meet their obligations under
these laws.
b. Due Process and Procedural Considerations
Comment: Respondents stated that the FAR Council has improperly
promulgated labor standards under 41 U.S.C. 1707, by incorporating
Guidance from DOL.
Response: The FAR rule does not promulgate new labor standards, nor
does it interpret labor laws or standards. Rather, the FAR rule adopts
DOL's interpretation of labor law provided in DOL's Guidance, which
interprets the labor terms in the E.O. The FAR rule explains when
contracting officers are to consider such guidance and, more
importantly, how and when contracting officers are to interact with
ALCAs who will be principally responsible for using the Guidance, along
with officials from DOL and enforcement agencies, to assess covered
contractor violations and provide advice to contracting officers.
Comment: One respondent stated that the rule would require the
contractor to report violations that arose outside of the performance
of a Government contract. The respondent stated that additional
consideration of these matters has no nexus with traditional contractor
responsibility determinations that relate to whether a contractor is
responsible for the particular procurement and the performance of a
Government contract.
Response: In issuing E.O. 13673, the President explained the broad
nexus that exists between general compliance with labor laws and
economy and efficiency:
Labor laws are designed to promote safe, healthy, fair, and
effective workplaces. 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.
Helping executive departments and 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.
As explained in the preamble to the proposed FAR rule and the
preliminary RIA, a growing body of research supports the conclusion
that a relationship exists between labor law violations and performance
problems. This includes reports by the GAO, the Senate HELP Committee,
and HUD's Inspector General; a Fiscal Policy Institute report; and
reports by the Center for American Progress.
Under longstanding tenets reflected in FAR subpart 9.1 contracting
officers have long had the discretion to consider violations of law,
whether related to Federal contracts or not, for insights into how a
contractor is likely to perform during a future Government contract.
Evidence of a prospective contractor's past violations of labor laws is
a basis to inquire into that contractor's potential for satisfactory
labor law compliance; furthermore, how the prospective contractor has
handled past violations is indicative of how it will handle future
violations. Whether or not a labor law violation arose in connection
with or outside of the performance of a Government contract, the
contracting officer should consider the impact of that violation and
the potential that future noncompliance will have in terms of the
agency resources that will be required to monitor the contractor's
workplace practices during contract performance.
Comment: Respondents stated that longstanding Federal procurement
statutes and regulations focus contracting officers on final
adjudications in determining if a contractor is in compliance with the
law, as evidenced by the type of information that Congress requires for
inclusion in FAPIIS. In addition, respondents noted that in the final
rule implementing FAPIIS (FAR Case 2008-027, 75 FR 14059), the Councils
recognized that if information regarding yet-to-be-concluded
proceedings were allowed, negative perceptions could unfairly influence
contracting officers to find a contractor nonresponsible, even in
situations that later end with the contractor being exonerated.
These respondents pointed out that this focus helps to avoid
unnecessary complexities and potential unfairness that may arise from
the systematic consideration of decisions that are subject to
adjudication but have not been fully adjudicated, in particular,
administrative merits determinations. Such determinations may not have
been approved or supported by an adjudicative body, and in some cases,
are only based on an agency's reasonable cause to believe that an
unlawful practice has occurred or is occurring. Respondents believed
this deviation from well-established practice undermines substantive
due process because, among other things, a contractor may be unable to
fully

[[Page 58572]]

explain itself during a responsibility determination if the basis of a
determination is being litigated, as it would potentially require
disclosure of privileged information, evidence, litigation strategy and
other sensitive information to the contracting officer. Also, a
contractor could find itself being denied work even though the
determination might be later overturned by a court. These respondents
concluded that this type of unfairness could be avoided if the rule
were revised to exclude disclosure and consideration of administrative
merits determinations.
Response: The Councils reaffirm their commitment, voiced in FAR
Case 2008-027, to avoid the potential perception that contracting
officers might be unfairly influenced by nonfinal decisions. We note
that the structure of the E.O., this final rule, and particularly the
DOL Guidance provide necessary steps for considering nonfinal
information. Specifically, the DOL Guidance (1) informs contractors of
the fact that the information being nonfinal is a mitigating factor,
and (2) explains that ALCAs consider that the decision is nonfinal as a
mitigating factor. Additionally, contractors have the opportunity to
make mitigating factors public (see FAR 52.222-57(d)(1)(iii), its
commercial item equivalent at 52.212-3(s)(3)(i)(C), and 52.222-
59(b)(3)).
The Councils refer respondents to DOL's Guidance, which addresses
matters relating to the violations that must be disclosed and
considered. In particular, attention is directed to DOL's Preamble and
the discussion of administrative merits determinations, which states,
in pertinent part:
The Department believes that the due process and related critiques
of the proposed definition of administrative merits determination are
unwarranted. The Order delegates to the Department the authority to
define the term. See Order, Sec. 2(a)(i). The proposed definition is
consistent with the Order and the authority delegated. The Department
limited the definition to a finite number of findings, notices, and
documents--and only those issued ``following an investigation by the
relevant enforcement agency.'' 80 FR 30574, 30579.
* * * * *
The definition of administrative merits determination simply
delineates the scope of contractors' disclosure obligations--the first
stage in the Order's process. Not all disclosed violations are relevant
to a recommendation regarding a contractor's integrity and business
ethics. Only those that are serious, repeated, willful, or pervasive
will be considered as part of the weighing step and will factor into
the ALCA's written analysis and advice. Moreover, when disclosing Labor
Laws violations, a contractor has the opportunity to submit all
relevant information it deems necessary to demonstrate responsibility,
including mitigating circumstances and steps taken to achieve
compliance with Labor Laws. FAR 22.2004-2(b)(1)(ii). As the Guidance
provides, the information that the contractor is challenging or
appealing an adverse administrative merits determination will be
carefully considered. The Guidance also states that Labor Law
violations that have not resulted in final determinations, judgments,
awards, or decisions should be given lesser weight. The Department
believes that contractors' opportunity to provide all relevant
information--including mitigating circumstances--and the guidance's
explicit recognition that nonfinal administrative merits determinations
should be given lesser weight resolve any due process concerns raised
by the commenters.
With respect to the specific concern that a contractor could find
itself being denied work even though the determination might be later
overturned by a court, DOL has noted in the Preamble to its final
Guidance that a very low percentage of administrative merits
determinations are later overturned or vacated. For example, only about
two percent of all OSHA citations are later vacated. In other words,
the likelihood that a contractor could find itself being denied work
even though the determination is later overturned by a court is very
low.
See also discussions below in Section III.B.13.b. on DOL Guidance
Content Pertaining to Disclosure Requirements; Defining Violations:
Administrative Merits Determinations, Arbitral Awards, and Civil
Judgments.
Comment: Respondents asserted that the regulation effectively
authorizes a de facto debarment of contractors by creating a system
where a contractor may be found nonresponsible based on the advice of
an ALCA or otherwise denied work for not agreeing to enter into a labor
compliance agreement when such action is recommended by the ALCA. They
further contended that the rule may produce disparate, conflicting, and
redundant decisions by Federal contracting officers on the issue of
contractor responsibility. Such decisions run the substantial risk of
violating constitutional protections of due process that have been
consistently applied to combat de facto suspension or debarment of
contractors.
Response: Evidence of a prospective contractor's past violations of
labor laws is a basis to inquire into that contractor's potential for
satisfactory labor law compliance; furthermore, how the prospective
contractor has handled past violations is appropriately considered as
being indicative of how it will handle future violations. Under
longstanding tenets reflected in FAR subpart 9.1, contracting officers
have the discretion to consider violations of law, whether related to
Federal contracts or not, for insights into how a contractor is likely
to perform during a future Government contract. These long-standing
tenets also hold that determinations regarding a prospective
contractor's responsibility shall be made by the particular contracting
officer responsible for the procurement. Requiring that decisions be
made on a case-by-case basis helps to ensure that actions are taken in
proper context.
While this approach may result in different decisions by different
contracting officers, steps have been taken in the context of this
rulemaking that will help to promote consistency in the assessment of
labor law violations and relevant labor law violation information by
ALCAs and the resultant advisory input to contracting officers and will
result in greater certainty for contractors. In particular, ALCAs will
coordinate with DOL and share their independent analyses for
consideration by other ALCAs. This collaboration should help to avoid
inconsistent advice being provided to the contractor from different
agencies. The ALCA's recommendation to the contracting officer is
advisory, and not conclusive on the subject of responsibility. The rule
does not supplant or modify suspension and debarment processes, which,
consistent with current regulations, is considered in certain extreme
cases when previous attempts to secure adequate contractor remediation
has been unsuccessful, or otherwise to protect the Government from
harm.
Comment: Respondents suggested that the rule relies on a construct
that certain violations must be addressed through a contractor
compliance plan. They remarked that this violates basic labor
management law, because it prevents contractors from exercising choice
of resolution, and hinders the right to negotiate mutually beneficial
settlements between parties. The respondents further noted that through
this process, DOL would have undue leverage in their enforcement of
labor law violations unrelated to the scope of the responsibility
determination process.

[[Page 58573]]

Response: The purpose of the E.O., regulation, and Guidance is to
improve contractor compliance with labor laws through processes that
are reasonable and manageable. Neither the rule nor the Guidance seeks
to limit a contractor's ability to choose how it will remediate labor
law violations or to negotiate settlement agreements. To the contrary,
the rule and Guidance fully anticipate that contractors will often take
action on their own, including entering into settlement agreements, to
remediate their labor law violations. For this reason, the rule and
Guidance both emphasize that contracting officers must carefully
consider these actions in deciding if a contractor is a responsible
source.
In deciding if additional action is required, the E.O. seeks to
avoid unnecessary action by instructing agencies to focus on only those
violations that require heightened attention because of the severity of
the violations. In addition to helping ALCAs identify those serious,
repeated, willful, and/or pervasive violations that warrant heightened
attention, DOL's implementing Guidance makes distinctions in the weight
to be given to the different types of opinions addressing a
contractor's violations. DOL's Guidance provides that violations that
have not resulted in a final judgment, determination, or order are to
be given less weight in the ALCA's analysis, and therefore also in the
contracting officer's consideration during the responsibility
determination. In this way, DOL explicitly recognizes that a contractor
may still be contesting the findings of an administrative merits
determination. And, as already discussed, ALCAs and contracting
officers must consider very carefully this information as well as any
other information that the contractor calls to their attention. There
are no automatic triggers in the rule that compel a contracting officer
to make a nonresponsibility determination, even in light of an ALCA's
recommendation to do so, or to prevent a contracting officer from
exercising an option; nor is there evidence that labor law enforcement
actions will be abused to pressure contractors into forfeiting their
rights in order to obtain favorable responsibility determinations. In
short, it is only in a limited number of situations--where agencies
have concluded that contractors have not taken sufficient steps to
remediate past violations and prevent future noncompliance--that a
contractor should expect to be advised of the need to enter into a
labor compliance agreement. Except for unusual circumstances where the
ALCA recommends and the contracting officer agrees that the prospective
contractor (i.e., those that have been tentatively selected to receive
an award and are undergoing a responsibility determination) must enter
into a labor compliance agreement before award, the prospective
contractor and existing contractors will be given a reasonable
opportunity to negotiate an appropriate labor compliance agreement.
Such agreements will accomplish the objective of mutually beneficial
settlements between enforcement agencies and employers. Put another
way, the labor compliance agreement is one additional tool of many,
designed to help prevent situations from deteriorating to the point
where exclusion becomes necessary. Thus, if an entity, at its own
choosing, does not take action, through a labor compliance agreement or
otherwise, it will be incumbent on the agency to determine the
appropriate action in light of the noncompliance. A nonresponsibility
determination or exclusion action would generally be considered only
where previous attempts to secure adequate remediation by the
contractor have been unsuccessful or otherwise it is necessary to
protect the Government's interest. With respect to the latter,
consistent with long-standing policy and practice, an entity would be
given an opportunity to be heard before an agency suspension and
debarment official debars the contractor in order to protect the
Government's interest.
c. False Claims Act
Comment: Several respondents stated that the proposed rule requires
the contractor to report a broad range of information including final
court decisions and administrative merits determinations, over a three
year period during which there was no previous requirement to track. As
these violations are now reportable, the respondents contended that the
rule creates a significant risk of litigation under the False Claims
Act, as (1) contractors may not have had the systems necessary to
catalogue that information when the violation occurred, and (2) it may
take significant time to develop systems which are capable of tracking
information in the manner required by the rule.
Response: As a general matter, the rule requires only that an
offeror represent ``to the best of [its] knowledge and belief'' that
there either has or has not been an ``administrative merits
determination, arbitral award or decision, or civil judgment for any
labor law violation(s) rendered against the offeror''. While knowingly
misrepresenting the existence of a determination, decision, or judgment
may result in adverse action against the contractor, an inadvertent
omission would not result in the same action.
In addition, in response to public feedback explaining the
challenges that some contractors may face in getting systems in place
(coupled with the fact that tracking was not required when past
violations occurred), the final rule provides for a phase-in of the
disclosure process, initially limited to a 1-year disclosure period.
Specifically, disclosure will be required no earlier than for decisions
rendered on October 25, 2015 and cover to the date of the offer, or for
the three years preceding the date of the offer, whichever period is
shorter. During the six month period after the rule becomes effective,
disclosures also will be limited to offerors and prospective
contractors on contracts valued at $50 million or more; subcontractor
reporting will not begin until one year after the rule's initial
effective date. These phase-in mechanisms are intended to give
contractors the time they need to evaluate and address their systems
needs and avoid placing a covered contractor in a situation where it
finds itself unable to collect and report the requisite information.
d. Other Issues
Comment: Several respondents raised concerns about the relationship
between labor compliance agreements and litigation-specific settlements
for violations. One respondent, in particular, stated that labor
compliance agreements could overlap with and contradict provisions of
settlement agreements that are already in place or administrative
agreements reached as part of suspension and debarment proceedings.
Response: Labor compliance agreements, settlement agreements, and
administrative agreements have similar objectives in addressing labor
law violations and remedial actions; however, they differ in their
specific purposes. Settlement agreements are entered into with an
enforcement agency to settle a particular case. Administrative
agreements that are entered into with suspending and debarring
officials may address a number of types of concerns (one of which may
be labor law compliance) and are entered into to address present
responsibility. Labor compliance agreements may be warranted when the
ALCA identifies a pattern of conduct or policies that could be
addressed through

[[Page 58574]]

preventative action. Where this is the case, the contractor's history
of labor law violations demonstrates a risk to the contracting agency
of violations during contract performance, but these risks might be
mitigated through the implementation of appropriate compliance
measures. For a discussion of the relationship between settlement
agreements, labor compliance agreements, and administrative agreements
resolving suspension and debarment actions the Councils refer
respondents to the DOL Guidance which addresses the purpose and use of
labor compliance agreements. In particular, attention is directed to
DOL's Preamble and the discussion of administrative merits
determinations, which states, in pertinent part:
The Department believes that concerns about labor compliance
agreements conflicting with existing settlements are unwarranted.
Contractors are encouraged to disclose information about existing
settlements as a potential mitigating factor in the weighing process.
In determining whether a labor compliance agreement is necessary, the
ALCA will consider any preexisting settlement agreement--and recommend
a labor compliance agreement only where the existing settlement does
not include measures to prevent future violations.
In addition, the Department notes that a labor compliance agreement
is an agreement between a contractor and an enforcement agency.
Enforcement agencies will know if they previously entered into
agreements with the contractor and can assure that any labor compliance
agreement does not conflict with prior agreements.
Comment: Several respondents stated that the final rule should not
compel disclosure to the Government of the existence or the content of
confidential arbitral proceedings that are subject to a nondisclosure
agreement. In addition, even if information is shared with the
Government, such information should not be disclosed to the public.
Response: The E.O. specifically requires the disclosure of arbitral
awards or decisions without exception, and confidentiality provisions
in non-disclosure agreements generally have exceptions for disclosures
required by law. Further, the final rule requires contractors to
publicly disclose only four limited pieces of information: The labor
law that was violated, the case number, the date of the award or
decision, and the name of the arbitrator. See FAR 22.2004-2(b)(1)(i).
There is nothing particularly sensitive about this information, as
evidenced by the fact that parties routinely disclose this information
and more when they file court actions seeking to vacate, confirm, or
modify an arbitral award. While this information may not be sensitive,
disclosing it to the government as part of the contracting process
furthers the E.O.'s goal of ensuring that the government works with
contractors that have track records of complying with labor laws.
Comment: Several respondents commented that the proposed rule
offered no explanation, or an inadequate explanation, for how a
limitation on arbitration agreements would promote economy and
efficiency in Federal procurement. Some of these respondents expressed
the view that the proposed rule would in fact work against the stated
aims of the E.O. One respondent also stated that the limitation had no
connection with the Federal procurement process and should be deleted
in its entirety.
Response: The Procurement Act grants the President broad authority
to prescribe policies and directives that the President considers
necessary to carry out the statutory purposes of ensuring economical
and efficient government procurement. The limitation on arbitration
agreements is a reasonable and rational exercise of that authority.
In particular, the limitation on arbitration agreements will help
bring to light sexual harassment and other Title VII violations,
ultimately reducing their prevalence. Allowing parties access to the
courts for alleged violations of the law provides employees with the
opportunity to file individual, group, or class lawsuits that can raise
awareness of and redress such violations. These developments will make
it easier for agencies to identify and work with contractors with track
records of compliance, consistent with the overall goals of the E.O. In
addition, lawsuits, and the attendant publicity they can generate, can
also deter other contractors from committing similar infractions.
Prohibiting pre-dispute arbitration may also increase employee
perceptions of fairness in workplace dispute mechanisms, thereby
improving employee morale and productivity.
Finally, DoD, the Federal government's largest contracting agency,
is currently subject to a nearly identical (and more restrictive)
limitation on mandatory arbitration. The rule would extend similar
restrictions to all contractors, helping make regulations more
consistent across agencies and thus reducing barriers to operating with
the federal government. That, in turn, helps to enhance competition
among suppliers, and competition is a well-established mechanism for
achieving cost savings. These gains in economy and efficiency would
come with limited burdens for contractors, as many are already doing
business with DoD, and are thus already subject to these restrictions.
Further, nothing in the E.O. or final rule prohibits employers or
workers from choosing voluntarily to arbitrate a dispute--the E.O. and
rule simply prevent an employer from unilaterally controlling the means
of dispute resolution before any disputes arise.
Comment: Respondents commented that the exception for arbitrations
conducted pursuant to collective bargaining agreements improperly
penalized contractors without collective bargaining agreements and
recommended the exception be removed.
Response: Unlike mandatory arbitration clauses in employment
contracts with individual employees, dispute resolution procedures set
forth in a collective bargaining agreement are jointly agreed upon by
employers and employees. These dispute resolution procedures are
therefore more likely to be perceived as fair, and thus unlikely to
undermine employee morale and productivity. Collective bargaining
agreements also tend to feature protections for workers coming forward
with grievances, which increase the likelihood that sexual harassment
and Title VII violations will be brought to light and hence enable
agencies to identify and work with contractors with records of
compliance. The rationales that generally support banning mandatory
arbitration of covered claims thus do not apply in the context of a
collective bargaining agreement negotiated between the contractor and a
labor organization representing the contractor's employees.
Comment: Respondents recommended that contractors who retain forced
arbitration provisions for employment disputes other than those
specifically prohibited by the regulation should be barred from
enforcing those remaining forced arbitration provisions in the event
disputes arise out of the same set of facts.
Response: To be consistent with DoD's existing regulations and the
requirements of the E.O., this rule does not apply the limitation on
mandatory pre-dispute arbitration to aspects of an agreement unrelated
to the covered areas. Establishing consistent rules across government
agencies helps to enhance competition among suppliers, which is a well-
established mechanism for achieving cost savings for the Federal
government.

[[Page 58575]]

Comment: Several respondents commented that the proposed rule's
coverage on arbitration is invalid and unenforceable because it
conflicts with Federal statute, U.S. Supreme Court precedent, current
regulation, or should otherwise only be accomplished through
Congressional legislation. Respondents provided the following in
support of their comments: Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20, 25 (1991) (the Federal Arbitration Act reflects a ``liberal
federal policy favoring arbitration agreements'') AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011) (``The FAA (Federal Arbitration
Act) was enacted in 1925 in response to widespread judicial hostility
to arbitration agreements.'') CompuCredit v. Greenwood, 565 U.S. 95
(2012), and similar rulings, which uphold the enforceability of
arbitration agreements pursuant to the Federal Arbitration Act.
Response: The Federal Arbitration Act provides for the validity and
enforceability of arbitration agreements. The final rule, consistent
with the proposed rule, does not alter the validity or enforceability
of such agreements; indeed, the E.O. makes clear that it does not
disturb existing pre-dispute arbitration agreements unless those
agreements are renegotiated or replaced in a process that allows
changes to the terms to the contract. Therefore, the final rule does
not conflict with the Federal Arbitration Act.
The government does, however, generally have the authority to
decide which companies it will contract with and what terms such
contracts will contain. The final rule accordingly provides that
contracting agencies in their capacity as contracting parties shall
not, with some exceptions, enter into contracts with contractors who
utilize certain types of mandatory arbitration agreements with their
employees. Contractors remain free to require employees to enter into
mandatory pre-dispute arbitration agreements of claims that do not
arise under Title VII or torts relating to sexual assault or
harassment, and may further seek to arbitrate covered disputes when
they arise.
Comment: Respondents argued that failure to include the cost of
reporting equivalent State labor law violations circumvents the intent
of the Congressional Review Act (CRA), the Small Business Regulatory
Enforcement Fairness Act (SBREFA) as part of the Regulatory Flexibility
Act (RFA), and E.O. 12866. Respondents indicated that when the cost of
a proposed rule is estimated to have a cost impact of more than $100
million on the economy, each of these Federal laws require the agency
proposing the rule to undertake additional regulatory review steps.
Response: The proposed and final FAR rules do not address the cost
of reporting violations related to equivalent State laws (other than
OSHA-approved State Plans) because the rule and DOL's Guidance do not
implement those requirements of E.O. 13673. In response to what the
Councils and DOL learned from public comments and public outreach
sessions regarding the best way to create a fair, reasonable, and
implementable process, the FAR rule and DOL Guidance will phase in
parts of the E.O. over time. As part of the phase-in plan, contractors
will not be required to disclose labor law decisions related to
equivalent State laws immediately (other than for OSHA-approved State
Plans), which will significantly reduce the number of labor law
decisions that a contractor or subcontractor will need to report.
Separate Guidance and an additional rulemaking will be pursued at a
future date to identify equivalent State laws, and such requirements
will be subject to public notice and comment before they take effect.
The notice of proposed rulemaking accompanying this subsequent action
will address the cost of disclosing labor law decisions concerning
violations of equivalent State labor laws and address applicable
requirements of the CRA, SBREFA, RFA, and E.O. 12866.

2. Various Alternatives to the Proposed Rule

a. Alternatives That Were Presented in the Proposed Rule
Introductory Summary: The proposed rule asked for consideration of,
and comment on, alternatives to three aspects of the rule: (i) Phase-in
of subcontractor disclosure requirements, (ii) subcontractor
disclosures and contractor assessments, (iii) contractor and
subcontractor remedies. The Councils reviewed and considered public
comments in development of the final rule and have implemented
revisions as follows:
Phase-in (of Disclosure Requirements). In addition to comments
received on subcontractor phase-in, a number of concerns, comments, and
additional phase-in options were offered with regard to the ability of
prime contractors to comply with the rule immediately on the effective
date. In order to best enable compliance with the rule, the Councils
have implemented the following phase-in periods for representations and
disclosures (see FAR 22.2007, 52.222-57 and its commercial items
equivalent at 52.212-3, 52.222-58, 52.222-59):
Prime Contractor Representations and Disclosures
[cir] For the first 6 months after the rule's effective date
(October 25, through April 24, 2017), representations and disclosures
are required for solicitations expected to result in contracts valued
at $50 million or more.
[cir] After the first 6 months (after April 24, 2017),
representations and disclosures are required for solicitations expected
to result in contracts valued at greater than $500,000.
Subcontractor Representations and Disclosures
Beginning 12 months after the rule's effective date (October 25,
2017), representations and disclosures are required for solicitations
expected to result in subcontracts valued at greater than $500,000
other than COTS.
Labor Law Decision Preaward Disclosure Period--Prime and
Subcontractor
Whenever preaward disclosures are required they must cover
decisions rendered during the time period beginning October 25, 2015 to
the date of the offer, or for three years preceding the date of the
offer, whichever period is shorter.
Subcontractor Disclosures and Contractor Assessments. The proposed
rule offered alternative language for subcontractor disclosures and
contractor assessments of labor law violation information; the final
rule adopts this alternative approach. In the final rule, at FAR
52.222-58 and 52.222-59(c) and (d), subcontractors disclose details
regarding decisions concerning their labor law violations (and
mitigating factors and remedial measures) directly to DOL for review
and assessment instead of to the prime contractor. The applicability to
subcontracts remains unchanged in the final rule, i.e., $500,000
threshold for other than COTS.
Contractor and Subcontractor Remedies. The proposed rule offered
supplemental language regarding remedial measures in order to achieve
the dual goals of providing reasonable time for remedial action and
accountability for unjustified inaction (FAR 22.2004-5, Consideration
of Compliance with Labor Laws in Evaluation of Contractor Performance,
at 80 FR 30557). The final rule instead includes language for
contracting officers to consider a contractor's compliance with labor
laws (including adherence to labor compliance agreements) in their
evaluation of past

[[Page 58576]]

performance (FAR 42.1502(j)). It also provides for contracting officers
to consider whether labor compliance agreements have been timely
entered into and complied with, at FAR 22.2004-2(b)(4); 22.2004-
3(b)(3).
i. Phase-in (of Disclosure Requirements)
Phase-In of Subcontractor Review
Comment: Several respondents recommended phase-in of the
subcontractor disclosure requirement. The proposals included (1)
allowing 12-18 months for phase-in, (2) delaying or phasing-in
subcontractor review requirements, and (3) limiting reporting on
violations to only those that arise after the effective date of the
proposed rule.
Response: As stated in the summary above, the Councils agree that
phase-in of subcontractor disclosures would benefit both the public and
the Government and have updated the rule to provide for a phase-in
period.
Phase-In of Subcontractor Disclosures by Subcontracting Tiers
Comment: Respondents recommended that the subcontractor disclosure
requirement be phased in by subcontractor tiers. Respondents
recommended: (1) Applying the rule initially to prime contractors and
then, after a phase-in period, expanding application only to first-tier
subcontractors, and (2) creating a phase-in schedule to add one year
for first-tier subcontracts, one more year for second-tier
subcontracts, and one more year for lower-tier subcontracts.
Response: As stated in the summary above, the Councils have decided
to apply a phase-in period to all subcontractor disclosures. This will
allow sufficient time for systems and processes to be in place to
implement the rule's requirements at the subcontractor level.
Phase-In for Small Businesses
Comment: The SBA Office of Advocacy and other respondents
recommended (in addition to the phase-in for subcontractors), that the
Councils consider providing a phase-in period for small business prime
contractors. The SBA Office of Advocacy recommended that this phase-in
period be long enough to allow small businesses, who are current
contractors or offerors interested in contracting with the Government,
to absorb the costs of the rule. Another respondent indicated that a
phased approach to implementation is appropriate for small businesses,
to afford them sufficient time to develop systems and modify
contractual terms, and one respondent recommended that the rule exempt
small businesses entirely. However, another respondent cautioned the
Councils that, while considering the burden on small businesses, the
Councils should avoid inadvertently providing an unfair competitive
advantage when small businesses participate in unrestricted
procurements.
Response: As stated in the introductory summary above, the burden
for all businesses, including small businesses, under the rule will be
greatly reduced by phased-in application of the rule regarding
disclosures by prime contractors and subcontractors.
Comment: A respondent recommended the phase-in apply to all
subcontractors and not make distinctions among subcontractor tiers. The
respondent proposed two distinct one-year phase-in periods for
subcontractor disclosure and for update requirements and provided
suggested FAR text changes.
Response: The Councils concur that a phase-in of application to
subcontractors will allow an opportunity for contractors and
subcontractors to become acclimated to the tracking, reporting, and
reviewing requirements of this rule.
Phase-In for Other-Than-Small Businesses
Comment: Several respondents recommended a phase-in or delayed
effective date for prime contractors with the most recommended timing
for a phase-in being one year. The recommendations included: (1) A
significant period for phase-in to develop mechanisms for reporting,
collecting, and evaluating information; (2) limiting initial
application to prime contractors, specifically those subject to full
Cost Accounting Standards compliance requirements; (3) an initial
phase-in period for contracts valued over $10,000,000; phase-in for
both prime contractors and subcontractors; and a phased approach over
at least 5 years.
Response: The Councils have revised the rule to phase in
application of the rule to prime contractors and subcontractors as
described in the summary above.
Length of Phase-In Period
Comment: Respondents made various recommendations for phase-in of
the three year period for disclosures: That it be reduced to six to
twelve months; that it begin four years after the rule's effective
date; that it be increased to five years consistent with the FAPIIS
reporting requirement and to enable contracting officers to conduct
more thorough responsibility determinations; that it be a year at a
time, e.g., a year after the effective date, contractors report a year
of violations; two years out, they report two years; and three years
out, they report 3 years of violations.
Response: The Councils have implemented revisions in the final rule
consistent with the disclosure reporting described in the above
summary.
Comment: Respondents expressed concern with implementation phasing.
A respondent noted that Section 10 of the E.O. indicated it will apply
to solicitations as set forth in the FAR final rule, and that the E.O.
Fact sheet stated that the E.O. will be ``implemented on new contracts
in stages, on a prioritized basis, during 2016.'' The respondent was
concerned that the proposed rule is silent on the timing of
implementation. The respondent stated that this omission is significant
as the effective date and implementation strategy will have substantive
implications for contractors. The respondent contended that by failing
to address this issue, contractors have been deprived of the
opportunity to comment on this critical point as required by the APA.
Response: The statutory publication requirement for FAR rules is
found at 41 U.S.C. 1707. The APA publication section at 5 U.S.C. 553
does not apply to FAR procurement regulations. The proposed rule met
the requirements of 41 U.S.C. 1707 by requesting public comment on
alternatives for implementation phase-in. See paragraph A of Section IV
of the proposed FAR rule preamble and paragraph 6 of the Initial
Regulatory Flexibility Analysis.
Comment: One respondent suggested a lengthy phased implementation
and enforcement approach, along the following lines: (1) During the
first two years after the effective date of the final rule, contracting
agencies and DOL would establish ALCA functions by staffing and
training employees to implement the rule, and contractors would begin
to establish compliance and reporting protocols and mechanisms, and
train their employees, (2) During the third and fourth year the final
rule should apply to new solicitations and contracts valued over
$20,000,000, and $10,000,000 respectively, but only to prime contracts,
and (3) During later years the threshold would be reduced and apply to
subcontracts.
Response: The Councils have revised the rule to reflect a phasing
as described in the summary above.

[[Page 58577]]

ii. Subcontractor Disclosures and Contractor Assessments
Comment: A respondent took exception to the requirement for primes
to ``certify'' that suppliers and subcontractors are complying with the
relevant labor laws and to collect this information every six months.
Response: There is no requirement for contractors to certify that
their subcontractors or suppliers are complying with relevant labor
laws. The requirement is for contractors to consider labor law
violations when conducting determinations of subcontractor
responsibility.
Comment: One respondent recommended that DOL be tasked with
evaluating subcontractors' history of violations and assessing the need
for a labor compliance agreement, rather than having the prime
contractors carry out that function. The respondent stated that the
process of evaluating compliance history and weighing the frequency and
gravity of violations should be treated as an inherently governmental
function.
Response: The Councils have adopted the alternative offered in the
proposed rule to have DOL assess subcontractor violations. The
contractor is still ultimately responsible for evaluating the
subcontractor's compliance with labor laws as an element of
responsibility. Determining subcontractor responsibility is not an
inherently governmental function, and reflects existing policy at FAR
9.104-4(a). There is no transfer of enforcement of the labor laws as a
result of the rule; the rule provides for information regarding
compliance with labor laws to be considered during subcontractor
responsibility determinations and during subcontract performance.
Comment: Many respondents objected to the role of contractors
collecting subcontractor violation information as prescribed in the
proposed rule. Several of those respondents expressed some level of
support for the alternative presented. Other respondents expressed
concerns that: (1) The rules for contractors are not the same or
similar to the practice that contracting officers follow; (2) proposed
subcontractors do not report directly to the Government; (3) the
subcontractor should make a representation back to the contractor
regarding any DOL response; (4) contractors should review their
subcontractors' compliance on a continual or ongoing basis; (5) if the
alternative is implemented, DOL would not be able to respond quickly
enough; (6) if the Government were to make a recommended responsibility
determination for a proposed subcontractor that the contractor making
the responsibility determination might come to a different conclusion;
and (7) DOL might issue inconsistent recommendations regarding
different proposed subcontracts with one company.
Response: As described in the summary above, the Councils are
implementing the final rule with the alternative whereby the contractor
would direct the subcontractor to disclose its labor law decisions (and
mitigating factors and remedial measures) to DOL, which will resolve
many of the concerns expressed regarding application of the rule to
subcontractors. See the full discussion of comments and responses on
the subcontractor disclosure alternative below at Section III.B.5.
iii. Contractor and Subcontractor Remedies
Comment: A number of respondents recommended that the rule
enumerate specific remedies or punitive measures that are available for
misrepresentations and failures to disclose relevant information.
Response: FAR representations, including those in this rulemaking,
are made to the best of the offeror's knowledge and belief. However,
inaccurate or incomplete representations related to this rule, like
other representations in the FAR, could constitute a false statement.
The rule provides that the representation 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. In
addition, there are existing civil and criminal penalties for making
false statements to the Government that are applicable to
representations and to other information not provided as part of a
representation, for example, information disclosed about labor law
violations.
Comment: Two respondents recommended that the representations
required of contractors and subcontractors be under oath.
Response: The Councils do not agree that the representations by
contractors and subcontractors should be made under oath as it is
inconsistent with how FAR representations are made. Also see prior
response regarding the impact of making a representation.
Comment: Respondents recommended that the remedies specified in the
regulation for misrepresentations at the ``check the box''
representation stage also apply to the contractor or subcontractor's
preaward and postaward labor law violation disclosures.
Response: There are existing civil and criminal penalties for
making false statements to the Government, which would be applicable to
representations and to other information not provided as part of a
representation, for example, information disclosed about labor law
violations. With respect to subcontracts, the rule does not discuss the
penalties applicable to the prime contractor--subcontractor
relationship in this FAR implementation. This is in accord with general
FAR practice. Prime contractors have discretion to establish
subcontract terms and conditions applicable to their subcontracts.
Therefore, the Councils do not consider a change to be necessary.
Comment: A respondent recommended that the penalties for
misrepresentation should apply to subcontractor disclosures and be
explicitly communicated to the subcontractor by the prime or higher-
tier subcontractor, or the contracting officer through the
solicitation.
Response: The rule does not discuss penalties for misrepresentation
by subcontractors in the provision at FAR 52.222-58, Subcontractor
Responsibility Matters Regarding Compliance with Labor Laws (Executive
Order 13673). However, contractors and subcontractors may draft terms
and conditions for their subcontracts that include coverage of
misrepresentation penalties.
Comment: A respondent recommended that the prime contractor should
have a rebuttable presumption that it was not responsible for a
subcontractor's false disclosure.
Response: The Councils agree that the prime is not responsible for
all subcontractor misrepresentations or false statements and have
revised the FAR provision at FAR 52.222-58(b) and clause at 52.222-
59(f) to read that ``A contractor or subcontractor, acting in good
faith, is not liable for misrepresentations made by its subcontractors
about labor law decisions or about labor compliance agreements.''
Comment: A respondent recommended that a mechanism be provided for
giving the subcontractor recourse for an erroneous negative
determination by the prime contractor of the subcontractor's
responsibility.
Response: Consistent with FAR 9.104-4(a), the prime contractor is
generally responsible for determining the responsibility of its
prospective subcontractors. Prime contractors must

[[Page 58578]]

exercise due diligence when evaluating and selecting among prospective
subcontractors. This is existing policy and implementation of the E.O.
does not change this construct. The prime contractor is ultimately
responsible for deciding with whom to subcontract and how to manage the
subcontractor relationship. Implementing the alternative in the final
rule provides DOL's subject matter expertise to the review of
subcontractor labor law decisions (and mitigating factors and remedial
measures) and allows for prime contractor consultation with DOL. The
Councils find the existing policies sufficient and decline to establish
the new mechanism requested.
Comment: A respondent recommended that the contracting officer
should document a contractor's violation of a labor compliance
agreement, or its refusal to enter into one, in its past performance
evaluation.
Response: As described in the summary above, the final rule has
been revised to include labor law compliance (including adherence to
labor compliance agreements) in information considered by contracting
officers in past performance evaluations (see FAR 42.1502(j)).
Comment: A respondent recommended that the rule more closely align
with the contractor performance information process which provides at
FAR subpart 42.15 for notice to a contractor, an opportunity for
comment, and a review at a level above the contracting officer to
address disagreements.
Response: The contractor performance information process provides
that agency evaluations of contractor performance, including both
negative and positive evaluations, shall be provided to the contractor
as soon as practicable after completion of the evaluation. As described
in the summary above, the final rule has been revised to include labor
law compliance (including adherence to labor compliance agreements) in
information considered by contracting officers in past performance
evaluations (see FAR 42.1502(j)).
Comment: Respondents stated that there could be an increase in
Contract Disputes Act appeals. Respondents suggested that reporting of
violations could trigger adverse performance evaluations or lead to
decisions not to exercise options based on responsibility
determinations. Respondents noted that the FAR provides specific
processes for responding to and appealing performance evaluations. In
addition, where a contracting officer determines that a contractor is
not responsible, such that the contract should be terminated for
default or options not exercised, there may be grounds to bring claims
under the contract, based on claims that the contracting officer acted
arbitrarily and capriciously; there is also a right to appeal any final
contracting officer decision on these grounds under the Contract
Disputes Act.
Response: The Councils note that the traditional use of options
under FAR part 17 involves the exercise of the option being within the
discretion of the contracting officer. The intent of the E.O. is to
have contractors put their efforts in improving their record of labor
law violations, rather than in litigating.
Comment: A respondent recommended that FAR 22.2004-3(b)(3) be
strengthened to specify that an ALCA may consider whether the
contractor has entered into a collectively bargained labor compliance
agreement and whether the contractor has failed to comply with an
existing labor compliance agreement as an aggravating factor.
Response: The ALCA, pursuant to FAR 22.2004-3(b)(1), is required to
verify, consulting with DOL as needed, whether the contractor is making
progress toward, or has entered into, the labor compliance agreement.
In addition, the ALCA, in developing its assessment using DOL Guidance,
will consider whether a labor compliance agreement already in place is
being adhered to. Specifying whether the labor compliance agreement is
collectively bargained is not required by the E.O.
Comment: Respondents proposed strengthening the remedies at FAR
22.2004-3(b)(4) to provide for the suspension of payments under a
contract until the labor law violation is remedied and/or an enhanced
labor compliance agreement is implemented.
Response: The respondents' recommendation for suspension of
payments for labor law violations is not provided for in the E.O., and
under current FAR practice, contractors are entitled to be paid for
work performed.
Comment: A respondent recommended that FAR 22.2004-3(b) should be
amended to provide that contracting officers and ALCAs must consider
all reportable labor law violations of a prime contractor's
subcontractors that were committed during the period of contract
performance, for those subcontractors that have not been cleared or
precleared by DOL. The respondent proposed an alternative process as a
remedy to address the violations of subcontractors for whom DOL had not
completed an assessment prior to subcontract award. The respondent
proposed that ALCAs and contracting officers, in addition to the prime,
should review all subcontractor labor law violations committed during
the performance period and the prime should face the same remedial
action from the contracting officer as if the prime had committed the
violation.
Response: We note that it appears that an underlying assumption to
the respondent's comment is that the prime's decision to award or
continue the subcontract was inappropriate, and that the prime was not
diligently considering the labor law violations. In fact, it may have
been the appropriate decision to award or continue the subcontract
depending on the totality of the circumstances related to (1) the labor
law violation(s), and (2) the circumstances of the particular
procurement.
Comment: A respondent recommended that the FAR should require DOL
to inform prime contractors directly when DOL conducts an investigation
of a subcontractor and provide specific information about the
subcontractor's need for and compliance with a labor compliance
agreement to the contracting officer and the prime.
Response: The E.O. does not provide that DOL must notify prime
contractors directly when DOL conducts an investigation of a
prospective subcontractor or provide copies of an established labor
compliance agreement to the contracting officer and the prime. However,
a contracting officer may request a copy of a labor compliance
agreement from DOL or an enforcement agency, and the contracting
officer is entitled to receive it. In addition, if prime contractors
decide to enter into or continue subcontracts with a subcontractor that
DOL has advised needs a labor compliance agreement and the
subcontractor is in disagreement with DOL, the prime contractor must
inform the contracting officer (see FAR 52.222-59(c)(5) and (d)(4)).
Also, the FAR text amended at 52.222-58(b)(2) and 52.222-59(f) states
that ``A contractor or subcontractor, acting in good faith, is not
liable for misrepresentations made by its subcontractors about labor
law decisions or about labor compliance agreements.''
Comment: A respondent recommended that the FAR should require a
prime contractor to consult with DOL if a subcontractor discloses labor
law violations to the prime during contract performance. The respondent
indicated that, if the subcontractor does not receive an updated
clearance from DOL and the prime continues to retain

[[Page 58579]]

the subcontractor, the prime should face the same action by the
contracting officer as if the prime had committed the violation.
Response: The processes for subcontractor disclosures to DOL at FAR
52.222-59(c) and (d) are mandatory; however, the opportunity for a
prime contractor to consult with DOL or an enforcement agency at FAR
52.222-59(e) is at the prime's discretion. The prime is responsible for
evaluating any information it has, including labor compliance
information received from DOL, when determining subcontractor
responsibility. FAR 9.104-4(a) does provide that determinations of
prospective subcontractor responsibility may affect the Government's
determination of the prospective prime contractor's responsibility. The
final rule is consistent with this policy. If prime contractors decide
to enter into or continue subcontracts with subcontractors that DOL has
advised need a labor compliance agreement and the subcontractor is in
disagreement with DOL, the prime contractor must inform the contracting
officer (see FAR 52.222-59(c)(5) and (d)(4)).
Comment: A respondent commented that an approach where DOL rather
than the prime contractors would make the subcontractor responsibility
determination would be equally problematic since the Government would,
in effect, determine the subcontractor with whom prime contractors can
do business. The respondent suggested that if DOL finds a subcontractor
nonresponsible and the subcontractor's work was necessary to the prime
contractor's supply chain, then the prime contractor may be forced to
go out of business or not do business with the Government.
Response: The rule requires prospective subcontractors to submit
labor law violation information to DOL, and requires DOL to develop an
assessment. The DOL assessment assists prime contractors as they
determine prospective subcontractor responsibility. Consistent with
current practices under FAR 9.104-4(a), prime contractors determine
subcontractor responsibility; the Government does not.
Comment: A respondent indicated that there could be conflicts of
interest for DOL advisors when DOL analyzes a labor law decision issued
by another part of DOL. This could also be problematic when State laws
are implemented. The respondent recommended that the ALCA should be the
moderator to avoid these conflicts of interest and the ALCAs should
weigh in on recommendations with regards to State law violations.
Response: The structure of the subcontractor responsibility process
does not create a conflict of interest, in and of itself. DOL Guidance
clarifies that labor law decision information forthcoming from an
enforcement component of DOL will be assessed objectively.
Administrative decision makers enjoy a presumption of honesty and
integrity. See Withrow v. Larkin, 421 U.S. 35, 47 (1975).
Comment: Another respondent suggested that DOL issue subcontractors
a certificate of competency for labor law violations, so that prime
contractors can be assured that any issues have been reviewed by the
most trained and appropriate subject matter experts.
Response: DOL has the most trained and appropriate subject matter
experts and will provide an assessment of a subcontractor's labor law
violations. There is no need for the requested certificate of
competency. The subcontractor is responsible for communicating the
results of the DOL assessment to the prime. The prime may rely on this
information in reaching a conclusion as to a subcontractor's
responsibility. In addition, DOL encourages 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
(See DOL Guidance Section VI, Preassessment).
Comment: One respondent agreed with the FAR Council's proposed
Supplemental Alternative which required that a contractor's compliance
with a labor compliance agreement be factored into the evaluation of a
contractor's performance. The respondent indicated this does not go far
enough, and should provide that contracting officers and ALCAs must
consider such compliance and factor it into both the contractor's
future responsibility reviews and its past performance evaluations. In
addition, the respondent stated that the contracting officer should not
be permitted to credit whether the prospective contractor is still in
good faith negotiating such an agreement as a mitigating factor under
FAR 22.2004-3(b)(2) or (3)(v) unless such delay is directly attributed
to specific Government action or inaction. The respondent stated that
this standard would otherwise provide a disincentive for employers to
promptly enter into a labor compliance agreement.
Response: The FAR currently provides a contracting officer with
broad discretion in determining the suitability of the prime
contractor. In addition, language has been added to the final rule, as
described in the summary of this section, to include consideration of
labor law violations in past performance evaluations (see FAR
42.1502(j)).
Comment: Respondents objected to the requirement that contractors
must disclose labor law decision information every six months during
the life of the contract for the Government to evaluate whether
contract performance under an existing contract should continue, and
contended that this would be akin to a determination of
nonresponsibility. They asserted that current FAR requirements do not
provide that the Government will automatically terminate an existing
contract when there has been a violation, even where the violation has
led to a debarment or suspension of the contractor. Indeed, Government
contacts generally continue. Respondents noted that a process that
disrupts a contract that is being properly and timely performed would
hinder the Government's ability to carry out its mission. They
suggested that the approach embodied in the proposed rule marks a
significant shift in how the Government procurement process operates,
and that such a fundamental shift is neither required nor justified to
implement the E.O. and may lead to legal action.
Response: FAR 52.222-59(b) requires the contractor to update
disclosed labor law decision information. An update of the contractor's
information does not automatically result in a decision by the
contracting officer to terminate the contract. Rather, the updated
information is considered by the contracting officer in making contract
decisions such as whether contract remedies are warranted or whether to
exercise an option (see FAR 22.2004-3(b)(4)). This is consistent with
current practice and no change to the rule is warranted.
b. Alternatives for Implementation of Disclosures That Were Not
Presented in the Proposed Rule
Comment: A respondent suggested using existing disclosure and
reporting requirements in the FAR to satisfy requirements under the
E.O.
Response: The existing FAR does not require disclosure and
reporting requirements for the fourteen labor laws and equivalent State
laws in the E.O. The E.O. addresses more than just disclosure and
reporting requirements; for clarity, the Councils have

[[Page 58580]]

determined to implement the E.O. through a separate subpart in the FAR,
consistent with how the Councils have implemented other statutes and
E.O.s of this scale.
Comment: A respondent recommended limiting the rule's disclosure
and reporting requirements for subcontracts only to first-tier
subcontracts, as defined at FAR 52.204-10, in order to avoid
application to a contractor's supplier agreements with vendors. This
change would exempt long term arrangements for materials or supplies
that benefit multiple contracts and/or related costs that are normally
applied to a contractor's general and administrative expenses or
indirect costs.
Response: The Councils decline to limit applicability of disclosure
and reporting requirements to only first-tier subcontracts, as that
term is defined in FAR 52.204-10. In addition, the Councils decline to
exclude long-term supplier agreements. The E.O. provides no exclusion
for lower-tier subcontracts, for non-COTS items, or for supplier
agreements. However, the exemption for COTS items, and the $500,000 and
above threshold, should minimize the number of supplier agreements with
small businesses that are covered by the E.O.
Comment: A respondent stated that contractors should be required to
obtain a responsibility recommendation from DOL concerning
subcontractors prior to making a subcontractor responsibility
determination.
Response: DOL, as an enforcement agency, does not perform
responsibility determinations or make recommendations on the
responsibility determination. DOL makes assessments of labor law
violations to inform the contractor's consideration of such information
when the contractor is making its subcontractor responsibility
determinations (FAR 52.222-59(c)(4)(ii)). The final rule, like the
proposed rule, provides at FAR 52.222-59(e) that the prime contractor
may consult with DOL for advice, as appropriate, regarding assessment
of subcontractor labor law violation information.
Comment: A respondent requested that the Councils establish new
affirmative prequalification procedures, or affirmative job-to-job
certification standards, for bidders and subcontractors on contracts
valued at more than $500,000, that will require offerors to attest that
they do not have any of the labor law violations specified by the E.O.
in order to qualify to bid or participate on a project. The respondent
commented that the disclosure provisions will not effectively remove
contractors with substantial histories of labor law violations from the
Federal procurement process.
Response: The Councils view the proposed disclosure provisions as
sufficiently rigorous. Having a labor law violation is not an automatic
bar from doing business with the Government. The information disclosed
will be assessed in accordance with the requirements of this rule and
the contracting officer is responsible for making a determination of
responsibility before awarding a contract.
Comment: A respondent expressed concern about subcontractor
monitoring by higher-tier contractors and recommended that contractors
be required to submit all disclosure information received from
potential subcontractors to the contracting officer, who, in
consultation with the ALCA, should assess the subcontractor's
responsibility as part of the assessment of the prime. Otherwise, the
respondent stated, there would be almost no Government oversight of
subcontractors' compliance with labor laws.
Response: The final rule has been revised to require subcontractors
at all tiers to disclose labor law decisions to DOL, so that
contractors can obtain the advice of DOL on labor law decisions (and
mitigating factors and remedial measures) in formulating subcontractor
responsibility decisions. The Councils do not support requiring the
submission of all labor law violations regarding subcontractors to the
contracting officer, as the prime contractor is responsible for
determining subcontractor responsibility (see FAR 9.104-4(a)).
Comment: A respondent recommended that the 3-year reporting period
be changed to a less-burdensome, rolling 12-month period under which
contractors would be required to report only labor law violations
occurring within the preceding 12 months which are serious, repeated,
willful and pervasive.
Response: As stated in the summary, the reporting period for
disclosing decisions relating to violations of labor laws is being
phased in; the period begins on October 25, 2015 and runs to the date
of the offer, or for three years preceding the offer, whichever period
is shorter.
Comment: A respondent recommended a ``fast-track'' approach for low
risk violations that would not activate the E.O.'s remedial process and
would permit contracting officer discretion to proceed with a
responsibility determination for matters that properly fit into the low
risk categories. This approach could involve consulting the ALCA, but
without the remedial process being activated.
Response: Violations must undergo the analysis process to determine
whether they are low-risk. The process in the final rule requires the
ALCA to assess the labor law violations; the contracting officer
considers the ALCA's analysis. No revisions are necessary.
Comment: Respondents expressed concerns about the proposed rule
being applied retroactively to existing contracts. One respondent
recommended that the rule prohibit retroactive application of the rule
through modification of existing contracts, including multiple year
IDIQ contracts with less than 3 years remaining, and prohibit
contracting officers from making option exercise contingent on
agreement to adopt new clauses.
Response: The rule will not apply to existing contract options for
contracts which do not contain the FAR 52.222-59 clause. As discussed
in the summary, the Councils have implemented a phase-in of contract
and subcontract disclosure requirements. Neither the E.O. nor the final
rule provides for retroactive application of the disclosure
requirements to existing contracts. Companies will be brought into the
labor law decision disclosure process with their first new contract
issued after this rule is effective. There is no need for the Councils
to make the rule applicable to contracts awarded before the rule, nor
is it necessary to risk voiding the Government's right to exercise a
unilateral option by attempting to add these clauses to an existing
contract. No changes to the final rule are necessary. The Councils note
that companies with a basic disregard for labor laws, without a
satisfactory record of integrity and business ethics, may be found
nonresponsible, whether or not the disclosure process is in effect.
c. Recommendations for Use of Existing Data or Employing Existing
Remedies
Comment: A respondent, echoing the view of many of respondents,
suggested using existing reporting and disclosure systems and processes
instead of creating new ones. The respondent commented that the
proposed rule is unnecessary to meet the Government's stated objectives
of economy and efficiency in procurement because the Government has
procedures already in place to ensure that it contracts only with
responsible parties, which include the consideration of labor law
violations. The respondent stated that the proposed reporting and
disclosure

[[Page 58581]]

requirements will duplicate information already in the Government's
possession thus placing a reporting burden on contractors that
outweighs the benefits. Several respondents suggested that Federal
agencies use existing, adequate suspension and debarment processes to
root out bad firms rather than create a new and burdensome regulatory
scheme for that purpose.
Response: DOL's existing systems were established in the past for a
different purpose and do not satisfy the current needs of the
Government in meeting the objectives of the E.O. As explained in the
Preamble to DOL's Guidance, DOL and other enforcement agencies are
actively working to upgrade their current tracking systems for use by
the Government in compiling and maintaining enforcement data and
contractor-disclosed data for purposes of implementation of the E.O.
Enforcement agency databases do not and will not collect labor law
decision data on arbitral awards or decisions or civil judgments in
private litigation. Thus, disclosure of labor law decisions
contemplated under the E.O. will necessarily include some level of
disclosure by contractors. Like all information collections, the
collections established to meet the requirements of this final rule
will be reviewed periodically and revised accordingly when Government
systems are better able to meet the terms of the E.O. See the RIA for
discussion on costs and benefits of the rule. Also see Section III.B.1.
of this publication and DOL Preamble Section V, paragraph D(1), which
discusses the explanation for the E.O. meeting the stated objectives of
increasing economy and efficiency.
Comment: A number of respondents objected to the proposed
disclosure and reporting requirements as unnecessary because DOL and
other agencies already have the authority to take action against
violators and track violators. These respondents commented that the
proposed rule would shift the burden and expense traditionally borne by
the Government to Federal contractors and subcontractors, and asserted
that private and public resources should not be spent filing the
proposed reports when the Government already has sufficient data on
whether offerors have labor law violations. A respondent commented: (1)
The protections sought by the proposed rule already exist in statutes
and regulations that contain civil and/or criminal penalties for
contractors who violate the labor laws and prevent egregious violators
from receiving contracts, referencing the FLSA, the OSH Act, Title VII
of the Civil Rights Act of 1964, and the debarment authority of labor
laws such as the Service Contract Act (SCA) and the Davis-Bacon Act
(DBA); (2) the Councils could dispense with the proposed contractor
reporting system and instead improve the Government's information
collection and dissemination mechanisms and processes because the
agencies which enforce the labor laws listed in the E.O. already
possess the information that contractors would be required to report
and the current process will work more efficiently at a fraction of the
cost of the proposed rule; and (3) contracting agencies can gather
information about a contractor's Federal labor law compliance history
by visiting DOL's Web site and the federal courts' public access
docketing viewer (commonly referred to as ``PACER'').
Response: The response to the prior comment addresses the limits of
utilizing the existing enforcement agency system capabilities versus
requiring contractor disclosure. See also the discussion of economy and
efficiency and authority challenges at Section III.B.1. of this
publication.
Comment: Several respondents indicated that the Government has
FAPIIS for compiling contractor data for purposes of informed
responsibility determinations based on a contractor's satisfactory
record of integrity and business ethics, which includes provisions
allowing agencies to impose exclusions for labor law violations.
Respondents noted that it is a robust system for determining whether to
award contracts to entities, including the discretion not to award a
contract if the entity has an unsatisfactory labor record. Respondents
pointed out that the rule should focus on modifications and
improvements to those Federal systems, rather than impose a reporting
requirement on Federal contractors.
Response: The E.O. provides a mechanism, implemented in this final
rule, for contracting officers and contractors to gain access to labor
law decision information of offerors and prospective subcontractors,
including mitigating factors and remedial information, so that it may
be considered when making responsibility determinations of offerors and
subcontractors. This information is not otherwise available.
Comment: A respondent stated the proposed rule confuses contracting
officers' authority to make determinations of responsibility with
Governmentwide exclusion determinations made by suspension and
debarment officials, causing duplication of roles and inconsistent
treatment under labor laws. The respondent stated that by giving
contracting officers tasks that belong to suspension and debarment
officials, the proposed rule is inconsistent, incompatible, and
duplicative of existing systems, and undermines the fairness and due
process protections established within the suspension and debarment
process.
Response: A contracting officer finding of nonresponsibility
relates to the contractor's capability of performing a particular
procurement. In contrast, the suspension and debarment process is based
upon the conclusion that a contractor is so lacking in integrity or
business ethics such that no contract award is in the Government's
interest. The Councils do not consider a change to be necessary.
Comment: Many respondents commented that the existing, proven
suspension and debarment system should be used in response to
contractors who have serious, repeated, willful, and/or pervasive labor
law violations instead of creating an overly burdensome and costly
additional process. Respondents stated: (1) It is fairer to allow a
negative Federal contracting determination only according to the
established due process-protected procedures found in the suspension
and debarment process; and (2) Federal labor law and Federal
procurement practices already strongly support not awarding Federal
contracts to employers who deny workers basic rights and Federal
agencies have sufficient authority with suspension and debarment-
exclusion practices.
Response: While the Councils agree that suspension and debarment is
an appropriate remedy in certain instances when labor law violations
occur, it may not be the appropriate vehicle to be used in most
instances of contractor labor law violations. A contractor may be able
to enter into a labor compliance agreement or otherwise remedy its
labor law violations, and still be eligible for future awards.
The final rule also provides that when a contractor discloses labor
law decisions, when being considered for contract award, it has the
opportunity to provide remedial measures and mitigating factors for
Government consideration.
The final rule also provides that the ALCA or the contracting
officer may notify agency suspending and debarring officials.
d. Alternatives Suggested for the Threshold for Dollar Coverage for
Prime Contracts
The disclosure of labor law decisions by prime contractors applies
to prime contracts over $500,000; see FAR 22.2007(a) and (c) and
52.212-3(s). For

[[Page 58582]]

paycheck transparency, the application is also to prime contracts over
$500,000; see FAR 22.2007(d). For arbitration, the application for
prime contracts is over $1,000,000 for other than commercial items; see
FAR 22.2007(e).
Comment: Some respondents stated that the $500,000 applicability
threshold is too low and will slow down the contracting process for
both the Government and prime contractors, have a disparate impact on
small business, and should be modified. In contrast, other respondents
believed the individual contract threshold of $500,000 is too high. One
wanted more contracts covered to highlight the importance of safety
issues. Another respondent cautioned that contractors with significant
labor law violations but no single contract or subcontract over the
$500,000 threshold will be exempted from the intent of the E.O.
Response: The $500,000 threshold is explicitly stated in the E.O.
Lowering the threshold would further increase the burden on the public.
Raising the threshold would eliminate a significant number of
prospective contractors and subcontractors from application of the E.O.
Comment: Respondents commented on the applicability of the rule to
task and delivery orders and Federal Supply Schedules (FSS),
Governmentwide Acquisition Contracts (GWACs), and Multi-agency
Contracts (MACs). One suggested that the rule clarify that it does not
apply to the award of task orders and delivery orders. Another asked
whether the required notices in FAR 52.222-59(c) and (d) would go to
the agency with the contract, or the agency that issued the order.
Response: While the value of expected task and delivery orders may
be relevant for the ``estimated value'' of a base contract for the
purpose of reaching the relevant dollar threshold (e.g., $500,000), the
issuing of an individual task or delivery order does not independently
trigger any of the E.O.'s requirements. Requirements of the
solicitation provision FAR 52.222-57 will apply to solicitations for
new base contracts, including indefinite-delivery contracts, FSS,
GWACs, and MACs. Representations and disclosures required at the time
of determination of responsibility will occur prior to the base
contract awards. Representations and disclosures required at the time
of determination of responsibility are not required again when a task
or delivery order is awarded against an indefinite-delivery base
contract. Existing base contracts that do not contain the FAR subpart
22.20 requirements are not subject to the disclosure requirements of
this rule; this includes those existing base contracts that pre-date
the effective date of the disclosure requirements, but which may have
subsequent task and delivery orders issued after the effective date of
the disclosure requirements. This practice is standard for application
of clauses in the FAR. If the FAR were to specify this practice in one
part or subpart, it would create an ambiguity on overall applicability.
Therefore, no clarification is needed to the rule. The disclosures
required by FAR 52.222-59(c)(5) and (d)(4) are made to the contracting
officer for the base contract. Existing contractors gradually will be
brought under the rule's requirements as new contracts are awarded.
e. Threshold for Subcontracts
The disclosure of labor law decisions by subcontractors applies to
subcontracts over $500,000 for other than COTS items; see FAR 52.222-58
and 52.222-59(g). For paycheck transparency, the application is also to
subcontracts over $500,000 for other than COTS; see FAR 52.222-60(f).
For arbitration, the application is to subcontracts over $1,000,000 for
other than commercial items; see FAR 52.222-61.
Comment: Some respondents stated that subcontracts for commercial
items and COTS should not be exempt from the labor law decision
disclosure requirements of the rule, because COTS and commercial item
subcontractors are just as prone to labor law violations, and that this
exemption will weaken the rule. On the other hand, some respondents
believed that subcontracts for commercial items should be exempt in the
same manner subcontracts for COTS items are.
Response: The E.O. limited the subcontractor disclosure exemption
to COTS in order to balance the objectives of the E.O. with minimizing
the burden it places on contractors. The Councils agree that this
approach is an appropriate balance and no change is made to the rule.
Comment: One respondent objected to the COTS exemption for
subcontracts under paycheck transparency (FAR 52.222-60) and the
commercial item exemption for arbitration (FAR 52.222-61).
Response: The E.O. restricted the subcontractor disclosure
exemption to COTS in order to balance the objectives of the E.O. with
minimizing the burden it places on contractors. The Councils agree that
this approach is an appropriate balance and no change is made to the
rule.
Comment: Some respondents stated that applicability of the rule to
subcontractors should not be delayed.
Response: Providing a phase-in period for subcontractors will allow
both prime contractors and Government personnel to understand the new
requirements, develop processes, and focus resources needed for
execution. Therefore the Councils have adopted a one year phased
implementation approach (see introductory summary in Section III.B.2.a.
above), whereby initial implementation applies to prime contractors,
later followed by subcontractors.
Comment: Several respondents, including the SBA Office of Advocacy,
were concerned about the effects that applicability of the rule may
have on small businesses. They suggested applicability to subcontracts
be minimized, for example, by raising the threshold from $500,000 to
$1,000,000, and indexing it to inflation.
Response: The E.O. considered impacts to small businesses and by
design has taken steps to minimize the burden on small businesses, by
exempting the majority of Federal contract awards to small businesses,
namely, contracts valued under $500,000 and subcontracts for COTS
items. Therefore, no change is being made to the rule.
41 U.S.C. 1908 provides for inflation indexing; however, that
statute does not provide for increasing E.O. thresholds.
f. Applicability to Prime Contracts for Commercial Items
For prime contractors the disclosure of labor law decisions and
coverage of paycheck transparency do not exclude contracts for
commercial items or COTS. For arbitration, the application for prime
contracts excludes contracts for commercial items. See prescriptions at
FAR 22.2007, and see 52.212-3.
Comment: Respondents expressed opposition to the rule, claiming
that the exemption for COTS subcontracts should be extended to COTS
prime contracts. In the respondents' view, applying the rule to prime
contractors may drive commercial companies out of the Federal
marketplace, particularly nontraditional, innovative suppliers. Some
respondents would expand the exemption to all contracts for commercial
items.
Others expressed the view that the final rule should not contain an
exemption for COTS or for commercial item contracts. In their view, the
quality of responsibility determinations should not depend on the type
of item being purchased.

[[Page 58583]]

Response: The E.O. considered impacts to contractors and
subcontractors who provide commercial items and COTS. The E.O. limited
the COTS exemption to subcontractor disclosure, in order to minimize
the burden it places on subcontractors, while still meeting the
objectives of the E.O. The E.O.'s approach is an appropriate balance in
applying the exception for COTS to subcontractors and not to prime
contractors.
Comment: A respondent pointed out that the Federal Acquisition
Streamlining Act of 1984 (FASA) was designed to make Federal contracts
for commercial items more consistent with their commercial counterparts
in order to encourage the commercial entities to enter the Federal
marketplace and the Government to purchase more commercial items.
Citing section 8002 of FASA, the respondent pointed out that
``contracts for the acquisition of commercial items must include only
those clauses that are required to implement provisions of law or
executive orders applicable to acquisitions of commercial items or that
are determined to be consistent with customary commercial practice to
the maximum extent practicable.'' Noting that the FAR contains similar
requirements, the respondent inferred that the E.O. is inconsistent
with statute to the extent it ``deters commercial item contractors from
participating in the Government market.''
Response: The E.O.'s goal is to contract with responsible parties
who have a satisfactory record of integrity and business ethics; this
is consistent with commercial practices. While there are aspects of the
rule that fall outside customary commercial practices (e.g.,
disclosures of labor law violations), its provisions and clauses fall
within FAR 12.301(a)(1) as ``[r]equired to implement provisions of law
or executive orders applicable to the acquisition of commercial
items.'' The E.O. was intended to cover commercial item contracts; it
specifically exempted COTS subcontracts but not commercial item
contracts. As a result, the Councils find the inclusion of the
provisions and clauses consistent with law, regulation, and the E.O.
g. Miscellaneous Public Comments Concerning Alternatives
Comment: Some respondents wanted to retain the disclosure
requirement for labor law violations occurring on nonGovernment work.
Other respondents wanted coverage limited to work under Government
contracts or to business units that do business with the Government.
Their rationale for coverage limited to Government contracts was that
if the reported labor law violations relate to performance under a
Government contract, these matters may be properly addressed under
applicable FAR subpart 42.15, Past performance information; there is no
need to impose redundant reporting obligations. Additionally, if the
reported labor law violations do not relate to past performance under a
Government contract, they reasoned that such information would not
necessarily be relevant to a contractor's or subcontractor's ability to
successfully perform a specific Government contract, and consideration
should instead be determined in accordance with the established
suspension and debarment procedures set out in FAR subpart 9.4.
Response: The rule covers the legal entity's full record, including
private sector work. The particular information that a contracting
officer may need to make a responsibility determination will be
specific to the circumstances of a given contract. Rather than
predetermine what information a contracting officer must use, the rule
provides the information that will allow a contracting officer to make
a considered responsibility determination.
Violations of the labor laws listed in Section 2 of the E.O.,
particularly in instances where the violations are serious, repeated,
willful, and/or pervasive, may specifically affect whether a contractor
has a satisfactory record of integrity and business ethics, and may
also negatively impact a contractor's ability to meet other standards
established in FAR 9.104-1. There is a direct nexus between labor law
violations and whether a contractor has a ``satisfactory record of
integrity and business ethics'' as required by FAR 9.104-1(d). See,
e.g., Gen. Painting Co., B-219449, Nov. 8, 1985, 85-2 CPD ] 530.
This nexus is explicitly cited in the E.O. at Section 2(a)(iii):
``In consultation with the agency's Labor Compliance Advisor,
contracting officers shall consider the information provided . . . in
determining whether an offeror is a responsible source that has a
satisfactory record of integrity and business ethics. . . .'' Further,
as stated in Section 1 of the E.O., the President has concluded that
``[c]ontractors 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. Helping executive departments
and 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.''
Satisfactory record of performance and ability to comply with the
required delivery or performance schedule are expressly included among
the list of standards in FAR 9.104-1, which a prospective contractor
shall meet to be determined responsible.
The E.O. provides that, in making a responsibility determination
prior to award, the contracting officer should consider all reported
labor law violations in determining whether a prospective contractor is
a responsible source that has a satisfactory record of integrity and
business ethics. This consideration should not be limited only to
reported violations that have occurred during the performance of prior
Federal Government contracts, but should also include violations that
have occurred outside the performance of Federal Government contracts.
Consideration of all reported labor law violations, whether related to
Federal contracts or not, provides insight into how the prospective
contractor will perform during a future Government contract. Evidence
of a prospective contractor's past labor law decisions concerning labor
law violations is a basis to inquire into that contractor's potential
for satisfactory labor law compliance; furthermore, how the prospective
contractor has handled past violations is indicative of how it will
handle future violations. When a prospective contractor has a record of
noncompliance with labor laws, the contracting officer should consider
the impact that likely future noncompliance will have in terms of the
agency resources that will be required to monitor the contractor's
workplace practices. Also see discussion in Section III.B.1.b. above.
Comment: Several respondents recommended that the rule provide an
exemption or other mechanism for a prime contractor to enter into a
contract with a subcontractor, notwithstanding its labor law violation
history, in the case of contingency, urgency, compelling need, or an
agency-directed subcontract.
Response: The rule requires contractors to consider a prospective
subcontractor's labor law decision information as part of its
responsibility determination, but it does not preclude a contractor
proceeding with a determination in the case of contingency, urgency, or
compelling need, even if the subcontractor has labor

[[Page 58584]]

law violations. The FAR text at 52.222-59(c)(2), (c)(5) and (c)(6) has
been revised to reflect how some of these circumstances may be handled.
Comment: A respondent recommended creation of an exemption, for
urgent needs, to the rule's requirement for contracting officers to
consult with labor compliance advisors.
Response: There is no need for an exemption for urgent needs
because under the existing rule text, the contracting officer can set
the timeframe for an ALCA's response and absent a response can move
forward with a responsibility determination (see FAR 22.2004-2(b)(2)
and (b)(5)(iii)).
Comment: Respondents commented that the reporting requirement for
initial and subsequent semiannual reporting conflicts with information
restrictions associated with classified contracts. They recommended
that the rule be revised to accommodate classified contracts, and that
public comments be requested on this issue. The recommendation was to
protect information relating to classified contracts, and classified
information. Respondents pointed out that sometimes the identity of the
contracting agency and the contractor are classified, and that the
issue can arise at prime and subcontract levels.
Response: The rule does not compel the disclosure of classified
information.
3. Requirements for Disclosures of Labor Law Decisions
Introductory Summary: The Councils received a number of comments
related to disclosures associated with the proposed rule. Particular
comments related to scope of information provided, potential liability,
need for disclosure, public availability of information, semiannual
updates, and reporting entity, among others.
The Councils recognize the E.O. and final rule contain a range of
new requirements for contractors, subcontractors, and the Government.
As such, the Councils have been mindful in attempting to minimize
impacts while meeting the objectives of the E.O.
In response to the comments, the Councils have:
Clarified in the final rule at FAR 52.222-59(b) that the
semiannual update does not have to be accomplished on a contract-by-
contract basis.
Clarified in the final rule at FAR 52.222-57(a)(2) that if
the offeror is a joint venture that is not itself a separate legal
entity, each concern participating in the joint venture must separately
comply with the representation and disclosure requirements.
a. General Comments
Comment: A respondent expressed general support for contractor
disclosures of labor law violations, stating that the contractor is in
the best position to furnish complete and accurate records about its
labor law violations.
Response: Noted.
Comment: A respondent recommended that a list of companies (both
contractors and subcontractors) that have been precleared or cleared in
prior responsibility determinations and the dates of those clearances
be made publicly available. The respondent further recommended that a
list of companies under ongoing responsibility investigations should be
made publicly available and promptly updated so that worker
representatives and advocates, community groups, and other relevant
interested parties may provide input. The respondent indicated that
such publication would assist contractors in choosing precleared
subcontractors, enhancing the efficiency and speed of the
subcontracting approval process.
Response: The E.O. and the FAR implementation require public
disclosure of labor law decision information in FAPIIS (i.e., labor law
violated, case number, date rendered, name of the body that made the
determination or decision). For each contract or subcontract award, a
responsibility determination is fact-specific and the assessment of
integrity and business ethics is but one factor that is taken into
consideration. A previous finding of responsibility does not indicate
present responsibility for the particular procurement. As such, the
Councils decline to adopt a requirement to establish a precleared or
cleared process for contractors previously found responsible on other
contracts and make such information publicly available. Nevertheless,
in accordance with DOL's Guidance, contractors do have the ability to
address their labor law compliance with DOL, in advance of any
particular procurement, to enhance the efficiency of the procurement
process (see DOL Guidance Section VI, Preassessment).
Comment: Respondents made recommendations to increase transparency
when prospective contractors were undergoing responsibility
determinations and investigations so that interested parties could
provide input. For example, respondents recommended that unions or a
contractor's employees be permitted to report labor law violations
directly to a contracting agency. To facilitate such reporting, the
respondents suggested that a prospective contractor be required to
notify unions and its employees at a prospective contract performance
location of the opportunity to report violations and of whistleblower
protections. Respondents further recommended that a list of companies
where there are ongoing responsibility investigations be made publicly
available and promptly updated so that worker representatives and
advocates, community groups, and other relevant interested parties may
provide input.
Response: Sources having knowledge of labor law violation
information are encouraged to provide it to DOL and the enforcement
agencies in a timely manner and not wait for agency procurement
actions. The Councils decline to make such information public as doing
so is outside the scope of the E.O.
Comment: Respondents recommended changing the scope of required
disclosures. Some recommended expanding the disclosures to include
information such as remedies and number of workers affected. One
recommended including violations older than three years. Others
recommended that disclosure not be required for nonfinal, nonmaterial,
or technical violations, for violations arising on nonGovernment
projects, or for citations that might be settled or withdrawn.
Response: Expanding the disclosures to require the submission of
additional information would create an increased burden on contractors.
Moreover, contracting officers have an existing duty under the FAR to
obtain such additional information as may be necessary to be satisfied
that a contractor has a satisfactory record of integrity and business
ethics (see FAR 9.104-1(d)), and contractors must provide the labor law
decision documents to contracting officers upon request (see FAR
22.2004-2(b)(2)(iii), 52.222-57(d)(1)(ii), 52.222-59(b)(2)).
Comment: A respondent recommended creating a safe harbor framework
to permit contractors and subcontractors found not to be responsible
back into the marketplace.
Response: Responsibility determinations are conducted on a
contract-by-contract basis. A finding of nonresponsibility on a
specific contract does not remove the contractor from the marketplace
or bar a contractor from bidding on or receiving future contracts.
Furthermore, the labor law violation information that informs the
assessment of integrity and business ethics is but one factor that is
taken into consideration in making a responsibility determination.

[[Page 58585]]

Comment: A respondent recommended that copies of administrative
merits determinations, civil judgments, and descriptions of violations
be available publicly.
Response: The final rule, consistent with the proposed rule,
compels public disclosure of certain basic information, i.e., whether
offerors do or do not have labor law decisions rendered against them
concerning violations of covered laws, and, for prospective contractors
being assessed for responsibility, certain basic information about the
violation. The FAR implementation requires that the basic information
be input in SAM and be publicly disclosed in FAPIIS. See FAR 52.222-
57(d). Other contractor information submitted to the Government under
this rule is not automatically available, and release is covered in FAR
9.105-3, FAR part 24, and agency policies issued pursuant to the
Freedom of Information Act (FOIA). A contractor which submits
mitigating factors and remedial measure or other explanatory
information into SAM may determine whether the contractor wants this
information to be made public. See FAR 22.2004-2(b)(1)(ii) and 52.222-
57(d)(1)(iii).
Comment: Respondents voiced concerns about keeping representations
current given a long solicitation lead time. For example, a respondent
observed that contractors would need to update representations right up
to the award date, which could be several months after the offer date.
Another respondent commented that contractors will need to update the
reporting system at the System for Award Management (SAM) so that the
agencies have the most current information available, which is
especially important if there is a long gap between offer and award.
Response: The offeror must notify the contracting officer of an
update to its representation (see FAR 52.222-57(e)) if the offeror
learns that its representation is no longer accurate. This means that
if an offeror represented at FAR 52.222-57(c) that no labor law
decisions were rendered against it, and since the time of the offer the
offeror now does have a labor law decision rendered against it, the
contractor must notify the contracting officer. The reverse is also
true: If for example, an offeror made an initial representation that it
has a labor law decision to disclose, and since the time of the offer
that labor law decision has been vacated by the enforcement agency or a
court, the contractor must notify the contracting officer. In the
process of making a responsibility determination, the contracting
officer may obtain additional information from a contractor in
accordance with FAR 9.105.
Comment: Respondents were concerned that the rule would reduce or
increase contractors' incentive to settle labor citations, e.g., in
order to attain a favorable responsibility determination.
Response: The objective of the E.O. is to increase the focus on
compliance with labor laws. Studies cited in the proposed rule link
compliance with labor laws to favorable performance. Therefore, it is
assumed that such consideration may alter certain aspects of contractor
behavior. With regard to attaining a favorable responsibility
determination: The assessment of integrity and business ethics is fact-
specific and labor law compliance is but one factor that is taken into
consideration in making a contractor or subcontractor responsibility
determination.
Comment: One respondent recommended that subcontractors be
permitted to file disclosures of labor law violations directly with the
Government through SAM.
Response: SAM registers contractors intending to do business with
the Federal Government, not their subcontractors. In consideration of
public comments, the Councils have revised the final rule at FAR
52.222-59(c) and (d) to incorporate the alternative presented in the
proposed rule, whereby subcontractors provide their labor law decision
disclosures to DOL, in lieu of to the prime contractor (see DOL
Guidance Section V).
b. Semiannual Updates
Comment: Several respondents recommended that the required labor
law violation disclosure update reporting be consolidated on an annual
or semiannual basis, based on a date chosen by the contractor and
subcontractor. There was concern that contractors holding many covered
contracts and subcontracts will find themselves gathering information
and submitting information on a near-constant basis.
Response: There is no requirement for the information in SAM to be
updated separately on a contract-by-contract basis. The Councils agree
that the term ``semiannual'' as used in the proposed rule was subject
to different interpretations. In the final rule, the Councils clarify
that contractors have flexibility in establishing the date for the
semiannual update; they may use the six-month anniversary date of
contract award, or may choose a different date before that six-month
anniversary date to achieve compliance with this requirement. In either
case, the contractor must continue to update it semiannually.
Registrations in SAM are required to be current, accurate, and complete
(see FAR 52.204-13). If the SAM registration date is less than six
months old, this will be evidence to the Government that the required
representation and disclosure information is updated and the
requirement is met.
Comment: A respondent recommended that the proposed rule require
the reporting of the following additional information about
administrative merits determinations, arbitral awards, or civil
judgments in the postaward semiannual disclosure updates, in SAM and
directly to the contracting officer: (a) Labor law violated; (b) docket
number; (c) name of the adjudicating body; (d) short factual
description of the violation; (e) remedies imposed including monetary
amount; (f) number of workers affected; (g) current status of the case;
(h) copy of the determination, arbitral award, or civil judgment; (i)
copy of any applicable labor compliance agreement or remediation
agreement; (j) any notice from DOL advising that the subcontractor
either has not entered into a labor compliance agreement within a
reasonable period of time or is not meeting the terms of an existing
agreement.
The respondent indicated that requiring the contractor to provide
such information and documentation directly to the contracting officer
would enable the ALCA to more efficiently and expeditiously assess the
contractor's labor law compliance and to recommend appropriate action
to the contracting officer.
Response: The scope of the required disclosure is delineated in the
E.O. The E.O. required DOL to define the terms ``administrative merits
determination'', ``civil judgment'', and ``arbitral award or
decision''. The definitions of these terms further delineate the scope
of required disclosure and the FAR rule adopts these definitions.
Expanding the disclosures to allow for the submission of additional
information is outside of the E.O. and DOL Guidance, creates an
increased burden on contractors, and will additionally complicate the
review process.
c. Burden of Disclosing Labor Law Decisions
Comment: Several respondents commented that the proposed rule adds
unnecessary regulatory burdens and risks that serve as a disincentive
for companies considering entry into the Federal market or may cause
companies to leave the Federal market entirely.

[[Page 58586]]

Response: The Federal procurement process works more efficiently
and effectively when contractors and subcontractors comply with
applicable laws, including labor laws. The Councils recognize that
implementation of the E.O. does have associated disclosure
requirements, but the final rule is designed to meet the E.O. objective
of promoting compliance with labor laws while minimizing burden where
possible.
Comment: Respondents, including the SBA Office of Advocacy,
expressed concern that the disclosure process, the frequency of
disclosures, and review process is very burdensome and costly for all.
They suggested that the burden could weigh more heavily on the small
business community. One respondent stated that the onerous reporting
requirements run counter to the Administration's commitment to reduce
burden in commercial items acquisitions and recommended that the
Government streamline the reporting process by exempting commercial
items.
Response: The E.O. does not exempt small businesses or commercial
items, which are significant components of the Federal marketplace.
However, to minimize burden, the E.O. disclosure requirements are
limited to contracts over $500,000 and subcontracts over $500,000 other
than COTS items. This disclosure threshold excludes the vast majority
of transactions, many of which are set aside and performed by small
business. Also see the discussion of phase-in at section III.B.2.a.
above.
Additionally, the Councils have adopted the alternative approach
whereby subcontractors provide their labor law decision information
(and mitigating factors and remedial measures) to DOL and revised FAR
52.222-59(c) and (d) to incorporate this alternative. This approach
will further reduce prime contractor burden. The final rule has been
revised to delete reporting language that specified updates
``throughout the life of the contract.'' Likewise, to minimize the
impact of the rule, the Councils clarify that contractors have
flexibility in establishing the date for the semiannual update; they
may use the six-month anniversary date of contract award, or may choose
a different date before that six-month anniversary date to achieve
compliance with this requirement. In either case, the contractor must
continue to update the disclosures semiannually.
The revised language should provide contractors with more
flexibility for compliance with the semiannual requirement.
Comment: A respondent expressed concern that if the rule is
tailored to mostly exempt small businesses, higher tiered contractors
will have to absorb all risk related to labor law violations by small
business suppliers.
Response: The E.O. disclosure requirements are limited to contracts
and subcontracts over $500,000. This threshold minimizes the impact and
burden by exempting contracts and subcontracts under $500,000, but the
risk level of subcontracting with suppliers with labor law violations
does not change. Under current practice, higher-tiered subcontractors
must subcontract with responsible firms and set the terms and
conditions of their subcontracts.
Comment: Respondents stated that contractors will have to make
significant investments to deal with the complexity of complying with
disclosures. In addition to understanding the various statutes and
executive orders, contractors will need to master the definitions and
terminology outlined in the FAR and the DOL Guidance. The respondents
surmised that contractors will expand their compliance departments and
much of the expense will get passed on to the Government.
Response: The Government and contractors will have to establish
disclosure procedures, processes, practices, and tracking mechanisms
commensurate with their size and organizational structure. However,
this information is necessary to provide a clear and accurate picture
of past labor law violations to comply with the E.O. requirements.
Comment: Respondents commented that the complexity of the proposed
rule and new requirements will burden Federal contracting agencies that
will have to create a new bureaucracy of advisors to counsel
contracting officers, contractors, and subcontractors on the
intricacies of the new rules. Respondents noted that each time a
contractor reports labor law violations, contracting officers will be
required to make determinations.
Response: The rule will impose additional requirements on the
Government. These efforts are necessary to meet the policy objectives
of the E.O. and to help inform procurement decisions made by the
contracting officer before contract award and during contract
performance, and enhance the Government's ability to contract with
those having a record of integrity and business ethics. DOL will create
processes that facilitate coordination between ALCAs and DOL, which
will minimize the burden for agencies by avoiding redundant and
inconsistent analysis.
Comment: Many respondents commented that the proposed rule and DOL
Guidance will create onerous data collection and reporting
requirements. They expressed that most companies do not have systems in
place that routinely track whether there have been any administrative
merits determinations, arbitration decisions, or civil judgments
against them. In addition, most companies would not track such actions
because they may not be final and are reversible. These respondents
remarked that in order to comply, contractors would need to create new
databases and collection mechanisms, develop new internal policies and
procedures, and hire and train new personnel to ensure compliance with
the proposed requirements.
Response: The Councils recognize that the rule creates reporting
requirements for which contractors and subcontractors may need to
establish systems, processes, and procedures, including for primes to
manage their subcontractors' compliance with the rule's requirements.
Each contractor and subcontractor will determine the size and
complexity of the processes, procedures, and tracking and/or collection
mechanisms necessary to meet its obligations under the rule.
Comment: Respondents stated that reporting potentially nonfinal
administrative merits determinations, arbitration decisions, or civil
judgments under the proposed FAR rule bears no traditional nexus
between labor law violations and traditional notions of responsibility
which are for a particular procurement and performance of a Government
contract. They suggested that narrowing the reporting requirement to
labor law violations that bear the most relevance would reduce the
burden for contractors and the Government.
Response: The E.O. falls well within the established legal bounds
of presidential directives regarding procurement policy. The
Procurement Act authorizes the President to craft and implement
procurement policies that further the statutory goals of that Act and
of the Office of Federal Procurement Policy Act (41 U.S.C. 1101) of
promoting ``economy'' and ``efficiency'' in Federal procurement. By
asking contractors to disclose past labor law decisions the Government
is better able to determine if the contractor is 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. See,

[[Page 58587]]

e.g., UAW-Labor Employment & Training Corp. v. Chao, 325 F.3d 360, 366
(D.C. Cir. 2003) (affirming authority of the President under the
Procurement Act to require Federal contractors, as a condition of
contracting, to post notices informing workers of certain labor law
rights). In issuing E.O. 13673, the President explained the broad nexus
that exists between general compliance with labor laws and economy and
efficiency:
Labor laws are designed to promote safe, healthy, fair, and
effective workplaces. 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.
Helping executive departments and 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.
As explained in the preamble to the proposed FAR rule and the
preliminary RIA, a number of studies over the years support the
conclusion that there is a relationship between labor law violations
and performance problems. These include reports by the GAO, the Senate
HELP Committee, HUD's Inspector General, the Fiscal Policy Institute,
and the Center for American Progress.
See also the discussion at Section III.B.1. above.
Comment: A respondent commented that the two-step reporting
approach does not reduce burdens. In this two-step approach, the first
step comprises a ``yes/no'' representation as to whether a contractor
has any covered labor law violations, and the second step requires
disclosure of the details of any violation(s).
Response: The two-step process is designed to reduce the preaward
burden by only requiring basic labor law decision information to be
reported by those for whom a responsibility determination has been
initiated, rather than by all prospective contractors that answered
affirmatively in the initial representation.
Comment: Respondents were concerned that contractors are required
to disclose labor law violations for the past three years and represent
accurately, when they had no notice of how past labor law violations
might be used in the procurement process and had no reason to track
these violations.
Response: The Council recognizes the burden that could be
associated with immediate implementation of a three-year reporting
period absent appropriate mechanisms to retrieve the information, and
therefore is phasing in the reporting periods. In order to best enable
compliance with the rule, the Councils have implemented a number of
phase-ins for labor law decision disclosure requirements, which are
discussed in Section III.B.2.a. above.
Comment: A respondent was concerned that contractor reporting of
labor law violation information should be directly tied to a
procurement consideration point (contract award, option exercise)
rather than set at semiannual intervals. The respondent suggested that
information not tied to procurement consideration point serves no
useful purpose.
Response: The E.O. contemplated the contracting officer having
information throughout the life of the contract, not at a specific
procurement consideration point. The final rule, consistent with the
proposed rule, requires disclosure of labor law decisions prior to a
finding of responsibility for a contract award, and within six months
from the last SAM update during performance. The purpose of the
recurring update is to enable the contracting officer to determine
whether any action is necessary in light of any updates to disclosures
or any new decisions disclosed.
Comment: A respondent expressed concern that because the proposed
rule required that contractors report on all tiers of their supply
chains, the requirement to submit representations of violations with
each bid or proposal would require the prime contractor to start very
early to accumulate the information needed to make such a
representation, or risk that the contractor would be unable to prepare
and submit a bid or proposal because it has been unable to obtain
information needed for its representation in a timely manner. Further,
if and when a contracting officer initiates a responsibility
determination and requests mitigating information, the contractor (and
its subcontractors) would need time to respond.
Response: The E.O. applies to subcontractors at any tier, with
subcontracts valued at greater than $500,000, except COTS acquisitions.
Prime contractors are to exercise diligence in selecting responsible
subcontractors. In an effort to minimize disruption to the procurement
process, DOL will be available to consult with contractors and
subcontractors to assist them in fulfilling their obligations under the
E.O. DOL will be available to contractors and subcontractors for
preassessment consultations on whether any of their labor law
violations are potentially problematic, as well as on ways to remedy
any problems.
As a matter of clarification, representations are made to the best
of the offeror's knowledge and belief at the time of an offer. Prime
and subcontractor representations are separate and distinct. Prime
contractors represent their own labor law decisions rendered against
them (see FAR 52.222-57 and 52.222-59(c)(3)). Subcontractor
representations of whether they have had or have not had labor law
decisions rendered against them are separately made under the FAR
52.222-58 provision to prime contractors and the Councils have
clarified this language at FAR 52.222-58, paragraph (b). If the
prospective subcontractor responded affirmatively in its
representation, and a responsibility determination has been initiated
by the prime contractor, the prospective subcontractor will be directed
by the prime contractor to disclose its labor law violation information
to DOL.
Likewise, prime contractors provide subcontractors an opportunity
to provide remediating and mitigating information to DOL that the
subcontractor deems necessary to demonstrate its responsibility.
Comment: Respondents expressed concern that risks of an adverse
responsibility determination are borne by the prime contractor, who
will be forced to pursue, compile, and update information throughout
its supply chain in order to effectively manage risk associated with
ongoing labor compliance reporting.
Response: As stated in FAR 9.104-4(a), prime contractors are
responsible for determining the responsibility of their prospective
subcontractors. This final rule does not change the responsibility
paradigm. In the final rule, the Councils adopted the alternative
approach to disclosure whereby prospective subcontractors submit labor
law violation information directly to DOL rather than the prime
contractor. This alternative approach reduces burden on the prime
contractor; it also provides access to DOL's expertise which may reduce
overall risk.
Comment: Respondents expressed concern that the proposed reporting
is unnecessarily duplicative and disrupts well-established, legally
protected enforcement mechanisms and highly effective settlement
processes. As an example, one respondent stated that OSHA maintains
databases of inspections and citations that contain

[[Page 58588]]

inspection case detail for approximately 100,000 OSHA inspections
conducted annually. Additionally, accident investigation information is
provided, including textual descriptions of the accident, and details
regarding the injuries that may have occurred. Respondents suggested
that DOL should report on and aggregate existing enforcement data,
rather than imposing this requirement on contractors. Alternatively,
DOL should fund its own data collection effort and allow industry to
input data into that DOL portal.
Response: This rule does not intend to disrupt existing settlement
processes in place by DOL or other enforcement agencies. Whenever
possible, the Government seeks to use and leverage existing databases,
sources, and systems. As explained in Section III.B.2.c., the existing
systems of DOL and other enforcement agencies do not satisfy the
current needs of the Government in meeting the objectives of the E.O.
DOL and other enforcement agencies are actively working to upgrade
these systems for use by the Government in compiling and maintaining
administrative merits determination enforcement data and contractor-
disclosed data for purposes of implementation of the E.O. Enforcement
agency databases do not and will not collect labor law violation data
on civil judgments, arbitral awards or decisions. Thus, disclosure of
labor law violations contemplated under the E.O. will necessarily
include some level of disclosure by contractors. Therefore, contractors
and subcontractors are best positioned to provide labor law violation
information.
Comment: Respondents stated that the proposed rule shifts a
significant proportion of the burden of monitoring and enforcing labor,
workplace safety, and anti-discrimination compliance across multiple
jurisdictions from the Government agencies responsible for ensuring
such compliance, namely the DOL and State labor departments, to
contracting agencies and contractors.
Response: Neither the E.O. nor the FAR implementation shifts
enforcement responsibility away from enforcement agencies. The rule
emphasizes the consideration of labor law violation information as part
of the contracting officer's and prime contractor's responsibility
determination process.
d. Risk of Improper Exclusion
Comment: Respondents, including the SBA Office of Advocacy,
surmised that the proposed regulation will have adverse impacts
particularly on small subcontractors; many prime contractors will
simply avoid contracting with a company that has a violation, rather
than wait for the outcome of a responsibility determination. A
respondent raised a concern that a contracting officer faced with
choosing between an offeror with a ``clean record,'' or an offeror with
some alleged labor law violations, would likely find it easier to
select the offeror that does not require a labor law assessment.
Response: The objective of the E.O. is for prime contractors to
contract with responsible parties, not to disregard subcontractors with
labor law violations. To further this objective, the E.O. seeks to help
contractors--especially those with serious, repeated, willful, and/or
pervasive violations--come into compliance with labor laws, not to deny
contracts. Companies with labor law violations will be offered the
opportunity to receive early guidance on whether those violations are
potentially problematic and how to remedy any problems. Very minor
labor law violations do not meet the threshold of serious, willful,
and/or pervasive, and in most cases a single violation of law may not
necessarily give rise to a determination of nonresponsibility,
depending on the nature of the violation (see E.O. Section 4(i) and DOL
Guidance).
The final rule has been revised at FAR 22.2004-2(b)(6) to clarify
that ``disclosure of labor law decisions does not automatically render
the prospective contractor nonresponsible'' and ``the contracting
officer shall consider the offeror for contract award notwithstanding
disclosure of one or more labor law decision(s).'' (Similar language is
added at FAR 52.222-59(c)(2) regarding subcontractor decisions.)
Contracting officers consider the totality of circumstances in a
particular procurement when making responsibility determinations and
contract award decisions. In doing so, contracting officers have an
obligation to possess or obtain sufficient information to be satisfied
that a prospective contractor has met specific standards of
responsibility. Documents and reports supporting a determination of
responsibility or nonresponsibility must be included in the contract
file (see FAR 9.105-2(b)). As explained in Section VI of DOL's
Guidance, prospective contractors are encouraged to contact DOL for a
preassessment of labor law violation information.
Comment: Respondents raised a variety of concerns regarding a
potential de facto debarment. A respondent stated that the rule would
increase contractors' incentive to bring protests, as a
nonresponsibility determination would in essence be a de facto
debarment. Another concern was contracting officers using one another's
nonresponsibility determinations without conducting an independent
assessment. A related concern was that the due process protections of
FAR subpart 9.4 would be unavailable. A respondent suggested that
guidance is necessary regarding types of conduct leading to denial of
contracts.
Response: The rule does not supplant or modify suspension and
debarment processes, which, consistent with current regulations, are
considered in certain extreme cases when previous attempts to secure
adequate contractor remediation have been unsuccessful, or otherwise to
protect the Government from harm. Evidence of a prospective
contractor's past violations of labor laws is a basis to inquire into
that contractor's potential for satisfactory labor law compliance;
furthermore, how the prospective contractor has handled past violations
is appropriately considered as being indicative of how it will handle
future violations. Under longstanding tenets reflected in FAR subpart
9.1, contracting officers have the discretion to consider violations of
law, whether related to Federal contracts or not, for insights into how
a contractor is likely to perform during a future Government contract.
These long-standing tenets also hold that determinations regarding a
prospective contractor's responsibility shall be made by the particular
contracting officer responsible for the procurement. Requiring that
decisions be made on a case-by-case basis helps to ensure that actions
are taken in proper context. While this approach may result in
different decisions by different contracting officers, steps have been
taken in the context of this rulemaking that will help to promote
consistency in assessments of labor law violation information by ALCAs
and the resultant advisory input to the contracting officers and will
result in greater certainty for contractors. In particular, ALCAs will
coordinate with DOL and share their independent analyses for
consideration by other ALCAs. This collaboration should help to avoid
inconsistent advice being provided to the contractor from different
agencies.
Comment: Respondents identified the due process procedures in the
FAR regarding suspension and debarment and noted that suspension and
debarment is a business decision and not for enforcement or punishment.
Response: The Councils agree. Suspension and debarment is a
discretionary action, for a finite period of time, to protect the
Government's interest, which is available for specific

[[Page 58589]]

causes and is invoked in accordance with procedures in FAR subpart 9.4.
The serious nature of debarment and suspension requires that these
sanctions be imposed only in the public interest for the Government's
protection and not for purposes of punishment (FAR 9.402(b)).
Comment: A respondent commented that, if Congress had intended for
Federal contracting remedies, such as suspension and debarment, to
apply to violations of all 14 laws cited in E.O. 13673, Congress would
have specifically identified this; instead, only two of the statutes in
the E.O.--the Davis-Bacon Act and the Service Contract Act--identify
that the suspension and debarment remedy should be available for
violations.
Response: Neither the FAR Council's rule nor DOL's Guidance expand
or change the availability of suspension or debarment as a statutory
remedy under the FAR or under the labor laws cited in the E.O. Under
existing FAR subpart 9.4, agencies are given the administrative
discretion to exercise suspension and debarment to protect the
Government from harm in doing business with contractors that are not
responsible sources. The rule requires only that contractors and
subcontractors disclose certain labor law decisions (and mitigating
factors and remedial measures) so that this information can be taken
into account as part of responsibility determinations and for award
decisions. The rule has been constructed to help contractors come into
compliance with labor laws, and consideration of suspension and
debarment is only considered when previous attempts to secure adequate
contractor remediation have been unsuccessful and to protect the
Government's interest. The rule provides for a number of mechanisms to
help contractors come into compliance, including labor compliance
agreements, that derive from labor enforcement agencies' inherent
authority to implement labor laws and to work with covered parties to
meet their obligations under these laws. (See also Section III.B.1.
above.)
e. Request for Clarification on Scope of the Reporting Entity
Comment: Respondents, including the SBA Office of Advocacy, were
unclear whether the representation of labor law violation history is
required for the legal entity signing the offer alone, or if they must
also represent for related entities, such as parents, subsidiaries, and
affiliates. Respondents further questioned whether the subcontractor
representation requirement would encompass supplier agreements or
arrangements.
Some respondents recommended expanding what is reported under the
representation to include the parent, subsidiaries, and affiliates of
the contractor. Respondents considered this especially important where
an entity exists less than three years and noted that some contractors
might use subsidiaries and affiliates to evade reporting requirements.
One respondent further recommended the reporting entity be expanded to
also encompass partnerships and joint ventures. Alternatively, a
respondent indicated that a contractor should be at least required to
identify its affiliates (parent corporations, subsidiaries) in its
disclosures.
Other respondents stated that reporting should be limited to the
entity performing the contract and recommended against expanding the
representation and certification requirement. One respondent was
concerned such an expanded requirement would serve to discourage
participation and have a negative impact on the number of contractors
participating in Federal procurement. Another respondent expressed
concern that such an expansion might lead to an unmanageable volume of
disclosures. Others, including the SBA Office of Advocacy, were
concerned with the associated increase in costs and impact on mid or
small-sized businesses.
Response: The scope of prime contractor and subcontractor
representations and disclosures follows general principles and
practices of the FAR that are the same for other provisions requiring
representations and disclosures. The requirement to represent and
disclose applies to the legal entity whose name and address is entered
on the bid/offer and that will be legally responsible for performance
of the contract. The Councils decline to expand the scope of the
representation and disclosure requirement beyond that required in the
E.O. and existing FAR practices. See the more detailed discussion of
``legal entity'' in Section III.A.3.a. above.
As is the current FAR practice, FAR rules are applied (unless
specifically instructed otherwise) to solicitations from the effective
date of the rule and are not applied retroactively to pre-existing
contracts or subcontracts.
The representation and disclosure requirements of this FAR rule
apply prospectively to subcontracts containing the provision at FAR
52.222-58, Subcontractor Responsibility Matters Regarding Compliance
with Labor Laws (Executive Order 13673), and the clause 52.222-59
Compliance with Labor Laws (Executive Order 13673). Regarding
applicability to supplier agreements or arrangements, neither the E.O.
nor the FAR rule contains an exception for supplier arrangements or
agreements. However, the exemption for COTS items, and the $500,000 and
above threshold, should minimize the number of supplier agreements with
small businesses that are covered by the E.O.
Comment: Respondents asked for clarification on representation and
disclosure requirements for companies in a joint venture or other
teaming arrangement, and stated that it is unclear how companies acting
jointly as a prime contractor should assess each other or how each
would be assessed--separately or jointly. One respondent recommended
the reporting entity encompass partnerships and joint ventures.
Response: The final rule has been revised to include a
clarification in the provision at FAR 52.222-57 that if the offeror is
a joint venture that is not itself a separate legal entity, each
concern participating in the joint venture must separately comply with
the representation and disclosure requirements. A joint venture that is
a separate legal entity will be treated as a separate legal entity. A
teaming arrangement that is a prime contractor with subcontractor will
represent and disclose separately as a prime contractor and as a
subcontractor. Labor law decisions that are represented and disclosed
will be considered for the concern that made the disclosure.
4. Labor Law Decision Disclosures as Relates to Prime Contractors
Introductory Summary: The FAR Council received considerable
comments addressing disclosure of labor law decisions. There was
general support of a process by which contractors and subcontractors
may consult with DOL and other enforcement agencies to receive early
guidance on whether labor law violations are potentially problematic,
and to receive assistance and an opportunity to remedy problems prior
to a particular procurement. Some respondents said that public access
to contractor disclosures will foster increased compliance with labor
laws, while other respondents expressed concern about public access and
safeguarding of information disclosed by contractors. The FAR Council
received comments on the type of documents and information that should
be disclosed by contractors; comments for and against reporting by
third parties of labor law violations; and comments

[[Page 58590]]

with respect to contractor reliance on representations, information,
and documents submitted by subcontractors.
a. General Comments
Comment: Respondents requested that the rule clarify that
contractors, prior to particular procurements, have access to a
``preclearance'' process for consulting with DOL concerning their labor
law violation history, and that contracting officers could accept DOL's
recommendations in making a responsibility determination.
Response: The availability of DOL for consultation, prior to a
contractor responding to a solicitation, is not addressed in the FAR
text, which generally focuses on requirements invoked by clauses and
provisions in solicitations. However, DOL's Guidance (Section VI
Preassessment) includes information about the process by which
contractors and subcontractors can consult with DOL and other
enforcement agencies for assistance. Specifically, contractors and
subcontractors are encouraged to receive early guidance on whether
violations are potentially problematic, as well as avail themselves of
the opportunity to remedy any problems. DOL's assessment, even if made
prior to a particular procurement, is available to contracting officers
through ALCAs for consideration during responsibility determination.
b. Public Display of Disclosed Information
Comment: Several respondents provided inputs on the benefits and
drawbacks of public display of disclosed information. Some respondents
recommended that the Government should make the disclosed information
publicly available. One respondent indicated that public availability
would foster increased compliance with labor laws, as well as increase
third-party awareness. On the other hand, some respondents contended
that public disclosure of information provided at the prime or
subcontractor level could harm the contractor's business and
reputation, lead to more protests, and inadvertently expose
confidential, sensitive, and classified information. Respondents stated
that if information must be made publicly available, it should be
limited to final determinations.
Response: At the prime contract level, the final rule requires the
public disclosure of prospective contractors' representation whether
they have labor law decisions concerning violations of covered labor
laws rendered against them within the last three years (phased-in, see
Section III.B. 2.a. above) and, for prospective contractors being
assessed for responsibility, certain basic information about the
violation (i.e., the law violated, docket number, date, name of the
body that made the determination or decision). Disclosure of the
representation and of the basic information about the labor law
decisions will be made publicly available in FAPIIS. The rule does not
provide for public disclosure of remedial and mitigating information
the prospective contractor deems necessary to demonstrate its
responsibility, unless the contractor determines that it wants the
information to be made public. See FAR 22.2004-2(b)(1)(ii) and 52.222-
57(d)(1)(iii). Concerning the decisions themselves, the rule limits
publicly disclosed information to specified data elements in order for
the Government to obtain copies of the decision documents; the rule
does not require disclosure to the public of the decision documents
themselves. These decision documents will be available for ALCAs and
will not reside in SAM or FAPIIS.
Comment: Respondents believed that the Government should provide
for protections to safeguard personal, corporate, and confidential
information; information relating to classified contracts or
subcontracts; personally identifiable and business proprietary
information; and information disclosed by contractors during the
bidding process and during the life of the contract. One respondent in
particular recommended that the FAR Council draft guidelines for
internal handling of contractor-provided information and provide
appropriate protections from disclosure under FOIA.
Response: Executive agencies each have procedures in place for the
handling and safeguarding of sensitive but unclassified information;
additional procedures are not necessary.
All public requests for information will be handled under FAR part
24, Protection of Privacy and Freedom of Information, as usual. The
data elements at FAR 52.222-57 (d)(1)(iii) (e.g., mitigating factors)
will be included in SAM and available to contracting officers and the
registrant, but will not be publicly disclosed in FAPIIS unless the
Contractor determines that it wants this information to be public. The
rule does not alter the current FAR procedures for classified contracts
(see FAR subpart 4.4).
Comment: Respondents believed that the Government should provide a
means for the contractor that provided the information to redact
confidential business information before it appears on SAM or FAPIIS.
Response: The rule does not provide for confidential business
information to be included on SAM or FAPIIS. The basic information
disclosed about the decision (e.g., the labor law violated, the case
number) is not confidential business information and will appear in
FAPIIS. The contractor may redact any mitigating information provided
at the discretion of the contractor into the SAM database or directly
to the contracting officer. The contracting officer may inquire if the
contracting officer needs to know the redacted information.
Comment: One respondent requested that the prime contractor be made
to safeguard the subcontractor's information in the same manner as the
Government is responsible for handling the prime contractor's
information.
Response: The laws that govern the protection of information shared
by the prime contractor with the Government (e.g., FOIA) do not apply
to protection of information shared between contractors, such as a
subcontractor sharing its information with the prime contractor.
However, as a matter of good business practice, many private parties
negotiate protections. This is a matter between the parties.
Comment: Respondents discussed concerns that as a result of the
rule, FOIA-related legal proceedings would increase, which would delay
the procurement process and significantly adversely impact the
efficiency of Government contracting. Reasons cited for the
respondents' concerns included: Increased exposure of contractor-
proprietary or competition-sensitive data, increased FOIA requests, and
``reverse FOIA appeals'' whereby contractors seek to protect
contractor-proprietary or competition-sensitive information. The
respondents cautioned that responding to FOIA requests will require
considerable Government administrative time and personnel to retrieve
relevant information, review and issue decisions, and litigate appeals
at the agency level or in Federal court.
Response: The rule requires limited information about labor law
decisions to be disclosed to the Government by contractors; however,
the general rules for Government disclosure to the public are not
changed as a result of the rule. The Councils acknowledge that handling
FOIA requests can absorb Government time. However, FOIA requests are
handled independently of procurements and do not typically delay
procurements.
c. Violation Documents
Comment: Respondents stated that the proposed rule should require
that more

[[Page 58591]]

than just ``basic information'' about violations be made publicly
available in the FAPIIS database. Respondents advocated for the public
availability of the actual labor law violation documents, contractor-
provided mitigation or remedial information (including settlement
agreements and labor compliance agreements), the ALCA's analysis, and
the contracting officer's resultant determination.
Response: The rule requires offerors to provide basic information
on labor law decisions (such as the law violated, case number, date
rendered, and name of the body that made the determination or
decision). Disclosure of this basic information about the labor law
decisions will be made publicly available in FAPIIS. If a labor
compliance agreement is entered into by a contractor, this information
will be entered by the Government into FAPIIS.
Comment: Respondents identified pros and cons of allowing labor law
violation reporting by third parties, such as employees, their
representatives, fair contracting compliance organizations, labor-
management cooperation committees, community groups, labor
organizations, worker centers, and other worker rights organizations.
Some respondents advocated for allowing reporting of relevant
information by third parties if they have information that contractors
may not have properly disclosed relevant information. A respondent
asserted that worker rights organizations may have experience with
employers' compliance records. This information might include
grievances, compliance with monitoring arrangements, or compliance with
a labor compliance agreement. Some respondents advocated for third-
party access to Government information on contractor responsibility.
Another proposed that ALCAs and contracting officers should
affirmatively reach out to worker organizations.
On the other hand, some respondents were concerned about the
negative implications of third-party reporting. A chief concern was
that a labor union seeking to organize the contractor might have an
incentive to report meritless labor law allegations in order to exert
pressure on contractors. Another concern was that the third parties may
report ``violations'' that are being resolved, are not yet fully
adjudicated, or lack merit altogether.
Response: Paragraph (b) of Section 2 of the E.O. provides that
information may be obtained from other sources during performance of a
contract. Specifically, E.O. Section 2(b)(ii) and (iii) provide that,
during contract performance, contracting officers, in consultation with
ALCAs, shall consider information obtained from contractor disclosures
or relevant information from other sources related to required labor
law violation disclosures.
The Councils have revised the rule at FAR 22.2004-3, Postaward
assessment of a prime contractor's labor law violations, at paragraph
(b)(1), to address ALCA consideration of relevant information from
other sources. The Councils have not expanded access to nonpublic
Government information nor created a requirement for affirmative
outreach to obtain information.
With regard to respondents' concerns about meritless allegations
from third parties, ALCAs will not recommend any action regarding
alleged violations unless a labor law decision, as defined in FAR
22.2002, has been rendered against the contractor.
Comment: In order for the ALCA to have sufficient time to consult
with third-party groups, a respondent recommended that the ALCA be
given more time to conduct his or her assessment of labor law
violations.
Response: The ALCA assesses violation information that is related
to labor law decisions, including information that originates with
third-party groups, in assessing a contractor's record of labor law
compliance. The three business day timeframe in the final rule at FAR
22.2004-2(b)(2) pertains to preaward review of labor law violation
information and was established to minimize negative impacts to
procurement timelines. FAR 22.2004-2(b)(2) also provides that a
contracting officer can determine another time period. The ALCA does
not consult with third-party groups about labor compliance records
related to specific ongoing procurements, due to Procurement Integrity
Act restrictions (see 41 U.S.C. chapter 21). The E.O. also provides for
information from other sources during contract performance. The FAR
implementation of this postaward requirement does not prescribe the
time available for the ALCA's postaward review. Also, in conducting
subsequent assessments, the ALCA will consider such information.
d. Use of DOL Database
Comment: A respondent stated that DOL should use its existing
databases and systems to capture labor law compliance information, in
order to protect contractor business information and minimize the
duplicative cost and process of collecting data from numerous
contractors.
Response: The Councils agree on the importance of leveraging
existing databases and systems where possible. Enforcement agency
databases do not and will not collect labor law violation data on civil
judgments, or on arbitral awards or decisions. Thus, disclosure of
labor law decisions contemplated under the E.O. will necessarily
include some level of disclosure by contractors. At this time, existing
data systems do not include all of the information required by the E.O.
DOL is working to ensure that its databases provide the information
necessary to implement the E.O. regarding administrative merits
determinations.
e. Remedial and Mitigating Information
Comment: Respondents stated that the Government should provide a
safe harbor framework. One respondent recommended that contractors and
higher-tiered subcontractors can safely rely on representations,
information, and documents provided by prospective and actual
subcontractors, without the need to independently verify information.
Another respondent recommended that civil liability protection for
contractors be provided if a subcontractor litigates the responsibility
decision.
Response: The rule provides a safe harbor with respect to reliance
on the FAR 52.222-58 and 52.222-59(c)(3) representations. The
representation is provided to the best of the subcontractor's knowledge
and belief at the time of submission. In support of the subcontractor
responsibility decision and consideration of updates during contract
performance, information and documents may be provided to the
contractor. The contractor may rely on those representations,
information, and documents. The contractor is responsible for reviewing
the information and documents in making reasoned decisions. The final
rule has been revised to state that ``A contractor or subcontractor,
acting in good faith, is not liable for misrepresentations made by its
subcontractors about labor law decisions or about labor compliance
agreements''. FAR 52.222-58(b)(2) and 52.222-59(f).
With respect to indemnification from civil liability, consistent
with current procurement practices the rule does not provide such
protections.
Comment: One respondent recommended that the public Web site where
contractors are required to submit basic information about labor law
violations should be updated to reflect subsequent decisions in the
contractor's favor.
Response: At the FAR 52.222-59 clause, the contractor is required
to update basic information semiannually in SAM. The rule does not
restrict

[[Page 58592]]

contractors from providing updated information more frequently, whether
the update is favorable or unfavorable.
Comment: Respondents approved of the DOL-stated intention to allow
contractors and subcontractors the opportunity to seek the DOL's
guidance on whether any of their violations of labor laws are
potentially problematic, as well as the opportunity to remedy any
problems, and urged DOL to formalize this as a ``preclearance''
process. They suggested that such a process for subcontractors would
greatly benefit the prime contractors by creating a ``safe harbor,''
guaranteeing that any ``precleared'' subcontractors they hire would
have no outstanding unremedied labor law violations. One respondent
encouraged DOL to issue a proposed process for notice and comment on
how this process will work, and how contractors may access it.
Response: The FAR rule only addresses implementation at the
initiation of the procurement process. However, the DOL Guidance (at
Section VI Preassessment) encourages early consultation with DOL, prior
to being considered for a contract or subcontract opportunity, to
address appropriate remediation and obtain DOL guidance and
assessments.
Comment: Respondents recommended that the regulations clarify that
the prime contractor's representation regarding compliance with labor
laws is required after it wins a contract competitively, not in its
initial offer.
Response: Representations are required when offerors submit either
a bid or proposal in response to a solicitation. This practice allows
the contracting officer to consider labor law violation information
when determining contractor responsibility, which is done before award.
No clarification to the FAR text is required.
Comment: A respondent recommended that prime contractors that
disregarded DOL advice should be responsible for the subcontractor
violation as if the prime contractor had committed the violation.
Response: The rule does not change remedies for false information
submitted to the Government. The rule is not intended to remove the
prime contractor's discretion in reviewing responsibility of their
subcontractors, nor to provide a penalty for exercising business
discretion. Prime contractors continue to be responsible for awarding
contracts to subcontractors with a record of satisfactory integrity and
business ethics; they are also responsible for the performance of their
subcontractors once award is made.
5. Labor Law Decision Disclosures as Relates to Subcontractors
Introductory Summary: To minimize burden on, and overall risk to,
prime contractors and to create a manageable and executable process for
both prime contractors and subcontractors, the proposed rule offered
alternative language for subcontractor disclosures and contractor
assessments of labor law violation information. After considering
public comments, the final rule adopts this alternative approach. In
the final rule, at FAR 22.2004-1(b), 22.2004-4, and 52.222-59(c) and
(d), subcontractors disclose details regarding labor law decisions
rendered against them (including mitigating factors and remedial
measures) directly to DOL for review and assessment instead of to the
prime contractor. The next set of comments focuses on the alternative
approach for subcontractor disclosures and contractor assessments.
a. General Comments
Comment: Respondents commented that subcontractor disclosures and
prime contractor assessments of those disclosures would impose costly,
burdensome, and difficult requirements for prime contractors to manage.
Respondents further expressed concern that contractors do not have
sufficient expertise, staff, and time to assess and track subcontractor
labor law violation disclosures and responsibility determinations for
subcontractors and their supply chain. Respondents recommended that DOL
be tasked with evaluating subcontractors' history of violations and
assessing the need for a labor compliance agreement.
Respondents expressed concern that multiple prime contractors may
provide inconsistent assessments of a single subcontractor. Another
expressed concern that the proposed rule did not provide guidance on
the roles and responsibilities of the ALCA, DOL, and the contracting
officer regarding a subcontractor's responsibility determination during
the preaward assessment process.
A respondent expressed concern that contractors may demand
additional remediation measures from subcontractors in order to ensure
they are found responsible by the contracting agency.
Response: As stated in the summary, the Councils have adopted the
alternative approach. The final rule has been revised at FAR 52.222-
59(c) and (d) to incorporate this alternative whereby subcontractors
provide their labor law decision information to DOL.
DOL's review and assessment of subcontractor labor law decision
information (and mitigating factors and remedial measures) will promote
consistent assessments as to whether labor law violations are of a
serious, repeated, willful, and/or pervasive nature, and whether labor
compliance agreements are warranted. It will also limit the likelihood
that different contractors would provide inconsistent assessments on a
single contractor. The alternative process will also minimize the
effort required by prime contractors to obtain additional resources and
expertise to assess and track subcontractor labor law decision
disclosures. ALCAs are not involved in the assessment of subcontractor
labor law violation information. Prime contractors will continue to
make subcontractor responsibility determinations in accordance with FAR
9.104-4(a). In making such responsibility determinations, prime
contractors will consider labor law compliance as an indicator of
integrity and business ethics. Subcontractors will also be afforded an
opportunity to provide information to DOL on mitigating factors and
remedial measures, such as subcontractor actions taken to address the
violations, labor compliance agreements, and other steps taken to
achieve compliance with labor laws.
Comment: A respondent raised concerns that DOL is not required to
provide its assessment of labor law violation information within any
particular time frame. The respondent postulated that, as a result, the
process implemented in the alternative (FAR 52.222-59(c) and (d)) for
subcontractors to disclose directly to DOL may result in weekly or
monthly delays awaiting DOL's assessment. The respondent indicated that
this is not consistent with the time frames for most procurements and
would be disruptive to contractors' ability to depend on subcontractor
availability and to rationally plan their proposals or bids. On the
other hand, the respondent cautioned that permitting prime contractors
to make a separate responsibility determination if DOL has failed to
respond to the subcontractor's submission within three days leaves the
prime contractor at substantial risk if DOL eventually provides an
adverse assessment. The respondent concluded that the alternative
process would be likely to place undue pressure on subcontractors to
come to terms with DOL on labor compliance agreements that, if
negotiated without the immediacy of a pending procurement, would likely
come out very differently.
Response: As stated in the summary, the Councils have adopted the

[[Page 58593]]

alternative approach whereby subcontractors provide their labor law
violation information to DOL. The final rule has been revised at FAR
52.222-59 (c) and (d) to incorporate this alternative. Paragraph (c)(6)
of the clause indicates that the contractor may proceed with making a
responsibility determination using available information and business
judgment, for appropriate circumstances, when DOL does not provide
advice to the subcontractor within three business days.
To maintain the time frames for most procurements, prospective
subcontractors with labor law violations are encouraged to consult
early with DOL, prior to being considered for a subcontract
opportunity, to: Address appropriate remediation, obtain DOL Guidance
and assessment, mitigate the risk of DOL providing an adverse
assessment and reduce delays and disruption of potential subcontract
awards (see DOL Guidance Section VI, Preassessment).
Comment: A respondent recommended the Councils give contractors a
choice about whether to use the language in the proposed rule, or the
alternative approach, for paragraphs (c), Subcontractor responsibility,
and (d), Subcontractor updates, of FAR 52.222-59 in their contracts
with subcontractors.
Response: In consideration of public comments, the Councils have
revised the final rule at FAR 52.222-59(c) and (d) to incorporate the
alternative presented in the proposed rule, whereby subcontractors
provide their labor law decision disclosures to DOL. This approach is
mandatory for contractors. By implementing the procedures in the
alternative language, the final rule will minimize contractor costs and
procedural steps required for compliance. Implementing two processes as
suggested by the respondent, and allowing contractors to choose which
process to utilize, would be administratively unmanageable for
subcontractors and the Government; therefore, the Councils decline to
accept the suggestion.
b. Definition of Covered Subcontractors
Comment: A respondent expressed concern that it was too costly and
burdensome to enforce the requirements of the proposed rule, which
apply to all subcontractors at any tier with subcontracts estimated to
exceed $500,000, except for contracts for COTS items. The respondent
recommended the final rule cover only first tier subcontractors.
However, another respondent recommended that subcontractors at all
tiers, regardless of dollar value, be subject to the proposed rule.
Response: Section 2(a)(iv) of the E.O. applies this requirement to
any subcontract where the estimated value of supplies and services
required exceeds $500,000 except for contracts for COTS items. Limiting
applicability to first tier subcontractors or removing the dollar
threshold alters the E.O. requirements. The final rule, similar to the
proposed rule, implements the E.O. requirements.
Comment: A respondent expressed concern that the proposed rule
would incentivize contractors to refuse to subcontract with companies
with very minor violations, which would disrupt longstanding business
relationships and even drive small and middle-tier subcontractors out
of business.
Response: The E.O. and rule seek to help contractors come into
compliance with labor laws, not to deny contracts or subcontracts.
Companies with labor law violations are encouraged to consult early
with DOL on whether those violations are potentially problematic and
how to remedy any problems. Very minor labor law violations do not meet
the threshold of serious, repeated, willful, and/or pervasive (see DOL
Guidance). The final rule has been revised at FAR 52.222-59(c)(2) to
state that ``Disclosure of labor law decision(s) does not automatically
render the prospective subcontractor offeror nonresponsible. The
Contractor shall consider the prospective subcontractor for award
notwithstanding disclosure of one or more labor law decision(s).''
Comment: Respondents asserted that the rule would encourage
contractors to seek to avoid Buy American restrictions and purchase
from foreign subcontractors who have no employees performing work
within the United States, and therefore have no United States labor law
violations. One respondent stated that the efforts to block
noncompliant U.S. companies from participating in the Federal
contractor process should not be allowed to provide an incentive for
the use of non-U.S. workers, thus violating the goals of the Buy
American requirements.
Response: The Councils acknowledge the concern. However, the
statues and the E.O. are clear. As stated in Sec. 9(b) of the E.O., the
requirement of this E.O. shall be implemented consistent with
applicable law. As such, the implementing FAR rule does not affect the
applicability of existing Buy American Act and trade agreement
requirements with regards to foreign acquisitions and subcontractors,
and does not alleviate contractors' compliance with these laws. For
contracts performed outside the United States, a company that had no
employees in the United States would have employees subject to the laws
of another country, and that country would enforce its own labor laws
on the company, not United States laws. Labor law violations that rise
to the level of Trafficking in Persons would be covered by FAR subpart
22.17.
Comment: A respondent commented that the proposed inclusion of
subcontractor disclosure will require public disclosure of proprietary
information (the identity of subcontractors the contractor would be
using to perform the contract) which is protected from disclosure by
FOIA. On the other hand, another respondent commented that DOL's
assessment of the subcontractor should be transparent, rigorous, and
public.
Response: As stated in the summary, the Councils have adopted the
alternative approach. The final rule has been revised at FAR 52.222-
59(c) and (d) to incorporate the alternative whereby subcontractors
provide their labor law violation information to DOL. The
subcontractor's semiannual updates of this information will also be
provided to DOL and DOL will assess this information in accordance with
the DOL Guidance. The E.O. and rule do not compel public disclosure of
subcontractors' identity, labor law violation information, nor DOL's
assessment of that information.
Comment: A respondent expressed concern that the proposed DOL
Guidance defined a ``covered subcontract'' as ``any contract awarded to
a subcontractor that would be a covered procurement contract except for
contracts for commercially available off-the-shelf items.'' The
respondent stated this definition is overly broad and is inconsistent
with the definition of subcontract in FAR part 44, Subcontracting
Policies and Procedures, which does not exclude COTS items.
Response: The DOL Guidance is not inconsistent with the definitions
of ``subcontract'' and ``subcontractor'' in FAR part 44. Unlike FAR
part 44, the DOL Guidance does not specifically define these terms.
Rather, it defines the term ``covered subcontract''--meaning a
subcontract that is covered by the E.O. It describes how it uses the
term ``subcontractor,'' for ease of reference both to subcontractors to
subcontractors and prospective subcontractors. Neither of these uses of
the terms are inconsistent with FAR part 44. The definition of
``covered subcontract'' in DOL Guidance is consistent with Sec.

[[Page 58594]]

2(a)(iv) of the E.O. which limits applicability to prime contracts and
any subcontracts exceeding $500,000, except for acquisitions for COTS
items. Prime contractors will determine applicability by following the
requirement as it is outlined in FAR 52.222-59(c)(1).
Comment: A respondent recommended requiring contractors to consult
with, and obtain a recommendation from, DOL regarding the review and
assessment of subcontractor disclosed information, rather than letting
the prime decide whether to consult DOL.
Response: As stated in the summary, the Councils adopted the
alternative approach presented in the proposed rule and have revised
the final rule at FAR 52.222-59(c) whereby subcontractors provide their
labor law decision disclosures to DOL. DOL will review and assess the
labor law violations and advise the subcontractor who will make a
representation and statement to the prime contractor pursuant to FAR
52.222-59(c)(4). In the implemented alternative, the prime does not
elect whether the subcontractor discloses to the prime or DOL; instead,
the subcontractor discloses to DOL.
Comment: A respondent recommended ensuring the process for
evaluating labor law violation information of subcontractors be as
transparent and rigorous as it is for primes' labor law violation
information. The respondent recommended requiring DOL to publicize that
it is conducting a review of labor law violation information; requiring
subcontractor disclosed information to be publicly accessible to the
same extent as prime disclosed information; requiring subcontractors to
provide the same information that primes must provide on labor law
violations; providing for 10 business days for DOL to perform an
assessment; and requiring the prime contractor to disclose to the
contracting officer all of the documentation underlying its
responsibility determination of the subcontractor.
Response: The E.O. and the rule compels public disclosure of basic
labor law decision information of the contractor (e.g., the law
violated, case number, date, name of the body that made the decision),
but not the subcontractor. In implementing the E.O., the Councils seek
to balance the importance of transparency with efficiency, recognizing
the potentially sensitive nature of relevant labor law violation
information, and do not agree with expanding on the E.O.'s disclosure
requirements. Therefore, no revision to the rule is made.
c. Authority for Final Determination of Subcontractor Responsibility
Comment: Respondents made comments on who should have the authority
to make final determinations of subcontractor responsibility. Some
respondents recommended the Councils amend the final rule to make
contracting officers responsible for evaluating subcontractor
responsibility in regard to labor law violations. One respondent
recommended that contractors alone should make the final determination
regarding subcontractor responsibility. Another respondent recommended
the Councils amend the final rule to prohibit DOL from giving advice on
subcontractor responsibility because DOL does not have the same amount
of experience and expertise as contracting officers.
Response: The final rule, consistent with the proposed rule, builds
on prime contractors' existing obligation to determine the
responsibility of their subcontractors and does not change who has the
authority to determine subcontractor responsibility in accordance with
FAR 9.104-4(a). DOL will be responsible for analyzing subcontractor
labor law violation information and providing an assessment which
subcontractors can provide to primes for use in determining
subcontractor responsibility, but DOL does not conduct a responsibility
determination.
d. Governmental Planning
Comment: A respondent expressed concerns regarding prime contractor
liability to an actual or prospective subcontractor, for either denying
a subcontract award or discontinuing a subcontract because the prime
found the actual or prospective subcontractor nonresponsible based on
the subcontractor's labor law violations.
Response: Contractors will continue to make subcontractor
responsibility determinations in accordance with FAR 9.104-4(a). The
final rule does not change the legal consequences of a prime
contractor's nonresponsibility determination of its actual or
prospective subcontractors. Likewise, the rule does not alter the
discretion a contractor has in making appropriate decisions regarding
whether to discontinue a subcontract.
Comment: A respondent commented that giving primes a six-month
cycle for review of thousands of subcontractors is not executable on a
timely basis, even if only a small number of subcontractors report
decisions concerning violations of the E.O.'s covered labor laws.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. This change shifts subcontractor disclosure
assessment from the prime contractor to DOL (see FAR 52.222-59(c) on
the procedures). The prime contractor's responsibility is to consider
DOL's analysis and determine whether to take action with their
subcontractor.
Comment: A respondent stated the proposed rule lacks procedures for
subcontractors to challenge prime contractors' responsibility
determinations.
Response: Neither the current FAR nor the rule includes procedures
for subcontractors to challenge prime contractors' responsibility
determinations (see FAR 9.104-4(a)). The prime contractor's
responsibility determination of their prospective subcontractors,
including review of labor law compliance history, remains a matter
between the two parties.
Comment: Respondents remarked that the proposed rule creates the
possibility of conflicting determinations between DOL and the ALCA, as
well as between the contracting officers and various prime contractors,
regarding subcontractors' labor law compliance history.
Response: The DOL Guidance includes a consistent approach for ALCAs
and DOL to use when considering labor law violation information.
However, each responsibility determination, made by a contracting
officer or prime contractor, is independent and fact-specific, and
therefore responsibility determinations may differ.
e. Subcontractor Disclosures (Possession and Retention of Subcontractor
Information)
Comment: Several respondents raised concerns about prime
contractors possessing and retaining subcontractor information. The SBA
Office of Advocacy asked how prime contractors would be required to
handle subcontractors' proprietary information. Other respondents
recommended greater protection for subcontractor's confidential and
proprietary information, including restrictions on handling and
distribution. Some respondents cited increased risks of third-party
liability, breach of contract, bid protests, and other litigation. One
respondent commented that supplying information to the primes would
violate legal privileges.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor

[[Page 58595]]

disclosures. This approach seeks to minimize the need for prime
contractors to retain subcontractor labor law violation information.
Notwithstanding, the rule does not address current practices for primes
and subcontractors regarding the handling and distribution of
subcontractor information including proprietary or confidential
information that subcontractors might provide in support of a
subcontractor responsibility determination. Subcontractors may assert
to their primes what information they consider proprietary or
confidential, by marking it for restrictions on disclosure and use of
data.
Comment: Respondents commented that the rule inappropriately
attempts to shift responsibility for labor law enforcement to prime
contractors.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. Subcontractors provide their labor law
violation information to DOL, not to prime contractors. Prime
contractors will review the subcontractor representation and DOL's
analysis provided by the subcontractor in order to assess integrity and
business ethics and make a responsibility determination. The rule does
not impinge on or shift responsibility for enforcement of labor laws to
prime contractors. Only the enforcement agencies have statutory or
other (e.g., E.O.) prescribed jurisdictional authority to administer
and enforce labor laws. The rule simply provides prime contractors with
relevant information to consider in making appropriate determinations
and subcontract decisions.
Comment: One respondent remarked that large projects would require
a prime to certify compliance of hundreds of subcontractors, and that
would be impractical or impossible.
Response: The rule does not require prime contractors to certify
the compliance of subcontractors with labor laws. Prime contractors may
rely on representations of subcontractors and DOL assessments. With
regard to the respondent's concern over a large number of
subcontractors, DOL will be available to consult with both contractors
and subcontractors, providing early guidance before bidding on a
particular subcontract opportunity, to address appropriate remediation,
and obtain DOL guidance and assessments (See DOL Guidance Section VI
Preassessment).
Comment: One respondent recommended that proposals be required to
include a list of subcontractors who will perform work under the
contract, to bolster effective checks and balances and reduce ``bid
shopping.''
Response: Bid shopping is the practice of a construction contractor
divulging to interested subcontractors the lowest bids the contractor
received from other subcontractors, in order for the contractor to
secure a lower bid. The Councils are aware of this practice but decline
to address it in the rule as the E.O. does not address bid shopping.
However, the Councils note that FAR Case 2014-003, Small Business
Subcontracting Improvements, will go into effect November 1, 2016. It
was published on July 14, 2016 (81 FR 45833). It adds a new requirement
to the content of subcontracting plans at FAR 19.704(a)(12) and 52.219-
9(d)(12), that the offeror will make assurances that the offeror will
make a good faith effort to acquire articles, equipment, supplies,
services, or materials, or obtain the performance of construction work
from the small business concerns that the offeror used in preparing the
bid or proposal, in the same or greater scope, amount, and quality used
in preparing and submitting the bid or proposal; the case also
describes what is meant by ``used in preparing.''
Comment: One respondent recommended establishing a single reporting
portal for all contractors, both prime and subcontractor, through SAM
to aggregate the data and avoid the added expense of creating new
databases and interfaces. The respondent stated that having one portal
for primes and subcontractors makes sense because many subcontractors
sell products to prime or higher tier contractors and also sell
directly to the Government.
Response: The E.O. does not contemplate a single Web site for prime
contractor and subcontractor disclosures. In Section 4, the E.O.
requires establishment of a single database that Federal contractors
could use for all Federal contract reporting requirements related to
it, and that certain information about disclosed labor law decisions
would be included in FAPIIS. The FAR implementation requires that
certain basic labor law decision information that contractors enter
into SAM will be publicly displayed in FAPIIS. There is no requirement
for subcontractor information to be included in SAM or FAPIIS, except
for trafficking in persons violation information which is posted to the
record of the prime contractor (see FAR 9.104-6(b)(5)). If a
subcontractor separately serves as a prime contractor on another
Government contract, at that time they will be required to report their
information in SAM.
f. Potential for Conflicts When Subcontractors Also Perform as Prime
Contractors
Comment: Respondents commented that subcontractors and prime
contractors are often competitors in subsequent procurements. One
concern was that subcontractor disclosures would lead to increased bid
protests because competitors may be a subcontractor on one opportunity
and a prime on a future one. One respondent suggested that the
subcontractors should be required to disclose violations directly to
DOL rather than to prime contractors to address this concern. Another
was concerned that having knowledge of a future competitor's labor law
violation information would provide an unfair competitive advantage.
Response: The Councils appreciate the concerns of the respondents
with respect to the disclosure of information to a potential future
competitor. This concern is mitigated by the adoption in the final rule
of the alternative approach to subcontractor disclosure whereby
subcontractor disclosures are provided to and assessed by DOL instead
of by the prime contractor. In the final rule, only under limited
circumstances would subcontractors disclose information to a prime
contractor (such as when the subcontractor disagrees with DOL advice).
See FAR 52.222-59(c)(4)(ii)(C)(3).
g. Not Workable Approach for Prime Contractors To Assess
Subcontractors' Disclosures
Comment: Respondents discussed the complexities of DOL's Guidance
for assessing an entity's reported labor law violations. Two
respondents specifically asserted that DOL's Guidance for assessing how
an entity's reported labor law violations bear on its integrity and
business ethics is detailed and complicated. One respondent asserted
that DOL's Guidance does not identify how a prime should consider
subcontractor reports and, with a lack of actual standards, one prime
may reach one determination while another reached a different
conclusion by considering the circumstances at a different level of
granularity.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. The final rule is revised at FAR 52.222-
59(c) and (d) to implement the alternative approach in the proposed
rule for contractors determining the

[[Page 58596]]

responsibility of their subcontractors, where the contractor directs
the subcontractor to consult with DOL on its violations and remedial
actions. Under this approach, subcontractors disclose labor law
violation details to DOL instead of to the prime contractor. The DOL
Guidance provides a consistent approach to consideration of the nature
of violations to determine if they are serious, repeated, willful, and/
or pervasive under the E.O. The DOL Guidance offers DOL's availability
to consult with both contractors and subcontractors that have labor law
violations. DOL's assessments of subcontractors, as well as its
availability for consultations, are designed to improve consistency of
assessments.
Comment: Respondents asserted that subcontractor reporting
requirements are unworkable. A respondent specifically claimed that
many subcontractors already agree to report to the prime offenses such
as OSHA citations, but much of the time the subcontractors fail to
actually report. One respondent specifically asserted that because
primes are required to obtain from covered subcontractors, at every
tier, the same information about Federal and State labor law violations
that they must disclose about themselves, the proposed regulation will
put contractors at risk of making good-faith representations regarding
their subcontractors that could, despite the contractors' due
diligence, turn out to be inaccurate or incomplete.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. The E.O. and final rule establish a
requirement for prime contractors to require subcontractors to disclose
to DOL specified labor law decisions. Under the rule, prime contractors
do not make a representation about their subcontractors' disclosures to
the Government. Per FAR 9.104-4(a), prime contractors make a
determination of subcontractor responsibility by virtue of awarding a
subcontract.
Comment: Respondents asserted that reviewing subcontractor labor
law violations and reporting requirements will be burdensome, costly,
and onerous for the Government and primes to administer and creates
unintended consequences for contractor/subcontractor relationships. One
respondent specifically asserted that the reporting requirements would
create a massive amount of reports to contracting officers and other
Government officials charged with evaluating contractor labor law
compliance. Respondents specifically asserted the proposed rule imposes
detailed obligations for reporting on subcontractors at every tier, and
that the Government would need to resolve disagreements between primes
and their subcontractors, which would add another dimension to the
burden placed on the Government's contract professionals.
Response: The E.O. includes disclosure requirements for contractors
and subcontractors, to provide information regarding compliance with
labor laws, and for Government review, assessment, and management of
the information. As described in the Introductory Summary to this
section III.B.5., the final rule implements the alternative approach
for subcontractor disclosures. This will minimize the burden and
address complexities involved with subcontractors reporting to primes.
Neither the E.O. nor the rule provides for the Government to resolve
differences between primes and subcontractors. Prime contractors have
discretion in determining subcontractor responsibility and in deciding
whether actions are needed during subcontract performance.
Comment: One respondent asserted that basic data regarding an
employer's workforce, such as the location where work is performed, the
number of employees working in an establishment or in a job group, how
a workforce is organized, and the like, are often considered
proprietary or confidential by contractors. The respondent stated that
for this reason contractors often object when requests are filed with
agencies under FOIA for these or similar types of information and the
Government has generally respected such objections. This respondent
recommended the FAR Council ensure that contractors are not required to
disclose such information to the public or to their competitors.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. This change shifts subcontractor disclosure
assessment from the prime contractor to DOL (see FAR 52.222-59(c) and
(d)).
Prime contractors and their prospective subcontractors may agree on
their own to impose restrictions on the handling of subcontractor
information, but the rule does not impose any restrictions. The FAR
implementation only compels public disclosure of basic information
regarding the prime contractor's labor law decision(s) specifically
prescribed in the E.O and does not compel public disclosure of
subcontractor information. The rule does not alter or change the
requirements of FOIA.
Comment: Respondents suggested that in certain industries, e.g.,
construction, where a preponderance of work on Federal contracts is
performed by subcontractors, the process in the rule for disclosure and
assessment of subcontractor labor law violations is neither
sufficiently robust nor transparent to achieve the desired objectives
of the E.O.
Response: The E.O., through the requirement to flow down to
subcontractors at all tiers, recognized that subcontractors and the
work performed by subcontractors is significant to Federal procurement.
The requirements of the E.O. are sufficient for all industries,
including those where a preponderance of work is performed by
subcontractors.
Comment: Respondents asserted the proposed model whereby primes
consult with DOL to determine subcontractor or supplier responsibility
creates an enormous risk for primes and is cost prohibitive for all
parties, including many small and nontraditional companies wishing to
act as either prime or subcontractor. A respondent claimed that because
the risks of an adverse responsibility determination are borne by the
prime, the prime would be forced to pursue and compile information and
would need sufficient experience, training, or background to determine
whether violations are serious, repeated, willful and/or pervasive; and
the ability to assess mitigating factors. A respondent contended that
contractors would also need to update that information on a regular
basis in order to effectively manage risk associated with labor law
compliance throughout their supply chain.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. Contractors currently are responsible for
taking necessary steps to subcontract with responsible parties and
perform adequate subcontract management. The E.O. and its
implementation in the final rule make it possible for contractors to
conduct a more thorough review of the subcontractor's responsibility
because they will now have information and analysis they did not
previously have with regard to labor law violations.
While the adoption of the alternative through which subcontractors
disclose violations to DOL will mitigate the degree to which
contractors may need to do assessments, there clearly is a need

[[Page 58597]]

for contractor employees who are responsible for subcontract awards and
management to have sufficient familiarity with the DOL Guidance and
their responsibilities under the rule.
Comment: Respondents supported the E.O. and asserted that there is
no incentive for primes to perform the comprehensive assessment
outlined in E.O. because primes want to hire subcontractors
expeditiously and with as little interference as possible. They
contended that unless a subcontractor runs into problems while working
on the project, there appears to be no penalty for a prime contractor
to deem a putative subcontractor ``responsible'' after performing a
cursory review of its labor law violations.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. The prime contractor's responsibility is to
consider DOL's analysis and determine whether to find a subcontractor
responsible and whether to take any action regarding the subcontractor.
As the final rule minimizes burdens to prime contractors, it should
increase prime contractors' ability to fully comply with the
requirements of the rule.
Comment: A respondent asserted that neither the proposed rule nor
the DOL Guidance establish processes for prime contractors to confirm
subcontractors' compliance with the requirements of the rule.
Response: The representation requirement at FAR 52.222-58(b), which
flows down to subcontractors at all tiers (see FAR 52.222-59(c) and
(g)), will help prime contractors obtain subcontractor compliance.
However, as they do with all subcontract requirements, prime
contractors will establish processes that they deem necessary for them
to validate and maintain subcontractor compliance.
Comment: One respondent asserted that to make compliance efforts
even more difficult, the proposed rule requires prime contractors to
collect labor law compliance information from subcontractors every six
months. This respondent stated that the Government should bear the
burden of collecting the information directly, rather than relying on
prime contractors to perform this function.
Response: The E.O. requires prime contractors to receive updated
subcontractor disclosures so the prime contractors can continue to
consider the information and determine whether action is necessary
during subcontract performance. As described in the Introductory
Summary to this section III.B.5., the final rule implements the
alternative approach for subcontractor disclosures. This alternative
applies to disclosures both before and after subcontract award.
h. Suggestions To Assess Subcontractor Disclosures During Preaward of
the Prime Contractor
Comment: One respondent recommended that DOL and ALCAs assess
disclosures, and contracting officers make responsibility
determinations, for both prime contractors and subcontractors before
awarding the prime contract. The respondent asserted that preaward
(versus postaward) determinations at all subcontractor tiers will
minimize the impact of ineligibility decisions later in the project,
due in part to consistent application of DOL Guidance standards
throughout the tiers, which in turn will reduce project delay, cost
overruns, claims, and disputes.
This respondent also asserted that consolidated agency review of
all covered firms at all contracting tiers at the start of the process
would bring uniform False Claims Act discipline to the certification
process.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. Contractors may encourage potential
subcontractors and those within their supply chain to consult with DOL
in advance of a specific subcontract opportunity, to address labor law
violations. (See DOL Guidance Section VI Preassessment). However, the
Councils decline to accept the suggestion to require that all
subcontract assessments be accomplished during prime contract preaward.
Often circumstances exist whereby contractors identify a need for
subcontracts during contract performance, as opposed to before contract
award. Therefore, the rule provides language to account for these
circumstances in the Compliance with Labor Laws (Executive Order 13673)
clause at FAR 52.222-59(c)(2).
Comment: A respondent recommended that contractors submit all
subcontractor labor law violation information to the contracting
officer, and not just violations relating to a labor compliance
agreement. The respondent further suggested that the contracting
officer should use the information to evaluate the prime contractor's
performance.
Response: A subcontractor's regard for compliance with labor laws
may be an indicator of integrity and business ethics. Subcontractors
are required to submit labor law decision information to DOL;
subcontractor labor law decision information does not automatically go
to the contracting officer. The final rule has been revised to require
contracting officers to consider the extent to which the prime
contractor addressed labor law decisions rendered against its
subcontractors, when preparing past performance evaluations (see FAR
42.1502(j)).
i. Suggestion for the Government To Assess Subcontractor Responsibility
Comment: One respondent recommended creating a preclearance program
to facilitate Government reviews of subcontractor responsibility and to
streamline this process.
Response: Prospective contractors and subcontractors with labor law
violations are encouraged to consult early with DOL, in accordance with
the DOL Guidance (at Section VI, Preassessment) to obtain guidance,
request assessments, and address appropriate remediation. These
opportunities for early engagement are available to prospective
contractors and subcontractors prior to and not tied to any specific
contract or subcontract opportunity. The Councils do not accept the
suggestion for the Government to perform or review subcontractor
responsibility. Contractors are responsible for making subcontractor
responsibility determinations. The Government determines subcontractor
responsibility only in those rare instances when it is critical to the
Government's interest or the particular agency's mission to do so. See
9.104-4(b).
Comment: Respondents advocated that the Government not only assess
a subcontractor's labor law violation history, but also directly
conduct subcontractor responsibility determinations. Respondents noted
that the language at FAR 9.104-4(a) does not require the contractor to
conduct a responsibility determination of its subcontractor and at FAR
9.104-4(b) allows the Government to do so.
Response: Contractors are responsible for making subcontractor
responsibility determinations. The Government determines subcontractor
responsibility only in those rare instances when it is critical to the
Government's interest or the particular agency's mission to do so (see
FAR 9.104-4(b)). In this case, the E.O. does not direct changes to how
subcontractor responsibility will be conducted by the prime contractor,
it simply provides a means by which prime contractors will receive
relevant information to consider. The Councils find the processes
established in this rule enable prime contractors to

[[Page 58598]]

effectively assess subcontractor labor law violation information, in
consultation with DOL.
Comment: A respondent acknowledged DOL's role is to advise and
provide technical assistance on compliance issues, which is consistent
with their enforcement agency role. The respondent recommended that DOL
not make responsibility determinations for subcontractors, as DOL does
not have the same level of experience and expertise in these matters as
ALCAs and contracting officers.
Response: The Councils concur that DOL's knowledge and technical
expertise support its role to provide assistance in analyzing and
assessing labor law compliance. Under the rule, DOL and ALCAs provide
advisory assessments that inform responsibility determinations made by
others. Contracting officers alone make responsibility determinations
on prime contractors; contractors make the responsibility
determinations for subcontractors.
Comment: In cases where DOL has determined that the subcontractor
has not entered into a labor compliance agreement within a reasonable
period or has not complied with the terms of such an agreement, a
respondent recommended that the contractor should provide the
contracting officer with a heightened explanation of the contractor's
need to proceed with an award to the subcontractor and should provide
information demonstrating the additional remedial measures that the
subcontractor took before subcontract award.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. The final rule adopts the alternative
language at FAR 52.222-59(c)(5) and (d)(4), which requires that the
prime contractor provide the contracting officer with the name of the
subcontractor and the basis for the contractor's decision for
proceeding with the subcontract (e.g., relevancy to the requirement,
urgent and compelling circumstances, preventing delays in contract
performance, or when only one supplier is available to meet the
requirement).
Comment: A respondent cited concerns that smaller subcontractors
may seek advice from the contractor's legal counsel regarding the
subcontractor's labor law violation history, creating potential ethical
issues for the contractor's legal counsel, whose legal responsibility
does not extend to the subcontractor.
Response: DOL's Guidance encourages prospective contractors and
subcontractors with labor law violations to consult early with DOL, to
obtain guidance, request assessments, and address appropriate
remediation. As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. The concern that the respondent describes is
not unique to the E.O.; a prime contractor's legal counsel will always
need to consider possible ethical issues when providing advice to a
subcontractor. However, in the application of the E.O., this concern is
addressed, in part, by the Councils' adoption of the alternative
subcontractor disclosure approach in the FAR rule, whereby prime
contractors direct their subcontractors to provide their labor law
violation information to DOL and DOL assesses the violations. In
addition, DOL's Guidance encourages prospective contractors and
subcontractors with labor law violations to consult early with DOL, to
obtain guidance, request assessments, and address appropriate
remediation. DOL's advice may reduce a subcontractor's need to seek
legal advice from outside counsel.
j. Miscellaneous Comments About Subcontractor Disclosures
Comment: One respondent recommended the process of evaluating
subcontractors' labor law compliance history be done by DOL as an
inherently governmental function.
Response: In accordance with FAR 9.104-4(a), contractors make
subcontractor responsibility determinations. Assessment of information
considered in subcontract responsibility is not inherently
governmental. There is no transfer of enforcement of the labor laws as
a result of the rule; the rule provides information regarding
compliance with labor laws to be considered during subcontract
responsibility determinations and during subcontract performance.
Comment: Respondents recommended that prime contractors be required
to consult with DOL if any prospective subcontractor discloses
workplace law violations.
Response: As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. The final rule has been revised at FAR
52.222-59(c) and (d) to incorporate this alternative whereby
subcontractors provide their labor law violation information to DOL.
Based on the subcontractor's submission, DOL provides its assessment to
the subcontractor, who provides this information to the prime.
Consultation with DOL is available to prime contractors, but is not
required.
Comment: Respondents inquired about the DOL consultation timeframe,
and one respondent suggested that DOL have 30 days to assess
subcontractor violations. Respondents suggested DOL should be open to
performing ``preclearance'' assessments before a subcontractor bids on
a subcontract to expedite matters when an actual procurement is
underway.
Response: If a subcontractor requests DOL's assessment to support a
specific subcontracting opportunity and does not receive DOL's response
within 3 business days, and DOL did not previously advise the
subcontractor that it needed to enter into a labor compliance
agreement, the prime contractor may proceed with making a subcontractor
responsibility determination without DOL's input, using available
information and business judgment (see FAR 52.222-59(c)(6)). The rule
does not specify a time limit for DOL to conduct its assessment.
Subcontractors do not need to wait until responding to a specific
opportunity in order to request DOL's review of their labor law
violation history. DOL will be available to consult with contractors
and subcontractors to assist them in fulfilling their obligations under
the E.O. (See DOL Guidance Section VI, Preassessment).
Comment: One respondent commented that 3 business days is not a
reasonable or appropriate amount of time for DOL to make an accurate
and complete determination. The respondent indicated that any period
shorter than 3 business days will not allow the Government to properly
assess contractors with track records of compliance. The respondent
pointed out that the DHS joint rulemaking on the labor certification
process for H-2B temporary workers allows DOL Certifying Officers 7
business days to examine, assess, and respond to an employer's
Application for Temporary Employment Certification.
Response: Allowing more than 3 business days for response from DOL
could, in some circumstances, cause delays to subcontract awards and
delivery of needed goods and services. Most offerors submit offers on
multiple solicitations and DOL will have an opportunity to do a
thorough and complete assessment of a subcontractor's labor law
violations.
Comment: One respondent recommended that a prime contractor be
required to submit to DOL its

[[Page 58599]]

communications with subcontractors with regard to the subcontractor's
reporting requirements and consequences for labor law violations.
Response: The E.O. and rule do not require a prime contractor to
submit to DOL its communications with subcontractors regarding the
subcontractor's reporting requirements and consequences for labor law
violations. As described in the Introductory Summary to this section
III.B.5., the final rule implements the alternative approach for
subcontractor disclosures. Based on the subcontractor's submission, DOL
provides its assessment to the subcontractor, who provides this
information to the prime contractor. This direct communication between
DOL and the prospective subcontractor provides for a dialogue on the
consequences for labor law violations.
Comment: One respondent asked what would happen on an instant
acquisition if DOL provides its advice subsequent to the prime
contractor's responsibility determination and the two are inconsistent.
Response: Under FAR 52.222-59(c)(6), if DOL does not provide its
advice with respect to the subcontractor's labor law decisions within 3
business days, the prime contractor is authorized to proceed with its
determination of subcontractor responsibility. If the advice from DOL
is received prior to subcontract award, the Government would expect the
prime to assess the impact of that information on its subcontract award
decision, consistent with prudent business practice. If the advice from
DOL is received subsequent to subcontract award, the contractor should
consider the information in a manner similar to information received
for semiannual update purposes at FAR 52.222-59(d) and determine if any
action is appropriate or warranted.
Comment: One respondent asked how long each contractor would have
to retain subcontractors' information, and whether a contractor would
be required to disclose information under Federal and State public
information statutes.
Response: The rule does not affect existing records retention or
public disclosure statutes or policies under Federal and State public
information statutes (e.g., FAR subpart 4.7, Contractor records
retention).
Comment: One respondent recommended that prime contractors be
responsible for making contracting officers aware that DOL has
determined that a prospective or existing subcontractor has not entered
into a labor compliance agreement within a reasonable period or is not
meeting the terms of the agreement. The respondent further recommended
that subcontractors be required to disclose DOL's concerns to the prime
contractor and DOL be required to directly inform the prime contractor.
Response: The FAR rule requires the subcontractor to make the prime
contractor aware of DOL assessments and this process preserves the
prime-subcontractor contractual relationship. The requirements in the
revised final rule, appearing in FAR 52.222-59(c)(5) and (d)(4), for
the prime contractor to notify the contracting officer are sufficient.
6. ALCA Role and Assessments
Introductory Summary: The agency labor compliance advisor (ALCA) is
defined at FAR 22.2002 as ``the senior official designated in
accordance with Executive Order 13673. ALCAs are listed at www.dol.gov/fairpayandsafeworkplaces.'' The ALCA is a senior agency official who
serves as the primary official responsible for the agency's
implementation of Executive Order 13673, Fair Pay and Safe Workplaces.
ALCAs will play a key new role in agencies, promoting awareness of and
respect for the importance of labor law compliance through their
interactions with senior agency officials, contracting officers, and
contractors, while also meeting regularly with DOL and ALCAs from other
executive departments and agencies to formulate effective and
consistent practices Governmentwide.
In the procurement process ALCAs will provide support to
contracting officers as technical advisors lending expertise in the
subject area of labor law compliance. ALCAs provide analysis and
advice, including a recommendation, to the contracting officer
regarding disclosed labor law violations (including mitigating factors
and remedial measures) for the consideration of contracting officers
when conducting responsibility determinations and during contract
performance. The ALCA's analysis includes an assessment of whether the
disclosed violations are of a serious, repeated, willful, and/or
pervasive nature; consideration of mitigating factors; and whether the
contractor has taken steps to adequately remedy the violation(s). The
ALCA's advice to the contracting officer may address whether a labor
compliance agreement is warranted given the totality of circumstances,
and the status of prior advice that a labor compliance agreement was
warranted.
ALCA tasks are addressed in FAR 22.2004-1(c), 22.2004-2(b), and
22.2004-3(b).
Nothing in the phase-in relaxes the ongoing and long-standing
requirement for agencies to do business only with contractors who are
responsible sources and abide by the law, including labor laws.
Accordingly, if information about a labor law decision is brought to
the attention of the ALCA indicating that a prospective prime
contractor has been found within the last three years to have labor law
violations that warrant heightened attention in accordance with DOL's
Guidance (i.e., serious, repeated, willful, and/or pervasive
violations), the contracting officer, upon receipt of the information
from the ALCA, shall provide the contractor with an opportunity to
review the information and address any remediation steps it has taken.
Based on this input, which shall be provided to the ALCA, the ALCA may
recommend measures to the contracting officer to further remediate the
matter, including seeking the prospective contractor's commitment to
negotiate a labor compliance agreement or other remedial measures with
the enforcement agency, which the contracting officer must then
consider. If the violations showed a basic disregard for labor law, or
the contractor refused to comply with the recommended remediation
measures, the ALCA's recommendation might advise the contracting
officer that the prospective contractor has an unsatisfactory record of
labor law compliance which may contribute to a contracting officer's
determination of nonresponsibility. For this reason, entities seeking
to do business with the Government are strongly encouraged to work with
DOL in their early engagement preassessment process to obtain
compliance assistance if they identify covered labor law decisions
involving violations that they believe may be serious, repeated,
willful, and/or pervasive. This assistance is available to entities
irrespective of whether they are responding to an active solicitation.
Working with DOL prior to competing for Government work is not required
by this rule, but will allow the entity to focus its attention on
developing the best possible offer when the opportunity arises to
respond to a solicitation.
a. Achieving Consistency in Applying Standards
Comment: Respondents speculated that ALCAs would perform their
duties with unclear standards and ambiguous criteria.
Response: The E.O. expressly requires the creation of processes to
ensure

[[Page 58600]]

Governmentwide consistency in its implementation. The DOL Guidance was
developed to provide specific guidelines for ALCAs, contractors, and
contracting officers. In addition, ALCAs will work closely with DOL
during more complicated assessments. This level of coordination will
ensure that ALCAs receive expert guidance and instruction.
Comment: Respondents expressed concern that ALCAs at different
agencies, when reviewing the same information regarding a contractor's
labor law violations, would come to inconsistent conclusions as to
whether a violation is of a serious, repeated, willful, or pervasive
nature and whether actions, such as termination of a contract, are
warranted. Similarly, respondents expressed concern that contracting
officers across various agencies will make inconsistent decisions
regarding responsibility and appropriate remedies.
Response: The DOL Guidance provides specific guidelines for
weighing and considering violations (see DOL Guidance Section III.B.),
which will foster consistency. Likewise, DOL is available to provide
advice and assistance, and ALCA coordination across agencies will
occur, as appropriate. The final rule, consistent with the proposed
rule, does not require the ALCA to advise the contracting officer
regarding which postaward contractual remedies to take, such as
contract termination. The Government is employing measures to achieve
consistency in ALCA analysis of labor law violation information, but
contracting officer responsibility determinations and postaward
decisions are intended to be arrived at independently. There is no
change to existing requirements for contracting officers to make
independent determinations on contractor responsibility (see FAR
subpart 9.1). The ALCA provides contracting officers with analysis and
advice, in addition to a specific recommendation, which does not
disturb the contracting officer's independent authority in determining
responsibility. Contracting officers consider assessments provided by
ALCAs consistently with advice provided by other subject matter
experts. Contracting officer responsibility determinations and
procurement decisions are made in the context of the specific
requirements of each procurement; lockstep consistency in such
determinations and decisions is not expected, appropriate, or required.
(See also Section III.B.1. above).
b. Public Disclosure of Information
Comment: Respondent requested that ALCAs' annual reports contain,
as separate elements, the number of contractors and subcontractors
reporting labor law violations, the names of contractors entering into
labor compliance agreements, the names of contractors failing to comply
with their labor compliance agreements, and the number of violations
that have been cured as a result of remedial actions.
Response: The FAR implementation does not cover the E.O. Section 3,
Labor Compliance Advisors, in its entirety; the FAR implementation is
limited to ALCA duties necessary for contracting officer execution of
procurement actions. Thus, the FAR does not cover the specifics of the
ALCA's annual report described in E.O. Section 3(h).
Comment: Respondent recommended that the final Guidance and
regulation specify that a public database publish ALCA recommendations
regarding responsibility, contracting officer final responsibility
determinations and any labor compliance agreements referenced as part
of the contracting officer's determination.
Response: The additional information requested by the respondent is
not required by the E.O. In addition, as part of the responsibility
determination, the contracting officer considers the ALCA's assessment
of a contractor's labor compliance history. Per FAR 9.105-3,
information accumulated for purposes of determining the responsibility
of a prospective contractor shall not be released or disclosed outside
the Government (this does not apply to information publicly available
in FAPIIS). The existence of a labor compliance agreement entered into
by the prime contractor will be public information. See FAR 22.2004-
1(c)(6).
c. Sharing Information Between ALCA and Contracting Officer
Comment: A respondent recommended that ALCAs be required to ``pass
on'' to the contracting officer additional information that the
contractor may have submitted demonstrating a commitment to compliance.
Response: The final rule has been revised to require that
information to demonstrate responsibility and commitment to compliance
(including mitigating factors and remedial measures such as contractor
actions taken to address the violations, labor compliance agreements,
and other steps taken to achieve compliance with labor laws) is
provided in SAM (FAR 22.2004-2(b)(1)(ii), 22.2004-3(b)(2)). The ALCA,
in providing analysis and advice to the contracting officer, provides
such supporting information that the ALCA finds to be relevant, which
may include discussion of mitigating factors and remedial measures.
Comment: A respondent noted concerns that Congress may not fund the
President's fiscal year 2016 budget request for an office of labor
compliance within DOL that would be staffed by 15 Federal employees at
a cost of $2.6 million.
Response: DOL and the FAR Council are committed to fulfilling their
duties under the E.O.
d. Respective Roles of Contracting Officers and ALCAs in Making
Responsibility Determinations
Comment: Respondents expressed concern that ALCAs and DOL, rather
than contracting officers, would decide which contractors are deemed
responsible to receive contract awards.
Response: Contracting officers determine the responsibility of
prime contractors. DOL is available to the ALCA for coordination and
assistance, and the ALCA provides analysis and advice for use by the
contracting officer. Neither DOL nor the ALCA make responsibility
determinations. The FAR provides for advisory input by technical
subject matter experts to assist contracting officers. For example, see
FAR 1.602-2(c) which requires contracting officers to request and
consider the advice of specialists in audit, law, engineering,
information security, transportation, and other fields, as appropriate.
Comment: Respondent speculated that contracting officers will
inevitably receive pressure from ALCAs, and that ALCA inputs may drive
contracting decisions.
Response: According to FAR 1.602-1(b), no contract shall be entered
into unless the contracting officer ensures all requirements of law,
executive orders, regulations, and all other applicable procedures have
been met. As advisors to the contracting officer, ALCAs provide an
assessment of labor law violation information, including mitigating
factors and remedial information, for the contracting officer's
consideration during the responsibility determination process. ALCAs,
like other technical expert advisors to the contracting officer, may
provide inputs that are persuasive; however, the ultimate determination
of responsibility is the contracting officer's.
Comment: Respondents recommended that contracting officers be
required to document reasons for not

[[Page 58601]]

complying with ALCA recommendations, and that agencies be required to
track compliance and publicly report the results on a regular basis.
Response: The final rule has been revised at FAR 22.2004-
2(b)(5)(ii) and 22.2004-3(b)(4) to require contracting officers to
place the ALCA's written analysis into the file and explain how it was
considered. Preaward procurement-specific information is protected from
release outside the Government per FAR 9.105-3, as it relates to the
responsibility of a prospective contractor. Separately, the E.O. at
Section 3(h) requires agencies to publicly report agency actions in
response to serious, repeated, willful, and/or pervasive violations,
which agencies will implement in a manner suitable to protecting
procurement-specific information, e.g., on a cumulative basis.
Comment: Respondent suggested that contracting officers not
complying with ALCA recommendations of nonresponsibility be required to
seek and obtain concurrence and approval from the senior agency
procurement official.
Response: ALCAs are advisors to the contracting officer. As part of
the ALCA analysis and advice, ALCAs make a recommendation about whether
the prospective contractor's record supports a finding by the
contracting officer of a satisfactory record of integrity and business
ethics (see FAR 22.2004-2(b)(3)). ALCAs provide analysis and advice on
one aspect of responsibility: Integrity and business ethics regarding
labor law violations. Contracting officers consider the information
provided by advisors such as ALCAs, as well as advice from other
experts. The FAR generally does not require higher-level review and
approval of a contracting officer's responsibility determination.
Comment: Respondents alleged that ALCA determinations violate
contractor due process rights.
Response: According to FAR 1.602-1(b), no contract shall be entered
into unless the contracting officer ensures all requirements of law,
executive orders, regulations, and all other applicable procedures have
been met. ALCAs provide input to be considered during the contracting
officer's responsibility determination process; however, ALCAs are
advisors to contracting officers and do not make responsibility
determinations. The assessments of ALCAs do not violate prospective
contractors' due process rights, because ALCAs are advisors to the
contracting officer in the well-established responsibility
determination process. Neither the E.O. nor the final rule affects
contractors' rights to administrative hearings. (See also Section
III.B.1. above.)
Comment: Respondents alleged that ALCA determinations have the
potential to result in de facto debarments. Specifically, respondents
alleged there is a danger that one ALCA determination and a subsequent
contracting officer decision, finding a contractor nonresponsible,
would be improperly copied across the Government on multiple contract
actions.
Response: ALCAs provide analysis and advice to contracting officers
about one aspect of offeror responsibility; it is the contracting
officer who makes the final responsibility determination. In addition,
as required by FAR 9.105-2(b)(2)(i), contracting officers must publish
in FAPIIS nonresponsibility determinations on acquisitions above the
simplified acquisition threshold. If the contracting officer finds
nonresponsibility determinations previously submitted in FAPIIS under
FAR 9.105-2 because the contractor does not have a satisfactory record
of integrity and business ethics, FAR 9.104-6(c) requires the
contracting officer to notify the agency official responsible for
initiating suspension and debarment action if the information appears
appropriate for consideration. This FAR requirement for suspension and
debarment notification is intended to prevent de facto debarments.
There is no evidence that nonresponsibility determinations have been
improperly ``copied'' across the Government on multiple contract
actions. (See also Section III.B.1. above.)
Comment: Respondents raised concerns that the potential of an ALCA
making a nonresponsibility recommendation would lead to coercive
efforts against potential contractors to enter into labor compliance
agreements.
Response: ALCA assessments are provided to the contracting officer,
who considers a range of information on various aspects of
responsibility. An ALCA's analysis may indicate to the contracting
officer that a labor compliance agreement is warranted. A contracting
officer will notify the contractor that the ALCA has advised that a
labor compliance agreement is warranted. See FAR 22.2004-2(b)(7) and
22.2004-3(b)(4)(i)(B)(1). There is no evidence to suggest that ALCAs or
contracting officers would act inappropriately in executing their
respective duties and responsibilities.
Comment: Respondent recommended procuring agencies engage in a
dialogue between offerors and ALCAs prior to award, suggesting that a
great deal of transparency between the Government and individual
contractors is necessary.
Response: The rule provides for exchange of information in FAR
22.2004-2(b)(1)(ii) and 52.222-57(d)(1)(iii), where each prospective
contractor has an opportunity to provide additional information to the
contracting officer it deems necessary to demonstrate its
responsibility, e.g., mitigating factors, remedial measures, etc. The
ALCAs are advisors to contracting officers, and as such, ALCA dialogue
with potential offerors is not available to the public. Additionally,
the DOL Guidance provides transparency in the form of early engagement
preassessment opportunities for prospective contractors.
Comment: Respondents were concerned that the role of the ALCA is
not consistent with, or usurps, the duties of contracting officers and
debarring officials.
Response: ALCAs are advisors to contracting officers in the field
of labor law; their provision of analysis and advice is consistent with
the advisory role of other specialists consulted by contracting
officers (FAR 1.602-2(c)), and with the role of the contracting officer
in making final decisions in contracting matters. In addition, the ALCA
functions and duties are separate and distinct from the suspension and
debarment process.
e. Number of Appointed ALCAs, ALCA Expertise, and ALCA Advice/Analysis
Turn-Around Time Insufficient
Comment: Respondents raised concern over the language at Section 3
of the E.O., which reads in part ``[e]ach agency shall designate a
senior agency official to be an [ALCA].'' Respondents were concerned
that each agency would have only one ALCA available to assist
contracting officers in analyzing and responding to labor law
violations, and as a result, ALCAs at certain agencies with a high
volume of contract work would cause delays in the procurement process.
Response: The E.O. requires each agency to designate a senior
agency official to serve as the agency's labor compliance advisor, and
it would be beyond the authority of this rule to require agencies to
appoint more than one ALCA. However, agencies have discretion to
develop an appropriate support structure to allow for successful
implementation of the ALCA's responsibilities. For example, an agency
has one General Counsel, one Chief Financial Officer, one Chief
Acquisition Officer, and one Chief Information Officer, but each has
support staff. In

[[Page 58602]]

response to the concern about delays in the procurement process, if an
ALCA does not reply in a timely manner, the contracting officer has the
discretion to make a responsibility determination using available
information and business judgment (see FAR 22.2004-2(b)(5)(iii)).
Comment: Respondents, including the SBA Office of Advocacy, raised
concerns that three business days were insufficient time for an ALCA to
provide written advice and recommendations to contracting officers
during the preaward assessment of an offeror's labor law violations.
Response: As stated at FAR 22.2004-2(b)(2)(i), contracting officers
shall request that ALCAs provide written analysis and advice ``within
three business days of the request, or another time period determined
by the contracting officer.'' The time period for an ALCA to provide
written advice to a contracting officer is adjustable according to
contracting officer requirements; however, the standard timeframe is
three business days. If an ALCA response is not timely, the contracting
officer has the discretion to make a responsibility determination using
available information and business judgment (see FAR 22.2004-
2(b)(5)(iii)). Additionally, contractors and subcontractors are
encouraged to avail themselves of the preassessment process to consult
with DOL in advance of a particular procurement opportunity, which will
facilitate processes during procurements (see DOL Guidance Section VI
Preassessment).
Comment: Respondents raised concerns about the lack of guidance
regarding training, knowledge and expertise required for an individual
to be qualified for appointment as an ALCA. Respondents recommended
that ALCAs have training in labor law and the role of labor
organizations in order to assist them in understanding and evaluating
the various labor laws identified in FAR 22.2002 of the rule.
Response: The Government has issued internal guidance to agencies
identifying ALCA's appropriate qualifications and expertise. See OMB
Memorandum M-15-08, March 6, 2015, Implementation of the President's
Executive Order on Fair Pay and Safe Workplaces. Agencies will consider
the knowledge, training, and expertise of individuals they appoint to
fulfill ALCA duties as they do for all other positions, as well as
relevant factors, including an individual's demonstrated knowledge and
expertise in Federal labor laws and regulations enumerated in the E.O.
Agencies are responsible for ensuring that ALCAs have sufficient
training to perform their duties. In addition, the Government plans to
develop internal policies and operating procedures for ALCAs.
7. Labor Compliance Agreements
Introductory Summary: Discussion of labor compliance agreements in
the DOL and FAR Preambles and coverage in the final DOL Guidance and
FAR rule have been reviewed for consistency. Discussion of public
comments and responses submitted on the topic of labor compliance
agreements is found in the DOL Preamble Section by Section Analysis at
Section III. Preaward assessment and advice, C. Advice regarding a
contractor's record of Labor Law compliance; coverage of labor
compliance agreements in the DOL Guidance is also in Section III.
Preaward assessment and advice, C. Advice regarding a contractor's
record of Labor Law compliance.
Labor compliance agreements are defined at FAR 22.2002 as ``an
agreement entered into between a contractor or subcontractor and an
enforcement agency to address appropriate remedial measures, compliance
assistance, steps to resolve issues to increase compliance with the
labor laws, or other related matters.'' The ALCA reviews disclosed
labor law violation information (including mitigating factors and
remedial measures) and, using DOL Guidance, provides analysis and
advice for the contracting officer to consider when assessing the
prospective contractor's present responsibility (FAR 22.2004-2(b)(3)
and (4)) and when determining if remedial action is required during
contract performance (FAR 22.2004-3(b)(3)). If an ALCA includes in its
analysis a notification to the contracting officer that a labor
compliance agreement is warranted, the contracting officer will provide
written notice to the prospective contractor. For preaward assessments,
the contracting officer's notice will state that the ALCA has
determined a labor compliance agreement is warranted, identify the name
of the enforcement agency, and either require the labor compliance
agreement to be entered into before award, or require the prospective
contractor to provide a written response to the contracting officer
regarding the prospective contractor's intent (see FAR 22.2004-
2(b)(7)). For postaward assessments, the contracting officer will
follow similar procedures in issuing a written notification that a
labor compliance agreement is necessary (see FAR 22.2004-3(b)(4).
The Government's objective is to maximize efficiency by negotiating
a single labor compliance agreement whenever possible. Occasionally, a
single labor compliance agreement may not be feasible. The Government
anticipates having a single point of contact within each enforcement
agency for coordinating labor compliance agreements involving more than
one enforcement agency.
a. Requirements for Labor Compliance Agreements
Comment: Respondents expressed differing views on whether a labor
compliance agreement should be required as a prerequisite for a
contract award and to continue contract performance. One view was that
a labor compliance agreement is unnecessary because it is not clearly
linked to a specific labor problem. Another requested the rule require
all contractors and subcontractors who violate labor laws during their
contract performance period to enter into a labor compliance agreement.
Several respondents proposed that labor compliance agreements be
incorporated into contracts as mandatory contract clauses.
Response: A labor compliance agreement is not necessarily a
prerequisite for a responsibility determination, award, or continued
performance at either the contract or subcontract level. An assessment
providing that a labor compliance agreement is warranted for a
prospective contractor is but one data point that a contracting officer
will consider in determining responsibility and may or may not have
bearing on an award decision. Contracting officers have discretion and
may find responsibility or nonresponsibility in the absence of a labor
compliance agreement as each responsibility determination is fact
specific. An ALCA assessment providing that a labor compliance
agreement is warranted for a performing contractor will result in the
contracting officer taking appropriate action, which will include
providing written notification to the contractor that a labor
compliance agreement is necessary or exercising a contract remedy (see
FAR 22.2004-3(b)(4)).
Comment: Respondents requested that the rule explicitly state when
a labor compliance agreement will be required.
Response: When labor law violations are of a serious, repeated,
willful, and/or pervasive nature, the ALCA may recommend to the
contracting officer that a labor compliance agreement is warranted,
after taking a holistic view of the totality of circumstances including
consideration of mitigating factors and remedial measures. The
contracting officer will notify the offeror in writing

[[Page 58603]]

if negotiation of a labor compliance agreement is warranted.
b. Negotiating Labor Compliance Agreements
Comment: Respondent opposed the negotiation of labor compliance
agreements with multiple labor and employment agencies across the
Government, due to the expected inefficiency of having several parties
involved in the negotiation process.
Response: As stated in the introduction to this section, the
Government's goal is maximizing efficiency and negotiating a single
labor compliance agreement where feasible.
Comment: Respondent expressed concern that there was no assurance
of fairness in the labor compliance agreement process because the
proposed rule and Guidance fail to include any recourse for a
contractor to challenge the fairness of the labor compliance agreement
negotiation process.
Response: The FAR rule provides opportunities both preaward and
postaward for contractors to provide relevant information to the
contracting officer. Such relevant information could include
information on difficulties in negotiating with enforcement agencies.
Similar opportunities are provided for subcontractors to provide
information to DOL. Labor compliance agreements, however, are
negotiated with enforcement agencies, not procurement agencies, and
therefore specific processes for entering into labor compliance
agreements are not covered in the FAR rule.
Comment: A respondent objected to the expectation in the proposed
rule and DOL Guidance that contractors would execute labor compliance
agreements to demonstrate efforts to mitigate labor law violations.
Response: The objective of the E.O. is to enhance economy and
efficiency by improving compliance with labor laws. There are many
methods and mechanisms available to contractors to improve their
compliance with labor laws. Labor compliance agreements are one such
mechanism that is made available for those contractors whose labor law
violation information (including mitigating factors and remedial
information) is such that a contracting officer may find them
nonresponsible absent some affirmative action to address concerns
identified by the ALCA analysis. If other remedial measures have been
employed such that, when considering the totality of the circumstances,
the ALCA does not find further actions are warranted, the analysis and
advice to the contracting officer will reflect this.
c. Settlement Agreements and Administrative Agreements
Comment: Respondent expressed concern that labor compliance
agreements are ill-defined in the regulation and seem to be viewed by
the Government as a cure-all for all alleged labor law violations.
Response: Labor compliance agreements are one way a contractor can
demonstrate that it has taken steps to resolve issues to increase
compliance with the labor laws. Neither the rule nor the DOL Guidance
anticipates that labor compliance agreements will be seen as a cure-all
or warranted in every situation. As delineated in the DOL Guidance,
labor compliance agreements will be considered in circumstances where
labor law violations are classified as serious, repeated, willful, and/
or pervasive and have not been outweighed by mitigating factors.
Comment: A respondent expressed concern that labor compliance
agreements will duplicate settlement agreements to resolve labor
litigation or administrative agreements executed to resolve suspension
and debarment matters.
Response: Labor compliance agreements, settlement agreements, and
administrative agreements have similar objectives in addressing labor
law violations and remedial actions; however, they differ in their
specific purposes. Remediation efforts for individual cases, such as
settlement agreements, are entered into to address specific violations.
Administrative agreements, although they may address broader concerns,
resolve issues concerning present responsibility during suspension and
debarment proceedings. The objective is that labor compliance
agreements will not duplicate or conflict with existing settlement
agreements or administrative agreements. In determining whether a labor
compliance agreement is necessary, the ALCA will consider information
about mitigating factors provided by the contractor. If the contractor
provides information about preexisting settlement or administrative
agreements in the mitigating information, the ALCA will necessarily
consider them. After conducting a holistic review of the totality of
relevant information, the ALCA will advise that a labor compliance
agreement may be warranted notwithstanding any prior agreements. DOL
similarly will take a holistic view of the totality of relevant
information when considering whether a labor compliance agreement is
warranted in the case of a subcontractor. (See also Section III.B.1.d.
above.)
d. Third Party Input
Comment: Respondents requested the regulation create a process for
third parties such as unions, worker centers, advocates and
subcontractors to have input in the following areas regarding labor
compliance agreements:
Reporting labor law violations to the contracting officer,
Providing input into the terms of labor compliance
agreements, and
Providing information on contractor compliance with labor
compliance agreements.
Response: Under current procurement practices, interested third
parties may report relevant information, including labor law
violations, to the contracting officer and to the appropriate
enforcement agency. Consistent with these current practices, third
parties may provide relevant information regarding compliance or
noncompliance with labor compliance agreements to the contracting
officer, ALCA, and to the appropriate enforcement agency. Enforcement
agencies will follow internal policies and procedures as they negotiate
and enter into labor compliance agreements with contractors. However,
to increase awareness that current practices will apply to issues of
labor law compliance, the final rule has been revised at FAR 22.2004-
3(b)(1) to indicate that at the postaward stage ALCAs will consider
labor law decision information received from sources other than SAM or
FAPIIS.
e. Consideration of Labor Compliance Agreements in Past Performance
Evaluations
Comment: Respondents requested that the rule clarify that when a
contractor violated a labor compliance agreement or refused to enter
into one, the contracting officer should document this in a past
performance evaluation. Another respondent opposed doing so as being
excessive since the contracting officer has existing tools available to
address noncompliance with a labor compliance agreement.
Response: Although the Councils did not adopt the alternative
supplemental FAR language (22.2004-5 Consideration of Compliance with
Labor Laws in Evaluation of Contractor Performance) presented for
consideration in the proposed rule preamble, the Councils sought to
achieve a balance between providing reasonable opportunities for
contractors to initiate and implement remedial measures and taking
appropriate action when remediation is not adequate or timely. In order
that compliance with labor laws is considered during source selection

[[Page 58604]]

when past performance is an evaluation factor, the final rule has been
revised to include language at FAR 42.1502(j) requiring that past
performance evaluations shall include an assessment of contractor's
labor violation information when the contract includes the clause at
52.222-59. FAR 22.2004-1(c)(2) describes the ALCA's role in providing
input to the individual responsible for preparing and documenting past
performance in Contractor Performance Assessment Reporting System.
f. Public Disclosure of Labor Compliance Agreements and Relevant Labor
Law Violation Information
Comment: Respondents made recommendations for public disclosure of
certain information and suggested the establishment of a user-friendly
public database for implementation of Section 2 of the E.O. The types
of information suggested included:
All workplace law violations;
Labor compliance agreements;
Mitigating factors and remedial measures;
DOL and ALCA recommendations, including their underlying
reasoning; and,
Lists of companies undergoing labor law violation
assessments and those not meeting the terms of their labor compliance
agreements.
Response: The E.O. did not prescribe that the specific information
respondents identified be made public or included in a public database.
However, the final rule provides language at FAR 22.2004-2 and 22.2004-
3 for public disclosure of certain relevant labor law decision
information.
Under FAR 22.2004-2(b), 52.212-3(s) and 52.222-57, prospective
contractors are required to represent whether the prospective
contractor has labor law decisions rendered during the disclosure
period. This representation will be public information in FAPIIS. See
FAR 52.212-3(s)(5) and 52.222-57(f).
If the contracting officer initiates a responsibility
determination, the prospective contractor discloses in SAM certain
information for each labor law decision. This information will be
publicly available in FAPIIS. See FAR 52.212-3(s)(3) and 52.222-57(d).
Also in SAM, contractors will provide additional information they deem
necessary to demonstrate responsibility, including mitigating factors
and remedial measures, which may include labor compliance agreements.
This information will not be made public unless the contractor
determines that it wants this information to be made public. See FAR
52.212-3(s)(3) and 52.222-57(d). A similar process is outlined in FAR
22.2004-3 and 52.222-59 for postaward updates of labor law decision
information, if there are new labor law decisions or updates to
previously disclosed labor law decisions. The existence of a labor
compliance agreement will be public in FAPIIS. See FAR 22.2004-
1(c)(c)(6). These processes are designed to strike a balance between
ensuring the Government has access to the information necessary to make
an informed analysis of a contractor's labor law violation information
and informed procurement decisions and recognizing the potentially
sensitive nature of relevant labor law violation information.
Comment: One respondent recommended that DOL should regularly
publish lists of companies undergoing responsibility investigations, as
well as the names of contractors that have not entered into a labor
compliance agreement in a timely manner or are not meeting the terms of
an existing agreement.
Response: The E.O. does not direct DOL to publicly publish
information suggested by the respondent; however, such information will
be available to ALCAs in performing their assessments of offerors and
contractors. While recognizing the value of transparency, the Councils
have concluded that it is also appropriate to protect sensitive
information and have limited the public exposure of information.
g. Labor Compliance Agreement--Suggested Improvements, Including
Protections Against Retaliation
Comment: Many respondents offered suggestions to improve the labor
compliance agreement process, including:
A labor compliance agreement should contain provisions
protecting employees against retaliation when they lodge complaints
under a labor compliance agreement.
Contractor employees should participate in developing a
labor compliance agreement and process.
Labor compliance agreement enforcement should be
centralized in DOL, and any labor compliance agreement should be
entered into between the DOL and/or Occupational Safety and Health
Review Commission and the contractor.
A labor compliance agreement should not modify or supplant
the terms of existing remediation agreements.
Specific guidance should exist on what should be included
in a labor compliance agreement, to include a list of specific
elements.
Additional guidance should be provided to ensure future
compliance with workplace laws, including plans for enhanced reporting,
notice, and protection for workers to safeguard against future
violations.
Response: E.O. 13673 does not provide for protection, beyond the
existing anti-retaliation protection included in statutes such as Title
VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act, and the statutes regarding whistleblower protections for
contractor employees (see FAR subpart 3.9). Therefore, the rule does
not create additional protections. Complaints related to labor
compliance agreements will be addressed in accordance with the policies
and procedures of the relevant enforcement agency. The enforcement
agencies, which will be party to the labor compliance agreements, will
negotiate the terms of each labor compliance agreement on a case-by-
case basis, taking into consideration the totality of the
circumstances.
A labor compliance agreement is negotiated between
contractors and enforcement agencies, and E.O. 13673 does not provide
for input from third parties into their negotiation.
As stated in the introduction to this section, the
Government's goal is to negotiate a single labor compliance agreement
where feasible and to appoint a single contact within each enforcement
agency for coordination. Each enforcement agency has a unique
jurisdiction, and E.O. 13673 does not alter these jurisdictions or
shift jurisdictional authority to DOL for labor compliance agreements.
When an enforcement agency negotiates a labor compliance
agreement with a contractor, it will have access to existing
remediation agreements. The Government does not anticipate duplicate or
conflicting terms among agreements. (Also see Section III.B.1.d.
above.)
Enforcement agencies enter into labor compliance
agreements with the contractor; therefore, it is not appropriate to
prescribe the content of such agreements in the FAR. Enforcement
agencies will determine the agreement contents on a case-by-case basis,
taking into consideration the totality of the circumstances.
The FAR rule implements the E.O. by ensuring that the
specific requirements of the E.O. that apply to procurement actions
have been implemented in the final rule. These requirements will serve
to improve future compliance. For example,

[[Page 58605]]

contracting officers will give contractors the opportunity to disclose
``mitigating factors and remedial measures such as Offeror actions
taken to address the violations, labor compliance agreements, and other
steps taken to achieve compliance with labor laws'' (FAR 52.222-
57(d)(1)(iii)). Another example is that ALCAs advise contracting
officers at FAR 22.2004-2(b)(3) on whether the contractor's record of
labor law compliance warrants a labor compliance agreement. By
definition, a labor compliance agreement is designed to increase
compliance with labor laws (see FAR 22.2002).
Also, as discussed in its Preamble, through its work with
enforcement agencies, DOL will provide assistance in analyzing whether
remediation efforts are sufficient to bring contractors into compliance
with labor laws and whether implemented programs or processes will
improve future compliance.
h. Weight Given to Labor Compliance Agreements in Responsibility
Determinations
Comment: A respondent proposed that a contractor's refusal to enter
into a labor compliance agreement, or its failure to comply with a
labor compliance agreement, be deemed an aggravating factor in a
contracting officer's responsibility determination.
Response: Efforts to negotiate and enter into a labor compliance
agreement, and adherence to a labor compliance agreement, are addressed
in ALCA assessments and are likewise considered in a contracting
officer's review of a contractor's record of integrity and business
ethics, as part of the responsibility determination. Responsibility
determinations are fact specific, and contracting officers, after
reviewing and considering the totality of relevant information to the
particular procurement, exercise discretion in determining present
responsibility (see FAR subpart 9.1). This is a longstanding tenet of
procurement practice in the FAR.
i. Concern Regarding Improper Discussions
Comment: A respondent expressed concern that discussions with a
contracting officer regarding a labor compliance agreement could
constitute improper interaction with offerors and violate the rules in
FAR part 15 on holding discussions. The active solicitation and receipt
of information and the follow-up discussions regarding the remediation
of violations and the terms upon which a contractor will be deemed
presently responsible pose significant risks of exceeding the
prescribed review of a contractor's record to determine present
responsibility for a particular procurement and may also exceed the
limited clarification of offers permitted prior to establishment of a
competitive range. Only once a competitive range is established can the
Government engage in discussions with offerors.
Response: The rule makes it clear at FAR 22.2004-2 that when a
contracting officer receives information about an offeror's labor law
violations, and the remediation of those violations, this is done to
determine ``whether a prospective contractor is a responsible source
that has a satisfactory record of integrity and business ethics.'' This
is typically done just prior to an award decision, which is after, not
during, a contracting officer's evaluation of offers. This does not
disturb the competition for a contract. Information needed to make a
responsibility determination may be obtained by the contracting officer
in accordance with FAR 9.105-1. Discussions under FAR part 15 are
distinct from communications with offerors pursuant to responsibility
determinations.
The contractor is encouraged to work with DOL on improving the
contractor's labor law compliance. This can be before the contractor
makes an offer on a solicitation.
j. Process for Enforcement of Labor Compliance Agreements
Comment: A respondent recommended that guidance be provided for
penalties to be administered when a labor compliance agreement is
violated.
Response: The FAR rule at 22.2004-3(b) provides for the ALCA
assessment to address whether the contractor is meeting the terms of a
labor compliance agreement. This information is provided to the
contracting officer for consideration in making procurement-related
decisions, including where the contractor should be referred to the
agency suspending and debarring official (see the third example in
22.2004-2(b)(3)(vi)). Procurement agencies are not parties to labor
compliance agreements and therefore do not enforce their terms.
k. Pressure or Leverage To Negotiate a Labor Compliance Agreement
Comment: Respondents raised concerns that: The Government will use
a labor compliance agreement to improperly expand its remedial
authority beyond those statutorily authorized by Congress, contracting
officers and ALCAs do not have enforcement authority, and a labor
compliance agreement will become an extra-legal mechanism for exacting
remedies from contractors that could not otherwise be imposed.
Response: The E.O. does not disrupt or alter existing remedies
provided under any of the 14 covered labor laws. Instead, the E.O. and
FAR implementation give prospective contractors an additional means,
labor compliance agreements, to demonstrate remediation of labor law
violations and efforts to prevent future labor law violations. Labor
compliance agreements are entered into with enforcement agencies that
have jurisdictional authority for the particular labor law(s) violated
and so no expansion or extra-legal authority will be undertaken. (See
also Section III.B.1. above.)
l. False or Without Merit Allegations/Citations
Comment: Respondents expressed concern that the rule forces
contractors into entering into a labor compliance agreement regardless
of the merits of the allegations, because the definition of an
administrative merits determination presumes all accusations equate to
violations. Respondents also raised a concern that third parties could
force a contractor into a labor compliance agreement by creating
unfounded complaints to undermine the responsibility determination
process.
Response: An accusation or claim by a party does not meet the
definition of a labor law decision. A labor law decision is not an
allegation; instead, only civil judgments, arbitral awards or
decisions, and administrative merits determinations are labor law
decisions. The terms are discussed in detail in Section II.B. of the
DOL Guidance.
m. Interference With Due Process
Comment: Respondents expressed concern that the proposed rule
provides virtually no due process protections, stating that every labor
law identified in the E.O. has its own enforcement regime. Each
provides for varying levels of due process for contractors before they
can be forced to pay a fine, or comply with long term injunctive
relief.
Response: The final rule, consistent with the proposed rule, does
not eliminate any due process protections afforded to parties under the
14 covered labor laws. As explained in discussion of the legal issues
in the above section III.B.1. and in the DOL Preamble, Section V.,
Discussion of general comments, paragraph D.3., neither the E.O., FAR
rule, nor the DOL Guidance

[[Page 58606]]

diminishes existing procedural safeguards already afforded to
prospective contractors during the preaward responsibility
determination or to contractors after they have been awarded a
contract. Moreover, the E.O. does not violate due process because
contractors receive notice that the responsibility determination is
being made and are offered a predecisional opportunity to be heard by
submission of any relevant information--including mitigating factors
related to any labor law decision. Nothing in the E.O. diminishes
contractors' postdecisional opportunity to be heard through existing
administrative processes and the Federal courts. Likewise, the E.O.
does not diminish or interfere with due process procedures available
with the enforcement agencies that have jurisdictional authority for
each of the 14 listed labor laws.
8. Paycheck Transparency
Introductory Summary: Section 5 of the E.O. requires contractors to
provide wage statements to individuals working for them, overtime
exemption notices to employees exempt from the overtime compensation
requirements of the Fair Labor Standards Act (FLSA) for whom the
contractor does not want to include hours-worked information on those
employees' wage statements, and documentation to individual workers
treated as independent contractors notifying them of their status as
independent contractors. Section 5 of the E.O. is implemented by FAR
22.2005 and clause 52.222-60 Paycheck Transparency (Executive Order
13673).
The purpose is to increase transparency in compensation information
and employment status, which will enhance workers' awareness of their
rights, promote greater employer compliance with labor laws, and
thereby increase economy and efficiency in Government contracting.
Section 5 of the E.O. requires contractors to provide, on contracts
that exceed $500,000, a wage statement document (e.g., a pay stub) in
every pay period to all individuals performing work under the contract,
for whom contractors are required to maintain wage records under the
FLSA, the Wage Rate Requirements (Construction) statute (also known as
the Davis-Bacon Act or DBA, see FAR 1.110), or the Service Contract
Labor Standards statute (also known as the Service Contract Act or
SCA). The content of the wage statement is covered at FAR 52.222-60 and
must include the total hours worked in the pay period, the number of
those hours that were overtime hours, the rate of pay, the gross pay,
and itemized additions made to or deductions taken from gross pay.
However, for employees who are exempt from the overtime compensation
requirements of the FLSA, contractors do not need to provide
information in that employee's wage statement about hours worked, if
the contractor has provided written notice of the employee's overtime
exemption status.
The E.O. requires that the wage statement also be provided to
individuals performing work under the contract for whom contractors are
required to maintain wage records under State laws equivalent to the
FLSA, DBA, or SCA. Section 2(a)(i)(O) of the E.O. requires DOL to
identify those equivalent State laws.
DOL plans to identify these State laws in a second Guidance to be
published in the Federal Register at a later date (see Section III.B.12
below).
The E.O. also requires contractors to provide a document to all
individuals performing work under the contract as independent
contractors informing them of that status. The clause at FAR 52.222-60
requires that the document must be provided anew for each Government
contract, at the time the independent contractor relationship with the
individual is established, or prior to the time the individual begins
to perform work on the Government contract.
The E.O. also states the E.O.'s wage statement requirement is
``deemed to be fulfilled if the contractor is complying with State or
local requirements that the Secretary of Labor has determined are
substantially similar to those required by this subsection.'' The DOL
determination of Substantially Similar Wage Payment States may be found
at www.dol.gov/fairpayandsafeworkplaces. Where a significant portion of
the workforce is not fluent in English, the clause requires a
contractor to provide its required notices in English and the language
with which the significant portion of the workforce is fluent. The
clause allows notices to be provided to workers electronically under
certain circumstances.
The clause flows down to subcontractors with subcontracts over
$500,000, other than subcontracts which are for COTS items.
Department of Labor Guidance--Section VII of the DOL Guidance
addresses paycheck transparency. The DOL Guidance assists agencies in
interpreting the paycheck transparency provisions of the E.O. and the
FAR rule. Like the FAR Council, DOL also received public comments
regarding these provisions. DOL analyzed public comments, and made
recommendations which the FAR Council is adopting in the final rule
version of the clause. The DOL analysis is summarized here. For more
detail on the reconciliation of the comments see the DOL Preamble
published today accompanying the DOL Guidance.
a. Wage Statement Provision
DOL and the FAR Council received many comments regarding the
different aspects of the proposed wage statement requirements. Employee
advocates generally supported the Order's wage statement provisions.
Employer organizations, on the other hand, commented that the wage
statement provisions are overly burdensome and in addition made several
specific suggestions and objections.
In order to implement the purposes of the Order's wage-statement
requirement, the final FAR rule has interpreted the term ``pay'' to
mean both gross pay and rate of pay. See FAR 52.222-60(b). The final
rule has clarified that any additions made to or deductions taken from
gross pay must be itemized or identified in the wage statement. See FAR
52.222-60(b). The FAR final rule, therefore, provides that wage
statements required under the E.O. must contain the following
information: (1) Hours worked, (2) overtime hours, (3) rate of pay, (4)
gross pay, and (5) an itemization of each addition to or deduction from
gross pay. Nothing prohibits the contractor from including more
information in the wage statement (e.g., exempt-status notification,
overtime pay rate).
i. Rate of Pay
Comment: Several respondents suggested that contractors should be
required to include in the wage statement: (a) The worker's rate of
pay, (b) hours and earnings at the basic rate, and (c) hours and
earnings at the overtime rate. In their view, these would allow ``a
worker to fully understand the basis for his or her net pay.'' They
argued that the term ``pay'' in the E.O. should be defined to include
both the worker's regular rate of pay and the total amount of pay for
the pay period. ``[E]mployers are already required to keep [the rate of
pay] information under the FLSA, it is not a burden for them to
disclose this information to their workers.'' Other respondents also
noted that several states already require rate of pay information in
wage statements, ``demonstrating the reasonableness of this
requirement.'' Another respondent suggested that the wage statement
should include the ``overtime rate of pay and hours calculated,''
reasoning that the ``rate of pay alone is not sufficient

[[Page 58607]]

for a worker to calculate his or her overtime hours . . . .''
Respondents also suggested that the Guidance ``should make clear that
the terms used in the paycheck transparency provisions have the same
meaning as they do under the FLSA.''
Response: The FAR Council and DOL agree with the respondents that
the wage statements required under the E.O.'s paycheck transparency
provisions should include the rate of pay information. The E.O. states
that the wage statement must contain the worker's ``pay.'' As the
respondents noted, the term ``pay'' can and should be defined to
include both ``gross pay'' and ``rate of pay.'' DOL indicates that a
worker's rate of pay is a crucial piece of information that should
appear in the wage statement, because a worker's knowledge of his or
her rate of pay enables the worker to more easily determine whether all
wages due have been paid. Inclusion of rate of pay in wage statements
will reduce the time an employer spends resolving pay disputes because
workers will have available the information on which their pay was
determined, and be able to identify any problems at an earlier date.
Thus, including the rate of pay in the wage statement will help to
implement the purposes of the E.O.'s wage statement provision by
providing workers with information about how their pay is calculated,
enabling workers to raise any concerns about their pay early on, and
encouraging employers to proactively resolve such concerns. All parties
have an interest in ensuring that workers receive their full pay when
it is earned--including contractors who benefit from fair competition,
employee satisfaction, and limiting liability for damages resulting
from unpaid wages. Also, in most cases, contractors compute gross pay
by multiplying the regular hours worked by the worker's rate of pay
and, in overtime workweeks, by also multiplying the overtime hours
worked by time and one half of the rate of pay. As contractors cannot
compute the worker's earnings without the rate of pay information,
workers similarly cannot easily determine how their earnings are
computed without inclusion of the rate of pay information in the wage
statement.
Moreover, the relevant laws already require that the employer keep
a record of the rate of pay. As one employee advocacy organization
pointed out, the employer must maintain a record of a nonexempt
employee's rate of pay under the FLSA. See 29 CFR 516.2(a)(6)(i). A
requirement to keep rate of pay information also applies to SCA-covered
contracts, see 29 CFR 4.6(g)(1)(ii), and to DBA-covered contracts, see
29 CFR 5.5(a)(3)(i). In general, for DBA and SCA, the basic hourly rate
listed in the wage determination is considered the rate of pay that is
to be included in the wage statement. Under the FLSA, rate of pay is
determined by dividing the employee's total remuneration (except
statutory exclusions) by total hours worked in the workweek. See 29 CFR
778.109.
In addition, DOL has identified 15 States that require the worker's
rate of pay to be included in wage statements. Contractors located in
one of these 15 States should already be compliant with the requirement
to include the rate of pay in the wage statement. Therefore, including
this information in the wage statement helps the worker to understand
the gross pay received and how it was calculated, in order to realize
the purposes of the E.O. with limited burden to contractors.
DOL indicates that it is not essential for the overtime rate of pay
to be included in the wage statement. For example, in order to check
the accuracy of the wages paid in weeks when overtime hours are worked,
a worker can generally perform the necessary calculations. The
inclusion of the overtime rate of pay in the wage statement would
slightly simplify the calculation for the worker. In most situations,
once the worker knows his or her rate of pay, the worker can readily
determine what the overtime pay rate should be by simply multiplying
the rate of pay by time and one half (by a factor of 1.5).
In addition, the FLSA, SCA, and DBA regulations do not require
contractors to keep a record of the overtime pay rate in their payroll
records. Similarly, with some exceptions, State laws generally do not
require that the overtime rate of pay be included in wage statements.
Therefore, requiring the overtime rate of pay in the wage statement
would be a new burden on contractors and, as already discussed, having
the overtime pay-rate information in the wage statement does not
significantly improve the worker's ability to determine whether the
correct wages were paid.
With regard to the comment that the Guidance should make clear that
the terms used in the E.O.'s paycheck transparency provision should be
given the same meaning as in the FLSA, DOL agrees with this comment to
the extent the FLSA provides relevant meaning and context to the terms
in the E.O.'s paycheck transparency provisions. DOL has cited to the
FLSA regulations where applicable.
ii. Itemizing Additions Made to and Deductions Taken From Wages
Comment: Employee advocates urged DOL to require contractors to
itemize additions made to and deductions taken from wages in the wage
statement.
Response: The Councils and DOL agree with respondents that the
additions made to and deductions taken from gross pay should be
itemized in the wage statement. Section 5(a) of the E.O. provides that
the wage statement should, among other items, include ``any additions
made to or deductions made from pay.'' The E.O., therefore, already
contemplates that any and all additions or deductions be separately
noted in the wage statement; in other words, the wage statement must
itemize or identify each addition or deduction, and not merely provide
a lump sum for the total additions and deductions. Accordingly, the FAR
final rule and the final Guidance clarify that additions and deductions
must be itemized.
Neither DOL nor the Councils received comments specifically
objecting to the itemization of additions or deductions.
With regard to suggestions by employee advocates that the wage
statements should identify the name and address of each fringe benefit
fund, and the plan sponsor and administrator of each fringe benefit
plan, DOL believes, and the Councils agree, that listing such
information in the wage statement would be duplicative.
Comment: One respondent requested that the hourly fringe-benefit
rate be listed in the wage statement.
Response: DOL concludes, and the Councils agree, that it is not
essential to include the hourly fringe-benefit rate in the wage
statement.
The amount of the fringe benefit required by the DBA or SCA is
typically expressed as an hourly rate in the wage determinations issued
by DOL. The contractor may pay this amount as a contribution to a
fringe benefit fund or plan, or in ``cash'' as an addition to the
worker's wages. Section 5(a) of the E.O. requires any additions made to
gross pay be listed in the wage statement. DOL stated that fringe-
benefit amounts paid by the contractor into a fund or plan (e.g.,
health insurance or retirement plan) on behalf of the worker should not
be considered additions to the worker's gross pay for purposes of the
Order. Such fringe-benefit contributions are excludable from the
regular rate for purposes of computing overtime pay under the FLSA and
are not taxable. Fringe-benefit contributions paid by the contractor on
behalf of the worker thus do not need to be included

[[Page 58608]]

in the wage statement, as such information has no bearing on
determining whether the worker received the correct cash wages as
reported in the wage statement.
The wage determination issued under the DBA and SCA that is
applicable to the contract must be posted by the contractor at the site
of work in a prominent and accessible place where it can be easily seen
by the workers. See 29 CFR 5.5(a)(1)(i), 4.6(e). Workers therefore have
access to fringe benefit rate information, further negating the
necessity to include the fringe benefit rate amount in the wage
statement.
On the other hand, when the contractor elects to meet its fringe
benefit obligation under the DBA or SCA by paying all or part of the
stated hourly amount in ``cash'' to the worker, the payments are
subject to tax withholdings, and the wage statement should list the
fringe benefit amounts paid as an addition to the worker's pay. Such
amounts are part of gross pay.
iii. Weekly Accounting of Overtime Hours Worked
Comment: Industry respondents objected to the proposed requirement
that 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), then the hours worked and overtime hours contained in
the wage statement must be broken down to correspond to the period for
which overtime is actually calculated and paid (which will almost
always be weekly). See 80 FR 30571 (FAR proposed rule); 80 FR 30591
(DOL proposed Guidance). Several employer representatives stated that
contractors generally issue wage statements on a bi-weekly basis, and
do not separately provide the number of hours worked (regular and
overtime hours) for the first and second workweeks of the bi-weekly pay
period. These respondents stated that requiring a weekly accounting of
regular hours worked (i.e., hours worked up to 40 hours) and overtime
hours worked in the wage statement would be costly to implement and
unnecessary.
Response: As DOL discussed in the proposed Guidance, transparency
in the relationships between employers and their workers is critical to
workers' understanding of their legal rights and to the speedy
resolution of workplace disputes. See 80 FR 30591. The calculation of
overtime pay on a workweek-by-workweek basis as required by the FLSA
has been a bedrock principle of labor protections since 1938. See 29
U.S.C. 207(a). A wage statement that is provided bi-weekly or semi-
monthly that does not separately state the hours worked during the
first workweek from those worked during the second workweek of the pay
period fails to provide workers with sufficient information about their
pay to be able to determine if they are being paid correctly. For
example, a worker who receives a wage statement showing 80 hours worked
during a bi-weekly pay period and all hours paid at the regular
(straight-time) rate may, in fact, have worked 43 hours the first week
and 37 hours the second week. In this case, to comply with the FLSA,
the employer should have paid the worker at time and one half of the
worker's regular rate of pay for the three hours worked after 40 hours
in the first workweek. Without documentation of the weekly hours, it
would be difficult for this worker to determine whether overtime pay is
due.
The FLSA already requires that employers calculate overtime pay
after 40 hours worked per week; and the implementing regulations under
the FLSA, DBA, and SCA require employers to maintain payroll records
for at least three years. Under the FLSA regulations at 29 CFR
516.2(a)(7), for instance, the employer must maintain a record of each
nonexempt employee's total hours worked per week. A requirement to keep
rate of pay information also applies to SCA-covered contracts, see 29
CFR 4.6(g)(1)(iii), and to DBA-covered contracts, see 29 CFR
5.5(a)(3)(i). Moreover, workers covered under DBA must be paid on a
weekly basis requiring a workweek-by-workweek accounting of overtime
hours worked. See 29 CFR 5.5(a)(1)(i). Therefore, as noted in this DOL
analysis, including hours worked information in the wage statement
derived on a workweek basis will not be overly burdensome, and the FAR
Council final rule retains this requirement.
iv. Substantially Similar State Laws
The E.O. provides that the wage-statement requirements ``shall be
deemed to be fulfilled'' where a contractor ``is complying with State
or local requirements that the Secretary of Labor has determined are
substantially similar to those required'' by the E.O. See E.O. Section
5(a). If a contractor provides a worker in one of these ``substantially
similar'' States with a wage statement that complies with the
requirements of that State, the contractor would satisfy the E.O.'s
wage-statement requirements. In the proposed Guidance, the DOL stated
that two requirements do not have to be exactly the same to be
``substantially similar''; they must, however, share ``essential
elements in common.'' 80 FR 30587 (quoting Alameda Mall, L.P. v. Shoe
Show, Inc., 649 F.3d 389, 392 (5th Cir. 2011)). The proposed Guidance
offered two options for determining whether State requirements are
substantially similar to the E.O.'s requirements.
The first proposed option identified as substantially similar those
States that require wage statements to have the essential elements of
overtime hours or earnings, total hours, gross pay, and any additions
made to or deductions taken from gross pay. As the proposed Guidance
noted, when overtime hours or earnings are disclosed in a wage
statement, workers can identify from the face of the document whether
they have been paid for overtime hours.
The second proposed option would have allowed wage statements to
omit overtime hours or earnings, as long as the wage statements
included ``rate of pay,'' in addition to the essential elements of
total hours, gross pay, and any additions made to or deductions taken
from gross pay. The intent of this option was to allow greater
flexibility while still requiring wage statements to provide enough
information for a worker to calculate whether he or she has been paid
in full. DOL noted that one drawback of this option was that failure to
pay overtime would not be as easily detected when compared with the
first option. The worker would have to complete a more difficult
calculation to identify an error in pay.
DOL requested comments regarding the two options and stated that it
could also consider other combinations of essential elements or other
ways to determine whether State or local requirements are substantially
similar. See 80 FR 30592.
Comment: Numerous employee advocates and members of Congress
strongly supported the first option. These respondents observed that
employers and workers benefit when workers can easily understand their
pay by reviewing their wage statement. They noted that wage statements
also provide an objective record of compensated hours, which helps
employers to more easily meet their burden of demonstrating wages paid
for hours worked. A comment by members of Congress favored the first
option because ``[d]isclosing whether workers have been paid at the
overtime rate is critical to enabling workers to discern whether they
have been paid fairly.'' Other respondents further recommended that the
first option be adopted with the modification that the rate of pay
information should also be included as an essential element.

[[Page 58609]]

The employee advocates found the second option (which would have
allowed wage statements to omit overtime hours or earnings, as long as
the wage statements include the rate of pay) to lack transparency. On
the other hand, employer representatives recommended that the second
option be adopted. They explained that the second option would result
in more substantially similar states and localities than would the
first option--thereby reducing compliance burdens and providing greater
flexibility to contractors. They also stated the second option is more
in line with employers' practices and is less burdensome than the first
option.
Response: DOL analyzed the public comments in the Preamble to its
final Guidance, and adopted the first option for determining whether
wage statement requirements under State law are substantially similar.
The list of Substantially Similar Wage Payment States, now adopted in
the final Guidance is: (1) Alaska, (2) California, (3) Connecticut, (4)
the District of Columbia, (5) Hawaii, (6) New York, and (7) Oregon.
These States and the District of Columbia require wage statements to
include the essential elements of hours worked, overtime hours, gross
pay, and any itemized additions made to and deductions taken from gross
pay.
Comment: A respondent requested clarification regarding whether
complying with a State requirement (e.g., the California State
requirement) means that the contractor has met the E.O.'s requirement
for all employees or just employees in that State.
Response: DOL notes that as long as the contractor complies with
the wage-statement requirements of any of the Substantially Similar
Wage Payment States, the contractor will be in compliance with the
final rule. For example, if a contractor has workers in California and
Nevada, the contractor may provide workers in both States with wage
statements that adhere to California State law to comply with the FAR
Council final rule. (California is among the States included in the
list of Substantially Similar Wage Payment States, while Nevada
requires minimal information in the wage statement provided to
workers.) Thus, the contractor would be in compliance with the final
rule if it adopts the wage-statement requirements of any particular
State or locality in the list of Substantially Similar Wage Payment
States in which the contractor has workers, and applies this model for
its workers elsewhere.
v. Request To Delay Effective Date
Comment: One employer advocate suggested that DOL and the FAR
Council allow Federal contractors time to comply with the wage-
statement provisions. The respondent noted that, in the short term,
contractors will have to devise manual wage statements to comply with
the E.O. until automated systems are able to generate compliant wage
statements. Citing DOL's Home Care rule regarding the application of
the FLSA to domestic service (78 FR 60454, Oct. 1, 2013), which had an
effective date 15 months after the publication of the final rule, the
respondent recommended that contractors be provided at least 12 to 15
months within which to comply with the wage-statement requirements.
Response: The Councils have revised the proposed rule to implement
a phased implementation for paycheck transparency provisions, in order
to permit time for prime contractors and subcontractors to determine
and effect changes necessary to their payroll systems to comply with
the rule. Beginning January 1, 2017, the 52.222-60 clause will be
inserted in solicitations if the estimate value exceeds $500,000, and
in resultant contracts. See FAR 22.2007(d).
b. Fair Labor Standards Act (FLSA) Exempt-Status Notification
According to the E.O., the wage statement provided to workers who
are exempt from the overtime pay provisions of the FLSA ``need not
include a record of hours worked if the contractor informs the
individuals of their exempt status.'' See E.O. Section 5(a). Because
such workers do not have to be paid overtime under the FLSA, hours
worked information need not be included in the wage statement. See 80
FR 30592. DOL suggested in its proposed Guidance that in order to
exclude the hours-worked information in the wage statement, the
contractor would have to provide a written notice to the worker stating
that the worker is exempt from the FLSA's overtime pay requirements;
oral notice would not be sufficient. Id. The proposed FAR rule noted
that if the contractor regularly provides documents to workers
electronically, the document informing the worker of his or her exempt
status may also be provided electronically if the worker can access it
through a computer, device, system, or network provided or made
available by the contractor. See 80 FR 30561. The proposals suggested
that if a significant portion of the contractor's workforce is not
fluent in English, the document provided notifying the worker of exempt
status must also be in the language(s) other than English in which the
significant portion of the workforce is fluent. See 80 FR 30592.
The FAR Council and DOL received comments regarding the following
issues related to the FLSA exempt-status notice: Type and frequency of
the notice, differing interpretations by the courts regarding
exemptions under the FLSA, and phased-in implementation.
i. Type and Frequency of the Notice
Comment: One labor union commented that the contractor should be
excused from recording the overtime hours worked in the wage statement
only if the worker is correctly classified as exempt from the FLSA's
overtime pay requirements. The respondent also recommended that workers
should be informed of their exempt status on each wage statement. An
employer-advocate requested clarification on whether the exempt-status
notice should be provided once (e.g., in a written offer of employment)
or on a recurring basis (e.g., on each wage statement).
Response: With regard to the labor union's comment on the
importance of correctly determining the exempt status of a worker under
the FLSA, the FAR Council and DOL agree that employers should correctly
classify their workers. An employer who claims an exemption from the
FLSA is responsible for ensuring that the exemption applies. See
Donovan v. Nekton, Inc., 703 F.2d 1148, 1151 (9th Cir. 1983). However,
the fact that an employer provides the exempt-status notice to a worker
does not mean that the worker is necessarily classified correctly. DOL
will not consider the notice provided by the contractor to the worker
as determinative of or even relevant to whether the worker is exempt or
not under the FLSA. Accordingly the FAR Council has provided in the
final rule that a contractor may not in its exempt-status notice to a
worker indicate or suggest that DOL or the courts agree with the
contractor's determination that the worker is exempt.
With regard to the type of notice to be provided to the worker and
how often it should be provided, after carefully reviewing the
comments, DOL believes, and the FAR Council agrees, that it is
sufficient to provide notice to workers one time before the worker
performs any work under a covered contract, or in the worker's first
wage statement under the contract. If during performance of the
contract, the contractor determines that the worker's status has
changed from nonexempt to exempt, it must provide notice to the worker
prior to providing

[[Page 58610]]

a wage statement to the worker without hours worked information or in
the first wage statement after the change. The notice must be in
writing; oral notice is not sufficient. The notice can be a stand-alone
document or be included in the offer letter, employment contract,
position description, or wage statement provided to the worker. See FAR
52.222-60(b).
DOL does not believe that it is necessary, and the FAR Council
agrees that it is not necessary, to require a contractor to include the
exempt-status information on each wage statement. While it is
permissible to provide notice on each wage statement, it also is
permissible to provide the notice one time before any work on the
covered contract is performed. If the contractor does the latter, there
is no need to provide notice in the first wage statement.
ii. Differing Interpretations by the Courts of an Exemption Under the
FLSA
Comment: One respondent stated that it would not be prudent to
require employers to report on the exempt or nonexempt status of
workers where there is disagreement among the courts on who is and who
is not exempt under the FLSA.
Response: Some court decisions regarding the exemption status of
certain workers under the FLSA may not be fully consistent. However,
this is not a persuasive reason to relieve contractors from providing
the exempt-status notice to employees. Regardless of any inconsistency
in court decisions, contractors already must make decisions about
whether to classify their employees as exempt or nonexempt under the
FLSA in order to determine whether to pay them overtime. Such
determinations are based on the facts of each particular situation, the
statute, relevant regulations, guidance from DOL, and advice from
counsel. In addition, in making these determinations, contractors
already must consider any inconsistent court decisions.
The E.O. does not change this status quo. Under the E.O., the
contractor retains the authority and responsibility to determine
whether to claim an exemption under the FLSA. All that is required
under the E.O. is notice to the workers of the status that the employer
has already determined. Such notice is only required if the employer
wishes to provide workers with a wage statement that does not contain
the worker's hours worked.
iii. Request To Delay Implementation of the Exempt-Status Notice
Comment: One industry association suggested that implementation of
the exempt-status notice be postponed until DOL has finalized its
proposal to update the regulations defining the ``white collar''
exemptions under section 13(a)(1) of the FLSA. See 80 FR 38515 (July 6,
2015); http://www.dol.gov/whd/overtime/NPRM2015/. The white-collar
exemptions define the executive, administrative, and professional
employees who are exempt from the FLSA's minimum wage and overtime pay
protections. See 29 CFR part 541.
Response: DOL has finalized its rulemaking to update the FLSA's
white-collar exemptions. (See 81 FR 32391, May 23, 2016.) In any event,
the FAR Council's concurrence to phased implementation for the wage
statement requirement will result in delayed implementation of the
paycheck transparency clause at FAR 52.222-60.
c. Independent Contractor Notice
Section 5(b) of the E.O. states that if a contractor treats an
individual performing work under a covered contract as an independent
contractor, then the contractor must provide ``a document informing the
individual of this [independent contractor] status.'' Contracting
agencies must require that contractors incorporate this same
requirement into covered subcontracts. See FAR 52.222-60(d) and (f).
The proposed FAR rule provided that the notice informing the
individual of the independent contractor status must be provided before
any work is performed under the contract. See 80 FR 30572. As DOL noted
in the proposed Guidance, the notice must be in writing and provided
separately from any agreement entered into between the contractor and
the independent contractor. See 80 FR 30593.
The proposed Guidance further stated that the provision of the
notice to a worker informing the worker that he or she is an
independent contractor does not mean that the worker is correctly
classified as an independent contractor under the applicable laws. See
80 FR 30593. The determination of whether a worker is an independent
contractor under a particular law remains governed by that law's
definition of ``employee'' and its standards for determining for its
purposes which workers are independent contractors and not employees.
Id.
DOL received comments from several unions and other employee
advocates that were supportive of the E.O.'s independent contractor
notice provisions. In contrast, several industry advocates commented
that several aspects of the independent contractor notice requirement
need to be clarified.
i. Clarifying the Information in the Notice
Comment: DOL received comments requesting clarification of the
information that should be included in the independent contractor
notice. Several employee advocates recommended that the document also
notify the worker that, as an independent contractor, he or she is not
entitled to overtime pay under the FLSA, is not covered by worker's
compensation or unemployment insurance, and is responsible for the
payment of relevant employment taxes.
One employee advocate recommended that the notice include a
statement notifying the worker that the contractor's designation of a
worker as an independent contractor does not mean that the worker is
correctly classified as an independent contractor under the applicable
law. Several respondents suggested that the notice also include
information regarding which agency to contact if the worker has
questions about being designated as an independent contractor or needs
other types of assistance. One labor union also recommended that DOL
establish a toll-free hotline that provides more information on
misclassification of employees as independent contractors or tools to
challenge the independent contractor classification.
One industry respondent suggested that the FAR Council or DOL
publish a model independent contractor notice with recommended
language. Another industry respondent requested more detailed guidance
on what the independent contractor notice should include.
Response: Section 5(b) of the E.O. requires that the worker be
informed in writing by the contractor if the worker is classified as an
independent contractor and not an employee. Thus, the final FAR rule
clarifies that the notice must be in writing and provided separately
from any independent contractor agreement entered into between the
contractor and the individual. See FAR 52.222-60(d)(1).
The E.O., however, does not require the provision of the additional
information suggested by respondents. DOL believes, and the FAR Council
agrees, that notifying the worker of his or her status as an
independent contractor satisfies the Order's requirement. Providing
such notice enables workers to evaluate their status as independent
contractors and raise

[[Page 58611]]

any concerns. The objective is to minimize disruptions to contract
performance and resolve pay issues early and efficiently. If the worker
has questions or concerns regarding the particular determination, then
he or she can raise such questions with the contractor and/or contact
the appropriate Government agency for more information or assistance.
With regard to comments about contractors correctly classifying
individuals as independent contractors, similar to the prior discussion
regarding the FLSA exempt-status notification, providing the notice
does not mean that the worker is correctly classified as an independent
contractor. DOL will not consider the notice when determining whether a
worker is an independent contractor or employee under the laws that it
enforces. Accordingly, a contractor may not in its notice indicate or
suggest that enforcement agencies or the courts agree with the
contractor's determination that the worker is an independent
contractor.
With regard to comments recommending that DOL establish a hotline
that provides information on issues involving misclassification of
employees as independent contractors, the relevant agencies within DOL
already have toll-free helplines that workers and contractors can
access to obtain this type of information and for general assistance.
Members of the public, for example, can call the Wage and Hour
Division's toll-free helpline at 1-866-4US-WAGE (487-9243), the
Occupational Safety and Health Administration at 1-800-321-OSHA (6742),
and the Office of Federal Contract Compliance Programs at 1-800-397-
6251. The National Labor Relations Board can be reached at 1-866-667-
NLRB (667-6572), and the Equal Employment Opportunity Commission at 1-
800-669-4000. Moreover, the enforcement agencies' respective Web sites
contain helpful information regarding employee misclassification.
With regard to comments requesting a sample independent contractor
notice, DOL does not believe that it is necessary to create a template
notice. DOL expects that any notice would explicitly inform the worker
that the contractor had made a decision to classify the worker as an
independent contractor.
ii. Independent Contractor Determination
Comment: Several industry members suggested that DOL clarify which
statute should provide the basis for determining independent-contractor
status for purposes of the E.O.'s requirement. These respondents noted
that the proposed Guidance stated that the determination of whether a
worker is an independent contractor or employee under a particular law
remains governed by that law's definition of ``employee.'' 80 FR 30593.
The respondents stated that they are uncertain as to what definition
should be used in determining whether a worker is an employee or
independent contractor.
Response: DOL and the FAR Council do not find it necessary or
appropriate to pick one specific definition of ``employee'' for the
E.O.'s independent-contractor notice requirement. Employers already
make a determination of whether a worker is an employee (or an
independent contractor) whenever they hire a worker. The E.O. does not
affect this responsibility; it only requires the contractor to provide
the worker with notice of the determination that the contractor has
made. If the contractor has determined that the worker is an
independent contractor, then the employer must provide the notice.
iii. Frequency of the Independent Contractor Notice
Comment: The FAR Council and DOL received comments regarding the
number of times an individual who is classified as an independent
contractor and engaged to perform work on several covered contracts
should receive notice of his or her independent contractor status. Two
industry respondents, for example, noted that an independent contractor
who provides services on multiple covered contracts on an intermittent
basis could receive dozens of identical notices, resulting in
redundancy and inefficiencies. Other industry respondents believed that
providing multiple notices for the same work performed on different
covered contracts is burdensome and unnecessary. Two industry
respondents suggested that an independent contractor agreement between
the relevant parties should satisfy the E.O.'s independent contractor
notice requirement.
Response: The final FAR rule provides that the notice informing the
individual of his or her independent contractor status must be provided
at the time an individual is engaged as an independent contractor or
before the individual performs any work under the contract. See FAR
52.222-60(d)(1). The final FAR rule also clarifies that contractors
must provide the independent-contractor notice to the worker for each
covered contract on which the individual is engaged to perform work as
an independent contractor. See FAR 52.222-60(d). The Guidance reflects
this clarification. DOL agrees that there may be circumstances where a
worker who performs work on more than one covered contract would
receive more than one independent contractor notice. DOL, however,
believes that because the determination of independent contractor
status is based on the circumstances of each particular case, it is
reasonable to require that the notice be provided on a contract-by-
contract basis even where the worker is engaged to perform the same
type of work. It is certainly possible that the facts may change on any
of the covered contracts such that the work performed requires a
different status determination.
iv. Workers Employed by Staffing Agencies
Comment: The FAR Council and DOL received several comments
regarding contractors that use temporary workers employed by staffing
agencies and whether those contractors must provide such workers with a
document notifying them that they are independent contractors. One
respondent believed that in such cases, ``temporary workers are neither
independent contractors nor employees of the contractor.'' Several
industry respondents suggested that the final Guidance clarify that
contractors would not be required to provide notice of independent
contractor status to temporary workers who are employees of a staffing
agency or similar entity, but not of the contractor. Some of these
respondents also recommended that the independent contractor status
notice be given only to those workers to whom the contractor provides
an IRS Form 1099.
Response: In situations where contractors use temporary workers
employed by staffing agencies to perform work on Federal contracts, the
contract with the staffing agency may be a covered subcontract under
the E.O. Section 5 of the E.O. requires that the independent contractor
status notice requirement be incorporated into subcontracts of $500,000
or more. See E.O. Section 5(a). If the contract with the staffing
agency is a covered subcontract, and the staffing agency treats the
workers as employees, then no notices would be required. If the
contract with the staffing agency is a covered subcontract, and the
staffing agency treats the workers as independent contractors, then the
staffing agency (not the contractor) is required to provide the workers
with notice of their independent contractor status. (When using a
staffing agency, a

[[Page 58612]]

contractor should consider whether it jointly employs the workers under
applicable labor laws. DOL recently issued Guidance under the FLSA and
Migrant and Seasonal Agricultural Worker Protection Act for determining
joint employment.)
The FAR Council and DOL disagree with comments suggesting that the
contractor should provide independent-contractor notices only to those
workers to whom the contractor already provides an IRS Form 1099.
Employers use a Form 1099-MISC to report, among other items, ``payments
made in the course of a trade or business to a person who is not an
employee or to an unincorporated business.'' The E.O. does not limit
the requirement to provide the independent contractor notice to workers
who receive a Form 1099-MISC. To the extent the contractor has
classified an individual as an independent contractor for Federal
employment tax purposes and provides the individual a Form 1099-MISC,
the contractor must provide the individual with the independent-
contractor status notice. The universe of workers who should receive an
independent contractor notice should not be limited only to those
workers to whom the contractor already provides a Form 1099.
d. Requirements That Apply to All Three Documents (Wage Statement, FLSA
Exempt-Status Notice, Independent Contractor Notice)
The FAR Council's proposed regulations would have required that if
a significant portion of the contractor's workforce is not fluent in
English, the document notifying a worker of the contractor's
determination that the worker is an independent contractor, and the
wage statements to be provided to the worker, must also be in the
language(s) other than English in which the significant portion of the
workforce is fluent. The proposed regulations were unclear with regard
to whether required documents could be provided electronically. See 80
FR 30572. The final rule has been revised at FAR 52.222-60(e) to
clarify that all documents required must be provided in English and the
language(s) in which significant portions of the workforce is fluent,
and that all documents may be provided electronically under certain
circumstances.
i. Translation Requirements
Comment: The FAR Council and DOL received comments requesting
clarification regarding what would constitute a ``significant portion''
of the workforce sufficient to trigger the translation requirement. One
industry respondent stated that the final Guidance should set a
specific threshold. Another stated that the translation requirement is
unnecessary and should be removed. One labor union recommended that the
term ``significant portion'' of the workforce be defined as 10 percent
or more of the workforce under the covered contract.
One industry respondent posited a situation where there are various
foreign languages spoken in the workplace, and requested clarification
regarding whether the contractor would be required to provide the wage
statement and the independent contractor notice to workers in every
language that is spoken by workers not fluent in English. The
respondent suggested that the wage statement translation requirement be
revised to state: ``Where a significant portion of the workforce is not
fluent in English but is fluent in another language, the contractor
shall provide the wage statement in English and in each other language
in which a significant portion of the workforce is fluent.''
With regard to translating the independent contractor notice, the
respondent recommended that this requirement apply only when the
company is aware that the worker is not fluent in English. Another
industry respondent also stated that it would not be sensible to
require contractors to provide notice in Spanish to an independent
contractor who speaks only English simply because a significant portion
of the contractor's workforce is fluent in Spanish. A respondent
further advocated that contractors should be allowed to include in each
wage statement and independent contractor notice a Web site address
where the translations are posted, instead of including the complete
translation in each wage statement or independent contractor notice for
each worker.
Response: For reasons noted by DOL, the FAR Council does not
believe that it is necessary to set a specific threshold defining what
would constitute a ``significant portion'' of the workforce sufficient
to trigger the final FAR rule's translation requirement. As DOL notes,
this requirement is similar to regulatory requirements implementing two
of the labor laws, the Family and Medical Leave Act and the Migrant and
Seasonal Agricultural Worker Protection Act. The term ``significant
portion'' has not been defined under these regulations, and the lack of
a definition or bright-line test has not prevented employers from
complying with the requirement. For these reasons, the term is not
defined in the final Guidance.
The FAR Council and DOL agree with the suggestion about workplaces
where multiple languages are spoken. Where a significant portion of the
workforce is not fluent in English, DOL finds that the contractor
should provide notices to workers in each language in which the
significant portion of the workforce is fluent. However, the FAR
Council and DOL do not agree with the suggestion that it would be
sufficient in all cases to provide a Web site address where the
translated notice would be posted. Where workers are not fluent in
English, providing a link to a Web site for the translation would be
ineffective at providing the required notice.
ii. Electronic Wage Statements
Comment: With regard to providing wage statements electronically,
one respondent agreed that providing wage statements electronically
should be an option. One labor union advocated that workers should be
allowed to access wage statements using the contractor's computer
network during work hours. According to the union, merely providing
workers with the Web site address to access their wage statements on
their own would be insufficient as such an arrangement would require
the worker to purchase internet connection to access the information.
Another respondent suggested that the contractor should be allowed to
provide wage statements electronically only with written permission
from the worker and if written instructions on how to access the wage
statements are provided to the worker.
Response: The FAR Council finds, and DOL agrees, that contractors
should have the option of providing wage statements either by paper-
format (e.g., paystubs), or electronically if the contractor regularly
provides documents electronically and if the worker can access the
document through a computer, device, system, or network provided or
made available by the contractor. (The final FAR rule states that the
FLSA exempt-status notice and the independent contractor notice also
may be provided electronically on these terms.) As DOL stated in the
Preamble to its final Guidance, merely providing workers with a Web
site address would be insufficient; the contractor must provide the
worker with internet or intranet access for purposes of viewing this
information. The FAR Council and DOL, however, find that it is not
necessary to require contractors to allow workers such access during
work hours. The FAR Council and DOL assume that workers will, in most
cases, access wage

[[Page 58613]]

statements (or other employer-provided documents, such as leave
statements or tax forms) using the contractor's network or system
during the workday--including during the worker's rest breaks or meal
periods. It is not necessary to specifically prescribe a requirement
regarding the time period during which a wage statement can be
accessed. We also find that it is not necessary to require that workers
give consent before receiving the wage statement electronically, or to
require that workers be given written instructions on how to access the
wage statement using the contractor's computer, device, system, or
network. As the DOL proposed Guidance noted, the employer must already
be regularly providing documents to workers electronically in order to
provide wage statements in the same manner. See 80 FR 30592.
Contractors that already provide documents electronically presumably
also provide general instructions regarding accessing personnel records
on their intranet Web pages; therefore, additional written instructions
specific to accessing the worker's wage statement using the
contractor's computer, device, network, or system are not necessary.
Similarly, requiring a written consent by the worker is not necessary,
because the workers for such employers should already be familiar with
the process for receiving documents electronically.
9. Arbitration of Contractor Employee Claims
Introductory Summary: The FAR Council received various comments
concerning the clause FAR 52.222-61, Arbitration of Contractor Employee
Claims (Executive Order 13673), which is required by Section 6 of the
E.O. The clause provides that contractors 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, subject to
certain exceptions. The clause applies to contracts and subcontracts if
the estimated value exceeds $1,000,000, other than those for commercial
items.
Comment: Several respondents commented that the proposed rule is
invalid and unenforceable because it conflicts with Federal statute,
U.S. Supreme Court precedent, current regulation, or should otherwise
only be accomplished through Congressional legislation. Respondents
provided the following in support of their comments: Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991) (the FAA reflects
a ``liberal federal policy favoring arbitration agreements.'' AT&T
Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (``The FAA was
enacted in 1925 in response to widespread judicial hostility to
arbitration agreements.'') U.S. Supreme Court's decision in CompuCredit
v. Greenwood, 565 U.S. 95 (2012), and similar rulings upholding the
enforceability of arbitration agreements pursuant to the Federal
Arbitration Act.
Response: As explained above in Section III.B.1.d., the final rule
does not conflict with the Federal Arbitration Act or regulations or
judicial decisions interpreting that Act.
Comment: Several respondents commented that the proposed rule
offered no explanation, or an inadequate explanation, for how a
limitation on arbitration agreements would promote economy and
efficiency in Federal procurement. Some of these respondents expressed
the view that the proposed rule would in fact work against the stated
aims of the E.O. One respondent also stated that the limitation had no
connection with the Federal procurement process and should be deleted
in its entirety.
Response: As explained above in Section III.B.1.d, the limitation
on arbitration agreements is a reasonable and rational exercise of the
President's authority, under the Procurement Act, to prescribe policies
and directives that the President considers necessary to carry out the
statutory purposes of ensuring economical and efficient government
procurement.
Comment: Respondents commented that the exception for arbitrations
conducted pursuant to collective bargaining agreements improperly
penalized contractors without collective bargaining agreements and
recommended the exception be removed.
Response: As explained above in Section III.B.1.d, the exception
does not penalize contractors without collective bargaining agreements
and will remain in the final rule.
Comment: Respondents recommended that contractors who retain forced
arbitration provisions for employment disputes other than those
specifically prohibited by the regulation should be barred from
enforcing those remaining forced arbitration provisions in the event
disputes arise out of the same set of facts.
Response: As explained above in Section III.B.1.d., to be
consistent with DoD's existing regulations and the requirements of the
Executive Order, this rule does not apply the limitation on mandatory
pre-dispute arbitration to aspects of an agreement unrelated to the
covered areas.
Comment: Several respondents expressed support of the limitations
on arbitration agreements as a worthwhile protection for employees.
Some respondents commented that the authority for this E.O. is sound.
One respondent expressed that society benefits from an open legal
process, which exposes civil rights violations and perpetrators of
sexual assault instead of hiding them from view. Forced arbitration, on
the other hand, restricts the public's ability to obtain such
information and keeps abusive practices hidden. One respondent found
that there is a distinct link between the E.O. and economy and
efficiency. Limiting forced arbitration is a fundamental component of
decreasing systemic discrimination by Government contractors because
forced arbitration allows employers to avoid accountability for
violating Federal anti-discrimination laws. Respondents asserted that,
with less discrimination in Government contracting, efficiency will
increase. The Federal Arbitration Act (FAA), as originally drafted and
passed in 1925, neither envisioned, nor intended forcing individual
employees into secret, private arbitration forums thereby depriving
them of their constitutional right to trial by jury. Nor was it
intended to apply in scenarios where individuals with little to no
bargaining power must sign away their rights as a condition of securing
employment. Rather, the FAA was intended to apply only in cases
involving commercial disputes between two businesses with relatively
equal bargaining power. Respondents provided the following in support
of their comments: Margaret L. Moses, Arbitration Law: Who's in
Charge?, 40 Seton Hall L. Rev. 147, 147 (2010) (``The Federal
Arbitration Act (FAA) that Congress adopted in 1925 bears little
resemblance to the Act as the Supreme Court of the United States has
construed it. The original Act was intended to provide Federal courts
with procedural law that would permit the enforcement of arbitration
agreements between merchants in diversity cases.''). Maureen A. Weston,
Preserving the Federal Arbitration Act by Reining in Judicial Expansion
and Mandatory Use, Nev. L.J. 385,392 (2007) (FAA ``was intended to
apply to disputes between commercial entities of generally similar
bargaining power.''). Judith Resnick, Diffusing Disputes: The Public in
the Private of Arbitration, the Private in Courts, and the Erasure of
Rights, Yale

[[Page 58614]]

Law Journal, Vol. 124, p. 2808-2943 (2015), available at http://ssrn.com/abstract=2601132.
Response: As explained above in Section III.B.1.d, the FAR Council
agrees that the limitation on arbitration agreements does not conflict
with the Federal Arbitration Act, and is a reasonable and rational
exercise of the President's authority, under the Procurement Act, to
prescribe policies and directives that the President considers
necessary to carry out the statutory purposes of ensuring economical
and efficient government procurement.
Comment: Respondents commented that the proposed rule was
unworkably vague because it failed to clarify whether the prohibition
on certain arbitration agreements applies solely to employees working
under a covered contract, or applies to all employees of the firm
generally, regardless of whether they were working under the contract.
Several respondents recommended the final rule specify that the
limitations on arbitration agreements apply to all employees, or all
unrepresented employees, not just those working on the Federal
contract.
Response: The clause requires the contractor to agree not to enter
into the specified arbitration agreements. The clause does not provide
an exception for employees not working under the contract. Thus, the
clause applies to all contractor employees and independent contractors.
Comment: A respondent recommended clarification of the exceptions
to the limitation on arbitration and particularly recommended
definitions for ``permitted,'' ``renegotiated,'' and ``replaced'' as
clarifications.
Response: The Councils decline to revise the clause because it is
implementing the language of Section 6.c.ii. of the E.O. There are
three terms that the respondent requested be clarified, which appear in
paragraph (b)(2) of the Arbitration of Contractor Employee Claims
(Executive Order 13673) clause at FAR 52.222-61. The word ``permitted''
means that the contractor is able to modify the employment contract.
The words ``renegotiated'' or ``replaced'' refer to a modified or new
employment contract.
Comment: Respondents recommended revising the proposed rule to
require contractors to report on use of forced arbitration not
prohibited by the regulation.
Response: The Councils decline to add a reporting requirement as
the E.O. did not contain a reporting requirement, and adding a
reporting requirement would increase the burden on contractors.
Comment: One respondent stated that there is no process for third
parties to report contractor violations of the arbitration provisions
of the E.O.
Response: Existing procurement practices allow for other sources,
including third parties, to inform the contracting officer that the
contractor is not meeting the terms of its contract, which would
include clause violations.
Comment: Respondents recommended that the final rule expand the
arbitration limitations to cover claims arising out of discrimination
against the disabled. Likewise, other respondents suggested expansion
to cover claims under the Vietnam Era Veterans' Readjustment Assistance
Act of 1974, as amended, or its implementing regulations at 41 CFR part
60-300, under the Uniformed Services Employment and Reemployment Rights
Act of 1994. Others suggested expansion to the full list of 14 labor
laws and E.O.s covered under Section 2 of the E.O.
Response: In accordance with the E.O., the clause applies to Title
VII of the Civil Rights Act of 1964, which prohibits employment
discrimination based on race, color, religion, sex and national origin,
and to any tort related to or arising out of sexual assault or
harassment. The Councils decline to extend the clause coverage.
Comment: A respondent recommended the dollar threshold that
triggers the predispute arbitration agreement requirement be lowered to
$500,000.
Response: The E.O. clearly states the prohibition on arbitration
applies to contracts above $1,000,000. The Councils decline to change
the dollar threshold.
Comment: One respondent recommended revising the proposed rule to
require contractors and subcontractors to notify employees and
independent contractors that employers cannot force them to enter into
a predispute arbitration agreement for disputes arising out of Title
VII or torts related to sexual assault or harassment, and that
compulsory predispute arbitration agreements violate the Federal
contract.
Response: The Councils decline to insert a requirement for
notification to employees and independent contractors as the E.O. does
not require such a notice.
Comment: Several respondents recommended that the final rule adopt
the interpretation given to the term ``contractor'' by DoD under the
Franken Amendment, section 8116 of the Department of Defense
Appropriations Act for Fiscal Year 2010, Public Law 111-118, that the
term ``contractor'' is narrowly applied only to the entity that has the
contract. Unless a parent or subsidiary corporation is a party to the
contract, it is not affected.
Response: The final rule does not expand ``contractor'' to include
parents and subsidiaries. Consistent with the standard interpretation
of contractor as used in the FAR and the Defense Federal Acquisition
Regulation Supplement (DFARS), it is limited to the entity awarded the
contract. (Also see Section III.B.3.e. above).
Comment: Another respondent recommended the final rule specify that
the arbitration limitations do not apply to commercial items or COTS
items.
Response: As required by the E.O., the clause prescription at FAR
22.2007(f) specifies an exception for commercial items. The policies
that apply to commercial items also apply to COTS (see FAR 12.103),
therefore COTS are likewise excepted from the arbitration clause.
Comment: A respondent provided an additional argument in support of
the limitation on arbitration. Forced arbitration clauses are also used
to limit the ability of employees to bring class claims. Further, an
employee might be too afraid to pursue a civil rights or sexual assault
related claim on her own. However, class actions allow employees who
have suffered a common harm to hold their employer accountable no
matter the disparity in resources. Indeed, class claims are powerful
tools that deter bad behaviors and allow employees to rectify employer
wrongs. Eliminating forced arbitration clauses will protect employees'
ability to bring class claims and therefore safeguard important
employee rights.
Response: The Councils appreciate the respondent's comment.
10. Information Systems
a. The Government Should Have a Public Data Base of All Labor Law
Violations
Comment: Several respondents recommended a searchable, public Web
site containing labor law violation information accessible to
contracting officers and prime contractors for their use in making
labor law compliance determinations, and increasing public involvement.
A respondent suggested that a public data base is the most effective
means to improve transparency and capture contractor misrepresentations
or ongoing violations, and would increase incentives to comply with
labor laws. A respondent provided examples of

[[Page 58615]]

existing Federal Web sites that allow the public and enforcement
agencies to benefit from mutual access to information.
Response: Although a public data base containing information on
entities and their labor law violations would enhance transparency,
creation of such a system to implement the E.O. is beyond the purview
of the FAR Council (see Section 4 of the E.O.).
b. Data Base for Subcontractor Disclosures
Introductory Summary
As stated in section III.B.5, the final rule requires
subcontractors to disclose details regarding labor law decisions
directly to DOL for review and assessment. Such disclosures will be
provided to DOL through the DOL Web site at www.dol.gov/fairpayandsafeworkplaces (see FAR 52.222-59 (c)). At the time of rule
publication, this subcontractor disclosure DOL Web site is under
development; it will be functional 60 days prior to the initiation of
subcontractor disclosures.
Comment: Respondents including the SBA Office of Advocacy, stated
the rule lacks a system to track subcontractor labor law violations.
One respondent recommended establishing a single reporting portal for
all subcontractors through SAM, as many subcontractors are also prime
contractors. The respondent believed it would greatly reduce the
significant reporting burden if the Government provided a common,
public place for subcontractor disclosures. The existing SAM system is
utilized in the contracting process, and could aggregate the data and
avoid the added expense of creating new data bases and interfaces.
Response: The E.O. requires that prime contractors report certain
information about the labor law decisions rendered against them. The
FAR implementation requires that the information is input in SAM and
will be publicly disclosed in FAPIIS. There is no requirement for
public disclosure of subcontractor violations. The process for
subcontractor disclosures is streamlined in the alternative implemented
in the final rule. Rather than providing their disclosures to each
prime contractor, subcontractors will instead provide disclosures to a
single site within DOL (see FAR 52.222-59(c)(3)(iv)).
c. Posting Names of Prospective Contractors Undergoing a Responsibility
Determination and Contractor Mitigating Information
Comment: One respondent stated contracting officers should
regularly post the names of prospective contractors undergoing a
responsibility determination in a publicly available place so that
interested parties can know that a prospective contractor is undergoing
review.
Response: The FAR implementation of this E.O. does not alter
existing processes for conducting the responsibility determination. The
names of contractors undergoing a responsibility determination are
Source Selection Information and cannot be disclosed.
Comment: One respondent recommended the final rule require the
public disclosure of documents the contractor submits to demonstrate
its responsibility, namely those describing mitigating circumstances,
remedial measures, and other steps taken to achieve compliance with
labor laws. These additional disclosures would greatly benefit the
public without imposing an undue burden on the Government.
Response: The E.O. does not require, and the FAR implementation
does not contemplate, public disclosure of documents submitted by the
contractor to demonstrate its responsibility, unless the contractor
determines that it wants this information to be made public. See FAR
22.1004-2(b)(1)(ii).
d. Method To Protect Sensitive Information Needed
Comment: One respondent stated the proposed rule requires
disclosure of sensitive corporate information to prime contractors and
does not adequately establish protocols to protect the required
information. The respondent noted the rule requires the collection by
prime contractors of labor law compliance data from subcontractors. The
respondent believed the proposed rule should provide guidance to
subcontractors supplying the information to redact or otherwise protect
sensitive information from risk of exposure.
Response: Contractors and subcontractors exchange sensitive
corporate information and have associated protocols to protect the
information. In addition, the amount of sensitive information exchanged
should be minimized under the final rule, which revised the clause at
FAR 52.222-59(c) and (d) to require prime contractors to direct that
subcontractor information shall be submitted to DOL, and not to the
prime contractor.
e. Information in System for Award Management (SAM) and Federal Awardee
Performance and Integrity Information System (FAPIIS)
Comment: One respondent cited the policy at FAR 22.2004-3(a)
includes ``whether'' there have been labor law violations pursuant to
the clause at FAR 52.222-59(b). Both SAM representations and
certifications and the SAM reporting module will include information on
``whether'' there have been any reportable violations of labor laws.
However, the respondent asserted that these two parts of SAM often
would be subject to different three-year timeframes thereby creating
potential confusion and ambiguity.
Response: The proposed rule's reference to a separate SAM reporting
module is removed in the final rule. All information is disclosed into
SAM. Contractors must ensure information in SAM is accurate, current,
and complete each time data is input or updated in SAM.
Comment: One respondent stated that the proposed rule provided no
mechanism for posting a contractor's vindication of a labor law
violation previously disclosed in SAM. The respondent is concerned that
contractors would be forever harmed by the required reporting of
incomplete, nonfinal information, without an effective remedy.
Response: Contractors are encouraged to maintain an accurate and
complete SAM registration and may update their information in SAM any
time the information changes.
Comment: One respondent stated the proposed rule does not clarify
whether companies must submit labor law violation information to FAPIIS
pursuant to each contract or whether a company may update the
information once every six months to cover the reporting requirements
for all of their contracts.
Response: The companies do not submit this semiannual update
information to FAPIIS but to SAM. The final rule has been revised to
clarify that contractors have flexibility in establishing the date for
the semiannual update; they may use the six-month anniversary date of
contract award, or may choose a different date before that six-month
anniversary date to achieve compliance with this requirement. In either
case, the contractor must continue to update it semiannually.
Registrations in SAM are required to be current, accurate, and complete
(see FAR 52.204-13). If the SAM registration

[[Page 58616]]

date is less than six months old, this will be evidence to the
Government that the required representation and disclosure information
is updated and the requirement is met. The revised language should
provide contractors with more flexibility for compliance with the
semiannual requirement.
Comment: One respondent stated the final rule should require that
more labor law violation data be made publicly available on the FAPIIS
database. The respondent recommended adding the following to the public
disclosure requirement: (1) The address(es) of the worksite where the
violation took place; and (2) the amount(s) of any penalties or fines
assessed and any back wages due as a result of the violation.
Response: The FAR rule implements the E.O. by requiring the minimum
information necessary; requiring any additional information would
unnecessarily increase the burden on the public.
Comment: Respondents expressed concern that the development of the
centralized electronic database for reporting of labor law compliance
information has not been completed.
Response: The next release of Government changes to SAM, scheduled
for October 28, 2016, will collect the following data fields for each
labor law decision required by FAR 52.212-3(s)(3)(a) and FAR 52.222-
59(b)(1)(i), based on the information the Entity provides when directed
to report the details in SAM by a contracting officer:
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;
Similarly, FAPIIS will be prepared to publicly display such
information, if appropriate.
Comment: One respondent observed that the proposed rule imposes
requirements that are more onerous than those imposed by FAPIIS.
Specifically, FAPIIS provides the contractor with a mechanism to object
to the public posting of information that is subject to FOIA
protections from disclosure. The respondent noted FAPIIS reporting also
permits the contractor to provide its comments along with the reported
violation, so that the reported matter is viewed in context.
Response: The Councils note that the final rule has been revised so
that contractors provide mitigating factors in SAM for the contracting
officer's consideration; this information will not be made public
unless the contractor determines that it wants this information to be
made public.
Comment: One respondent stated that FAPIIS was established to
create a ``one-stop'' resource for contracting officers reviewing the
background of prime contract offerors. In implementing FAPIIS, the FAR
Council identified existing sources of information that would not
require the creation of additional information submissions. If no
existing source was found, preference was given to obtaining
information from Government sources rather than contractors. The
respondent stated that FAPIIS applies only to reporting covered
proceedings in connection with the award to or performance by the
offeror of a Federal contract or grant and this limits the scope of
FAPIIS reporting to matters that have a nexus to a contractor's
contracting relationship with the Federal Government.
Response: In order to maximize efficiency by leveraging an existing
and known system, the E.O. identified FAPIIS for the display of labor
law decision disclosures. The FAPIIS statute does not require that
proceedings involve award or performance of a Federal contract or grant
(see for example paragraph (c)(8) of 41 U.S.C. 2313 on blocked persons
lists).
f. Contractor Performance Assessment Reporting System (CPARS)
Comment: A respondent was concerned that the alternative proposed
rule language at FAR 22.2004-5 is overly broad and past performance
reports should require a clear connection between the labor law
performance issue and the contract action being reported in CPARS. Any
discussion in the past performance report should have arisen directly
under the contractor's performance of the contract action being
reported in CPARS, or at a minimum the labor law performance issue
should be connected to a substantially similar labor law issue that was
considered during the initial responsibility determination for the
contract action subject to CPARS reporting. The respondent believed
that labor compliance agreements having no connection to the contract
action being reported in CPARS should be excluded from the contractor's
performance report.
Response: Contracting officers address regulatory compliance,
including compliance with labor laws, as appropriate. The Councils have
not incorporated the alternative supplemental FAR language at FAR
22.2004-5. However, the final rule has been revised to include a
contractor's relevant labor law compliance and the extent to which the
prime contractor addressed labor law violations by its subcontractors
in preparation of past performance evaluations (see FAR 42.1502(j)).
g. Chief Acquisition Officer Council's National Dialogue on Information
Technology
Comment: One respondent expressed concern that the proposed rule
required a single Web site for all Federal contract reporting
requirements and commented on the reference in the proposed rule to the
National Dialogue, which is an interagency campaign to solicit feedback
on how to reduce burdens and streamline the procurement process. The
respondent noted the National Dialogue Web site contained no
information related to implementation of E.O. 13673. The respondent
requested that the FAR Council re-open the public comment period after
sufficient information has been made available on the Web site to allow
for meaningful input.
Response: The reference to the National Dialogue in the preamble
was to inform the public and encourage participation in the National
Dialogue and Pilot to reduce reporting compliance costs for Federal
contractors and grantees. The proposed rule advised that such comments
would not be considered public comments for purposes of this
rulemaking.
h. Difficulty for Contractors To Develop Their Own Information
Technology System
Comment: One respondent stated that contractors do not currently
have centralized systems in place to capture information required by
the proposed rule and DOL Guidance. The respondent commented that
existing systems do not have the reliability needed to make
representations as prime contractors or subcontractors, or assess
reports from subcontractors. The respondent stated that it is not
feasible to develop information technology solutions to comply until
the requirements are known. Additionally, the respondent stated that
contractors cannot implement solutions until the scope of the State law
requirement is clear. The respondent indicated that the challenge
facing the Government is similar: Neither contracting agencies nor DOL
can develop reliable guidance or internal processes with undefined
requirements.
Response: The Councils recognize that developing information
systems is challenging for contractors, especially large contractors
with multiple

[[Page 58617]]

locations. Although the rule does not contain an explicit requirement
for contractors to establish independent IT systems, the Councils
recognize that many contractors and subcontractors will elect to create
or modify administrative and information management systems to manage
and comply with the rule's requirements. See also discussion at Section
III.B.1.c. above.
11. Small Business Concerns
Introductory Summary: To the extent practicable, the E.O. and
implementing FAR rule minimize the compliance burden for Federal
contractors and subcontractors and in particular small businesses by:
(1) Limiting disclosure requirements, for the first six months to
contracts for $50 million or more, and subsequently 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
representation of whether the offeror has any covered labor law
decisions and generally requiring more detailed disclosures only from
the apparent awardee; (3) only requiring postaward updates
semiannually; (4) creating certainty for contractors by having ALCAs
coordinate through DOL to promote consistent responses across
Government agencies regarding assessments of disclosed labor law
violations; (5) phasing in disclosure requirements for subcontractor
flowdown so that contractors and subcontractors have an opportunity to
become acclimated to new processes; (6) establishing the alternative
subcontractor disclosure approach that directs the prime contractor to
have their subcontractor disclose labor law decisions and mitigating
information to DOL; and (7) emphasizing in the final rule that labor
law decisions do not automatically render the offeror nonresponsible
(see FAR 22.2004-2(b)(6) and an equivalent statement at FAR 52.222-
59(c)(2) for assessment of subcontractors). In addition, DOL encourages
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 (See DOL Guidance Section VI,
Preassessment). Language is added at FAR 52.222-59(c)(2) that the prime
contractor should encourage prospective subcontractors to contact DOL
for a preassessment of their record of labor law compliance.
The RIA includes estimates of all costs associated with the
rulemaking and an assessment and (to the extent feasible) a
quantification and monetization of benefits and costs anticipated to
result from the proposed action and from alternative regulatory
actions. The Regulatory Flexibility Act (RFA) requires Federal agencies
to consider the impact of regulations on small entities in developing
regulations. If a proposed rule is expected to have a significant
economic impact on a substantial number of small entities, an initial
regulatory flexibility analysis must be prepared.
Comment: Respondents, including the SBA Office of Advocacy, asked
for clarification of three aspects of applying FAR subpart 19.6,
Certificates of Competency and Determinations of Responsibility, under
the final rule. Specifically, they asked whether: (1) A Certificate of
Competency (COC) would apply if a contracting officer determines an
apparent successful small business lacks responsibility due to a labor
law violation, (2) under a COC the contracting agency's ALCA or an ALCA
at the SBA would make the final determination of whether a small
business is responsible, and (3) a system for COC could be set up for
small business subcontractors.
Response: The E.O. and FAR rule do not make any changes to the SBA
COC program or require a new COC system to be established for small
subcontractors. Contracting officers are required to refer small
businesses that are found nonresponsible to the SBA (see FAR 9.103(b)
and 19.601(c)), and the final rule reiterates that nonresponsibility
determinations must be referred to SBA (see FAR 22.2004-2(b)(5)(iv)).
The SBA certifies responsibility for small businesses under the SBA COC
program, applying existing processes and procedures for COCs.
Consistent with existing FAR 9.104-4(a), prime contractors make
responsibility determinations for their prospective subcontractors. The
COC program does not apply to determination of subcontractor
responsibility. The ALCA is not involved in making the responsibility
determination.
Comment: Respondents, including the SBA Office of Advocacy, raised
a number of concerns that the rule would drive out small businesses,
including specialized information technology firms, from Government
procurement. A number of the concerns related to cost implications
including additional compliance costs and delays in processing
contracts, lack of resources to compile and/or assess reports of labor
law violations and unwillingness to take on the risk of making a false
statement to the Government, lack of profitability due to the cost
burden (a particular concern of the SBA Office of Advocacy), and no
existing systems for small businesses to track their own labor law
violations or those of subcontractors. The SBA Office of Advocacy
recommended a phase-in period for small businesses.
Response: Federal contractors will undertake the necessary due
diligence to fully comply with the requirements of the E.O. and the
final rule. Steps were taken to minimize the impact on small businesses
as described in the introductory summary to this section III.B.11. With
regard to the risk of making a false statement, see the discussion
above at Section III.B.1.c. With regard to the risk of false statements
by subcontractors, FAR 52.222-58(b)(2) and 52.222-59(f) are revised to
read that ``A contractor or subcontractor, acting in good faith, is not
liable for misrepresentations made by its subcontractors about labor
law decisions or about labor compliance agreements.''
Comment: Respondents, including the SBA Office of Advocacy,
expressed concern that the Initial Regulatory Flexibility Analysis
(IRFA) of the proposed rule is flawed in a number of ways and is in
violation of the Regulatory Flexibility Act. The flaws described by the
respondents included:
Presumption that the $500,000 applicability threshold will
minimize impact to small businesses, given that long-term supplier
agreements with small businesses are likely to exceed this threshold;
Reliance on different metrics to determine the percentage
of entities with labor law violations (respondent suggested using firms
versus entities);
Failure to compare the compliance burden on the typical
small business in relevant terms to the burden on other affected
businesses; and
Reliance on Federal Procurement Data System (FPDS) data to
determine the proportion of small versus large subcontractors.
Response: The Councils have considered concerns raised by
respondents regarding IRFA concerns and provide the following in
response:
The E.O. provides no exclusion for supplier agreements.
Supplier agreements are used between a company and its supplier, are
typically for products, and range in contract value. However, the
exemption for COTS items, and the $500,000 and above threshold, should
minimize the number

[[Page 58618]]

of supplier agreements with small businesses that are covered by the
E.O.
The FAR Council worked closely with DOL in developing the
final RIA for this rule. In response to public comments, DOL reexamined
the methodology used to develop the estimated percentage of likely
violators and has revised the estimate for all entities from 4.05
percent to 9.67 percent. For a detailed discussion of the estimating
methodology, please see the final RIA. The Final Regulatory Flexibility
Analysis (FRFA) has been prepared using the 9.67 percent estimate
developed for the RIA.
The FAR Council, working closely with DOL, developed the
regulatory compliance burden estimates used in the analyses prepared
for this final rulemaking. In response to public comments, relative
size structure and complexity of small and other than small businesses
has been considered and taken into account in developing the burden
estimates. The Government does not collect data that easily translates
into such a stratification of business size and complexity, however,
where it was feasible and lent greater realism to the estimates, it has
been considered, e.g., estimates of tracking system costs. For a more
detailed discussion of how relative business size and complexity have
been considered, see the final RIA.
The Government's procurement data source is FPDS, and this
data system is used in preparing estimates for procurement regulatory
actions. For each procurement, FPDS contains a data field that
indicates whether the procurement is awarded to a small business or an
other than small business. As the Government has no other comparable
data source for business size of subcontractors, the approximate
percentage of small versus large businesses represented in FPDS was
applied, as an estimating methodology, in developing the estimated
population of subcontractors.
Comment: Respondents stated the Government failed to articulate in
the IRFA a rational basis for its decision to promulgate the rule, in
violation of the Regulatory Flexibility Act. Specifically, respondents
contended that the Government merely regurgitated the substance of E.O.
13673, made a conclusory statement that the rule would reinforce
protections for workers, and made a conclusory statement that the rule
would ensure the Government contracted with companies with a
satisfactory record of business ethics.
Response: The FAR Council examined a number of options and
combinations of options to meet the requirements of the E.O., achieve
the objectives of the E.O., and minimize burden on industry, especially
small businesses. The introductory summary to this section III.B.11.
describes the results of this examination of options, which include
implementing the alternative for subcontractor labor law decision
disclosures to DOL instead of to the prime contractor. This alternative
approach is expected to reduce the compliance burden of this regulatory
action for primes and subcontractors and will benefit small businesses,
particularly small business prime contractors. The FRFA contains
discussion of the examination and consideration of these options.
Although it is not possible to guarantee the Government only
contracts with companies with integrity and business ethics, the E.O.
and the rule are expected to greatly increase the Government's ability
to contract with companies that regularly comply with labor laws, as
the rule and DOL Guidance provide a structural foundation and
assistance to companies that do business with the Government to
continually improve their compliance with labor laws.
Comment: Respondents stated the Government failed to identify in
the IRFA any significant alternatives to the rule that accomplished the
rule's stated objectives while minimizing any significant economic
impact on small entities, in violation of the Regulatory Flexibility
Act. For example, the respondents indicated that Government did not
analyze the recordkeeping or ongoing compliance costs that will be
imposed on small businesses. In addition, Federal dollars would be
better spent improving existing processes rather than requiring
contractors to collect data and self-report.
Response: In the proposed rule the FAR Council recognized that the
rule would impose recordkeeping and ongoing compliance costs. The FAR
Council requested input from the public regarding what types of
recordkeeping systems it might employ to develop and maintain
compliance, and what costs might be incurred to initialize and maintain
such systems. The final rule analyses (RIA, PRA Supporting Statement,
and FRFA) have been developed to include estimates for such costs. The
Government remains committed to ongoing efforts to improve its ability
to retrieve data from the various enforcement agencies. As these
abilities are developed and improved, the Government will continue to
consider the most efficient means to meet the requirements and
objective of the E.O. and minimize compliance burden on industry,
especially small businesses.
Comment: One respondent stated the Government failed to identify in
the IRFA any relevant Federal rules which may duplicate, overlap, or
conflict with the rule, in violation of the Regulatory Flexibility Act.
In particular, the respondent asserted that the rule conflicts with
suspension and debarment procedures because Congress determined the
suspension and debarment remedy should be available for only two of the
statutes identified in E.O. 13673: The Davis-Bacon Act and the Service
Contract Act. The respondent also asserted that each of the 14 labor
laws already have complex enforcement mechanisms and remedial schemes,
and only some of those allow for the denial of a Federal contract as a
result of a violation.
Response: The Councils do not find that the rule conflicts with
existing procedures for suspension and debarment. The rule creates
procedures associated with the award of individual contracts.
Suspension and debarment applies to contracts across all Federal
agencies. Suspension and debarment procedures and labor law enforcement
procedures are independent of one another. Companies who have violated
labor laws respond to the enforcing agency or body that found the
violation. Suspension and debarment actions are taken by Suspending and
Debarring Officials to protect the Government's interest when a
company's record of integrity and business ethics indicates cause for
concern. The actions of an enforcement agency when it issues an
administrative merits determination for a labor law violation, and the
procurement system's use of the suspension and debarment process, are
independent of each other. For additional discussion see Section
III.B.1 of this preamble.
Comment: Respondents expressed concern that small businesses
(especially Service-Disabled Veteran-Owned, Women-owned and HUBzone
small businesses) would not have the resources to collect and assess
information on the labor law violations of large contractors, including
Fortune 500 companies, that serve as their subcontractors.
Response: The Councils acknowledge that small business prime
contractors may have larger firms as subcontractors, and the assessment
of the labor law violations of a large firm may be especially difficult
for the small prime contractor. The Councils have revised the final
rule at FAR 52.222-59(c) to incorporate the alternative presented in

[[Page 58619]]

the proposed rule, whereby subcontractors provide their labor law
decision disclosures (including mitigating factors and remedial
measures) to DOL (see introductory summary to Section III.B.5). DOL
will assess the violations and advise the subcontractor who will make a
representation and statement to the prime contractor pursuant to FAR
52.222-59(c)(4)(ii). A great deal of the burden to prime contractors,
including small business prime contractors, thus has been reduced. If
DOL does not provide a timely response, the final rule provides that
the prime contractor may proceed with making a responsibility
determination using available information and business judgment,
including whether, given the circumstances, it can await DOL analysis,
see FAR 52.222-59(c)(6).
Comment: Respondents expressed concerns that the DOL Guidance was
devoid of any instructions on how the size of a contractor could impact
an analysis of whether a business had ``pervasive'' violations and
therefore could be applied inequitably against small businesses. In
addition, a respondent expressed concern that there was no definition
in the DOL Guidance of what constituted a small, medium, or large
contractor.
Response: Contractor size standards are the purview of the SBA and
are specific to the procurement's assigned North American Industry
Classification System (NAICS) code. However, in response to these
comments in its Preamble to the final Guidance, DOL explains that it
declines to eliminate the company-size factor because the E.O.
explicitly requires the Department to ``take into account . . . the
aggregate number of violations of requirements in relation to the size
of the entity.'' See E.O. Section 4(b)(i)(B)(4). DOL notes that the
size of the employer will be one factor among many assessed when
considering whether violations are pervasive. Likewise, DOL declines to
establish specific criteria for how company size will affect the
determination of pervasive violations. Violations vary significantly,
making the imposition of bright-line rules for company size
inadvisable. However, the final DOL Guidance in Appendix D provides
examples that note in most of the examples the number of employees for
the contractor. The examples illustrate circumstances under which
violations may be classified as pervasive.
Comment: One respondent stated the Government violated the
Regulatory Flexibility Act by failing to identify or consider in the
IRFA the burden of compliance faced by small entities such as small
towns, small nonprofit organizations, and small school systems.
Response: To the extent that small towns, nonprofit organizations,
and school systems are engaged in Federal procurement contracts, award
information to these entities is reported in FPDS. The FRFA addresses
the impact on small entities such as small towns, small nonprofit
organizations, and small school systems.
Comment: A respondent expressed concern about small businesses'
ability to monitor subcontractor compliance near the threshold value of
$500,000, and suggested raising the threshold to $3 million for small
business prime contractors.
Response: The E.O. set the $500,000 applicability threshold in
order to minimize impact on small business and to be consistent with
current procurement practices, including the then-existing FAPIIS
reporting threshold ($500,000 when the E.O. was signed). The threshold
in the FAR rule will remain at $500,000.
Comment: Respondents, including the SBA Office of Advocacy,
expressed concerns that prime contractors will avoid contracting with a
small business that has a labor law violation, rather than wait for the
outcome of a responsibility determination, and that it would be
difficult and costly to find new subcontractors.
Response: The existence of a single labor law decision is not cause
for disqualification; however, if a subcontractor is found to be
nonresponsible, then it is appropriate to select a more suitable
source. All businesses with labor law violations, including small
business subcontractors, are encouraged to remediate violations and
consult early with DOL. In addition, the Councils have revised the
final rule to implement the alternative approach provided in the
proposed rule, whereby subcontractor labor law information (including
decisions, mitigating factors, and remedial measures) is submitted to
DOL and DOL assesses the violations (FAR 52.222-59(c)). (See
introductory summary to Section III.B.5.) This revised implementation
is designed to, among other things, lessen the concerns of prime
contractors so that they will continue subcontracting with small
businesses.
The final rule has been revised at FAR 22.2004-2(b)(6) to clarify
that for prime contractors ``[d]isclosure of labor law decision(s) does
not automatically render the offeror nonresponsible'' and ``[t]he
contracting officer shall consider the offeror for contract award
notwithstanding disclosure of one or more labor law decision(s).''
Similar language is added at FAR 52.222-59(c)(2) regarding
subcontractor violations.
Comment: The SBA Office of Advocacy stated the proposed regulation
underestimated the rule's ``quantifiable cost'' to the public, and
recommended that the Council and DOL provide more clarity as to the
actual cost of compliance for small entities acting as prime
contractors and as subcontractors. As an example, the respondent said
the Government's calculation did not reflect additional time and cost
to review phase two of the DOL Guidance and the revised FAR rule, nor
did it include any costs for review of current State labor laws.
Response: In preparing the analyses (RIA, PRA Supporting Statement,
FRFA) for the final rule, DOL and the FAR Council considered public
comments and have adjusted the estimates of quantifiable costs of
compliance with the regulation, including the costs for regulatory
review and familiarization. DOL and the FAR Council have also paid
particular attention to, and where appropriate have noted more clearly,
the estimates of costs of compliance for small entities acting as prime
contractors and as subcontractors. The proposed and final FAR rules do
not address the cost of reporting violations related to equivalent
State laws (other than OSHA-approved State Plans) because the rule and
DOL's Guidance do not implement those requirements of E.O. 13673. (See
also the discussion above at Section III.B.1.d.)
Comment: The SBA Office of Advocacy recommended that the IRFA be
amended to reflect the costs that are cited in the RIA. The Office of
Advocacy suggested that to further support the importance of this cost
data, once such data are made more readily available, the Council
should extend the public comment period for 30 days.
Response: The RIA includes estimates of all costs associated with
the rulemaking and an assessment and (to the extent feasible) a
quantification and monetization of benefits and costs anticipated to
result from the proposed action and from alternative regulatory
actions. The Regulatory Flexibility Act (RFA) requires Federal agencies
to consider the impact of regulations on small entities in developing
regulations. If a proposed rule is expected to have a significant
economic impact on a substantial number of small entities, an initial
regulatory flexibility analysis must be prepared. A summary of the
proposed RIA and IRFA were published with the proposed rule and full

[[Page 58620]]

documents were available for review by the general public. The public
comment period deadline was extended twice from the original closing
date of July 27, 2015, to August 11, 2015, and again to August 26,
2015, to provide additional time for interested parties to review and
provide comments on the FAR case including the RIA and IRFA. Those
comments have been reviewed and considered in the development of the
final RIA and FRFA.
Comment: A respondent suggested exempting small businesses to
lessen burden.
Response: The objective of the E.O. is to increase the ability of
the Government to award contracts to contractors that are compliant
with labor laws and as such does not exempt small businesses. However,
the E.O. and the FAR rule were designed to minimize the burden
associated with the required disclosure for Federal contractors and
subcontractors, especially small businesses.
Comment: A respondent suggested the Government allow small business
to submit their filings to one central database in order to lessen the
burden on small businesses.
Response: In regard to prime contractors (including small
businesses), the initial representations are completed in SAM. If, at
responsibility determination, disclosures are required, they will
likewise be made in SAM. For subcontractors (including small business
subcontractors), the Councils have revised paragraphs (c) and (d) of
the FAR clause 52.222-59, Compliance With Labor Laws (Executive Order
13673), in the final rule to implement the alternative presented in the
proposed rule for subcontract labor law violations to be disclosed to
DOL. (See the introductory summary to Section III.B.5.) This eliminates
the requirement for subcontractors to disclose to each of their
contractors, reducing the compliance burden for small businesses
whether in the capacity of primes or subcontractors.
Comment: A respondent suggested that the IRFA's discussion of
alternatives to subcontractor reporting overstates the obligation of
the prime contractor to make a subcontractor responsibility
determination.
Response: Consistent with existing procurement practice and FAR
9.104-4(a), prospective prime contractors are responsible for
determining the responsibility of their prospective subcontractors.
12. State Laws
a. OSHA-Approved State Plans
The E.O. directs DOL to define the State laws that are equivalent
to the 14 identified Federal labor laws and executive orders. See E.O.
Section 2(a)(i)(O). The proposed DOL Guidance stated that OSHA-approved
State Plans are equivalent State laws for purposes of the E.O.'s
disclosure requirements because the OSH Act permits certain States to
administer OSHA-approved State occupational safety-and-health plans in
lieu of Federal enforcement of the OSH Act. See 80 FR 30574, 30579.
Comment: Several respondents addressed the inclusion of OSHA-
approved State Plans as equivalent State laws. One respondent agreed
that State Plans are equivalent to the OSH Act, as the State Plans
function in lieu of the OSH Act in those States, and a second
respondent called it ``essential'' to the E.O.'s purpose that both the
OSH Act and ``its State law equivalents'' be included.
In contrast, another respondent argued that the State Plans are not
equivalent State laws. The respondent noted that, under Section 18 of
the OSH Act, the State Plans must be ``at least as effective'' as
OSHA's program, and therefore may be more protective than OSHA's
requirements.
Response: DOL responds to these comments in its Preamble to the
final DOL Guidance. See DOL Preamble Section-by-Section Analysis,
II.B., coverage of ``OSHA State Plans''. DOL did not modify this aspect
of the Guidance. The Councils agree with DOL. Equivalent State laws do
not need to be identical to Federal laws, and failing to include the
OSHA-approved State Plans would lead to a gap in coverage. The OSHA-
approved State Plans can be found at www.osha.gov/dcsp/osp/approved_state_plans.html.
b. Phased Implementation of Equivalent State Laws
The proposed Guidance provided that DOL will identify additional
equivalent State laws in a second Guidance to be published in the
Federal Register at a later date.
Comment: Several respondents expressed concern that the Guidance is
incomplete without identification of all equivalent State laws. A
number of them argued that without the second Guidance employers are
unable to estimate the costs associated with implementing the E.O.,
including the disclosure requirements. One respondent asserted that by
failing to identify equivalent State laws, the proposed Guidance
ignored the costs of tracking and disclosing violations of potentially
hundreds of additional laws and the potential costs of entering into
labor compliance agreements with respect to those additional laws. Some
industry respondents called for a delay of the implementation of the
E.O.'s requirements until guidance identifying the equivalent State
laws is issued. Another respondent requested that the second Guidance
not be issued at all because the requirement will be ``unworkable.''
Others encouraged DOL to issue the second Guidance ``swiftly'' before
the end of 2015.
Response: DOL responds to these comments in its Preamble to the
final DOL Guidance. See DOL Preamble Section VIII. Effective date and
phase-in of requirements, coverage of ``Phased implementation of
equivalent state laws''. DOL did not modify this aspect of the
Guidance. The Councils agree with DOL. DOL plans to identify the
equivalent State laws in a second Guidance published in the Federal
Register at a later date.
That second Guidance will be subject to notice and comment, and the
FAR Council will engage in an accompanying rulemaking that will include
the costs of disclosing labor law decisions concerning violations of
equivalent State laws, and address applicable requirements of the CRA,
SBREFA, RFA, and E.O. 12866. Delaying implementation of all of the
E.O.'s requirements until DOL completes the second Guidance will not
serve to promote the E.O.'s goal of improving the Federal contracting
process and would have negative consequences on the economy and
efficiency of Federal contracting by allowing contractors who have
unsatisfactory records of compliance with the 14 Federal labor laws
identified in the Order, and OSHA-approved State Plans, to secure new
contracts in the interim. The proposed and final FAR rules do not
address the cost of reporting violations related to equivalent State
laws (other than OSHA-approved State Plans) because the rule and DOL's
Guidance do not implement those requirements of E.O. 13673. (See also
the discussion at Section III.B.1.d.)
13. DOL Guidance Content Pertaining to Disclosure Requirements
Introductory Summary: The Councils received various responses
concerning matters addressed by DOL Guidance and applied in the
proposed rule. The E.O., Section 2, provides, in relevant part, that
DOL Guidance will define ``administrative merits determination,
arbitral award or decision, or civil judgment . . . rendered . . . for
violations of any of the [listed] labor

[[Page 58621]]

laws and Executive Orders (labor laws).'' The E.O., Section 4(b),
states, in relevant part, that DOL ``shall (i) develop 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 of these
requirements for purposes of implementation of any final rule issued by
the FAR Council pursuant to this order.'' DOL analyzed public comments,
and developed definitions which the FAR Council is adopting in its
final rule. The DOL Guidance was initially published concurrent with
this FAR rule and significant revisions to the Guidance will be
published for public comment. DOL's analysis is referred to below; for
more detail see the DOL Preamble published today accompanying the DOL
Guidance.
a. General Comments
Comment: Respondents, including the SBA Office of Advocacy,
contested the proposed rule's incorporation by reference of the DOL
Guidance. Some respondents asserted that because the DOL Guidance is
explicitly incorporated in the FAR, it is a de facto regulatory
provision that must be subject to notice-and-comment rulemaking. Other
respondents said that any future changes to the DOL Guidance must also
be subject to notice-and-comment rulemaking. One respondent said the
current approach, which incorporates the DOL Guidance into the FAR, is
a violation of the APA. One respondent requested the withdrawal of the
DOL Guidance.
Response: The Councils disagree that references in the rule to
DOL's Guidance, such as for purposes of determining whether a labor law
violation is serious, repeated, willful and/or pervasive, conflict with
the APA, 5 U.S.C. 553(b). The E.O. charges DOL with developing guidance
on, among other things, the definitions of those specific terms. The
rule accordingly relies on those definitions. Moreover, whether or not
required, DOL satisfied the APA by publishing the proposed Guidance in
the Federal Register and soliciting and then considering comments
before issuing the final Guidance. The FAR 22.2002 definition of ``DOL
Guidance'' includes an acknowledgement that significant revisions will
be published for public comment in the Federal Register.
Comment: One respondent requested that DOL provide a
``preclearance'' process for contractors who have no labor law
violations, or have remedied any reportable labor law violations. The
respondent also requested the names of precleared contractors be made
publicly available.
Response: DOL has provided a preassessment process for prospective
prime contractors and subcontractors, covered in the DOL Guidance at
Section VI. However, the FAR does not cover a preassessment process
because it takes place prior to the procurement process. Concerning
covered subcontractors, the final rule has been modified to clarify
that contractors shall direct their prospective subcontractors to
submit labor law violation information (including mitigating factors
and remedial measures) to DOL. (See introductory summary to Section
III.B.5.) Contractors will consider DOL analysis and advice as they
make responsibility determinations on their prospective subcontractors.
See FAR 22.2004-1(b), 52.222-58, and 52.222-59(c) and (d).
Comment: One respondent commented that if the Government chooses to
apply the E.O. to subcontractors, the definition of ``subcontract'' and
``subcontractor'' should be modified. It stated that the proposed DOL
Guidance definitions were inconsistent with the FAR part 44 provisions
on subcontracting, which narrowly define a ``subcontract'' and
``subcontractor.''
Response: The DOL Guidance is not inconsistent with the definitions
of ``subcontract'' and ``subcontractor'' in FAR part 44. Unlike FAR
part 44, the DOL Guidance does not specifically define these terms.
Rather, it defines the term ``covered subcontract''--meaning a
subcontract that is covered by the E.O. It describes how it uses the
term ``subcontractor,'' for ease of reference both to subcontractors
and prospective subcontractors. Neither of these uses of the terms are
inconsistent with FAR part 44. The definition of ``covered
subcontract'' in the DOL Guidance is consistent with sections 2(a)(i)
and (iv) of the E.O. which limit applicability to prime contracts
exceeding $500,000, and any subcontracts exceeding $500,000 except for
acquisitions for COTS items. Prime contractors will determine
applicability by following the requirement as it is outlined in FAR
52.222-59(c)(1). Consistent with the E.O., the DOL Guidance explains,
among other things, that references to ``contractors'' and
``subcontractors'' include both individuals and organizations, and both
offerors on and holders of contracts (see DOL Guidance, Section V,
Subcontractor responsibility).
Comment: One respondent requested that a definition of ``compliant
with labor laws'' be added, and that the phrase be defined as
compliance with current business ethics standards.
Response: The Councils decline to add a definition of ``compliant
with labor laws'' to mean compliance with current business ethics
standards. While clearly compatible, the two terms are distinct and not
always coextensive.
Comment: A respondent expressed concerns that DOL's Guidance
permits contracting officers to take remedial measures up to and
including contract termination and referral to the agency's suspending
and debarring officials. They contended that the new proposals play
directly into the hands of malicious third parties that seek to put
unfair pressure on employers, because mere allegations of labor law
violations could result in disqualification of targeted Government
contractors.
Response: Contracting officers have a number of contract remedies
available to them that are preexisting in the FAR. The final rule,
consistent with the proposed rule, includes mention of a number of
these available remedies, and also addresses the availability of a
labor compliance agreement as a remedy. The DOL Guidance mentions the
remedies that are addressed in the FAR. The DOL Guidance does not
create or permit actions available to contracting officers. The E.O.
contemplates that information regarding labor law violations will be
``obtained through other sources.'' During the postaward period, ALCAs
are required to consider any information received from sources other
than the Federal databases into which disclosures are made. See FAR
22.2004-3(b)(1). ALCAs will be available to receive such information
from other sources. ALCAs will not recommend any action regarding
alleged violations unless a labor law decision, as defined in FAR
22.2002, has been rendered against the contractor.
Comment: A respondent recommended that the rule provide that
agreeing to legally enforceable protection for workers who come forward
with information regarding violations is a strong mitigating factor in
determining a contractor's ethics and responsibility. The respondent
asserted that the best tool for ensuring that future violations do not
occur are informed workers who are not afraid to step forward when a
violation occurs.
Response: Although protections for workers are not addressed in the
FAR rule, DOL does include consideration of such information as a
mitigating factor in the Guidance at Section III.B.1., Mitigating
factors that weigh in favor of a satisfactory record of Labor Law
compliance, at paragraph d, which is also found in Appendix E,
Assessing

[[Page 58622]]

Violations of the Labor Laws. The E.O. does not authorize the Councils
to create an anti-retaliation mechanism for adverse actions taken
against workers or others who provide information to contracting
officers, ALCAs, or others. The Councils note, however, that Federal
law provides whistleblower protections to employees who report fraud or
other violations of the law related to Federal contracts. See, e.g.,
FAR subpart 3.9, Whistleblower Protections for Contractor Employees.
b. Defining Violations: Administrative Merits Determinations, Arbitral
Awards, and Civil Judgments
Comment: Two respondents said that administrative merits
determinations by Government agencies are not and cannot be labeled as
labor law violations, as proposed by FAR subpart 22.20.
Response: The E.O. requires the disclosure and weighing of
administrative merits determinations, arbitral awards or decisions, and
civil judgments, as defined in Guidance issued by DOL, for violations
of the specified labor laws (see E.O. Section 2(a)(i)). This can
include determinations, awards, decisions, and judgments subject to
appeal. Challenges to the express contents of the E.O. are outside the
purview of this rulemaking. (See also the discussion at Section
III.B.1.b.)
Comment: One respondent requested that the regulation limit the
scope of reportable labor law violations to facilities currently in use
and owned by the contractor at the time of a bid, and to employees
currently working under Federal contract.
Response: The Councils decline to limit disclosure requirements to
facilities currently in use and owned by the contractor at the time of
a bid and to employees currently working under Federal contract. Such
limitations on the scope of disclosure would be inconsistent with and
largely undermine the effectiveness of the E.O.
Comment: One respondent requested that the regulation clarify
whether a matter qualifies as a labor law violation if it is settled or
resolved in a manner that results in the elimination of the violation.
Response: While not negating the existence of an administrative
merits determination, arbitral award or decision, or civil judgment (as
defined in the DOL Guidance), evidence submitted of remedial measures
taken to resolve or settle a labor law violation shall be considered by
a contracting officer in making a responsibility determination. A
private settlement, however, that occurs without a determination of a
labor law violation is not a civil judgment under the E.O. In addition,
as the DOL Guidance explains, a labor law decision that is reversed or
vacated in its entirety need not be disclosed. (See Section II.B.4. of
the Guidance.)
Comment: Respondents commented that FAR subpart 22.20 should
require contractors to report only fully adjudicated labor law
violations. Specifically, the respondents challenged the definition of
labor law violation as including administrative merits determinations
asserting that administrative merits determinations are not final, are
frequently overturned in court, are not issued pursuant to proceedings
that provide due process protections to contractors, and are often
issued based on novel, untested theories that seek to expand or
overturn existing law.
Response: The E.O. mandates the disclosure of administrative merits
determinations of labor law violations. Furthermore, the Councils
disagree that requiring disclosure of administrative merits
determinations will interfere with due process. Existing procedural
safeguards available to prospective contractors during the preaward
responsibility determination, or to contractors during postaward
performance, remain intact. Among other things, contractors receive
notice that the responsibility determination is being made and are
offered a predecisional opportunity to be heard by submission of any
relevant information, including mitigating factors related to any labor
law decision. Also, no limit is placed on contractors' postdecisional
opportunity to be heard through existing administrative processes and
the Federal courts. (See also the discussion at Section III.B.1.b.)
Comment: One respondent commented that, as with the definition of
administrative merits determination, the definitions of civil judgment
and arbitral award or decision are, in some instances, based on
preliminary determinations or mere allegations. By requiring
contractors to report such preliminary findings, the respondent
contended that the DOL Guidance short-circuits due process and gives
undue weight to preliminary determinations. The respondent suggested
revising the definitions of ``civil judgment'' and ``arbitral award or
decision'' to limit them to judgments made on the basis of a complete
record, including contractor response, a decision in writing, and a
finding of fault.
Response: The Councils do not agree that the definitions for civil
judgment and arbitral award or decision undermine due process or are
based on allegations alone and need to be limited. For purposes of the
E.O., a labor law violation may exist, even if the determination is not
final, or, in the case of preliminary injunctions, if there is a court
order that enjoins or restrains a labor law violation.
Comment: The SBA Office of Advocacy asked on behalf of small
businesses whether the rule allows for due process and stated that the
implication of the rule is that a disclosure of a violation, such as
administrative merits determinations, before final adjudication may
result in the denial of a contract.
Response: Requiring disclosure of administrative merits
determinations will not interfere with due process. Existing procedural
safeguards available to prospective contractors during the preaward
responsibility determination, or to contractors during postaward
performance, remain intact. Among other things, contractors receive
notice that the responsibility determination is being made and are
offered a predecisional opportunity to be heard by submission of any
relevant information, including mitigating factors related to any labor
law decision. Also, no limit is placed on contractors' postdecisional
opportunity to be heard through existing administrative processes and
the Federal courts. (See also discussion at Section III.B.1.b.)
Comment: Respondent commented that every labor law identified in
the E.O. provides due process for contractors before they can be forced
to pay a fine, or comply with long term injunctive relief. However, the
respondent indicated that the proposed FAR rule and proposed DOL
Guidance provide virtually no due process protections. According to the
respondent, basing responsibility determinations on preliminary agency
findings undermines the accuracy of responsibility determinations and
increases the chance that contracts will be denied due to mistakes,
incompetency, and bias with little possibility of check, balance, or
correction by an objective arbiter. While permitting contractors the
opportunity to explain reportable incidents is a critically important
component, respondent asserts that it provides little comfort to
contractors who still have comparatively little real guidance about the
types of conduct that will lead to the denial of Federal contracts or
de facto debarment.
Response: Employers who receive administrative findings of labor
law violations have the right to due process, including various levels
of adjudication

[[Page 58623]]

and review before administrative and judicial tribunals, depending on
the labor law involved in the violation. For clarity, DOL has modified
its Guidance to include an additional discussion of the three steps in
the assessment and advice process: Classifying of violations, weighing
of the violations and mitigating factors, and providing advice. This
discussion provides extensive information about the factors that weigh
in favor of a satisfactory record of labor law compliance, and those
factors that weigh against. It also now contains a separate and more
extensive explanation of labor compliance agreements, which are another
tool that may be used to assist contractors in coming into compliance
(See DOL Guidance, Section III.B. and III.C.).
Comment: One respondent commented that nonfinal violations can be
later overturned, which makes the reporting unfair. The respondent
asserted that the process of agency adjudication and judicial appeal
often results in the initial administrative decision being overturned--
yet the rule and Guidance unfairly sweep these decisions within its
reach, risking loss of contracts before the employer is ultimately
vindicated.
Response: The E.O., Section 2(a)(i), requires the disclosure and
weighing of administrative merits determinations, arbitral awards or
decisions, or civil judgments, as defined in Guidance issued by DOL,
for violations of the specified labor laws and E.O.s. As the DOL
Guidance explains, this can include determinations, awards, decisions,
and judgments subject to appeal. The DOL Guidance explains that
contractors' opportunity to provide all relevant information--including
mitigating circumstances--coupled with the explicit recognition that
nonfinal administrative merits determinations should be given lesser
weight, addresses due process concerns. A contractor's avenues to seek
due process under the statutes or E.O.s violated remain undiminished
and undisturbed by the E.O. and this rule. Finally, the aim of the rule
is to increase efficiency by increasing contractor compliance with the
specified labor laws, not to deny contracts. Federal agencies have a
duty to protect the integrity of the procurement process by contracting
with responsible sources that are compliant with the terms and
conditions of their contracts including labor laws.
In addition, as the DOL Guidance explains, a labor law decision
that is reversed or vacated in its entirety need not be disclosed. (See
Section II.B.4. of the Guidance.)
Comment: Respondent expressed concerns that the proposed rule will
disqualify contractors from performing Government work because of
unadjudicated agency decisions or judicial allegations.
Response: As explained in DOL's Preamble, nonfinal administrative
merits determinations are not mere allegations. These determinations
are made only after the agency has conducted an investigation or
inspection and has concluded, based on evidentiary findings, that a
violation has occurred. (See the section-by-section analysis in the
Preamble to DOL Guidance at Section II.B.1.) Furthermore, the
definition of administrative merits determination (see DOL Guidance
Section II.B.1) is used to identify the extent of a contractor's
obligation to disclose violations. Not all disclosed violations are
relevant to a recommendation regarding a contractor's integrity and
business ethics. Only those that are found to be serious, repeated,
willful, and/or pervasive will be subsequently considered as part of
the weighing step and will factor into the ALCA's written analysis and
advice. Moreover, when disclosing labor law violations, a contractor
has the opportunity to submit all relevant information it deems
necessary to demonstrate responsibility, including mitigating factors
and remedial measures such as steps taken to achieve compliance with
labor laws. See FAR 22.2004-2(b)(1)(ii). The DOL Guidance provides that
information that the contractor is challenging or appealing an adverse
administrative merits determination will be carefully considered.
Comment: Respondents favored full disclosure of potential
violations for the consideration of contracting officers. Another
respondent requested that contractors not be required to disclose
allegations of unlawful conduct made by employees or their
representatives.
Response: The E.O. expressly provides as a threshold for disclosure
an administrative merits determination, civil judgment, or arbitral
award or decision of a labor law violation. For this reason, the
Councils decline to add a disclosure requirement of a potential
violation. An allegation alone does not mandate disclosure under the
E.O. However, an allegation may lead to a determination, or the
enjoining or restraining, of a labor law violation by an administrative
merits determination, civil judgment, or arbitral award or decision
that would need to be disclosed.
Comment: Respondents opposed the requirement that confidential
arbitral awards or decisions should be reported, as this would violate
State laws that enforce the terms of any confidentiality agreements
contained in the arbitration award and expose contractors to suit for
breach of a confidentiality provision.
Response: The E.O., Section 2(a)(i), specifically requires the
disclosure of arbitral awards or decisions without exception, and
confidentiality provisions in non-disclosure agreements generally have
exceptions for disclosures required by law. Further, the final rule
requires contractors to publicly disclose only four limited pieces of
information: The labor law that was violated, the case number, the date
of the award or decision, and the name of the arbitrator(s). See FAR
22.2004-2(b)(1)(i). There is nothing particularly sensitive about this
information, as evidenced by the fact that parties routinely disclose
this information and more when they file court actions seeking to
vacate, confirm, or modify an arbitral award. While this information
may not be sensitive, disclosing it to the government as part of the
contracting process furthers the Executive Order's goal of ensuring
that the government works with contractors that have track records of
complying with labor laws.
Comment: One respondent commented that disclosure requirements
should apply to private settlements in which the lawsuit is dismissed
without any judgment being entered because legal actions against
companies often settle without a formal judgment by a court or
tribunal. The respondent suggested that the final rule should require
the disclosure of labor law violation cases that were settled without a
final judgment, and contracting officers should be required to assess
such cases as part of the responsibility determination.
Response: Disclosure is required for civil judgments that are not
final, or are subject to appeal, provided the court determined that
there was a labor law violation, or enjoined or restrained a labor law
violation. If a private settlement results in a lawsuit dismissed by
the court without any judgment being entered of a labor law violation
or without any enjoining or restraining of a labor law violation, it
does not meet the definition of ``civil judgment''.
Comment: One respondent opposed the requirement that contractors
report civil judgments that are not final, such as preliminary
injunctions and temporary restraining orders.
Response: In defining ``civil judgment'' for the implementation of
the E.O., DOL affirms that disclosure is required for court judgments
and orders

[[Page 58624]]

that are not final, or are subject to appeal, provided the court
determined that there was a labor law violation, or enjoined or
restrained a labor law violation. A preliminary injunction qualifies as
a civil judgment if the court order or judgment enjoins or restrains a
labor law violation. Temporary restraining orders, however, are not
civil judgments for the purposes of the Order, and need not be
disclosed. They are distinct from preliminary injunctions under the
Federal Rules of Civil Procedure and can, in certain circumstances, be
issued without notice to the adverse party. (See DOL Preamble, section-
by-section analysis, Section II.B.2, Defining ``civil judgment'' and
DOL Guidance Section II.B.2.)
Comment: A number of respondents requested that various violations
be exempted from the disclosure requirement or that others that are not
reportable be required to be disclosed.
One respondent requested that contractors not be required to
disclose OSHA violations that do not occur on the premises of the
contractor; two respondents requested that contractors not be required
to report violations caused by the Government; two respondents
requested that contractors not be required to disclose administrative
merits determinations issued by a Regional Director of the National
Labor Relations Board; one respondent requested that contractors be
required to report violations of foreign laws similar to the 14
statutes and executive orders listed in FAR subpart 22.20; one
respondent requested that contractors be required to report all health
and safety violations found by any Government agency; and one
respondent requested that contractors be required to disclose labor law
violations that occurred only while the contractor was performing a
Government contract.
Response: The E.O. required DOL to provide Guidance that includes
definitions of ``administrative merits determination'', ``arbitral
award or decision'', and ``civil judgment''. DOL proposed definitions,
analyzed public comments, and has retained the essence of the proposed
definitions, but has made some minor revisions. Discussion of the
revisions can be found in Section II.B. of the section-by-section
analysis in the Preamble to the Guidance, and the final definitions can
be found in Section II.B. of the Guidance. Regarding the request that
contractors not be required to report violations caused by the
Government, if a violation was caused by the Government, the contractor
may present this as a mitigating factor. See Section III.B.1.f. of the
Guidance.
Comment: One respondent requested that contractors not be required
to disclose any violation caused by a contractor acting in good faith
to vindicate its rights.
Response: Disclosure of administrative merits determinations,
arbitral awards or decisions, and civil judgments, as defined in
Guidance issued by DOL, for violations of the specified labor laws and
orders is required even if the violation occurred despite the
contractor acting in good faith to vindicate its rights. As the DOL
Guidance explains, however, evidence of ``good faith and reasonable
grounds'' is a mitigating factor that weighs in favor of a
recommendation that a contractor has a satisfactory record of labor law
compliance. In addition, as the DOL Guidance explains, a labor law
decision that is reversed or vacated in its entirety need not be
disclosed. (See Section II.B.4. of the Guidance.)
Comment: Respondents requested that contractors be required to
disclose allegations of retaliation.
Response: An allegation of retaliation standing alone does not
mandate disclosure under the E.O. Disclosure is triggered if an
allegation of retaliation, results in a determination, or enjoining, of
a labor law violation by administrative merits determination, civil
judgment, or arbitral award or decision. Also, as the DOL Guidance
explains, evidence of retaliation related to a labor law violation
weighs in favor of a serious violation classification.
Comment: Some respondents observed that criminal violations of
workplace law are not addressed in the draft regulations, and that
existing acquisition regulations require contractors to only report on
criminal workplace law violations if they occurred while performing a
Federal contract. According to them, this would potentially exclude
some of the most serious violations of workplace laws.
The respondent indicated that while the E.O. does not specifically
address criminal violations of workplace law, the FAR already requires
disclosure of other types of criminal violations regardless of whether
they occurred during the performance of a Federal contract. The
respondent suggested that the final regulations should require
contractors to report on criminal violations occurring on private
contracts or, at the very least, allow contracting officers and
compliance advisors to review this sort of information when conducting
a review of a company that has disclosed other legal violations.
Response: DOL has declined to adopt this, and the Councils agree.
Comment: One respondent suggested that civil judgments and arbitral
awards or decisions should concern conduct that occurred or ceased
within the prior three years so that consideration is given only to
reasonably current conduct and also requested that contractors be
required to report only those administrative merits determinations made
within the past three years.
Response: The representation required of an offeror is to represent
to the best of the offeror's knowledge and belief whether there has
been ``an administrative merits determination, arbitral award or
decision, or civil judgment for any labor law violation(s) rendered
against the Offeror during the period beginning on October 25, 2015 to
the date of the offer, or for three years preceding the date of the
offer, whichever period is shorter''. (See FAR 52.222-57(c).)
``Rendered'' refers to the date of the decision, not the date of the
underlying conduct. Revisions have been made in the FAR text, including
the representations, to make this clear. To facilitate initial
implementation of the E.O., the final rule, and DOL Guidance, the
Councils have modified provisions to require disclosures for the period
beginning on October 25, 2015 to the date of the offer, or for three
years preceding the date of the offer, whichever period is shorter.
Comment: Respondent requested that contractors be required to
disclose labor law violations that occurred only while the contractor
was performing a Government contract.
Response: The Councils decline to excuse from disclosure labor law
violations that occur on nonGovernmental contracts. The E.O. provides
no exclusion of violations that occur while performing nongovernmental
work. (See discussion at Section III.B.1.b. above.)
c. Defining the Nature of Violations
i. Serious, Repeated, Willful, and/or Pervasive Violations
Comment: Respondents stated that one or more of the definitions of
``serious,'' ``repeated,'' ``willful,'' and ``pervasive'' in the DOL
Guidance are extra-legal for various reasons, including that they are
not found in a statute and are vague.
Response: E.O. section 4(b)(i) directs DOL to develop guidance to
assist agencies in classifying labor law violations as serious,
repeated, willful, or pervasive. The definitions are specific,
thoroughly explained in DOL Guidance, and are based on concrete,
factual information. (See DOL Guidance,

[[Page 58625]]

Section III.A, Preaward assessment and advice--Classifying Labor Law
violations; DOL Preamble, Section III.A, Preaward assessment and
advice--Classifying Labor Law violations; also see the Appendices to
the DOL Guidance.)
Comment: A number of respondents commented on the definitions of
``serious,'' ``repeated,'' ``willful,'' and ``pervasive''.
Some respondents said the proposed definitions of ``serious,''
``repeated,'' ``willful,'' and ``pervasive'' found in proposed FAR
subpart 22.20 are overbroad because they will result in virtually all
labor and employment agency findings at whatever stage to be viewed as
serious, repeated, willful, and/or pervasive. As a result, the
respondents said the proposed definitions will overburden contractor
responsibility determinations with irrelevant information, and will
eliminate any cost savings contemplated by the Government.
Other respondents said the vagueness of the proposed definitions of
``serious,'' ``repeated,'' ``willful,'' and ``pervasive'' found in FAR
subpart 22.20 will lead to inconsistent, arbitrary, capricious and
nontransparent results across the Government.
Response: The Councils do not agree that the definitions are
overbroad or too vague. Rather, as defined in FAR subpart 22.20 and
section III of the DOL Guidance, the criteria set forth for determining
whether violations are serious, repeated, willful, and/or pervasive are
fair, appropriate, and administrable. Many of the definitions provided
in FAR subpart 22.20 and in section III of the DOL Guidance set out
clear criteria that leave little room for ambiguity. However, in some
instances, DOL has modified the criteria for increased clarity (see DOL
Guidance, Section III.A., Preaward assessment and advice; DOL Guidance,
Section III.A.1, Preaward assessment and advice--Classifying Labor Law
violations; see also the Appendices to the DOL Guidance). DOL and ALCAs
have or will develop the expertise necessary to classify and weigh the
violations.
Comment: One respondent indicated that the DOL Guidance's
definition of ``administrative merits determination,'' combined with
its definitions of ``serious'', ``repeated'', ``willful'', and
``pervasive,'' will result in an agency always finding that there is a
serious, repeated, willful, and/or pervasive violation, or some
combination thereof. According to the respondent, this will lead to
excessive and inconsistent ALCA assessments, as well as excessive costs
for both Government agencies and contractors, because the definitions
do not distinguish bad actors from the rest of the contractor
community. For example, the respondent noted that because OSH Act
violations are serious violations under the E.O. if the underlying
citation was designated as serious by OSHA, a substantial majority of
all OSHA citations would be classified as ``serious violations.'' The
respondent also criticized the DOL Guidance's classification of a
violation as serious if it affects 25 percent of the workforce because,
in the respondent's view, the 25 percent threshold is too low and lacks
a reasonable minimum for smaller sites, and the term ``worksite''
should be more clearly defined such as in the Worker Adjustment and
Retraining Notification (WARN) Act. Finally, the respondent indicated
that it would be inefficient and costly for contractors to have to
negotiate labor compliance agreements with multiple enforcement
agencies.
Response: The rationale for requiring nonfinal administrative
merits determinations to be reported has been explained in Section
III.B.1.b. of this Preamble. Regarding the classification of violations
under the E.O., the DOL Guidance's specific definitions of each of the
terms ``serious,'' ``repeated,'' ``willful,'' and ``pervasive'' make it
clear that not all violations will meet these criteria. Moreover, even
if a violation is classified as serious, repeated, willful, and/or
pervasive, the ALCA will also consider any additional information that
the contractor has provided, including mitigating circumstances and
remedial measures.
Regarding the examples cited by the respondent, as to OSH Act
violations, the DOL Guidance explicitly incorporated the OSH Act's
definition of a serious violation to comply with Section 4(b)(i)(A) of
the E.O., which requires incorporation of existing statutory standards
for assessing whether a violation is serious, repeated, or willful. As
to the 25 percent threshold, under the final DOL Guidance, this
criterion has been narrowed so it applies only if there are at least 10
affected workers, thus avoiding triggering the 25 percent threshold
when only a few workers are affected. Additionally, as explained below
in Section III.B.13.c.ii., the definition of ``worksite'' in the DOL
Guidance is already similar to the definition of ``single site of
employment'' under WARN Act regulations.
Regarding the respondent's concerns about consistency, ALCAs will
work closely with DOL during more complicated determinations, and DOL
will be able to assist ALCAs in comparing a contractor's record with
records that have in other cases resulted in advice that a labor
compliance agreement is warranted, or that notification of the
Suspending and Debarring Official is appropriate. Through its work with
enforcement agencies, DOL also will provide assistance in analyzing
whether remediation efforts are sufficient to bring contractors into
compliance with labor laws and whether contractors have implemented
programs or processes that will ensure future compliance in the course
of performance of federal contracts. This level of coordination will
ensure that ALCAs (and through them, contracting officers) receive
guidance and structure.
Finally, the Councils anticipate that labor compliance agreements
will be warranted in relatively infrequent circumstances. As such, the
respondent's concerns about contractors having to negotiate numerous
labor compliance agreements with multiple agencies will not likely be
realized.
ii. Serious Violations
Comment: One respondent recommended revising the definition to
remove any form of injunctive relief as a ``serious violation.''
Response: The Councils and DOL agree with the respondent, and DOL
has modified the definition of ``serious'' in the Guidance accordingly.
In the final Guidance, DOL removes injunctive relief from the list of
criteria used to classify violations as serious, given that injunctions
may include violations that do not necessarily bear on a contractor's
integrity and business ethics. DOL has, however, added injunctive
relief to the weighing section of its Guidance. Both preliminary and
permanent injunctions imposed by courts are rare and require a showing
of compelling circumstances, including irreparable harm to workers and
a threat to the public interest. Thus, DOL determined that the
imposition of injunctive relief for a serious, repeated, willful, and/
or pervasive violation should give that violation additional weight
against a finding that the contractor is responsible.
Comment: Respondents requested the definition of ``serious''
include any violation resulting in death, serious bodily injury, or
assault.
Response: The Councils agree with DOL that a violation of any labor
law should be serious when the violation causes or contributes to the
death or serious injury of a worker. DOL has adopted this change in its
final Guidance. The Councils agree with DOL that an assault would not
necessarily

[[Page 58626]]

render a violation serious; no change is made to the DOL final Guidance
to that effect.
Comment: One respondent requested the definition of ``serious,''
when based on a fine or other monetary penalty, be based on the final
adjudicated value of the fine, and not the original assessment.
According to one respondent, monetary penalties or back-wage
assessments may be reduced for a variety of reasons, such as an
employer demonstrating that it did not commit all or any of the alleged
violations, or that the agency's calculations were erroneous.
Additionally, the respondent stated that characterizing the reduced
amount, which the agency agrees to and accepts, as a mitigating factor
is not factually or legally sound. Respondent recommended that the
final, reduced amount paid should be the only amount reported and
considered because the original assessment is a flawed indication of
the seriousness of the violation and cannot reasonably be used to
measure the gravity of the violation or the contractor's integrity and
business ethics.
Response: The E.O. explicitly instructs that ``the amount of
damages incurred or fines or penalties assessed with regard to the
violation'' be taken into account. Section 4(b)(i)(B)(1). The final DOL
Guidance states that the thresholds are measured by the amount ``due''
instead of, as proposed, by the amount the enforcement agency
``assessed.'' This means that if an enforcement agency consents to
accept a reduced amount of either back wages or penalties for a
violation, it is that lesser amount that will be used to determine
seriousness. The Councils agree with DOL's determination that the
``reduced amount'' will be considered when determining whether a
violation is serious. However, reliance on a lesser amount will not
apply if an employer files for bankruptcy and cannot pay the full
amount, or simply refuses to pay such that the full penalty is never
collected. In such cases, the original assessed amount is the amount
due, and therefore should be used when evaluating seriousness. (See DOL
Preamble, section-by-section analysis, Section III.A.1.b.ii, Preaward
assessment and advice-Fines, penalties, and back wages.) Finally, the
Councils note that the respondent's concern about ``reporting'' the
initial amount is unfounded; the disclosure provision in FAR 22.2004-
2(b)(1)(i)(A)-(D) does not require contractors to disclose the amount
of back wages assessed.
Comment: A respondent requested that the definition of ``serious''
include not only violations affecting 25 percent or more of the
workforce at the site of the violation, but also any violations
affecting 25 workers or more. Another respondent recommended that the
``25 percent'' threshold be lower to accurately reflect the impact that
a serious violation may have on a workforce. By requiring that a full
quarter of the workforce at any given worksite be affected by a
violation in order for it to be considered ``serious,'' these
respondents stated that the threshold would fail to capture many
serious violations that affect a smaller number of employees.
Response: As noted in the final DOL Guidance, DOL has declined to
lower the threshold of affected workers from 25 percent. While any
threshold will necessarily include some violations and exclude others,
DOL believes that 25 percent is an appropriate benchmark for
determining whether a violation affects a sufficient number of workers
to be considered serious and thus warranting further review. DOL also
has declined to add a threshold based on an absolute minimum number of
workers; as DOL indicates, such a threshold would disproportionately
affect larger employers. However, as to the 25 percent threshold, under
the final DOL Guidance, this criterion has been narrowed so it applies
only if there are at least 10 affected workers, thus avoiding
triggering the 25 percent threshold when only a few workers are
affected.
While recognizing the concerns of employee advocates that certain
violations may fall short of the threshold, DOL notes that these
violations may meet other criteria for seriousness.
Comment: One respondent requested that the definition of
``serious'' include any litigation involving ``systemic'' labor law
violations.
Response: DOL determined not to expand the criterion of ``systemic
discrimination'' to include other ``systemic'' labor law violations.
``Systemic discrimination'' has a well-established meaning under anti-
discrimination laws and many widespread violations unrelated to
discrimination will likely be classified as serious under other
criteria in the DOL final Guidance. (See DOL Preamble, section-by-
section analysis, Section III.A.1.b.vii, Preaward assessment and
advice-Pattern or practice of discrimination or systemic
discrimination.)
Comment: One respondent recommended revising the DOL Guidance with
respect to findings that would ``support'' a conclusion that a
contractor ``interfered'' with an agency's investigation for the
purpose of determining whether a violation is serious under the E.O.
The respondent asserted that: (1) The Guidance does not explain what it
means by ``support'' such a finding; and (2) the Guidance would deprive
contractors of rights to challenge scope of the agency's investigation.
Response: DOL has removed the language indicating that the findings
in a labor law decision must ``support a conclusion'' that a contractor
engaged in certain activities. In its place, DOL has clarified that the
relevant criteria for classifying a violation as serious, repeated,
willful, and/or pervasive must be readily ascertainable from factual
findings or legal conclusions of the labor law decision itself. This
means that ALCAs should not second-guess or re-litigate enforcement
actions or the decisions of reviewing officials, courts, and
arbitrators. It also means that a contractor will not be deemed to have
interfered with an investigation based on a minimal or arguable
showing. While ALCAs and contracting officers may seek additional
information from the enforcement agencies to provide context, they
should rely only on the information contained in the labor law
decisions themselves to determine whether violations are serious,
repeated, willful, and/or pervasive.
Additionally, the term ``interference,'' when used to determine
whether a violation is serious, has been narrowed in the final DOL
Guidance to include a more limited set of circumstances. While DOL
views interference with investigations as serious because such behavior
severely hinders enforcement agencies' ability to conduct
investigations and correct violations of law, DOL also recognizes that
employers may have good-faith disputes with agencies about the scope or
propriety of a request for documents or access to the worksite, and has
accordingly narrowed the definition of ``interference''. The Councils
agree with DOL's determinations on these issues.
Comment: A respondent proposed that the definition of ``serious''
violations should: (1) Include all workplace law violations that cause
or contribute to the death and life-threatening injury of a worker; (2)
clarify that the proposed dollar threshold for fines and penalties is
cumulative across provisions violated and workers affected; and (3)
stipulate that the 25 percent affected-worker threshold may be applied
either to a single site of a company or on a cumulative basis across
all of a company's worksites.

[[Page 58627]]

Response: As noted in the final DOL Guidance, DOL adopted the
respondent's three suggestions with regard to the definition of serious
violations.
Comment: One respondent suggested that the term ``worksite'' in the
definition of ``serious'' was ambiguous when compared with the
regulatory definition under the Worker Adjustment and Retraining
Notification (WARN) Act, 29 U.S.C. 2101-09. See 20 CFR 639.1-10.
Response: As noted in the DOL preamble, the definition of
``worksite'' in the proposed Guidance, which is largely unchanged in
the final Guidance, is already similar to the definition of ``single
site of employment'' under WARN Act regulations. Both definitions
provide that: (1) A worksite can be a single building or a group of
buildings in one campus or office park, but that separate buildings
that are not in close proximity are separate worksites; and (2) for
workers who do not have a fixed worksite, their worksite is the site to
which they are assigned as their home base, from which their work is
assigned, or to which they report. See 80 FR 30583, 20 CFR 639.3(i).
These similarities support the conclusion that the definition of
worksite in the DOL Guidance is appropriate.
Comment: One respondent recommended that DOL provide a more
exhaustive definition of ``serious'' violations by:
1. Reducing the percentage of a workforce a violation must affect
to trigger the serious designation;
2. Adding an alternative back wages threshold for wage and hour
violations; and
3. Specifying that the designation applies to any labor law
violation that causes or contributes to death or serious injury, or
involves physical assault; and clarifying that a violation need not
arise from a class action to support a determination of engagement in a
pattern or practice of discrimination or systemic discrimination.
Response: DOL, in its final Guidance, declined to lower the
threshold of affected workers from 25 percent. While any threshold will
necessarily include some violations and exclude others, DOL believes
that 25 percent is an appropriate benchmark for determining whether a
violation affects a sufficient number of workers to be considered
serious and thus warranting further review. Additionally, DOL declined
to lower the back-wage threshold from $10,000 because it believes that
this amount is appropriate.
DOL has clarified in the final Guidance that the $10,000 threshold
is cumulative; i.e., it can be satisfied by summing the back wages due
to all affected employees. DOL believes that this will appropriately
capture wage-and-hour violations that warrant additional scrutiny.
Additionally, DOL, in its final Guidance, modified the definition of
serious violations such that a violation of any labor law is serious
when the violation causes or contributes to the death or serious injury
of a worker. DOL has not, however, changed the Guidance to require that
any case involving physical assault is a serious violation given that
this term may include minor workplace altercations or interactions.
Finally, DOL has clarified in the final Guidance that systemic
discrimination is not limited to class actions.
iii. Repeated Violations
Comment: Some respondents requested that the definition of
``repeated'' include any violation of a law that happens five or more
times in a three-year period.
Response: DOL made a determination not to adopt this suggestion. As
DOL's final Guidance indicates, this suggestion is inconsistent with
the E.O.'s specific direction that a determination of a repeated
violation be based on ``the same or a substantially similar
requirement.'' However, DOL notes in its final Guidance that multiple
violations that are not substantially similar to each other may be
properly considered in an assessment of whether such violations
constitute pervasive violations.
Comment: One respondent proposed that the definition of ``repeated
violation,'' which is in the new FAR 22.2002 and 52.222-59(a), include
``the same or'' between the existing ``one or more additional labor
violations of'' and ``substantially similar requirements.''
The respondent rationalized that the phrase ``the same or'' is
included in the DOL Guidance and would improve the brief definition of
``repeated violation'' being proposed for the FAR.
Response: The definition of ``repeated violation'' at FAR 22.2002
is revised to reflect the terminology ``the same or a substantially
similar.''
iv. Willful Violations
Comment: A respondent proposed that the definition of a ``willful''
violation should be strengthened by allowing the reckless disregard or
plain indifference standard of willfulness to apply to violations of
all of the covered workplace laws--not just those for which no
alternative statutory standard exists.
Response: As explained in DOL's final Guidance, DOL has declined to
adopt this suggestion. The purpose of listing specific standards for
the five laws that already incorporate a concept of willfulness is to
further the efficient implementation of the E.O. The DOL Guidance
states that for labor laws with an existing willfulness framework,
violations are only willful under the E.O. if the relevant labor law
decision explicitly includes such a finding. This reflects DOL's
reasoning that it is inappropriate for ALCAs to second-guess the
decision that a violation was willful, when an existing willfulness
framework exists.
v. Pervasive Violations
Comment: One respondent expressed concern that the definition of
``pervasive'' lacked sufficient clarity. The respondent indicated that
DOL has only identified a vague category of factors to measure/define
``pervasive'' which leave the contracting officers with no guidance or
standards and thus leave it in the contracting officers' discretion to
determine what is ``pervasive.''
Response: In DOL's view, the definition of pervasive violations
must be a flexible one. Notwithstanding the utility of the definitions
of serious, repeated, and willful violations, violations falling within
these classifications may still vary significantly in their gravity,
impact, and scope. Thus, in DOL's view, it would not be reasonable to
require a finding of ``pervasive'' violations based on a set number or
combination of these violations. Similarly, DOL declined to adopt rigid
criteria that would mandate, for example, that any company of a certain
size with at least a certain designated number of serious, repeated, or
willful violations would be deemed to have pervasive violations. The
Councils agree with these determinations.
d. Considering Mitigating Factors in Weighing Violations
Comment: One respondent commented that a contractor who has
implemented a health and safety program must have in place more than
just a ``paper program'' to be considered as having taken steps to
mitigate past violations. The respondent requested that the definition
of ``mitigate'' include the implementation of an effective compliance
program and added that the contractor must have corrected the
identified violations. The respondent also suggested that any
contractor with

[[Page 58628]]

repeat or pervasive violations should not be considered to have
implemented a sufficient program.
Response: The Councils decline to adopt the suggested changes and
DOL's final Guidance does not include any substantive changes to its
discussion of mitigating factors. Concerns about ``paper'' compliance
programs will be addressed through careful consideration of the
totality of the circumstances--which may include the adequacy of a
compliance program put forth as a mitigating factor. The Councils also
decline to add a restriction that a contractor with repeated or
pervasive OSHA violations may never be considered to have implemented a
sufficient program or that such a program is required for mitigation.
(See DOL Preamble, section-by-section analysis, Section III.B.1.,
Preaward assessment and advice--Mitigating factors that weigh in favor
of a satisfactory record of Labor Law compliance.)
Comment: A respondent expressed concerns that DOL's limitation of
remediation to those cases where any affected workers are made whole
has generated some confusion, as in many cases, employers will choose
to settle alleged violations even though the settlement does not pay
affected workers with the full amount of back pay and other relief
originally sought by the agency. Additionally, the respondent suggested
that the proposed Guidance places special emphasis on remediation
measures that go beyond the scope of the applicable law, such as
enhanced settlement agreements that address remediation on an
enterprise-wide level. Respondent recommended that in settlement cases
involving alleged violations, affected workers are made whole even if
they do not get full amount of back pay and other relief originally
sought by the agency. Additionally, the respondent asserted that the
provisions should not require that remediation efforts exceed the law's
requirement in order to receive ``full credit'' for remediation.
Response: ALCAs are required to weigh, and contracting officers are
required to consider, contractors' mitigating and remedial information
in assessing contractors' disclosed labor law violations. ALCAs will
not second-guess the remediation that has already been negotiated by
enforcement agencies during a settlement agreement. A contractor's
future-oriented measures that go beyond the minimum specifically
required under the labor laws--whether voluntarily, through a
settlement with an enforcement agency, or through a labor compliance
agreement negotiated at the suggestion of an ALCA, are considered and
contribute to a favorable finding regarding a contractor's record of
labor law compliance. (See the DOL Guidance, section III.B.1.a.
Mitigating factors that weigh in favor of a satisfactory record of
Labor Law compliance, Remedial measures). This approach is consistent
with the E.O.'s underlying goal of encouraging contractors to comply
with labor laws while performing on Federal contracts.
Comment: A respondent recommended the following be included in the
category of mitigating factors related to safety and health programs or
grievance procedures that is in the proposed Guidance: (1)
Participation in OSHA Voluntary Protection Programs, as the program
encourages employee involvement and continuous improvement, similar to
those industry consensus standards cited in the proposal; and (2) the
final Guidance include reference to the International Organization for
Standardization (ISO) 45001, which is a voluntary consensus standard
for occupational health and safety management systems that is currently
under development.
Response: ALCAs and contracting officers will take additional
information about safety-and-health programs into consideration as part
of their review of the totality of the circumstances. Employers who
participate in such programs or have adopted safety and health
management systems pursuant to recognized consensus standards are
encouraged to include this information when they have an opportunity to
provide relevant information, including regarding mitigating factors.
Comment: A respondent recommended more emphasis on safety and
health programs, including ensuring the contractor enforces its own
program, especially if a contractor wants to use a safety and health
program as a mitigating factor. The respondent attached a copy of an
OSHA Advisory Committee on Construction Safety and Health checklist for
contracting officers to evaluate a program.
Response: The Councils thank the respondent for this information.
14. General and Miscellaneous Comments
a. Out of Scope of Proposed Rule
Comment: One respondent indicated that Government employees
carrying out the mandates of these regulations should receive
conspicuous notice of whistleblower protection as contracting officers,
ALCAs (who are housed in contracting agencies), and other DOL personnel
may face retaliation for failing to approve contracts even when serious
labor law violations exist. Another respondent said employees of
contractors and subcontractors and Government officials should be
notified of the prohibition against retaliation and they should have
effective remedies should retaliation occur.
Response: The E.O. does not provide for additional notifications of
protection for whistleblowers. Whistleblower protection for contractor
employees is already covered at FAR subpart 3.9. Whistleblower
protection for Government employees is not covered in the FAR. The
Councils note that contracting officers are given warrants; they are
required to pay close attention to the requirements of law and are
expected to be less susceptible to pressure than other Government
employees. In addition, the Notification and Federal Employee
Antidiscrimination and Retaliation Act of 2002 (known as the No Fear
Act) requires that agencies provide annual notice to Federal employees,
former Federal employees, and applicants for Federal employment of the
rights and protections available under Federal antidiscrimination and
whistleblower protection laws. Thus, no change to the final rule is
warranted.
Comment: One respondent indicated that the Occupational Safety and
Health (OSH) Act does not apply where another Federal agency has
prescribed or enforced occupational safety and health standards. Under
the authority of the 2002 National Defense Authorization Act's
amendments to the Atomic Energy Act (AEA), 42 U.S.C. 2282c, Congress
directed the Department of Energy to promulgate and enforce
occupational safety and health standards for contractors working on
Federally-owned nuclear facilities and laboratories operated by private
employers. The E.O. does not expressly list the AEA among the statutes.
However, scores of contractors and subcontractors regularly perform
construction and large-scale maintenance work on Department of Energy
worksites, under the AEA. The rule should cover the AEA.
Response: This is beyond the scope of the rule. The E.O.'s specific
coverage did not include the AEA.
Comment: One respondent urged the FAR Council, for procurements
that involve work with hazardous chemicals and/or hazardous work
practices, add provisions to FAR 9.104-1 to require contracting
officers to review the content of prospective contractors' safety and
health programs before making a determination of responsibility. Best
practices developed

[[Page 58629]]

and published by industry in consensus standards and advocacy documents
should be adopted by the FAR Council and placed in the final rule to
aid contracting officers in evaluating prospective contractors' safety
and health programs, especially when hazardous chemicals or hazardous
work practices are involved.
Response: This is beyond the scope of the rule. The E.O.'s specific
coverage concerns labor law violations and not the preventative
measures envisioned by the respondent. However, contracting officers
have the authority and ability to investigate and affirm the
responsibility of contractors whose performance might involve hazardous
chemicals and/or hazardous work practices.
Comment: One respondent indicated that the rule does not adequately
address current DoD practices regarding business ethics. With respect
to DoD contracts, this framework failed to acknowledge that the
contractor purchasing system requirements already have clear
requirements for the procurement of subcontract and supplier resources
by DoD contractors.
Response: This comment is specific to DoD, and beyond the scope of
the FAR rule which is a Governmentwide rule.
b. Extension Request
Comment: A number of respondents requested an extension beyond the
initial 60 days. Some recommended that the FAR Council and DOL publish
revised proposed rules in response to comments from affected persons,
and delay implementation of any final rule until all affected persons
have a meaningful opportunity to weigh in on all of the issues raised
by the proposed rule and DOL Guidance.
Response: Two extensions were granted. The first extended the
comment due date from July 27, 2015, to August 11, 2015 (80 FR 40968,
July 14, 2015). The second extended the comment period from August 11,
2015, to August 26, 2015 (80 FR 46531, August 5, 2015).
Comment: One respondent opposed an extension because the respondent
stated the President did not have the authority to issue the
regulations.
Response: The President properly exercised his authority under 40
U.S.C. 121 and issued the E.O. directing the FAR Council to issue this
regulation.
c. Miscellaneous
Comment: One respondent asserted that 41 U.S.C. 2313(g), part of
the statute authorizing the FAPIIS database, should be used as the
authority for the FAR rule, and that only some parts of the FAPIIS
database need be publicly available.
Response: By statute, information in the FAPIIS database must be
publicly available, except for past performance information. (41 U.S.C.
2313 Note).
Comment: A respondent stated that labor law enforcement is not a
function the Federal Government should directly or indirectly transfer
to its prime contractors through the acquisition process, especially
since law enforcement is an inherently governmental function.
Response: As detailed in Section III.B.5 of this preamble, the
Councils have adopted the alternative offered in the proposed rule for
subcontractor disclosures whereby DOL assesses subcontractor
violations. The contractor is still ultimately responsible for
evaluating the subcontractor's compliance with labor laws as an element
of responsibility. Determining subcontractor responsibility is not an
inherently governmental function. There is no transfer of enforcement
of the labor laws as a result of the rule; the rule provides
information regarding compliance with labor laws to be considered
during subcontract responsibility determinations and during subcontract
performance.
Comment: A respondent theorized that a subcontractor could
structure its bid to be under the $500,000 threshold, forcing the
contractor to staff a project with several low-cost subcontractors
instead of one that could most efficiently perform the work.
Response: Subcontractors are not forbidden from doing this. But for
this to happen, multiple subcontractors would have to keep their bids
under $500,000. Another subcontractor with an excellent labor law
decision record might decide to bid over $500,000 and win more or all
of the work. The intent of the E.O. is not to stifle competition, but
to improve economy and efficiency by assuring that the Government
contracts with responsible sources that will comply with labor laws; a
subcontractor would be better off discussing its labor law decisions
with DOL to try to improve its position. The Councils note that the
E.O. exempts COTS subcontracts from the labor law decision disclosures
(see FAR 52.222-58(b)).
Comment: A respondent recommended that contractor costs for
implementing the E.O. should be specifically addressed as being
allowable and allocable in the final rule.
Response: FAR cases do not normally revise FAR part 31 Cost
Principles when new FAR coverage is added by the case. No revisions to
the final rule are required.
Comment: The SBA Office of Advocacy commented that small businesses
are concerned about how this rule impacts mergers, acquisitions and
teaming agreements. Another respondent pointed out that during the due
diligence phase of the merger/acquisition, companies would have to go
back through at least three years of labor records in order to ensure
that they are not purchasing a company with any violations, or alleged
violations, which could impact the company formed as a conclusion of
that deal. The respondent presumed that companies would steer clear of
merging with or acquiring any company with violations on their record
that could come back to haunt them in the future, potentially missing
out on valuable innovation and development coming from companies with
previous labor law violations and hindering deals that would otherwise
result in positive developments for all parties involved. Another
respondent warned that companies may seek to disavow prior labor law
violation liability that could impact their present responsibility per
this rule by spinning off companies whose sole purpose is to own the
violations.
Response: Whichever legal entity is signing the contract is the one
which discloses its own labor law decisions. The State law on
corporations, not the FAR, will govern whether the legal entity signing
the contract is the entity which owns a particular labor law violation.
The legal entity that is the offeror does not include a parent
corporation, a subsidiary corporation, or other affiliates (see
definition of affiliates in FAR 2.101). A corporate division is part of
the corporation. Consistent with current FAR practice, representation
and disclosures do not apply to a parent corporation, subsidiary
corporation, or other affiliates, unless a specific FAR provision
(e.g., FAR 52.209-5) requires that additional information. Therefore,
if XYZ Corporation is the legal entity whose name appears on the bid/
offer, covered labor law decisions concerning labor law violations by
XYZ Corporation at any location where that legal entity operates would
need to be disclosed. The fact that XYZ Corporation is a subsidiary of
XXX Corporation and the immediate parent of YYY Corporation does not
change the scope of the required disclosure. Only XYZ Corporation's
violations must be disclosed.
However, the Councils also note that the FAR does sometimes
consider affiliates of an entity. Affiliates are defined in FAR
2.101(b) as associated business concerns or individuals if,

[[Page 58630]]

directly or indirectly, (1) Either one controls or can control the
other; or (2) A third party controls or can control both. Affiliates
are considered, for example under small business size rules, under
debarment and suspension, and sometimes under contracting officer
responsibility considerations. See FAR 9.104-3(c), 9.406-3(b), and
subpart 19.1. A final rule under FAR Case 2013-020, Information on
Corporate Contractor Performance and Integrity, was published on March
7, 2016 (81 FR 11988); it implemented section 852 of the NDAA for FY
2013, giving more information for a contracting officer to consider
about an immediate owner, predecessor, or subsidiary.
Comment: Two respondents alleged that current staffing at the GAO
is insufficient to manage the expected increase in the number of
protests as a result of adverse or delayed responsibility
determinations under this rule. Insufficient GAO resources would mean
additional delays since a bid protest at the GAO automatically stays
the performance of a contract.
Response: Staffing at GAO, an agency in the legislative branch, is
beyond the scope of the FAR rule, which covers executive branch
agencies.
Comment: A respondent theorized that there would be increased bid
protests alleging favoritism, e.g., that a protester was passed over
for a bid in place of an entity the protester believes has a similar
record of labor law violations.
Response: ``Being passed over for contract award'' describes a
source selection evaluation. The labor law violation assessment is a
matter of responsibility, which occurs separate from the evaluation.
Comment: A respondent stated that the rule expands the grounds for
a sustainable protest, including for reasons of de facto debarment
resulting from a nonresponsibility determination, use of a competitor's
alleged noncompliance for a competitive advantage, and many other
potential scenarios.
Response: One finding of nonresponsibility is not a de facto
debarment, but multiple findings of nonresponsibility based on the same
facts may constitute an improper de facto debarment. Contracting
officers will work with ALCAs, and when appropriate, notify their
agency suspending and debarring officials, using the procedures at FAR
subpart 9.4 as the proper means of excluding a firm from Government
contracting. Both ALCAs and the suspending and debarring officials will
coordinate actions within an agency and across the Government, as a
further protection. The contracting officer and the ALCA will each be
exercising their own independent judgment in each case. The Councils do
not see that the rule will expand the grounds for protests. The ALCA
will be documenting his/her analysis and advice, and the contracting
officer will be documenting how the ALCA analysis was considered. (See
also discussion at Section III.B.1.b. above.)
Comment: A respondent warned that a death spiral could occur for a
contractor after a nonresponsibility determination from a single labor
law ``violation'' in a single transactional process, and so bid
protests could increase as a matter of company survival.
Response: The E.O. states that, in most cases, a single violation
will not lead to a finding of nonresponsibility.
The intent of the E.O. is to improve efficiency by assuring
contractors' compliance with labor laws while performing Federal
contracts, not to decrease competition or increase bid protests. The
DOL Guidance at section III.B.2.c. lists four examples of violations of
particular gravity:

Violations related to the death of an employee; violations
involving a termination of employment for exercising a right
protected under the Labor Laws; violations that detrimentally impact
the working conditions of all or nearly all of the workforce at a
worksite; and violations where the amount of back wages, penalties,
and other damages awarded is greater than $100,000.

Even a violation of particular gravity is not an automatic bar; the
ALCA and contracting officer will consider mitigating factors and
remedial measures (see FAR 22.2004-2(b)).
Comment: Respondents alleged that the rule will open the way to
many more bid protests. Even if a competitor would otherwise have no
basis to challenge an award, publicly available information would
provide them with a road map to protest. Information regarding any
reported violation would be made available in FAPIIS. An unsuccessful
offeror could raise as a challenge to the procurement decision the
agency's failure to properly consider the responsibility of that
awardee in light of the violation. Although the record of the ALCA and
contracting officer's consideration of the matter would, in many
instances, lead to the denial of this protest ground, this resolution
could not be accomplished without completion of the full protest
adjudication process--100 days at GAO and potentially longer if brought
at the Court of Federal Claims.
Response: It is undetermined whether and how much of an increase in
bid protests will occur as a direct result of this rule. A long-
standing tenet of Federal procurement is that the responsibility
determination is solely the contracting officer's duty and discretion.
When reviewing a bid protest based on responsibility grounds, GAO gives
great deference to a contracting officer's decision. Although some
disclosed information associated with this rule will be made publicly
available in FAPIIS, potential protesters will not have insight into
how the ALCA assessed, and the contracting officer considered the labor
law violation information, nor into how a contractor's record of labor
law compliance factored into the contracting officer's overall
responsibility determination, which considers the totality of
circumstances for the particular procurement.
Comment: Respondents noted that bid protests may result in long
delays in the procurement process, and that protests at GAO may result
in automatic stays.
Response: While bid protests can cause delays in the procurement
process, the Government considers them valuable in preserving fairness,
integrity, and ethics in the procurement process.
Comment: Respondents noted that small businesses can appeal
nonresponsibility determinations at SBA. The contracting officer can
only refer one matter at a time for a single acquisition to the SBA.
Thus, if multiple small businesses are being considered for an award
and such questions are raised, the SBA would be required to consider
each of these matters in turn. In the interim, no award could issue for
a period of at least 15 business days following receipt of a referral.
Response: The Councils acknowledge that the Certificate of
Competency process can add time to the procurement process.
Comment: A respondent alleged that the rule would have broad impact
on the construction industry, as few construction contracts are below
the $500,000 threshold. The respondent indicated that the procedures
will be an encumbrance on the procurement process, especially since
violations on nonGovernment contracts are to be disclosed.
Response: The Councils acknowledge that the E.O. was intended to
have a broad scope. The final rule disclosures will have a phase-in
threshold for solicitations and contracts of $50 million for October
25, 2016, through April 24, 2017, dropping to $500,000 thereafter.

[[Page 58631]]

Comment: A respondent stated that the responsibility process,
already expanded by many other new preaward compliance checks aimed at
tax delinquency, human trafficking, and counterfeit parts, just to name
a few, will become its own distinct procurement process aimed at
enforcing laws not related to contract performance, rather than a last
due diligence step as prescribed by FAR part 9.
Response: The responsibility process requires the contractor have a
satisfactory record of integrity and business ethics. See 9.104-1(d).
The E.O. properly instructs contracting officers to consider whether a
contractor's labor law compliance may affect its record of integrity
and business ethics.
d. General Support for the Rule
Comment: Many respondents expressed some support for the proposed
rule. Among the numerous reasons cited were that: Federal contractors
that commit labor law violations harm their workers and cost taxpayers
money; the American people deserve to be assured that their Federal tax
dollars are not being used to subsidize violations of the employment
rights of workers, and that high-road employers are not placed at a
competitive disadvantage; the E.O. and the proposed rules are critical
to closing gaps in the Federal Government's system for ensuring that
contractors that do business with the Federal Government abide by labor
laws; and the fact that the proposed regulation and DOL's Guidance
offer putative contractors compliance assistance shows that this is not
a punitive ``blackballing'' system, but rather one aimed at proactively
assisting contractors in improving and maintaining compliant labor
policies and practices.
Response: The Councils appreciate the support for the rule and E.O.
e. General Opposition to the Rule
Comment: Many respondents expressed some opposition to the proposed
rule. Some recommended withdrawal of the proposed rule. Among the
comments and reasons cited were:

--The E.O., the proposed rule, and DOL Guidance fail to demonstrate an
actual need for this new rule and process. The proposed rule
acknowledges that ``the vast majority of Federal contractors play by
the rules.'' As a result, the proposed rule and Guidance are a solution
in search of a problem;
--The FAR Council has not adequately assessed the impacts or seriously
examined the potential for unintended consequences and other harmful
effects of this rule on the Government mission, the vendor community,
and the Federal marketplace and costs to the taxpayer directly
resulting from compliance with the new rule. The FAR Council should
withdraw the proposed rule until it concludes that the benefits of the
intended regulation justify the costs. Further study and analysis is
needed to demonstrate that the E.O.'s goals are attainable, and whether
they might be achieved through less-costly modifications to existing
regulatory regimes;
--The E.O., FAR rule, and DOL Guidance violate statutes and/or the
Constitution.
--The E.O. improperly usurps existing enforcement regimes at the
expense of due process. The existing suspension and debarment
structure, and the FAPIIS clauses, are sufficient to address the matter
of unscrupulous contractors. The Office of Federal Contractor
Compliance Programs already reviews contractors' compliance with
affirmative action employment practices.
--The implementation of the rule as it relates to safety and health
violations would add no constructive value to existing law and
structures.

Response: Noted. Many of these comments are described in more
detail elsewhere in this Preamble (see Section III.B.1.) and in the DOL
Preamble. The Councils are implementing the E.O.

IV. Executive Orders 12866 and 13563

A. Executive Orders (E.O.s) 12866 and 13563 direct agencies to
assess all costs and benefits of available regulatory alternatives and,
if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
E.O. 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. 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 (RIA) that includes a detailed
discussion and explanation about the assumptions and methodology used
to estimate the cost of this regulatory action is available at https://www.regulations.gov/. A summary of the RIA follows.
The RIA was developed as a joint product by DoD, GSA, and NASA
along with DOL in its capacity as the lead program agency for
implementing this Executive Order. Many of the estimates and much of
the supporting analysis were developed in cooperation with DOL and rely
to a significant extent on input provided by DOL. The RIA contains
comprehensive discussion of the many public comments received and was
revised as a result of careful consideration of public comment to
better reflect estimates of burden and cost associated with this
regulatory approach. The final RIA was adjusted in the following areas
following careful consideration of public comments--(1) stratification
of the contractor and subcontractor population when estimating costs
for key compliance areas (e.g., reporting and disclosure, semiannual
updates) to reflect the size of contractors most impacted by this rule,
(2) increase of burden hours for familiarization with the regulation,
(3) adjustment to the labor burden hours for compliance, (4) inclusion
of tracking mechanism costs (e.g., software upgrades to include this
compliance functionality), and (5) recognition of contractor and
subcontractor overhead associated with this rule. Quantified cost
estimates are presented where feasible and presented in a qualitative
manner when not feasible. The analysis covers 10 years to ensure it
captures the key benefits and costs of this regulatory action and
considers the phase in periods of the disclosure and paycheck
transparency requirements.
The RIA presents a subject-by-subject analysis of the benefits and
costs of the final rule, followed by a summary of these benefits and
costs, including the total benefits and costs over the 10-year period
of analysis. The subject-by-subject analysis sections of the RIA
provide comprehensive and detailed discussion of the estimating
methodologies used.
Number of Prime Contract Awards and Unique Contractors
In estimating the number of contract awards over $500,000 subject
to the rule, three years of FPDS data, from FY2012 to FY2014, was
utilized to arrive at an estimate of 26,757 prime contract awards per
fiscal year. The estimating methodology for prime contractors and
subcontractors was revised. The most significant revision in
methodology was in aligning the population of affected contractors with
the legal entity making the offer, which is the scope of the reporting
burden. The

[[Page 58632]]

final rule uses Tax Identification Numbers (TIN), rather than the DUNS
number, to identify unique prime contractors that will be impacted by
this rule. The unique subcontractor population was determined using a
methodology that assumes the subcontractor population is a factor of
the unique prime contractor population. Again taking an average over
the three fiscal years, the agencies estimate that there are on average
13,866 unique contractors who receive awards valued at or over $500,000
each fiscal year.
Number of Subcontract Awards and Unique Subcontractors
The unique subcontractor population was determined using a
methodology that assumes the subcontractor population is a factor of
the unique prime contractor population. Specifically, that each unique
prime contractor has three subcontractors with awards valued at or over
$500,000 (across all tiers) with further adjustments, for example, for
duplication of subcontractors who also perform as prime contractors.
The number of unique subcontractors subject to the rule is estimated at
10,317. It was assumed that, on average, subcontractors receive four
awards valued at or above $500,000 each year for an average 41,268
subcontract awards subject to the rule.
Adjusting the Annual Number of Unique Contractors and Subcontractors
for Repeat Recipients of Awards
The analysis identifies, for years 2 through 10, what share of
affected contractors and subcontractors would likely receive an award
for the first time under the new requirements. This was done in order
to eliminate double counting certain burdens, such as regulatory
familiarization costs.
Hourly Compensation Rates
For Federal employees, the agencies are using the mid-range of the
GS-13, GS-14, and GS-15 wage rates from the GS salary table adjusted
for the locality pay area of Washington-Baltimore-Northern Virginia.
For private sector employees, a source which more closely reflects
private sector compensation is used: Median wage rates from the Bureau
of Labor Statistics' Occupational Employment Statistics (OES) program.
The agencies adjusted these wage rates using a loaded wage factor to
reflect total compensation, which includes health insurance and
retirement benefits. The loaded wage factor for private sector
employees is 1.44, and the loaded wage factor for federal employees is
1.63. (See RIA Exhibit 2: Calculation of Hourly Compensation Rates).
The final RIA contains a lengthy qualitative discussion that
considers inclusion of overhead and how overhead has been treated in a
number of recent regulatory actions. The RIA, in footnote 21, applies a
17% overhead rate, which is a rate utilized by EPA in recent rules, as
example to demonstrate the affect overhead might have on the estimate
for this regulatory action.
Time To Review the Final Rule
The RIA recognizes that eight hours would not be sufficient for a
large contractor to review and understand the rule. The agencies also
recognize that some large and small employers without in-house labor
law expertise would need participation and advice from a labor
attorney, as stated in the public comments. Therefore, the estimate for
the amount of time it will take employers to become familiar with the
rule has been revised accordingly. Based in part on FPDS data, the
signatory agencies and DOL estimate that 55 percent of federal
contractors are small businesses that would need 8 hours by a general
manager and 4 hours by a labor attorney, while 45 percent of federal
contractors that are not small businesses would need 14 hours by a
general manager and 8 hours by a labor attorney.
Costs of the Disclosure Requirements
Cost Methodology
To determine the impact of the disclosure requirements the
following steps were taken:
1. Estimate the population of affected contractors and
subcontractors.
2. Estimate the number of initial responses disclosing information
related to labor law violations, and supporting documentation.
3. Estimate the number of hours and the associated costs of
completing those responses.
4. Estimate the number of workers who would receive status notices,
along with the number of hours and the associated costs of completing
the recurring status notices.
5. Estimate the cost of producing and disseminating required wage
statements.
6. Consider the potential cost of increased litigation due to the
E.O.'s provision prohibiting certain contractors from requiring their
workers to sign mandatory-arbitration agreements.
The estimated representation costs include the time and effort it
will take federal contractors and subcontractors to search for relevant
documents, review and approve the release of the information, and
disclose the information. The estimates assume that not all efforts
(e.g., retrieving and keeping records) are attributed solely to the
purpose of complying with the disclosure requirements of the Order;
only those actions that are not customary to normal business operations
are attributed to this estimate.
Population of Contractors and Subcontractors With Labor and Employment
Violations
The estimating methodology for the percent of likely violators has
been revised to use a randomly selected statistically representative
sample of 400 Federal contractors with at least one award over $500,000
from FY 2013 FPDS. The estimated percent of Federal contractors and
subcontractors that will have labor law decisions subject to disclosure
has been revised from 4.05 percent in the proposed RIA to 9.67 percent
in the final RIA.
Cost of Contractor and Subcontractor Representation Regarding
Compliance With Labor Laws
The amount of time required for personnel to research files
containing compliance and litigation history information, determine
whether to report that it has or has not had a covered violation at the
initial representation stage, and to identify any additional
information that may be submitted if in fact it has a covered violation
will vary depending on the complexity of any given case. In some
instances, where the violation history of a particular case is more
elaborate, compiling supporting documentation to demonstrate mitigating
factors may require significant resources and time. In other cases,
where one violation or a few violations are reported or where there is
little to no supporting information to show mitigating factors, this
step could take virtually no time. The estimate assumes 25 hours are
required for the first time a contractor or subcontractor conducts a
full reporting period response and 4 hours for subsequent responses.
Cost of Contractor Review of Subcontractor Information
The analysis expects that prime contractors will incur costs for
reviewing the information submitted by prospective subcontractors.
Where a prospective subcontractor responded that it has a covered
violation and DOL requests additional information, DOL will review
materials submitted by the subcontractor and notify the contractor of
DOL's recommendation. An

[[Page 58633]]

estimated 80 percent of prospective subcontractors with violations will
agree with DOL's recommendation, so it is estimated that prime
contractors will only expend about 30 minutes to review DOL's
recommendation. For the other 20 percent of prospective subcontractors
with violations, if a prospective subcontractor does not agree with
DOL's recommendation and requests review by a prime contractor or if
DOL has not completed its review within three days, then the prime
contractor will expend an estimated 31.0 hours to consider the
information submitted by a prospective subcontractor. Therefore, the
weighted average time for prime contractors to review information
submitted by prospective subcontractors with violations is estimated to
be 6.6 hours (= 80% x 0.5 hours + 20% x 31.0 hours).
Cost of Semiannual Updates Regarding Compliance With Labor Laws
In determining whether updated information needs to be provided,
the estimate recognizes that identifying information at this stage
would be part of an established process and is for a greatly reduced
timeframe (i.e., six months or less versus 36 months for the initial
representation), therefore 4 hours is estimated for a management level
employee. It is estimated that the task of input and transmission of
the updated information identified will take a legal support worker 2
hours.
Lastly, contractors may need or want to review and analyze the
updated information submitted by subcontractors to determine whether
any additional action is warranted. The estimate considers that 80
percent of subcontractors with violations will agree with DOL's
recommendation, so prime contractors will only expend about 30 minutes
to review DOL's recommendation. For the other 20 percent of
subcontractors with violations, if a subcontractor does not agree with
DOL's recommendation and requests review by a prime contractor or if
DOL has not completed its review within three days, then the prime
contractor will expend an estimated 3.6 hours to consider the updated
information submitted by a subcontractor. The 3.6 hour estimate is
derived from the estimated 2 hours that is used in the Government Costs
section to estimate contracting agency evaluations of prospective
contractor information, with an upward adjustment to account for added
reporting when contractors decide to continue the subcontracts of
subcontractors after having been informed that the subcontractor has
not entered into a labor compliance agreement within a reasonable
period or is not meeting the terms of the agreement. Therefore, the
estimated time for a manager to review the updated information provided
by a subcontractor is 1.12 hours (= 80% x 0.5 hour + 20% x 3.6 hours).
Cost of Developing and Maintaining a System for Tracking Violations
The final rule acknowledges that some contractors may choose to
utilize tracking mechanisms in order to more easily: (1) Identify labor
violations; (2) determine which violations are reportable; (3) disclose
information to the contracting officer when a responsibility
determination is being made; (4) provide to the contracting officer
additional information to demonstrate responsibility; and (5) provide
required semi-annual updates. A tracking system could be a mechanism
such as software, added functionality to an existing system, or
establishing a new system. Regardless of whether a contractor has had
labor violations or is likely to have any in the future the analysis
recognizes that prudent contractors and subcontractors may establish a
tracking mechanism with the appropriate depth and breadth that, in
their business judgment, is necessary to demonstrate compliance.
Startup Costs
The analysis stratifies contractors by organizational complexity
level relative to company size small, medium, large, and the top one
percent of federal contractors. FPDS categorizes businesses as either
``small'' or ``other than small.'' As already discussed, analysis
estimates that 55 percent of Federal contractors are small businesses.
Within the ``other than small'' category, there are varying
organizational sizes and complexities, therefore, for purposes of this
estimate, the agencies have attributed 35 percent of other than small
businesses in FPDS to medium organizations, and 10 percent to large
businesses, further breaking out the top one percent representing the
very largest businesses. Subcontractors were not stratified by
organizational complexity because Federal procurement data do not
include information about subcontractor size; therefore, the total
subcontractor estimate remains 10,317.
Illustrative estimates of system development costs for contractors
within the four complexity categories are presented. The cost estimates
reflect the tasks associated with identifying the requirements for a
tracking system, developing the system, giving access to the system,
and providing training on the system.
Maintenance Costs
Once tracking systems are in place, ongoing maintenance costs may
accrue. To account for these maintenance costs, the analysis considered
a range from 10 percent to 20 percent of the initial cost of
establishing the tracking system. The estimate of annual maintenance
costs is based on the size of the organization, with smaller
contractors incurring higher costs as a percentage of their initial
system costs. The annual maintenance costs are estimated as follows: 20
percent of startup costs for small contractors; 15 percent of startup
costs for medium-sized contractors; 10 percent of startup costs for
large contractors; 10 percent of startup costs for the very largest
contractors; and 15 percent of startup costs for subcontractors.
Sensitivity Analysis
The cost estimates for tracking systems are the function of
primarily two assumptions: (1) The type of system each firm size
category will need to develop, and (2) the average cost to develop a
given tracking system. A sensitivity analysis presents what the
estimated total tracking system costs would be if these two assumptions
were altered (see RIA Exhibits 6 and 7).
Government Costs
The analysis includes estimates for five categories of costs to the
federal government directly related to the implementation of the Order:
(1) New staff at DOL; (2) new Agency Labor Compliance Advisors (ALCAs)
at other federal agencies; (3) contracting agency evaluation costs; (4)
information technology costs to support implementation of the Order;
and (5) government personnel training costs.
Costs of the Paycheck Transparency Provision
Cost Methodology
The final rule's paycheck transparency clause contain a requirement
for contractors and subcontractors to provide two documents to workers
on such contracts for whom they are required to maintain wage records
under the FLSA, the DBA, the SCA, or equivalent state laws. First,
contractors and subcontractors will provide a notice to each worker
whom they treat as an independent contractor informing the worker of
his/her independent contractor status. Second, contractors and
subcontractors will provide a wage statement to each worker in each pay
period. The wage

[[Page 58634]]

statement need not contain a record of hours worked if the contractor
or subcontractor has informed the worker that he/she is exempt from the
FLSA's overtime requirements, so contractors and subcontractors may
elect to provide additional notices to their exempt employees informing
them of their FLSA exempt status. The analysis of costs for the
paycheck transparency requirements include estimates for--
Number of Independent Contractor Status Notices.
Number of FLSA Status Notices.
Total Number of Status Notices.
Cost of Implementation of Status Notices.
Cost of Status Notices in Year One.
Cost of Recurring Status Notices.
Generation and Distribution of Wage Statements.
Total Quantifiable Costs
Exhibit 8, which is reproduced below, presents a summary of the
first-year, second-year, and annualized quantifiable costs final rule
disclosure and paycheck transparency requirements to contractors and
subcontractors, as well as the estimated government costs. Exhibit 8
includes both the first-year and second-year impacts because the Final
Rule's requirement for contractors and subcontractors to report labor
law violations will be phased in over three years.

Exhibit 8--Summary of Quantifiable Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized costs
Entity affected Monetized year 1 Monetized year 2 -------------------------------------
costs costs 3% Discounting 7% Discounting
--------------------------------------------------------------------------------------------------------------------------------------------------------
Time to Review the Order.................... Contractors and Subcontractors $126,918,776 $76,912,778 $57,154,219 $59,743,450
Offeror Initial Representation.............. Contractors................... 25,046,077 63,945,154 59,460,088 59,187,405
Subcontractors................ 0 86,105,338 70,900,398 69,982,912
Offeror Additional Information.............. Contractors................... 17,921 130,666 233,556 226,447
Subcontractors................ 0 201,529 357,073 345,577
Contractor Review of Subcontractor Contractors................... 0 1,268,066 2,352,118 2,275,288
Information.
Update Determination........................ Contractors................... 0 2,026,028 6,237,564 5,905,436
Subcontractors................ 0 0 4,145,008 3,867,284
Providing Additional Information............ Contractors................... 0 8,146 25,105 23,768
Subcontractors................ 0 0 16,684 15,566
Contractor Considers Subcontractors' Updated Contractors................... 0 0 18,705 17,452
Information.
Tracking System Costs....................... Contractors and Subcontractors 291,052,560 172,493,936 187,486,027 189,038,901
Status Notice Implementation................ Contractors and Subcontractors 1,569,801 0 178,669 208,883
Issuing First and Recurring Status Notices.. Contractors and Subcontractors 2,388,669 1,283,828 1,409,577 1,430,842
Update of Payroll Systems................... Contractors and Subcontractors 5,079,547 3,078,206 2,287,428 2,391,054
Wage Statement Distribution................. Contractors and Subcontractors 6,279,598 6,279,598 6,279,598 6,279,598
---------------------------------------------------------------------------
Total Employer Costs.................... .............................. 458,352,949 413,733,272 398,541,816 400,939,861
Government Costs........................ .............................. 15,772,150 10,129,299 10,944,157 11,091,474
Total Costs (Employer + Government)..... .............................. 474,075,099 423,862,572 409,535,973 412,031,335
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Totals may not sum due to rounding.

See RIA Exhibit 9, Summary of Monetized Costs, for a summary of the
cost analysis of the final rule. The monetized costs displayed are the
yearly summations of the calculations already described.
Cost of Complaint and Dispute Transparency Provision
The final rule contains a clause that prohibits contractors and
subcontractors with Federal contracts exceeding $1 million from
requiring employees to arbitrate certain discrimination and harassment
claims. Specifically, the Order provides that the decision to arbitrate
claims under Title VII of the Civil Rights Act of 1964 and sexual
harassment or sexual assault tort claims may only be made with the
voluntary consent of the employee or independent contractor after such
a dispute arises. The analysis presents a discussion of the impacts of
this prohibition in terms of a presumption that as a result of this
provision more workers will seek to litigate such claims in court as
opposed to raising them through arbitration. A quantified analysis was
not feasible as the agencies were unable to obtain empirical data that
would allow them to quantify the provision's overall cost because the
potential increase in the number of claimants that would elect to go to
trial as a result of this prohibition is unknown.
Benefits, Transfer Impacts, and Accompanying Costs of Disclosing Labor
Law Violations
In the final analysis, as in the proposed analysis, there were
insufficient data to accurately quantify the benefits presented. The
agencies invited respondents to provide data that would allow for more
thorough benefit estimations, however no data were received that could
be used to quantify the benefits of the final rule. The agencies have
extensively discussed the benefits and showed relevant peer-reviewed
studies and other published reports that often quantitatively
demonstrate that fair pay and safe workplaces would lead to improved
contractor performance, fewer injuries

[[Page 58635]]

and fatalities, reduced employment discrimination, less absenteeism,
and higher productivity at work. Extensive discussion is presented on
the following--
Improved Contractor Performance
Safer Workplaces
Reduced Employment Discrimination
Fairer Wages
Enforcement Cost Savings and Transfer Impacts for the
Government, Contractors, and Society
Transfer Impacts of the Paycheck Transparency Provision
Non-Quantified Impacts of the Paycheck Transparency Provision
Benefits and Transfer Impacts of Complaint and Dispute
Transparency Provision
Discussion of Regulatory Alternatives
The E.O. and the Final Rule are designed to reduce the likelihood
that taxpayers will be subject to poor performance on Federal contracts
and preventing taxpayer dollars from rewarding corporations that break
the law. A series of alternative regulatory approaches were examined
including--
1. Require contracting officers to consider prospective
contractors' labor compliance without the assistance of ALCAs, and
without disclosure by contractors of their labor law decisions. This
alternative was rejected because the E.O. provided for contractor
disclosure and for ALCAs to assist contracting officers because these
tools are deemed necessary for contracting officers to effectively
consider a prospective contractor's labor compliance. Without timely
disclosures or the support and expert advice of ALCAs, it is
unrealistic to expect a consistent approach to the assessment of labor
violation information provided to contracting officers for their
consideration during responsibility determinations and during contract
performance.
2. Remove the requirement that prospective contractors disclose
their labor violations while leaving the rest of the final rule
implementation of the E.O. intact. This could be an attractive
alternative if a contracting agency's ALCA had access to a database
that would provide all of a prospective contractor's labor law
decisions as required by the E.O. and implementing regulation. However
even if a current system had efficient access to all enforcement agency
information, e.g. administrative merits determinations, and all
publicly available information, it would still not have access to all
labor law decisions required by the E.O. and implementing regulation,
e.g., privately conducted arbitration decisions and all civil
judgments. OMB, GSA, and other Federal agencies are working on systems
that will improve the availability of relevant data in the longer term,
however for implementation of the final rule, this alternative has been
rejected.
3. Require all contractors for which a responsibility determination
is undertaken to provide the following nine categories of information
regarding their labor violations:
a. The labor law that was violated;
b. The case number, inspection number, charge number, docket
number, or other unique identification number;
c. The date that the determination, judgment, award, or decision
was rendered;
d. The name of the court, arbitrator(s), agency, board, or
commission that rendered it;
e. The name of the case, arbitration, or proceeding, if applicable;
f. 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);
g. Whether the proceeding was ongoing or closed;
h. Whether there was a settlement, compliance, or remediation
agreement related to the violation; and
i. The amount(s) of any penalties or fines assessed and any back
wages due as a result of the violation.
This approach would make the process of considering labor
violations more efficient from the perspective of contracting agencies
because more information would immediately be available to ALCAs and
contracting officers without the necessity of gathering it. However, it
was rejected in favor of a narrowed list of four data elements of
information in order to reduce the burden on contractors while still
providing the minimally necessary information to achieve the desired
regulatory outcome.
4. Another alternative would be to have all prospective contractors
bidding on contracts valued at greater than $500,000--not just those
for which a contracting officer undertakes a responsibility
determination--disclose the information. This alternative was rejected
because it would increase the burden on contractors and it was
determined that the approach taken in the final rule of a more narrowly
tailored requirement would retain the rule's effectiveness relative to
the objectives of the E.O. while minimizing the burden on contractors.
5. With regard to the Order's and Final Rule's provisions regarding
subcontractors, one alternative would be to simply exempt
subcontractors from any obligations under the Order 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. This alternative was
rejected because contractors are already required to evaluate their
prospective subcontractors' integrity and business ethics, when
determining subcontractor responsibility and disregarding
subcontractors' labor compliance in making that determination would
undermine the core objective of the E.O.
6. Similarly, the Order's requirements could be limited to first-
tier subcontractors. This alternative was rejected because similar to
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.

V. Regulatory Flexibility Act

DoD, GSA, and NASA have prepared a Final Regulatory Flexibility
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA is summarized as follows--
The final regulatory flexibility analysis contains six discrete
types of information, consistent with 5 U.S.C. 604. The FRFA coverage
of these elements is summarized below.
1. Rule objectives. The FRFA summarizes E.O. 13673's requirement
for the FAR Council to develop Fair Pay and Safe Workplace regulations,
identifies the objective of promoting economy and efficient in
procurement by awarding contracts to contractors that comply with labor
laws; and provides an overview of the final rule's main requirements.
2. Significant IRFA issues raised by the public. The FRFA
identifies six issues that the public raised as shortcomings with the
IRFA--
The Government did not articulate a rational basis for the
rule promulgation,
The Government did not sufficiently explore alternatives
to the rule,
The rule conflicts with suspension and debarment
procedures,
The applicability threshold will not help minimize impact
to small businesses,
The compliance burden on small businesses was not
addressed in relevant terms, and
The data source for subcontractors was problematic.

[[Page 58636]]

The FRFA includes the Government's assessment of each issue and
identifies an associated disposition.
3. Disposition of comments from the Chief Counsel for Advocacy of
the Small Business Administration (SBA). The FRFA identifies 14
comments raised by the Chief Counsel for Advocacy of the Small Business
Administration. Specifically, the Chief Counsel for Advocacy of the
SBA's comments reflected concerns about DOL Guidance, the proposed FAR
rule, and the associated burden estimate, including: (1) Calculation of
small business entities, (2) increased costs of compliance, (3) burdens
of the disclosure process, (4) impact on small business subcontractors,
(5) handling by primes of subcontractor proprietary information, (6)
insufficient processing time for ALCAs to assess information, (7)
inability to track subcontractor law violations, (8) lack of clarity on
the rule's impact to the Certificate of Competency process, (9)
underestimate of affected entities, (10) underestimate of public cost,
(11) non-inclusion of all RIA costs in the IRFA, (12) lack of using the
rulemaking process to publish the DOL Guidance, (13) lack of due
process in disclosing a violation before final adjudication, and (14)
negative impact on mergers, acquisitions, and teaming agreements. The
FRFA includes the Government's assessment of each issue and identifies
an associated disposition.
4. Impact to small entities. The FRFA estimates that 17,943 small
businesses (7,626 prime contractors and 10,317 subcontractors) will be
impacted by the rule's requirements, noting that this rule will impact
all small entities who propose as contractors or subcontractors on
solicitations and resultant contracts estimated to exceed $500,000. The
number of impacted small entities is derived by estimating a total of
24,183 impacted contractors (13,866 prime contractors and 10,317
subcontractors), then deducing the number of impacted small businesses
(7,626 prime contractors and 10,317 subcontractors). The RIA section A,
Contractor and Subcontractor Populations, provides detailed
information.
5. Estimated compliance requirements. The FRFA reviews the
reporting and disclosure requirements of two FAR provisions, 52.222-57,
Representation Regarding Compliance with Labor Laws (Executive Order
13673) and 52.222-58, Subcontractor Responsibility Regarding Compliance
with Labor Laws (Executive Order 13673). It also reviews the compliance
requirements of associated clauses. The FRFA includes an Exhibit from
the RIA that outlines overall employer costs of $458,352,949, in year
one, which account for 12 compliance activities (review the E.O., make
an initial representation, provide additional information, review
subcontractor information, update the determination, provide Additional
Information, consider subcontractors' updated Information, establish a
tracking system, implement a status notice, issue status notices,
update payroll systems, and distribute wage statements). The FRFA notes
that Exhibit 8 is a summary of overall costs; not those specific to
small businesses.
6. Steps to minimize impact on small entities. The FRFA indicates
that the Councils have taken several actions to minimize burden for
contractors and subcontractors, small and large, in response to the
public comments and those of SBA's Office of Advocacy. Among the steps
taken are:
The disclosure reporting period is phased in to provide
the time affected parties may need to familiarize themselves with the
rule, set up internal protocols, and create or modify internal
databases.
Subcontractor disclosure of labor law decisions (the
decisions, mitigating factors and remedial measures) is made directly
to DOL for review and assessment instead of to the prime contractor.
Public disclosure is limited to four basic pieces of labor
law decision information; the final rule does not compel public
disclosure of additional documents demonstrating mitigating factors,
remedial measures, and other compliance steps.
The availability and consideration of existing remedies,
such as documenting noncompliance in past performance, over more severe
remedies (e.g., termination) is emphasized; and early engagement with
DOL is encouraged.
The FRFA also identifies other significant alternatives to the rule
that were considered, which affect the impact on small entities, and
why each was rejected.
Interested parties may obtain a copy of the FRFA from the
Regulatory Secretariat. The Regulatory Secretariat has submitted a copy
of the FRFA to the Chief Counsel for Advocacy of the Small Business
Administration.

VI. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies. The
rule contains information collection requirements. OMB has cleared this
information collection requirement under OMB Control Number 9000-0195,
titled: Fair Pay and Safe Workplaces. The PRA supporting statement is
summarized as follows--
The PRA supporting statement provides a description of the
requirements of the rule that contain information collection
requirements and indicates that they are contained in two solicitation
provisions and two contract clauses.
Provision 52.222-57, Representation Regarding Compliance
with Labor Laws (Executive Order 13673) (which is repeated at
paragraph(s) of 52.212-3 Offeror Representations and Certifications--
Commercial Items).
Provision 52.222-58, Subcontractor Responsibility Matters
Regarding Compliance with Labor Laws (Executive Order 13673).
Clause 52.222-59, Compliance with Labor Laws (Executive
Order 13673).
Clause 52.222-60, Paycheck Transparency (Executive Order
13673).
The PRA supporting statement contains a discussion of the public
comments submitted to the proposed rule information collection analysis
and supporting statement. Respondents submitted public comments on
various aspects of the estimates in the proposed rule PRA supporting
statement and were critical of estimating methods used and expressed
that many cost elements were missing from the estimates or were
(sometimes significantly) underestimated. The cost elements addressed
in the public comments with respect to the PRA included: (1) Regulatory
familiarization, (2) recordkeeping, and (3) burden hours.
The public comments were carefully considered in developing the
estimates for the final rule supporting statement. The supporting
statement estimates were prepared in coordination with, and relied
heavily on, the final Regulatory Impact Analysis (RIA). The RIA is a
joint FAR Council and DOL product with substantial analysis provided by
DOL in its capacity as a program agency and advisor to the FAR Council
on labor matters.
As a result of the consideration of public comments adjustments
were made to reflect the following (note that the table numbers cited
in this summary correlate to the table numbers appearing in the PRA
supporting statement)--
(1) Regulatory familiarization--Larger and more complex
organizational structures will require more hours and the time of an
attorney is warranted. Therefore the estimate for regulatory review and
familiarization has been significantly increased in the final rule. See
Table 7 for initial costs and Table 5 for annual regulatory review
costs that

[[Page 58637]]

will be incurred for new entrants in subsequent years.
(2) Recordkeeping--Contractors and subcontractors may establish new
internal control systems or modify existing systems in order to track
and report labor law decisions and related information and to manage
and track subcontractor compliance with the disclosure requirements.
Estimates have been included for initial startup and annual maintenance
costs for tracking mechanisms. The estimates took into consideration
that for those contractors with the least complicated organizational
structures, a commercial software program may suffice, for others
revising existing systems or building additional functionality and
capability into existing systems may suffice, and yet for others
development of a web-based compliance system may be necessary. The
estimates considered a stratification of contractors by organizational
complexity. See Table 8 for nonrecurring initial start-up costs and
Table 4 for recurring annual maintenance costs.
(3) Burden hours--The comments on the calculations of burden hours
reflected concerns with the estimates of (i) Population of affected
contractors; (ii) percentage of those contractors estimated to be
violators; (iii) omission of overhead in the estimates of labor burden;
and (iv) underestimating the hours needed to accomplish required tasks.
(i) Population of affected contractors--The estimating methodology
for prime contractors and subcontractors was revised. The most
significant revision in methodology was in aligning the population of
affected contractors with the legal entity making the offer, which is
the scope of the reporting burden. The final rule uses Tax
Identification Numbers (TIN), rather than the DUNS number, to identify
unique prime contractors that will be impacted by this rule. The unique
subcontractor population was determined using a methodology that
assumes the subcontractor population is a factor of the unique prime
contractor population.
(ii) Percentage of contractors estimated to be violators--
The estimating methodology has been revised to use a randomly
selected statistically representative sample of 400 Federal contractors
with at least one award over $500,000 from FY 2013 FPDS. A detailed
description of the methodology can be found in the RIA, section D.2.
Population of Contractors and Subcontractors with Labor and Employment
Violations. The estimated percent of Federal contractors and
subcontractors that will have labor law decisions subject to disclosure
has been revised from 4.05 percent in the proposed RIA to 9.67 percent
in the final RIA. A detailed description of the methodology is found in
the RIA, section A. Contractor and Subcontractor Populations.
(iii) Overhead as a component of labor burden--While overhead
impacts exist, they are difficult to effectively quantify for this
regulatory action. The final RIA contains a lengthy discussion that
considers inclusion of overhead and how overhead has been included in a
number of recent regulatory actions, see section B. Hourly Compensation
Rates. The RIA, in footnote 21, applies a 17% overhead rate, which is
the rate utilized by EPA in a recent rule, as example to demonstrate
the affect overhead might have on the estimate for this final rule.
(iv) Burden hours--The tasks necessary to comply with the
representation and disclosure requirements of the rule were carefully
considered, and estimates have been adjusted as shown in Table 1 and
summarized in Table 3 (Table 3 is reproduced below). With regard to the
labor burden hours for specific representation and disclosure tasks,
the estimates generally did not increase in recognition of the
inclusion of costs for contractors and subcontractors to modify or
develop tracking system mechanisms. Inherent in the development of such
systems are internal controls and protocols and processes which will
greatly streamline the information retrieval process. The majority of
the labor violation disclosure effort is at the initial representation
and as such the greatest number of hours is allotted to the initial
response. A detailed breakdown, including explanatory footnotes, of
estimated burden hours can be found in Table 1, Reporting Estimate. It
should be noted that estimates for burden hours considered that the
time needed for a simple disclosure and for a complex disclosure vary;
and that across the universe of disclosures, a greater proportion are
simple, i.e., for single or non-complex labor law violations.
Annualized cost estimates for this supporting statement have been
prepared assuming the full implementation of the rule, i.e., upon
completion of all phase-in periods. The RIA and PRA supporting
statement are not intended to match each other as they are
representative of different analyses and timeframes.

Table 3--Summary of Table 1 Annual Estimated Cost to the Public of
Reporting Burden*
------------------------------------------------------------------------

------------------------------------------------------------------------
Number of respondents................................... 24,183
Responses per respondent................................ 17.3
Total annual responses.................................. 417,808
Hours per response...................................... 5.19
Total hours............................................. 2,166,815
Rate per hour (average)................................. $61.43
---------------
Total annual cost to public......................... $133,109,793
------------------------------------------------------------------------
* Totals may not sum due to rounding.

A number of other tables in the supporting statement estimate cost
elements including--annual recurring costs to include maintenance of
tracking mechanism costs and costs incurred by new entrants (see Tables
4 and 5); and nonrecurring costs to include regulatory review and
familiarization (see Table 7) and contractor business systems (see
Table 8). The summary of total costs to the public is captured in
Tables 10a and 10b, reproduced below.

Table 10a--Summary of Total Costs to the Public
[First year of full implementation]
------------------------------------------------------------------------
Cost element Cost
------------------------------------------------------------------------
Table 3. Annual Reporting(Recurring).................... $133,109,793
Table 9. Initial Start Up (Nonrecurring)................ 321,534,290
---------------
Total Initial Public Costs.......................... 454,644,083
------------------------------------------------------------------------

Table 10b--Summary of Total Costs to the Public
[Subsequent years]
------------------------------------------------------------------------
Cost element Cost
------------------------------------------------------------------------
Table 3. Annual Reporting (Recurring)................... $133,109,793
Table 6. Other Recurring Costs.......................... 126,931,469
---------------
Total Annual Subsequent Public Costs................ 260,041,262
------------------------------------------------------------------------

List of Subjects in 48 CFR Parts 1, 4, 9, 17, 22, 42, and 52

Government procurement.

Dated: August 10, 2016.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Governmentwide Policy.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 4, 9, 17, 22,
42, and 52 as set forth below:

0
1. The authority citation for 48 CFR parts 1, 4, 9, 17, 22, 42, and 52
continues to read as follows:

[[Page 58638]]

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 ``52.222-57'', ``52.222-
58'', 52.222-59'', and 52.222-60'' and their corresponding OMB Control
Number ``9000-0195''.

PART 4--ADMINISTRATIVE MATTERS

0
3. Amend section 4.1202 by redesignating paragraphs (a)(21) through
(31) as paragraphs (a)(22) through (32), respectively; and adding a new
paragraph (a)(21) to read as follows:

4.1202 Solicitation provision and contract clause.

(a) * * *
(21) 52.222-57, 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 read as follows:

9.104-4 Subcontractor responsibility.

* * * * *
(b) For Executive Order (E.O.) 13673, Fair Pay and Safe Workplaces,
requirements pertaining to labor law violations, see subpart 22.20.
* * * * *

0
5. Amend section 9.104-5 by redesignating paragraph (d) as paragraph
(e); and adding a new paragraph (d) to read as follows:

9.104-5 Representation and certifications regarding responsibility
matters.

* * * * *
(d) When an offeror provides an affirmative response to the
provision at 52.222-57(c)(2), Representation Regarding Compliance with
Labor Laws (Executive Order 13673), or its commercial item equivalent
at 52.212-3(s)(2)(ii), the contracting officer shall follow the
procedures in subpart 22.20.
* * * * *

0
6. Amend section 9.104-6 by revising paragraph (b)(4) and adding
paragraph (b)(6) to read as follows:

9.104-6 Federal Awardee Performance and Integrity Information System.

* * * * *
(b) * * *
(4) Since FAPIIS may contain information on any of the offeror's
previous contracts and information covering a five-year period, some of
that information may not be relevant to a determination of present
responsibility, e.g., a prior administrative action such as debarment
or suspension that has expired or otherwise been resolved, or
information relating to contracts for completely different products or
services. Information in FAPIIS submitted pursuant to the following
provision and clause is applicable above $500,000, and may be
considered if the information is relevant to a procurement below
$500,000: 52.222-57, Representation Regarding Compliance with Labor
Laws (Executive Order 13673), its commercial item equivalent at 52.212-
3(s), and 52.222-59, Compliance with Labor Laws (Executive Order
13673).
* * * * *
(6) When considering information in FAPIIS previously submitted in
response to the provision and clause listed at paragraph (b)(4) of this
section the contracting officer--
(i) Shall follow the procedures in 22.2004-2, if the procurement is
expected to exceed $500,000; or
(ii) May elect to follow the procedures in 22.2004-2, if the
procurement is not expected to exceed $500,000.
* * * * *

0
7. Amend section 9.105-1 by adding paragraph (b)(4) to read as follows:

9.105-1 Obtaining information.

* * * * *
(b) * * *
(4) When an offeror provides an affirmative response to the
provision at 52.222-57, Representation Regarding Compliance with Labor
Laws (Executive Order 13673) at paragraph (c)(2), or its commercial
item equivalent at 52.212-3(s)(2)(ii), the contracting officer shall
follow the procedures in 22.2004-2.
* * * * *

9.105-3 [Amended]

0
8. 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
9. Amend section 17.207 by--
0
a. Removing from paragraph (c)(6) ``considered; and'' and adding
``considered;'' in its place;
0
b. Removing from paragraph (c)(7) ``satisfactory ratings.'' and adding
``satisfactory ratings; and'' in its place; and
0
c. Adding paragraph (c)(8).
The addition reads as follows:

17.207 Exercise of options.

* * * * *
(c) * * *
(8) The contractor's labor law decisions, mitigating factors,
remedial measures, and the agency labor compliance advisor's analysis
and advice have been considered in accordance with subpart 22.20, if
the contract contains the clause 52.222-59, Compliance with Labor Laws
(Executive Order 13673).
* * * * *

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

0
10. Amend section 22.000 by--
0
a. Removing from paragraph (a) ``Deals with'' and adding ``Prescribes''
in its places;
0
b. Revising paragraph (b); and
0
c. Removing from paragraph (c) ``labor law.'' and adding ``labor law
and Executive order.'' in its place.
The revision reads as follows:

22.000 Scope of part.

* * * * *
(b) Prescribes contracting policy and procedures to implement each
pertinent labor law and Executive order; and
* * * * *

0
11. Amend section 22.102-2 by revising the section heading and
paragraph (c)(1) and adding paragraph (c)(3) to read as follows:

22.102-2 Administration and enforcement.

* * * * *
(c)(1) The U.S. Department of Labor (DOL) is responsible for the
administration and enforcement of the Occupational Safety and Health
Act. DOL's Wage and Hour Division is responsible for administration and
enforcement of numerous wage and hour statutes including--
(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 Equipment Exceeding $15,000 (see subpart 22.6); and
(v) 41 U.S.C. chapter 67, Service Contract Labor Standards (see
subpart 22.10).
* * * * *

[[Page 58639]]

(3) DOL's administration and enforcement authorities under the
statutes and under the Executive orders implemented in this part do not
limit the authority of contracting officers to administer and enforce
the terms and conditions of agency contracts. However, DOL has
regulatory authority to require contracting agencies to change contract
terms to include missing contract clauses or wage determinations that
are required by the FAR, or to withhold contract amounts (see, e.g.,
22.1015, 22.1022).

0
12. 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 duties:
(1) Interfacing with DOL, agency labor compliance advisors (ALCAs)
(as defined at 22.2002), outside agencies, contractors, and other
parties in matters concerning interpretation, guidance, and enforcement
of labor statutes, Executive orders, and implementing regulations
applicable to agency contracts.
(2) Providing advice and guidance to the contracting agency
regarding application of labor statutes, Executive orders, and
implementing regulations in agency contracts.
(3) Serving 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/ala.aspx.
(d) For information about ALCAs, who provide support regarding
Executive Order 13673, Fair Pay and Safe Workplaces, see subpart 22.20.

0
13. 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 General.
22.2004-2 Preaward assessment of an offeror's labor law violations.
22.2004-3 Postaward assessment of a prime contractor's labor law
violations.
22.2004-4 Contractor preaward and postaward assessment of a
subcontractor's labor law 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. An administrative merits determination 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 consult section II.B. in the DOL Guidance.
Agency labor compliance advisor (ALCA) means the senior official
designated in accordance with E.O. 13673. ALCAs are listed at
www.dol.gov/fairpayandsafeworkplaces.
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 an award or decision
that is not final or is subject to being confirmed, modified, or
vacated by a court, and includes an award or decision resulting from
private or confidential proceedings. To determine whether a particular
award or decision is covered by this definition, it is necessary to
consult 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 judgment or order is covered by this
definition, it is necessary to consult 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'.''
The DOL Guidance, dated August 25, 2016, can be obtained from
www.dol.gov/fairpayandsafeworkplaces.
Enforcement agency means any agency granted authority to enforce
the Federal labor laws. It includes the enforcement components of DOL
(Wage and Hour Division, Office of Federal Contract Compliance
Programs, and Occupational Safety and Health Administration), the Equal
Employment Opportunity Commission, the Occupational Safety and Health
Review Commission, and the National Labor Relations Board. It also
means 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,
conduct investigations of potential labor law violations. The
enforcement agencies associated with each labor law under E.O. 13673
are--
(1) Department of Labor Wage and Hour Division (WHD) for--
(i) The Fair Labor Standards Act;
(ii) The Migrant and Seasonal Agricultural Worker Protection Act;
(iii) 40 U.S.C. chapter 31, subchapter IV, formerly known as the
Davis-Bacon Act;
(iv) 41 U.S.C. chapter 67, formerly known as the Service Contract
Act;
(v) The Family and Medical Leave Act; and
(vi) E.O. 13658 of February 12, 2014 (Establishing a Minimum Wage
for Contractors);
(2) Department of Labor Occupational Safety and Health
Administration (OSHA) for--
(i) The Occupational Safety and Health Act of 1970; and
(ii) OSHA-approved State Plans;
(3) Department of Labor Office of Federal Contract Compliance
Programs (OFCCP) for--
(i) Section 503 of the Rehabilitation Act of 1973;
(ii) The Vietnam Era Veterans' Readjustment Assistance Act of 1972
and the Vietnam Era Veterans' Readjustment Assistance Act of 1974; and
(iii) E.O. 11246 of September 24, 1965 (Equal Employment
Opportunity);
(4) National Labor Relations Board (NLRB) for the National Labor
Relations Act; and
(5) Equal Employment Opportunity Commission (EEOC) for--
(i) Title VII of the Civil Rights Act of 1964;
(ii) The Americans with Disabilities Act of 1990;
(iii) The Age Discrimination in Employment Act of 1967; and
(iv) Section 6(d) of the Fair Labor Standards Act (Equal Pay Act).
Labor compliance agreement means an agreement entered into between
a contractor or subcontractor and an enforcement agency to address
appropriate remedial measures,

[[Page 58640]]

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 E.O.s:
(1) The Fair Labor Standards Act.
(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) E.O. 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) E.O. 13658 of February 12, 2014 (Establishing a Minimum Wage
for Contractors).
(15) Equivalent State laws as defined in the DOL Guidance. (The
only equivalent State laws implemented in the FAR are OSHA-approved
State Plans, which can be found at www.osha.gov/dcsp/osp/approved_state_plans.html.)
Labor law decision means an administrative merits determination,
arbitral award or decision, or civil judgment, which resulted from a
violation of one or more of the laws listed in the definition of
``labor laws''.
Pervasive violations, in the context of E.O. 13673, Fair Pay and
Safe Workplaces, means labor law violations that bear on the assessment
of a contractor's integrity and business ethics because they reflect a
basic disregard by the contractor for the labor laws, as demonstrated
by a pattern of serious and/or willful violations, continuing
violations, or numerous violations. To determine whether violations are
pervasive it is necessary to consult the DOL Guidance section III.A.4.
and associated Appendix D.
Repeated violation, in the context of E.O. 13673, Fair Pay and Safe
Workplaces, means a labor law violation that bears on the assessment of
a contractor's integrity and business ethics because the contractor had
one or more additional labor law violations of the same or a
substantially similar requirement within the prior 3 years. To
determine whether a particular violation(s) is repeated it is necessary
to consult the DOL Guidance section III.A.2. and associated Appendix B.
Serious violation, in the context of E.O. 13673, Fair Pay and Safe
Workplaces, means a labor law violation that bears on the assessment of
a contractor's integrity and business ethics because of the number of
employees affected; the degree of risk imposed, or actual harm done by
the violation; the amount of damages incurred or fines or penalties
assessed; and/or other similar criteria. To determine whether a
particular violation(s) is serious it is necessary to consult the DOL
Guidance section III.A.1. and associated Appendix A.
Willful violation, in the context of E.O. 13673, Fair Pay and Safe
Workplaces, means a labor law violation that bears on the assessment of
a contractor's integrity and business ethics because the contractor
acted with knowledge of, reckless disregard for, or plain indifference
to the matter of whether its conduct was prohibited by one or more
requirements of labor laws. To determine whether a particular
violation(s) is willful it is necessary to consult the DOL Guidance
section III.A.3. and associated Appendix C.

22.2003 Policy.

It is the policy of the Federal Government to promote economy and
efficiency in procurement by awarding contracts to contractors that
promote safe, healthy, fair, and effective workplaces through
compliance with labor laws, and by promoting opportunities for
contractors to do the same when awarding subcontracts. Contractors and
subcontractors 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 supported by E.O. 13673, Fair Pay and Safe
Workplaces.

22.2004 Compliance with labor laws.

22.2004-1 General.

(a) Contracts. An offeror on a solicitation estimated to exceed
$500,000 must represent whether, in the past three years, any labor law
decision(s), as defined at 22.2002, was rendered against it. If an
offeror represents that a decision(s) was rendered against it, and if
the contracting officer has initiated a responsibility determination,
the contracting officer will require the offeror to submit information
on the labor law decision(s) and afford the offeror an opportunity to
provide such additional information as the prospective contractor deems
necessary to demonstrate its responsibility including mitigating
factors and remedial measures such as contractor actions taken to
address the violations, labor compliance agreements, and other steps
taken to achieve compliance with labor laws. The contractor must update
the information semiannually in the System for Award Management (SAM).
For further information, including about phase-ins, see the provisions
and clauses prescribed at 22.2007(a) and (c).
(b) Subcontracts. Contractors are required to direct their
prospective subcontractors to submit labor law decision information to
DOL. Prospective subcontractors will also be afforded an opportunity to
provide information to DOL on mitigating factors and remedial measures,
such as subcontractor actions taken to address the violations, labor
compliance agreements, and other steps taken to achieve compliance with
labor laws. Contractors will consider DOL analysis and advice 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.
Subcontractors must update the information semiannually. For further
information, including about phase-ins, see the provision and clauses
prescribed at 22.2007(b) and (c).
(c) ALCA assistance. The ALCA is responsible for accomplishing the
specified objectives of the E.O., which include a number of overarching
management functions. In addition, the ALCA provides support to the
procurement process by--
(1) Encouraging prospective contractors and subcontractors that
have labor law violations that may be serious, repeated, willful, and/
or pervasive to work with enforcement agencies to discuss and address
the labor law violations as soon as practicable;
(2) Providing input to the individual responsible for preparing and
documenting past performance evaluations in Contractor Performance
Assessment Reporting System (CPARS) (see 42.1502(j) and 42.1503) so
that labor compliance may be considered during source selection;
(3) Providing written analysis and advice to the contracting
officer for consideration in the responsibility determination and
during contract performance (see 22.2004-2(b) and

[[Page 58641]]

22.2004-3(b)). The analysis requires obtaining labor law decision
documents and, using DOL Guidance, assessing the labor law violations
and information on mitigating factors and remedial measures, such as
contractor actions taken to address the violations, labor compliance
agreements, and other steps taken to achieve compliance with labor
laws;
(4) Notifying, if appropriate, the agency suspending and debarring
official, in accordance with agency procedures (see 9.406-3(a) and
9.407-3(a)), or advising that the contracting officer provide such
notification;
(5) Monitoring SAM and FAPIIS for new and updated contractor
disclosures of labor law decision information; and
(6) Making a notation in FAPIIS when the ALCA learns that a
contractor has entered into a labor compliance agreement.

22.2004-2 Preaward assessment of an offeror's labor law violations.

(a) General. Before awarding a contract in excess of $500,000, the
contracting officer shall--
(1) Consider relevant past performance information regarding
compliance with labor laws when past performance is an evaluation
factor; and
(2) Consider information concerning labor law violations when
determining whether a prospective contractor is responsible and has a
satisfactory record of integrity and business ethics.
(b) Assessment of labor law violation information during
responsibility determination. When the contracting officer initiates a
responsibility determination (see subpart 9.1) and a prospective
contractor has provided an affirmative response to the representation
at paragraph (c)(2) of the provision at 52.222-57, Representation
Regarding Compliance with Labor Laws (Executive Order 13673), or its
equivalent for commercial items at 52.212-3(s)(2)(ii)--
(1) The contracting officer shall request that the prospective
contractor--
(i) Disclose in SAM at www.sam.gov for each labor law decision, the
following information, which will be publicly available in FAPIIS:
(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 such additional information, in SAM, as the
prospective contractor deems necessary to demonstrate its
responsibility, including mitigating factors and remedial measures such
as actions taken to address the violations, labor compliance
agreements, and other steps taken to achieve compliance with labor
laws. Prospective contractors may provide explanatory text and upload
documents in SAM. This information will not be made public unless the
contractor determines that it wants the information to be made public;
and
(iii) Provide the information in paragraphs (b)(1)(i) and (ii) of
this section to the contracting officer if the prospective contractor
meets an exception to SAM registration (see 4.1102(a));
(2) The contracting officer shall--
(i) Request that the ALCA provide written analysis and advice, as
described in paragraph (b)(3) of this section, within three business
days of the request, or another time period determined by the
contracting officer;
(ii) Furnish to the ALCA all relevant information provided to the
contracting officer by the prospective contractor; and
(iii) Request that the ALCA obtain copies of the administrative
merits determination(s), arbitral award(s) or decision(s), or civil
judgment(s), as necessary to support the ALCA's analysis and advice,
and for each analysis that indicates an unsatisfactory record of labor
law compliance. (The ALCA will notify the contracting officer if the
ALCA is unable to obtain any of the necessary document(s); the
contracting officer shall request that the prospective contractor
provide the necessary documentation).
(3) The ALCA's advice to the contracting officer will include one
of the following recommendations about the prospective contractor's
record of labor law compliance in order to inform the contracting
officer's assessment of the prospective contractor's integrity and
business ethics. The prospective contractor's record of labor law
compliance, including mitigating factors and remedial measures--
(i) Supports a finding, by the contracting officer, of a
satisfactory record of integrity and business ethics;
(ii) Supports a finding, by the contracting officer, of a
satisfactory record of integrity and business ethics, but the
prospective contractor needs to commit, after award, to negotiating a
labor compliance agreement or another acceptable remedial action;
(iii) Could support a finding, by the contracting officer, of a
satisfactory record of integrity and business ethics, only if the
prospective contractor commits, prior to award, to negotiating a labor
compliance agreement or another acceptable remedial action;
(iv) Could support a finding, by the contracting officer, of a
satisfactory record of integrity and business ethics, only if the
prospective contractor enters, prior to award, into a labor compliance
agreement; or
(v) Does not support a finding, by the contracting officer, of a
satisfactory record of integrity and business ethics, and the agency
suspending and debarring official should be notified in accordance with
agency procedures;
(4) The ALCA will provide written analysis and advice, using the
DOL Guidance, to support the recommendation made in paragraph (b)(3) of
this section and for the contracting officer to consider in determining
the prospective contractor's responsibility. The analysis and advice
shall include the following information:
(i) Whether any labor law violations should be considered serious,
repeated, willful, and/or pervasive.
(ii) The number and nature of labor law violations (depending on
the nature of the labor law violation, in most cases, a single labor
law violation may not necessarily give rise to a determination of lack
of responsibility).
(iii) Whether there are any mitigating factors.
(iv) Whether the prospective contractor has initiated and
implemented, in a timely manner--
(A) Its own remedial measures; and
(B) Other remedial measures entered into through agreement with or
as a result of the actions or orders of an enforcement agency, court,
or arbitrator.
(v) If the ALCA recommends pursuant to paragraphs (b)(3)(iii) or
(iv) of this section that the prospective contractor commit to
negotiate, or agree to enter into, a labor compliance agreement prior
to award, the rationale for such timing (e.g., (1) the prospective
contractor has failed to take action or provide adequate justification
for not negotiating when previously notified of the need for a labor
compliance agreement, or (2) the labor violation history demonstrates
an unsatisfactory record of integrity and business ethics unless an
immediate commitment is made to negotiate a labor compliance
agreement).
(vi) If the ALCA's recommendation is that the prospective
contractor's record of labor law compliance does not support a finding,
by the contracting officer, of a satisfactory record of integrity and
business ethics, the rationale for the recommendation (e.g., a labor
compliance agreement cannot be reasonably expected to improve future
compliance; the prospective contractor has shown a basic disregard for
labor

[[Page 58642]]

law including by failing to enter into a labor compliance agreement
after having been given reasonable time to do so; or the prospective
contractor has breached an existing labor compliance agreement).
(vii) Whether the ALCA supports notification to the suspending and
debarring official and whether the ALCA intends to make such
notification.
(viii) If the ALCA recommends a labor compliance agreement pursuant
to paragraphs (b)(3)(ii), (iii), or (iv) of this section, the name of
the enforcement agency or agencies that would execute such agreement(s)
with the prospective contractor.
(ix) Any such additional information that the ALCA finds to be
relevant;
(5) The contracting officer shall--
(i) Consider the analysis and advice from the ALCA, if provided in
a timely manner, in determining prospective contractors'
responsibility;
(ii) Place the ALCA's written analysis, if provided, in the
contract file with an explanation of how it was considered in the
responsibility determination;
(iii) Proceed with making a responsibility determination if a
timely written analysis is not received from an ALCA, using available
information and business judgment; and
(iv) Comply with 9.103(b) when making a determination that a
prospective small business contractor is nonresponsible and refer to
the Small Business Administration for a Certificate of Competency;
(6) Disclosure of labor law decision(s) does not automatically
render the prospective contractor nonresponsible. The contracting
officer shall consider the offeror for contract award notwithstanding
disclosure of one or more labor law decision(s), unless the contracting
officer determines, after considering the analysis and advice from the
ALCA on each of the factors described in paragraph (b)(4) of this
section, and any other information considered by the contracting
officer in performing related responsibility duties under 9.104-5 and
9.104-6, that the offeror does not have a satisfactory record of
integrity and business ethics (e.g., the ALCA's analysis of disclosed
or otherwise known violations and lack of or insufficient remediation
indicates a basic disregard for labor law).
(7) If the ALCA's assessment indicates a labor compliance agreement
is warranted, the contracting officer shall provide written
notification, prior to award, to the prospective contractor that states
that the prospective contractor's disclosures have been analyzed by the
ALCA using DOL's Guidance, that the ALCA has determined that a labor
compliance agreement is warranted, and that identifies the name of the
enforcement agency or agencies with whom the prospective contractor
should confer regarding the negotiation of such agreement or other such
action as agreed upon between the contractor and the enforcement agency
or agencies.
(i) If the ALCA's recommendation is that the prospective contractor
needs to commit, after award, to negotiating a labor compliance
agreement or another acceptable remedial action (paragraph (b)(3)(ii)
of this section), the notification shall indicate that--
(A) The prospective contractor is to provide a written response to
the contracting officer and that the response is not required prior to
contract award. The response is due in a time specified by the
contracting officer. (The contracting officer shall specify a response
time that the contracting officer determines is reasonable for the
circumstances.);
(B) The contractor's response will be considered by the contracting
officer in determining if application of a postaward contract remedy is
appropriate. The prospective contractor's commitment to negotiate in a
reasonable period of time will be assessed by the ALCA during contract
performance (see 22.2004-3(b));
(C) The response shall either--
(1) Confirm the prospective contractor's intent to negotiate, in
good faith within a reasonable period of time, a labor compliance
agreement, or take other remedial action agreed upon between the
contractor and the enforcement agency or agencies identified by the
contracting officer, or
(2) Explain why the prospective contractor does not intend to
negotiate a labor compliance agreement, or take other remedial action
agreed upon between the contractor and the enforcement agency or
agencies identified by the contracting officer; and
(D) The prospective contractor's failure to enter into a labor
compliance agreement or take other remedial action agreed upon between
the contractor and the enforcement agency or agencies within six months
of contract award, absent explanation that the contracting officer
considers to be adequate to justify the lack of agreement--
(1) Will be considered prior to the exercise of a contract option;
(2) May result in the application of a contract remedy; and
(3) Will be considered in any subsequent responsibility
determination where the labor law decision on the unremediated
violation falls within the disclosure period for that solicitation;
(ii) If the ALCA's recommendation is that the prospective
contractor commit, prior to award, to negotiating a labor compliance
agreement or another acceptable remedial action (paragraph (b)(3)(iii)
of this section), use the procedures in paragraph (b)(7)(i) but
substitute the following paragraphs (b)(7)(ii)(A) and (B) for
paragraphs (b)(7)(i)(A) and (B):
(A) The prospective contractor is to provide a written response to
the contracting officer and that the response is required prior to
contract award. The response is due in a time specified by the
contracting officer. (The contracting officer shall specify a response
time that the contracting officer determines is reasonable for the
circumstances.);
(B) The contractor's response will be considered by the contracting
officer in determining responsibility.
(iii) If the ALCA's recommendation is that the prospective
contractor enter, prior to award, into a labor compliance agreement
(paragraph (b)(3)(iv) of this section), the notification shall state
that the prospective contractor shall enter into a labor compliance
agreement before contract award;
(8) The contracting officer shall notify the ALCA--
(i) Of the date notice was provided to the prospective contractor;
and
(ii) If the prospective contractor fails to respond by the stated
deadline or indicates that it does not intend to negotiate a labor
compliance agreement; and
(9) If the prospective contractor enters into a labor compliance
agreement, the entry shall be noted in FAPIIS by the ALCA.
(c)(1) The contracting officer may rely on an offeror's negative
response to the representation at paragraph (c)(1) of the provision at
52.222-57, Representation Regarding Compliance with Labor Laws
(Executive Order 13673), or its equivalent for commercial items at
52.212-3(s)(2)(i) unless the contracting officer has reason to question
the representation (e.g., the ALCA has brought covered labor law
decisions to the attention of the contracting officer).
(2) If the contracting officer has reason to question the
representation, the contracting officer shall provide the prospective
contractor an opportunity to correct its representation or provide the
contracting officer an explanation as to why the negative
representation is correct.

22.2004-3 Postaward assessment of a prime contractor's labor law
violations.

(a) Contractor duty to update. (1) If there are new labor law
decisions or updates to previously disclosed labor

[[Page 58643]]

law decisions, the contractor is required to disclose this information
in SAM at www.sam.gov, semiannually, pursuant to the clause at 52.222-
59, Compliance with Labor Laws (Executive Order 13673).
(2) The contractor has flexibility in establishing the date for the
semiannual update. The contractor may use the six-month anniversary
date of contract award, or may choose a different date before that six-
month anniversary date. In either case, the contractor must continue to
update its disclosures semiannually.
(3) Registrations in SAM are required to be maintained current,
accurate, and complete (see 52.204-13, System for Award Management
Maintenance). If the SAM registration date is less than six months old,
this will be evidence that the required representation and disclosure
information is updated and the requirement is met.
(b) Assessment of labor law violation information during contract
performance. (1) The ALCA monitors SAM and FAPIIS for new and updated
labor law decision information pursuant to paragraph (a) of this
section. If the ALCA is unable to obtain any needed relevant documents,
the ALCA may request that the contracting officer obtain the documents
from the contractor and provide them to the ALCA. If the contractor had
previously agreed to enter into a labor compliance agreement, the ALCA
verifies, consulting with DOL as needed, whether the contractor is
making progress toward, or has entered into and is complying with a
labor compliance agreement. The ALCA also considers labor law decision
information received from sources other than SAM and FAPIIS. If this
information indicates that further consideration or action may be
warranted, the ALCA notifies the contracting officer in accordance with
agency procedures.
(2) If the contracting officer was notified pursuant to paragraph
(b)(1) of this section, the contracting officer shall request the
contractor submit in SAM 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 complying with a labor compliance agreement.
Contractors may provide explanatory text and upload documents in SAM.
This information will not be made public unless the contractor
determines that it wants the information to be made public.
(3) The ALCA will provide written analysis and advice, using the
DOL Guidance, for the contracting officer to consider in determining
whether a contract remedy is warranted. The analysis and advice shall
include the following information:
(i) Whether any labor law violations should be considered serious,
repeated, willful, and/or pervasive.
(ii) The number and nature of labor law violations (depending on
the nature of the labor law violation, in most cases, a single labor
law violation may not necessarily warrant action).
(iii) Whether there are any mitigating factors.
(iv) Whether the contractor has initiated and implemented, in a
timely manner--
(A) Its own remedial measures; and/or
(B) Other remedial measures entered into through agreement with, or
as a result of, the actions or orders of an enforcement agency, court,
or arbitrator.
(v) Whether a labor compliance agreement or other remedial measure
is--
(A) Warranted and the enforcement agency or agencies that would
execute such agreement with the contractor;
(B) Under negotiation between the contractor and the enforcement
agency;
(C) Established, and whether it is being adhered to; or
(D) Not being negotiated or has not been established, even though
the contractor was notified that one had been recommended, and the
contractor's rationale for not doing so.
(vi) Whether the absence of a labor compliance agreement or other
remedial measure, or noncompliance with a labor compliance agreement,
demonstrates a pattern of conduct or practice that reflects disregard
for the recommendation of an enforcement agency.
(vii) Whether the labor law violation(s) merit consideration by the
agency suspending and debarring official and whether the ALCA will make
such a referral.
(viii) Any such additional information that the ALCA finds to be
relevant.
(4) The contracting officer shall--
(i) Determine appropriate action, using the analysis and advice
from the ALCA. Appropriate action may include--
(A) Continue the contract and take no remedial action; or
(B) Exercise a contract remedy, which may include one or more of
the following:
(1)(i) Provide written notification to the contractor that a labor
compliance agreement is warranted, using the procedures in 22.2004-
2(b)(7) introductory paragraph and (b)(7)(i), appropriately modifying
the content of the notification to the particular postaward
circumstances (e.g., change the time in paragraph 2004-2(b)(7)(i)(D) to
``within six months of the notice''); and
(ii) Notify the ALCA of the date the notice was provided to the
contractor; and notify the ALCA if the contractor fails to respond by
the stated deadline or indicates that it does not intend to negotiate a
labor compliance agreement.
(2) Elect not to exercise an option (see 17.207(c)(8)).
(3) Terminate the contract in accordance with the procedures set
forth in part 49 or 12.403.
(4) In accordance with agency procedures (see 9.406-3(a) and 9.407-
3(a)), notify the agency suspending and debarring official if the labor
law violation(s) merit consideration; and
(ii) Place any ALCA written analysis in the contract file with an
explanation of how it was considered.
(5) If the contractor enters into a labor compliance agreement, the
entry shall be noted in FAPIIS by the ALCA.

22.2004-4 Contractor preaward and postaward assessment of a
subcontractor's labor law violations.

(a) The provision at 52.222-58, Subcontractor Responsibility
Matters Regarding Compliance with Labor Laws (Executive Order 13673),
and the clause at 52.222-59, Compliance with Labor Laws (Executive
Order 13673), have requirements for preaward subcontractor labor law
decision disclosures and semiannual postaward updates during
subcontract performance, and assessments thereof. This requirement
applies to subcontracts at any tier estimated to exceed $500,000, other
than for commercially available off-the-shelf items.
(b) If the contractor notifies the contracting officer of a
determination and rationale for proceeding with subcontract award under
52.222-59(c)(5), the contracting officer should inform the ALCA.

22.2005 Paycheck transparency.

E.O. 13673 requires contractors and subcontractors to provide, on
contracts that exceed $500,000, and subcontracts that exceed $500,000
other than for commercially available off-the-shelf items--
(a) A wage statement document (e.g., a pay stub) in every pay
period to all individuals performing work under the contract or
subcontract, for which the contractor or subcontractor is required to
maintain wage records under the Fair Labor Standards Act (FLSA), Wage
Rate

[[Page 58644]]

Requirements (Construction) statute, or Service Contract Labor
Standards statute. The clause at 52.222-60 Paycheck Transparency
(Executive Order 13673) requires certain content to be provided in the
wage statement; and
(b) A notice document to all individuals performing work under the
contract or subcontract who are treated as independent contractors
informing them of that status (see 52.222-60). The notice document must
be provided either--
(1) At the time the independent contractor relationship with the
individual is established; or
(2) Prior to the time that the individual begins to perform work on
that Government contract or subcontract.

22.2006 Arbitration of contractor employee claims.

E.O. 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. This flows down to subcontracts
exceeding $1,000,000 other than for the acquisition of commercial
items.

22.2007 Solicitation provisions and contract clauses.

(a) The contracting officer shall insert the provision at 52.222-
57, Representation Regarding Compliance with Labor Laws (Executive
Order 13673), in solicitations that contain the clause at 52.222-59.
(b) For solicitations issued on or after October 25, 2017, the
contracting officer shall insert the provision at 52.222-58,
Subcontractor Responsibility Matters Regarding Compliance with Labor
Laws (Executive Order 13673), in solicitations that contain the clause
at 52.222-59.
(c) The contracting officer shall insert the clause at 52.222-59,
Compliance with Labor Laws (Executive Order 13673)--
(1) In solicitations with an estimated value of $50 million or
more, issued from October 25, 2016 through April 24, 2017, and
resultant contracts; and
(2) In solicitations that are estimated to exceed $500,000 issued
after April 24, 2017 and resultant contracts.
(d) The contracting officer shall, beginning on January 1, 2017
insert the clause at 52.222-60, Paycheck Transparency (Executive Order
13673), in solicitations if the estimated value exceeds $500,000 and
resultant contracts.
(e) The contracting officer shall insert the clause at 52.222-61,
Arbitration of Contractor Employee Claims (Executive Order 13673), in
solicitations if the estimated value exceeds $1,000,000, other than
those for commercial items, and resultant contracts.

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
14. Amend section 42.1502 by adding paragraph (j) to read as follows:

42.1502 Policy.

* * * * *
(j) Past performance evaluations shall include an assessment of
contractor's labor violation information when the contract includes the
clause at 52.222-59, Compliance with Labor Laws (Executive Order
13673). Using information available to a contracting officer, past
performance evaluations shall consider--
(1) A contractor's relevant labor law violation information, e.g.,
timely implementation of remedial measures and compliance with those
remedial measures (including related labor compliance agreement(s));
and
(2) The extent to which the prime contractor addressed labor law
violations by its subcontractors.
0
15. Amend section 42.1503 by--
0
a. Removing from paragraph (a)(1)(i) ``management office and,'' and
adding ``management office, agency labor compliance advisor (ALCA)
office (see subpart 22.20), and,'' in its place;
0
b. Removing from paragraph (a)(1)(ii) ``service, and'' and adding
``service, ALCA, and'' in its place; and
0
c. Adding paragraph (h)(5).
The addition reads as follows:

42.1503 Procedures.

* * * * *
(h) * * *
(5) References to entries by the Government into FAPIIS that are
not performance information. For other entries into FAPIIS by the
contracting officer see 9.105-2(b)(2) for documentation of a
nonresponsibility determination. See 22.2004-1(c)(6) for documentation
by the ALCA of a labor compliance agreement. See 9.406-3(f)(1) and
9.407-3(e) for entry by a suspending or debarring official of
information regarding an administrative agreement.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
16. Amend section 52.204-8 by--
0
a. Revising the date of the provision;
0
b. Redesignating paragraphs (c)(1)(xv) through (xxii) as paragraphs
(c)(1)(xvi) through (xxiii), respectively; and
0
c. Adding a new paragraph (c)(1)(xv).
The revision and addition read as follows:

52.204-8 Annual Representations and Certifications.

* * * * *

Annual Representations and Certifications (OCT 2016)

* * * * *
(c)(1) * * *
(xv) 52.222-57, Representation Regarding Compliance with Labor Laws
(Executive Order 13673). This provision applies to solicitations
expected to exceed $50 million which are issued from October 25, 2016
through April 24, 2017, and solicitations expected to exceed $500,000,
which are issued after April 24, 2017.
* * * * *

0
17. Amend section 52.212-3 by--
0
a. Revising the date of the provision;
0
b. Removing from the introductory text ``(c) through (r)'' and adding
``(c) through (s)'' in its place;
0
c. Adding to paragraph (a), in alphabetical order, the definitions
``Administrative merits determination'', ``Arbitral award or
decision'', ``Civil judgment'', ``DOL Guidance'', ``Enforcement
agency'', ``Labor compliance agreement'', ``Labor laws'' and ``Labor
law decision'';
0
d. Removing from paragraph (b)(2) ``(c) through (r)'' and adding ``(c)
through (s)'' in its place; and
0
e. Adding paragraph (s).
The revision and additions read as follows:

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

* * * * *

Offeror Representations and Certifications--Commercial Items (OCT 2016)

* * * * *
(a) * * *
Administrative merits determination means certain notices or
findings of labor law violations issued by an enforcement agency
following an investigation. An administrative merits determination 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 consult section II.B. in the DOL Guidance.
Arbitral award or decision means an arbitrator or arbitral panel
determination that a labor law violation

[[Page 58645]]

occurred, or that enjoined or restrained a violation of labor law. It
includes an award or decision that is not final or is subject to being
confirmed, modified, or vacated by a court, and includes an award or
decision resulting from private or confidential proceedings. To
determine whether a particular award or decision is covered by this
definition, it is necessary to consult section II.B. in the DOL
Guidance.
Civil judgment means--
(1) In paragraph (h) of this provision: A judgment or finding of a
civil offense by any court of competent jurisdiction.
(2) In paragraph (s) of this provision: 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
judgment or order is covered by this definition, it is necessary to
consult 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'
''. The DOL Guidance, dated August 25, 2016, can be obtained from
www.dol.gov/fairpayandsafeworkplaces.
* * * * *
Enforcement agency means any agency granted authority to enforce
the Federal labor laws. It includes the enforcement components of DOL
(Wage and Hour Division, Office of Federal Contract Compliance
Programs, and Occupational Safety and Health Administration), the Equal
Employment Opportunity Commission, the Occupational Safety and Health
Review Commission, and the National Labor Relations Board. It also
means 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,
conduct investigations of potential labor law violations. The
enforcement agencies associated with each labor law under E.O. 13673
are--
(1) Department of Labor Wage and Hour Division (WHD) for--
(i) The Fair Labor Standards Act;
(ii) The Migrant and Seasonal Agricultural Worker Protection Act;
(iii) 40 U.S.C. chapter 31, subchapter IV, formerly known as the
Davis-Bacon Act;
(iv) 41 U.S.C. chapter 67, formerly known as the Service Contract
Act;
(v) The Family and Medical Leave Act; and
(vi) E.O. 13658 of February 12, 2014 (Establishing a Minimum Wage
for Contractors);
(2) Department of Labor Occupational Safety and Health
Administration (OSHA) for--
(i) The Occupational Safety and Health Act of 1970; and
(ii) OSHA-approved State Plans;
(3) Department of Labor Office of Federal Contract Compliance
Programs (OFCCP) for--
(i) Section 503 of the Rehabilitation Act of 1973;
(ii) The Vietnam Era Veterans' Readjustment Assistance Act of 1972
and the Vietnam Era Veterans' Readjustment Assistance Act of 1974; and
(iii) E.O. 11246 of September 24, 1965 (Equal Employment
Opportunity);
(4) National Labor Relations Board (NLRB) for the National Labor
Relations Act; and
(5) Equal Employment Opportunity Commission (EEOC) for--
(i) Title VII of the Civil Rights Act of 1964;
(ii) The Americans with Disabilities Act of 1990;
(iii) The Age Discrimination in Employment Act of 1967; and
(iv) Section 6(d) of the Fair Labor Standards Act (Equal Pay Act).
* * * * *
Labor compliance agreement means an agreement entered into between
a contractor or subcontractor and an enforcement agency 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 E.O.s:
(1) The Fair Labor Standards Act.
(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) E.O. 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) E.O. 13658 of February 12, 2014 (Establishing a Minimum Wage
for Contractors).
(15) Equivalent State laws as defined in the DOL Guidance. (The
only equivalent State laws implemented in the FAR are OSHA-approved
State Plans, which can be found at www.osha.gov/dcsp/osp/approved_state_plans.html).
Labor law decision means an administrative merits determination,
arbitral award or decision, or civil judgment, which resulted from a
violation of one or more of the laws listed in the definition of
``labor laws''.
* * * * *
(s) Representation regarding compliance with labor laws (Executive
Order 13673). If the offeror is a joint venture that is not itself a
separate legal entity, each concern participating in the joint venture
shall separately comply with the requirements of this provision.
(1)(i) For solicitations issued on or after October 25, 2016
through April 24, 2017: The Offeror [ ] does [ ] does not anticipate
submitting an offer with an estimated contract value of greater than
$50 million.
(ii) For solicitations issued after April 24, 2017: The Offeror [ ]
does [ ] does not anticipate submitting an offer with an estimated
contract value of greater than $500,000.
(2) If the Offeror checked ``does'' in paragraph (s)(1)(i) or (ii)
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 for any labor law
violation(s) rendered against the offeror (see definitions in paragraph
(a) of this section) during the period beginning on October 25, 2015 to
the date of the offer, or for three years preceding the date of the
offer, whichever period is shorter; or
[ ](ii) There has been an administrative merits determination,
arbitral award or decision, or civil judgment for any labor law
violation(s) rendered against the Offeror during the period beginning
on October 25, 2015 to the date of the offer, or for three years
preceding the date of the offer, whichever period is shorter.
(3)(i) If the box at paragraph (s)(2)(ii) of this provision is
checked and the

[[Page 58646]]

Contracting Officer has initiated a responsibility determination and
has requested additional information, the Offeror shall provide--
(A) The following information for each disclosed labor law decision
in the System for Award Management (SAM) at www.sam.gov, unless the
information is already current, accurate, and complete in SAM. This
information will be publicly available in the Federal Awardee
Performance and Integrity Information System (FAPIIS):
(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 administrative merits determination, arbitral award or
decision, or civil judgment document, to the Contracting Officer, if
the Contracting Officer requires it;
(C) In SAM, such additional information as the Offeror deems
necessary to demonstrate its responsibility, including mitigating
factors and remedial measures such as offeror actions taken to address
the violations, labor compliance agreements, and other steps taken to
achieve compliance with labor laws. Offerors may provide explanatory
text and upload documents. This information will not be made public
unless the contractor determines that it wants the information to be
made public; and
(D) The information in paragraphs (s)(3)(i)(A) and (s)(3)(i)(C) of
this provision to the Contracting Officer, if the Offeror meets an
exception to SAM registration (see FAR 4.1102(a)).
(ii)(A) The Contracting Officer will consider all information
provided under (s)(3)(i) of this provision as part of making a
responsibility determination.
(B) A representation that any labor law decision(s) were rendered
against the Offeror 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 (s)(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.
(4) 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 at paragraph (s)(2) of this provision is
no longer accurate.
(5) The representation in paragraph (s)(2) of this provision will
be public information in the Federal Awardee Performance and Integrity
Information System (FAPIIS).
* * * * *

0
18. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (b)(35) through (58) as paragraphs (b)(37)
through ((60), respectively;
0
c. Adding new paragraphs (b)(35) and (36);
0
d. Redesignating paragraphs (e)(1)(xvi) through (xviii) as paragraphs
(e)1)(xviii) through (xx), respectively;
0
e. Adding new paragraphs (e)(1)(xvi) and (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 (P) as paragraphs
(e)(1)(ii)(Q) and (R); and
0
3. Adding new paragraphs (e)(1)(ii)(O) and (P).
The revisions and additions read 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 (OCT 2016)

* * * * *
(b) * * *
__(1) * * *
__(35) 52.222-59, Compliance with Labor Laws (Executive Order
13673) (OCT 2016). (Applies at $50 million for solicitations and
resultant contracts issued from October 25, 2016 through April 24,
2017; applies at $500,000 for solicitations and resultant contracts
issued after April 24, 2017).
__(36) 52.222-60, Paycheck Transparency (Executive Order 13673)
(OCT 2016).
* * * * *
(e)(1) * * *
(xvi) 52.222-59, Compliance with Labor Laws (Executive Order 13673)
(OCT 2016) (Applies at $50 million for solicitations and resultant
contracts issued from October 25, 2016 through April 24, 2017; applies
at $500,000 for solicitations and resultant contracts issued after
April 24, 2017).
(xvii) 52.222-60, Paycheck Transparency (Executive Order 13673)
(OCT 2016)).
* * * * *
Alternate II (OCT 2016). * * *
(e)(1) * * *
(ii) * * *
(O) 52.222-59, Compliance with Labor Laws (Executive Order 13673)
(OCT 2016).
(P) 52.222-60, Paycheck Transparency (Executive Order 13673) (OCT
2016).
* * * * *

0
19. 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) (OCT 2016)

(a) * * *
(2) * * *
(viii) 52.244-6, Subcontracts for Commercial Items (OCT 2016).
* * * * *

0
20. Add section 52.222-57 to read as follows:

52.222-57 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) (OCT 2016)

(a)(1) Definitions.
Administrative merits determination, arbitral award or decision,
civil judgment, DOL Guidance, enforcement agency, labor compliance
agreement, labor laws, and labor law decision as used in this provision
have the meaning given in the clause in this solicitation entitled
52.222-59, Compliance with Labor Laws (Executive Order 13673).
(2) Joint ventures. If the offeror is a joint venture that is not
itself a separate legal entity, each concern participating in the joint
venture shall separately comply with the requirements of this
provision.
(b)(1) For solicitations issued on or after October 25, 2016
through April 24, 2017: The Offeror [ ] does [ ] does not anticipate
submitting an offer with an estimated contract value of greater than
$50 million.
(2) For solicitations issued after April 24, 2017: The Offeror [ ]
does [ ] does not anticipate submitting an offer with an estimated
contract value of greater than $500,000.

[[Page 58647]]

(c) If the Offeror checked ``does'' in paragraph (b)(1) or (2) 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 for any labor law
violation(s) rendered against the Offeror during the period beginning
on October 25, 2015 to the date of the offer, or for three years
preceding the date of the offer, whichever period is shorter; or
[ ](2) There has been an administrative merits determination,
arbitral award or decision, or civil judgment for any labor law
violation(s) rendered against the Offeror during the period beginning
on October 25, 2015 to the date of the offer, or for three years
preceding the date of the offer, whichever period is shorter.
(d)(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--
(i) For each disclosed labor law decision in the System for Award
Management (SAM) at www.sam.gov, the following, unless the information
is already current, accurate, and complete in SAM. This information
will be publicly available in the Federal Awardee Performance and
Integrity Information System (FAPIIS):
(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 administrative merits determination, arbitral award or
decision, or civil judgment document to the Contracting Officer, if the
Contracting Officer requires it;
(iii) In SAM, such additional information as the Offeror deems
necessary to demonstrate its responsibility, including mitigating
factors and remedial measures such as Offeror actions taken to address
the violations, labor compliance agreements, and other steps taken to
achieve compliance with labor laws. Offerors may provide explanatory
text and upload documents. This information will not be made public
unless the contractor determines that it wants the information to be
made public; and
(iv) The information in paragraphs (d)(1)(i) and (d)(1)(iii) of
this provision to the Contracting Officer, if the Offeror meets an
exception to SAM registration (see 4.1102(a)).
(2)(i) The Contracting Officer will consider all information
provided under (d)(1) of this provision as part of making a
responsibility determination.
(ii) A representation that any labor law decisions were rendered
against the Offeror 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.
(e) 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 at paragraph (c) of this provision is no
longer accurate.
(f) The representation in paragraph (c) of this provision will be
public information in the Federal Awardee Performance and Integrity
Information System (FAPIIS).
(End of provision)

0
21. Add section 52.222-58 to read as follows:

52.222-58 Subcontractor Responsibility Matters Regarding Compliance
with Labor Laws (Executive Order 13673).

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

Subcontractor Responsibility Matters Regarding Compliance with Labor
Laws (Executive Order 13673) (OCT 2016)

(a) Definitions.
Administrative merits determination, arbitral award or decision,
civil judgment, DOL Guidance, enforcement agency, labor compliance
agreement, labor laws, and labor law decision as used in this provision
have the meaning given in the clause in this solicitation entitled
52.222-59, Compliance with Labor Laws (Executive Order 13673).
(b) Subcontractor representation. (1) 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 Offeror, 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
any labor law violation(s) rendered against the prospective
subcontractor during the period beginning October 25, 2015 to the date
of the offer, or for three years preceding the offer, whichever period
is shorter.
(2) A contractor or subcontractor, acting in good faith, is not
liable for misrepresentations made by its subcontractors about labor
law decisions or about labor compliance agreements.
(c) Subcontractor responsibility determination. If the prospective
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 52.222-59,
Compliance with Labor Laws (Executive Order 13673).
(End of provision)

0
59. Add section 52.222-59 to read as follows:

52.222-59 Compliance with Labor Laws (Executive Order 13673).

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

Compliance With Labor Laws (Executive Order 13673) (OCT 2016)

(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. An administrative merits determination 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 consult section II.B. in the DOL Guidance.
Agency labor compliance advisor (ALCA) means the senior official
designated in accordance with E.O. 13673. ALCAs are listed at
www.dol.gov/fairpayandsafeworkplaces.
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 an award or decision
that is not final or is subject to being confirmed, modified, or
vacated by a court, and includes an award or decision resulting from
private or confidential proceedings. To determine whether a particular
award or

[[Page 58648]]

decision is covered by this definition, it is necessary to consult
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 judgment or order is covered by this
definition, it is necessary to consult 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'
''. The DOL Guidance, dated August 25, 2016, can be obtained from
www.dol.gov/fairpayandsafeworkplaces.
Enforcement agency means any agency granted authority to enforce
the Federal labor laws. It includes the enforcement components of DOL
(Wage and Hour Division, Office of Federal Contract Compliance
Programs, and Occupational Safety and Health Administration), the Equal
Employment Opportunity Commission, the Occupational Safety and Health
Review Commission, and the National Labor Relations Board. It also
means 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,
conduct investigations of potential labor law violations. The
enforcement agencies associated with each labor law under E.O. 13673
are--
(1) Department of Labor Wage and Hour Division (WHD) for--
(i) The Fair Labor Standards Act;
(ii) The Migrant and Seasonal Agricultural Worker Protection Act;
(iii) 40 U.S.C. chapter 31, subchapter IV, formerly known as the
Davis-Bacon Act;
(iv) 41 U.S.C. chapter 67, formerly known as the Service Contract
Act;
(v) The Family and Medical Leave Act; and
(vi) E.O. 13658 of February 12, 2014 (Establishing a Minimum Wage
for Contractors);
(2) Department of Labor Occupational Safety and Health
Administration (OSHA) for--
(i) The Occupational Safety and Health Act of 1970; and
(ii) OSHA-approved State Plans;
(3) Department of Labor Office of Federal Contract Compliance
Programs (OFCCP) for--
(i) Section 503 of the Rehabilitation Act of 1973;
(ii) The Vietnam Era Veterans' Readjustment Assistance Act of 1972
and the Vietnam Era Veterans' Readjustment Assistance Act of 1974; and
(iii) E.O. 11246 of September 24, 1965 (Equal Employment
Opportunity);
(4) National Labor Relations Board (NLRB) for the National Labor
Relations Act; and
(5) Equal Employment Opportunity Commission (EEOC) for--
(i) Title VII of the Civil Rights Act of 1964;
(ii) The Americans with Disabilities Act of 1990;
(iii) The Age Discrimination in Employment Act of 1967; and
(iv) Section 6(d) of the Fair Labor Standards Act (Equal Pay Act).
Labor compliance agreement means an agreement entered into between
a contractor or subcontractor and an enforcement agency 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 E.O.s:
(1) The Fair Labor Standards Act.
(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) E.O. 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) E.O. 13658 of February 12, 2014 (Establishing a Minimum Wage
for Contractors).
(15) Equivalent State laws as defined in the DOL Guidance. (The
only equivalent State laws implemented in the FAR are OSHA-approved
State Plans, which can be found at www.osha.gov/dcsp/osp/approved_state_plans.html.)
Labor law decision means an administrative merits determination,
arbitral award or decision, or civil judgment, which resulted from a
violation of one or more of the laws listed in the definition of
``labor laws''.
Pervasive violations in the context of E.O. 13673, Fair Pay and
Safe Workplaces, means labor law violations that bear on the assessment
of a contractor's integrity and business ethics because they reflect a
basic disregard by the contractor for the labor laws, as demonstrated
by a pattern of serious and/or willful violations, continuing
violations, or numerous violations. To determine whether violations are
pervasive it is necessary to consult the DOL Guidance section III.A.4.
and associated Appendix D.
Repeated violation in the context of E.O. 13673, Fair Pay and Safe
Workplaces, means a labor law violation that bears on the assessment of
a contractor's integrity and business ethics because the contractor had
one or more additional labor law violations of the same or a
substantially similar requirement within the prior 3 years. To
determine whether a particular violation(s) is repeated it is necessary
to consult the DOL Guidance section III.A.2. and associated Appendix B.
Serious violation in the context of E.O. 13673, Fair Pay and Safe
Workplaces, means a labor law violation that bears on the assessment of
a contractor's integrity and business ethics because of the number of
employees affected; the degree of risk imposed, or actual harm done by
the violation; the amount of damages incurred or fines or penalties
assessed; and/or other similar criteria. To determine whether a
particular violation(s) is serious it is necessary to consult the DOL
Guidance section III.A.1. and associated Appendix A.
Willful violation in the context of E.O. 13673, Fair Pay and Safe
Workplaces, means a labor law violation that bears on the assessment of
a contractor's integrity and business ethics because the contractor
acted with knowledge of, reckless disregard for, or plain indifference
to the matter of whether its conduct was prohibited by one or more
requirements of labor laws. To determine whether a particular
violation(s) is willful it is necessary to consult the DOL Guidance
section III.A.3. and associated Appendix C.
(b) Prime contractor updates. Contractors are required to disclose
new labor law decisions and/or updates to previously disclosed labor
law decisions in SAM at www.sam.gov, semiannually. The Contractor has
flexibility in establishing the date for the semiannual

[[Page 58649]]

update. (The contractor may use the six-month anniversary date of
contract award, or may choose a different date before that six-month
anniversary date. In either case, the contractor must continue to
update its disclosures semiannually.) Registrations in SAM are required
to be maintained current, accurate, and complete (see 52.204-13, System
for Award Management Maintenance). If the SAM registration date is less
than six months old, this will be evidence that the required
representation and disclosure information is updated and the
requirement is met. The Contractor shall provide--
(1) The following in SAM for each disclosed labor law decision.
This information will be publicly available in the Federal Awardee
Performance and Integrity Information System (FAPIIS):
(i) The labor law violated.
(ii) The case number, inspection number, charge number, docket
number, or other unique identification number.
(iii) The date rendered.
(iv) The name of the court, arbitrator(s), agency, board, or
commission that rendered the determination or decision;
(2) The administrative merits determination, arbitral award or
decision, or civil judgment document to the Contracting Officer, if the
Contracting Officer requires it;
(3) In SAM, such additional information as the Contractor deems
necessary, including mitigating factors and remedial measures such as
contractor actions taken to address the violations, labor compliance
agreements, and other steps taken to achieve compliance with labor
laws. Contractors may provide explanatory text and upload documents.
This information will not be made public unless the Contractor
determines that it wants the information to be made public; and
(4) The information in paragraphs (b)(1) and (b)(3) to the
Contracting Officer, if the Contractor meets an exception to SAM
registration (see 4.1102(a)).
(c) Subcontractor responsibility. (1) This paragraph (c) applies--
(i) To subcontracts with an estimated value that exceeds $500,000
for other than commercially available off-the-shelf items; and
(ii) When the provision 52.222-58, Subcontractor Responsibility
Matters Regarding Compliance with Labor Laws (Executive Order 13673),
is in the contract and the prospective subcontractor responded
affirmatively to paragraph (b) of that provision, and the Contractor
initiates a responsibility determination.
(2) The Contractor shall consider subcontractor labor law violation
information when assessing whether a prospective subcontractor has a
satisfactory record of integrity and business ethics with regard to
compliance with labor laws, when determining subcontractor
responsibility. Disclosure of labor law decision(s) does not
automatically render the prospective subcontractor nonresponsible. The
Contractor shall consider the prospective subcontractor for subcontract
award notwithstanding disclosure of one or more labor law decision(s).
The Contractor should encourage prospective subcontractors to contact
DOL for a preassessment of their record of labor law compliance (see
DOL Guidance Section VI, Preassessment). The Contractor shall complete
the assessment--
(i) For subcontracts awarded within five days of the prime contract
award or that become effective within five days of the prime contract
award, no later than 30 days after subcontract award; or
(ii) For all other subcontracts, prior to subcontract award.
However, in urgent circumstances, the assessment shall be completed
within 30 days of subcontract award.
(3)(i) 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 any labor law
violation(s) rendered against the subcontractor during the period
beginning on October 25, 2015 to the date of the subcontractor's offer,
or for three years preceding the date of the subcontractor's offer,
whichever period is shorter.
(ii) When determining subcontractor responsibility, the Contractor
shall require the prospective subcontractor to disclose to DOL, in
accordance with paragraph (c)(3)(iv) of this clause, for each covered
labor law decision, the following information:
(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.
(iii) The Contractor shall inform the prospective subcontractor
that the prospective subcontractor may provide information to DOL, in
accordance with paragraph (c)(3)(iv) of this clause, on mitigating
factors and remedial measures, such as subcontractor actions taken to
address the violations, labor compliance agreements, and other steps
taken to achieve compliance with labor laws.
(iv) The Contractor shall require subcontractors to provide
information required by paragraph (c)(3)(ii) and discussed in paragraph
(c)(3)(iii) of this clause to DOL through the DOL Web site at
www.dol.gov/fairpayandsafeworkplaces.
(4) The Contractor, in determining subcontractor responsibility,
may find that the prospective subcontractor has a satisfactory record
of integrity and business ethics with regard to compliance with labor
laws if--
(i) The prospective subcontractor provides a negative response to
the Contractor in its representation made pursuant to paragraph
(c)(3)(i) of this clause; or
(ii) The prospective subcontractor--
(A) Provides a positive response to the Contractor in its
representation made pursuant to paragraph (3)(i);
(B) Represents, to the Contractor, 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 for any labor law violation(s) rendered against the
subcontractor during the period beginning on October 25, 2015 to the
date of the offer, or for three years preceding the date of the offer,
whichever period is shorter; and
(C) Provides the following information concerning DOL review and
assessment of subcontractor-disclosed information--
(1) The subcontractor has been advised by DOL that it has no
serious, repeated, willful, and/or pervasive labor law violations;
(2) The subcontractor has been advised by DOL that it has serious,
repeated, willful, and/or pervasive labor law violations; and
(i) DOL has advised that a labor compliance agreement is not
warranted because, for example, the subcontractor has initiated and
implemented its own remedial measures;
(ii) The subcontractor has entered into a labor compliance
agreement(s) with an enforcement agency and states that it has not been
notified by DOL that it is not complying with its agreement; or
(iii) The subcontractor has agreed to enter into a labor compliance
agreement or is considering a labor compliance agreement(s) with an
enforcement agency to address all disclosed labor law violations that
DOL has determined to be serious, willful, repeated, and/or

[[Page 58650]]

pervasive labor law violations and has not been notified by DOL that it
has not entered into an agreement in a reasonable period; or
(3) The subcontractor disagrees with DOL's advice (e.g., that a
proposed labor compliance agreement is warranted), or with DOL's
notification that it has not entered into a labor compliance agreement
in a reasonable period or is not complying with the agreement, and the
subcontractor has provided the Contractor with--
(i) Information about all the disclosed labor law violations that
have been determined by DOL to be serious, repeated, willful, and/or
pervasive;
(ii) Such additional information that the subcontractor deems
necessary to demonstrate its responsibility, including mitigating
factors, remedial measures such as subcontractor actions taken to
address the labor law violations, labor compliance agreements, and
other steps taken to achieve compliance with labor laws;
(iii) A description of DOL's advice or a description of an
enforcement agency's proposed labor compliance agreement; and
(iv) An explanation of the basis for the subcontractor's
disagreement with DOL.
(5) If the Contractor determines that the subcontractor has a
satisfactory record of integrity and business ethics based on the
information provided pursuant to paragraph (c)(4)(ii)(C)(3), or the
Contractor determines that due to a compelling reason the contractor
must proceed with subcontract award, the Contractor shall notify the
Contracting Officer of the decision and provide the following
information in writing:
(i) The name of the subcontractor.
(ii) The basis for the decision, e.g., relevancy to the
requirement, urgent and compelling circumstances, to prevent delays
during contract performance, or when only one supplier is available to
meet the requirement.
(6) If DOL does not provide advice to the subcontractor within
three business days of the subcontractor's disclosure of labor law
decision information pursuant to paragraph (c)(3)(ii) and DOL did not
previously advise the subcontractor that it needed to enter into a
labor compliance agreement to address labor law 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, semiannually, whether labor law decision
disclosures provided to DOL pursuant to paragraph (c)(3)(ii) of this
clause are current, accurate, and complete. If the information is
current, accurate, and complete, no action is required. If the
information is not current, accurate, and complete, subcontractors must
provide revised information to DOL, in accordance with paragraph
(c)(3)(iv) of this clause, and make a new representation and provide
information to the Contractor pursuant to paragraph (c)(4)(ii) of this
clause 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 subcontract 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 complying with a labor compliance agreement, 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.
(4) If the Contractor has been informed by the subcontractor of
DOL's assessment that the subcontractor has not demonstrated compliance
with labor laws, and the Contractor decides to continue the
subcontract, the Contractor shall notify the Contracting Officer of its
decision to continue the subcontract and provide the following
information in writing:
(i) The name of the subcontractor; and
(ii) The basis for the decision, e.g., relevancy to the
requirement, urgent and compelling circumstances, to prevent delays
during contract performance, or when only one supplier is available to
meet the requirement.
(e) Consultation with DOL and other enforcement agencies. The
Contractor may consult with DOL and enforcement agency representatives,
using DOL Guidance at www.dol.gov/fairpayandsafeworkplaces, for advice
and assistance regarding assessment of subcontractor labor law
violation(s), including whether new or enhanced labor compliance
agreements are warranted. Only DOL and enforcement agency
representatives are available to consult with Contractors regarding
subcontractor information. Contracting Officers or Agency Labor
Compliance Advisors may assist with identifying the appropriate DOL and
enforcement agency representatives.
(f) Protections for subcontractor misrepresentations. A contractor
or subcontractor, acting in good faith, is not liable for
misrepresentations made by its subcontractors about labor law decisions
or about labor compliance agreements.
(g) Subcontractor flowdown. If the Government's solicitation
included the provision at 52.222-58, the Contractor shall include the
substance of paragraphs (a), (c), (d), (e), (f) and (g) of this clause,
in subcontracts with an estimated value exceeding $500,000, at all
tiers, for other than commercially available off-the-shelf items.
(End of clause)

0
23. Add section 52.222-60 to read as follows:

52.222-60 Paycheck Transparency (Executive Order 13673).

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

Paycheck Transparency (Executive Order 13673) (OCT 2016)

(a) Wage statement. In each pay period, the Contractor shall
provide a wage statement document (e.g. a pay stub) to all individuals
performing work under the contract subject to the wage records
requirements of any of the following statutes:
(1) The Fair Labor Standards Act.
(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).
(b) Content of wage statement. (1) The wage statement shall be
issued every pay period and contain--
(i) The total number of hours worked in the pay period;
(ii) The number of those hours that were overtime hours;
(iii) The rate of pay (e.g., hourly rate, piece rate);
(iv) The gross pay; and
(v) Any additions made to or deductions taken from gross pay. These
shall be itemized. The itemization shall identify and list each one
separately, as well as the specific amount added or deducted for each.
(2) 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.
(3) The wage statement provided to an individual exempt from the
overtime compensation requirements of the Fair Labor Standards Act
(FLSA) need not

[[Page 58651]]

include a record of hours worked, if the Contractor informs the
individual in writing of his or her overtime exempt status. The notice
may not indicate or suggest that DOL or the courts agree with the
Contractor's determination that the individual is exempt. The notice
must be given either before the individual begins work on the contract,
or in the first wage statement under the contract. Notice given before
the work begins can be a stand-alone document, or can be in an offer
letter, employment contract, or position description. If during
performance of the contract, the Contractor determines that the
individual's status has changed from non-exempt to exempt from
overtime, it must provide the notice to the individual before providing
a wage statement without hours worked information or in the first wage
statement after the change.
(c) Substantially similar laws. A Contractor satisfies this wage
statement requirement by complying with the wage statement requirement
of any State or locality (in which the Contractor has employees) that
has been determined by the United States Secretary of Labor to be
substantially similar to the wage statement requirement in this clause.
The determination of substantially similar wage payment states may be
found at www.dol.gov/fairpayandsafeworkplaces.
(d) Independent contractor. (1) If the Contractor is treating an
individual performing work under the contract as an independent
contractor (e.g., an individual who is in business for him or herself
or is self-employed) and not as an employee, the Contractor shall
provide a written document to the individual informing the individual
of this status. The document may not indicate or suggest that the
enforcement agencies or the courts agree with the Contractor's
determination that the worker is an independent contractor. The
Contractor shall provide the document to the individual either at the
time an independent contractor relationship is established with the
individual or prior to the time the individual begins to perform work
on the contract. The document must be provided for this contract, even
if the worker was notified of independent contractor status on other
contracts. The document must be separate from any independent
contractor agreement between the Contractor and the individual. If the
Contractor determines that a worker's status while performing work on
the contract changes from employee to independent contractor, then the
Contractor shall provide the worker with notice of independent
contractor status before the worker performs any work under the
contract as an independent contractor.
(2) The fact that the Contractor does not make social security,
Medicare, or income tax withholding deductions from the individual's
pay and that an individual receives at year end an IRS Form 1099-Misc
is not evidence that the Contractor has correctly classified the
individual as an independent contractor under the labor laws.
(e) Notices--(1) Language. Where a significant portion of the
workforce is not fluent in English, the Contractor shall provide the
wage statement required in paragraph (a) of this clause, the overtime
exempt status notice described in paragraph (b)(3) of this clause, and
the independent contractor notification required in paragraph (d) of
this clause in English and the language(s) with which the significant
portion(s) of the workforce is fluent.
(2) Electronic notice. If the Contractor regularly provides
documents to its workers by electronic means, the Contractor may
provide to workers electronically the written documents and notices
required by this clause. Workers must be able to access the document
through a computer, device, system or network provided or made
available by the Contractor.
(f) Subcontracts. The Contractor shall insert the substance of this
clause, including this paragraph (f), in all subcontracts that exceed
$500,000, at all tiers, for other than commercially available off-the-
shelf items.
(End of clause)

0
24. Add section 52.222-61 to read as follows:

52.222-61 Arbitration of Contractor Employee Claims (Executive Order
13673).

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

Arbitration of Contractor Employee Claims (Executive Order 13673) (OCT
2016)

(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 commercial items.
(End of clause)

0
25. Amend section 52.244-6 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (c)(1)(xiii) through (xv) as paragraphs
(c)(1)(xv) through (xvii), respectively; and
0
c. Adding new paragraphs (c)(1)(xiii) and (xiv).
The revision and additions read as follows:

52.244-6 Subcontracts for Commercial Items.

* * * * *

Subcontracts for Commercial Items (OCT 2016)

* * * * *
(c)(1) * * *
(xiii) 52.222-59, Compliance with Labor Laws (Executive Order
13673) (OCT 2016), if the estimated subcontract value exceeds $500,000,
and is for other than commercially available off-the-shelf items.
(xiv) 52.222-60, Paycheck Transparency (Executive Order 13673) (OCT
2016), if the estimated subcontract value exceeds $500,000, and is for
other than commercially available off-the-shelf items.
* * * * *
[FR Doc. 2016-19676 Filed 8-24-16; 8:45 am]
BILLING CODE 6820-EP-P