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Federal Register
/Vol. 65, No. 144/Wednesday, July 26, 2000/Proposed Rules
universal resource locator (URL): http://dms.dot.gov. It is available 24 hourseach day, 365 days each year. Pleasefollow the instructions online for moreinformation and help.An electronic copy of this documentmay be downloaded by using acomputer, modem, and suitablecommunications software from theGovernment Printing Office’s ElectronicBulletin Board Service at (202) 512–1661. Internet users may reach theOffice of the Federal Register’s homepage at http://www.nara.gov/fedreg andthe Government Printing Office’s webpage at http://www.access.gpo.gov/nara.The document may also be viewed atthe DOT’s intelligent transportationsystems (ITS) home page at http://www.its.dot.gov.
Background
On May 25, 2000 (65 FR 33994), theFHWA published an NPRM proposingthe establishment of regulations toimplement a portion of section 5206(e)of the Transportation Equity Act for the21st Century (TEA–21) (Public Law105–178, 112 Stat. 107) which requiresITS projects funded from the highwaytrust fund to conform to the NationalITS Architecture, applicable orprovisional standards, and protocols.The DOT has received requests fromthe American Association of StateHighway and Transportation Officials,the American Public TransportationAssociation, the Association of Metropolitan Planning Organizations,and several State departments of transportation to extend the commentperiod. These groups voiced concernsthat the proposed rule was extremelycomplex and that 90 days wasinsufficient time to assess the impact of the proposed rules and providemeaningful comments. We agree thatmore time for an in-depth analysis of the NPRM would be beneficial to theFHWA in this rulemaking. For thesereasons the FHWA finds good cause toextend this NPRM comment periodclosing date by 30 days.
Authority:
23 U.S.C. 101, 109, 315, and508; sec. 5206(e), Pub. L. 105–178; 112 Stat.457 (23 U.S.C. 502 note); and 49 CFR 1.48.Issued on: July 17, 2000.
Kenneth R. Wykle,
Federal Highway Administrator.
[FR Doc. 00–18916 Filed 7–25–00; 8:45 am]
BILLING CODE 4910–22–P
DEPARTMENT OF LABOROffice of the Secretary29 CFR Part 4
RIN 1215–AB26
Service Contract Act; Labor Standardsfor Federal Service Contracts
AGENCY
:
Wage and Hour Division,Employment Standards Administration,Labor.
ACTION
:
Proposed rule.
SUMMARY
:
Pursuant to Section 4(b) of theMcNamara-O’Hara Service Contract Act(SCA), the Department of Labor (DOL orthe Department) is proposingexemptions from coverage for certaincontracts for commercial services. Theproposed exemptions were requested bythe Administrator for FederalProcurement Policy, Office of FederalProcurement Policy (OFPP), in a May12, 1999, letter to the Secretary of Laborrepresenting that the requestedexemptions were both necessary andproper in the public interest, and inaccord with the remedial purpose of theSCA to protect prevailing laborstandards.
DATES
:
Comments are due on or beforeAugust 25, 2000.
ADDRESSES
:
Submit written commentsto John R. Fraser, Deputy Administrator,Wage and Hour Division, EmploymentStandards Administration, U.S.Department of Labor, Room S–3502, 200Constitution Avenue, N.W.,Washington, DC 20210. Commenterswho wish to receive notification of receipt of comments are requested toinclude a self-addressed, stampedpostcard, or to submit them by certifiedmail, return receipt requested. As aconvenience to commenters, commentsmay be transmitted by facsimile(‘‘FAX’’) machine to (202) 693–1432(this is not a toll-free number). If transmitted by facsimile and a hardcopy is also submitted by mail, pleaseindicate on the hard copy that it is aduplicate copy of the facsimiletransmission.
FOR FURTHER INFORMATION CONTACT
:
William W. Gross, Director, Office of Wage Determinations, Wage and HourDivision, Employment StandardsAdministration, U.S. Department of Labor, Room S–3028, 200 ConstitutionAvenue, N.W., Washington, D.C. 20210;telephone (202) 693–0062. This is not atoll-free number.
SUPPLEMENTARY INFORMATION
:
I. Paperwork Reduction Act
This rule contains no reporting orrecordkeeping requirements subject tothe Paperwork Reduction Act of 1980(Pub. L. 96–511). The existinginformation collection requirementscontained in Regulations, 29 CFR Part 4were previously approved by the Officeof Management and Budget under OMBcontrol number 1215–0150.
II. Background
On October 1, 1995, the FederalAcquisition Regulations were amendedto implement provisions of the FederalAcquisition Streamlining Act (FASA).One provision of the final regulation, 48CFR 12.504(a)(10), provided that therequirements of the McNamara-O’HaraService Contract Act (SCA) are notapplicable to subcontracts at any tier forthe acquisition of commercial items orservices.After a subsequent review of the issue by the FAR Council the Administratorfor Federal Procurement Policy wrote tothe Secretary of Labor and requestedthat the Department propose anexemption for a more limited group of commercial service contracts (bothprime contracts and subcontracts). TheAdministrator stated that the FARCouncil had concluded that a blanketexemption of all subcontracts forcommercial items may not adequatelyserve the Administration’s policy of supporting exemptions of the SCA onlywhere they do not undermine thepurposes for which the SCA wasenacted. Therefore the FAR Councilagreed that any exemption from thecoverage of SCA for subcontracts for theacquisition of commercial items orcomponents should be accomplishedunder the Secretary of Labor’s authorityin the SCA, and stated that it wouldwithdraw the FAR provision.The FAR Council indicated that theadoption of their recommendations willfurther the commitment of theAdministration to be more commercial-like, encourage broader participation ingovernment procurement by companiesdoing business in the commercialsector, and reinforce their commitmentto reduce government-unique terms andconditions from their contracts.Furthermore, the FAR Councilrepresented that the limited exemptionsthat it proposed could be accomplishedwithout compromising the remedialpurpose of the SCA to protect prevailinglabor standards.The Department of Labor hasreviewed the requested exemptions andthe representations of the FAR Counciland has concluded that a sufficientshowing has been made to propose to
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implement the exemptions requested bythe FAR Council. Based on therepresentations, the Department haspreliminarily determined that theexemption would meet the requirementsof Section 4(b) of the Act thatexemptions be necessary and proper inthe public interest or to avoid seriousimpairment of Government business,and in accord with the remedialpurpose of the SCA to protect prevailinglabor standards. Comments arerequested on this determination.Contemporaneously with publicationof this NPRM in the
Federal Register
,the FAR Council is publishing a finalrule removing the SCA from the list of laws inapplicable to subcontracts forcommercial items, currently in the FARat 48 CFR 12.504(a)(10). As a result, asmall group of commercial subcontractsthat were previously exempted underthe FAR rule and that also meet therequirements of DOL’s proposed rulecould change from exempt tononexempt and back to exempt if theDOL proposal becomes final as it iscurrently proposed. To prevent thedisruption that could be caused by suchchanges, including the possibledisruption of services if the currentsubcontractor does not agree to continuethe subcontract services under therequirements of SCA, the Departmenthas published a final rule in today’s
Federal Register
, temporarily exemptingfrom the SCA those commercialsubcontracts which meet the criteria of this NPRM. This final rule will remainin effect for one year from today’s dateor until the Department completes itsrulemaking on this NPRM, whicheveroccurs first. The Department notes thatit intends to proceed expeditiously withthis rulemaking and anticipates that afinal rule, after review of all of thecomments, will be issued within sixmonths.
III. Summary of the ProposedExemptions
This proposal, as requested by theFAR Council, addresses two separate but somewhat related issues. First, thecurrent exemption for the maintenanceand repair of Automated DataProcessing (ADP) equipment, 29 CFR4.123(e)(1), is proposed to be modifiedto reflect terminology changes in lawthat have occurred since the exemptionwas originally established; broaden theexemption to cover informationtechnology as currently defined; applythe exemption to installation services;and apply the exemption tosubcontracts as well as prime contracts.Second, a new exemption is proposed,similar to the current ADP exemption,to exempt both prime contractors andsubcontractors for a specified subset of commercial services that meet certaincriteria.
Proposed Revision of the Current ADP Exemption
The Clinger-Cohen Act of 1996,Divisions D and E of Pub. L. 104–106,repealed the Brooks Automatic DataProcessing Act, 40 U.S.C. 759, and setforth a new framework for themanagement and acquisition of information technology, replaced the‘‘ADP’’ terminology originally in theBrooks ADP Act with ‘‘informationtechnology’’ to reflect the convergenceof ADP and telecommunicationsequipment and technology. See 40U.S.C. 1401
et seq.
This proposal wouldreflect this change in the regulations.Further, as recommended by the FARCouncil, the exemption would beupdated to reflect the current statutorydefinition of ‘‘information technology’’and be consistent with otherregulations. As defined at 40 U.S.C.1401(3) and incorporated in the FAR, 48CFR 2.101, the term ‘‘informationtechnology,’’ with respect to anexecutive agency, means ‘‘anyequipment or interconnected system orsubsystem of equipment that is used inthe automatic acquisition, storage,manipulation, management, movement,control, display, switching, interchange,transmission, or reception of data orinformation.’’ Under this definition,equipment is considered to be used byan executive agency if the agency usesthe equipment directly or if theequipment is used by a contractor undera contract which requires the use of such equipment, or requires the use of such equipment to a significant extentin the performance of a service or thefurnishing of a product. The term‘‘information technology’’ does notinclude any equipment that is acquired by a contractor incidental to a contract;or any equipment that containsimbedded information technology thatis used as an integral part of theproduct, but the principal function of which is not the acquisition, storage,manipulation, management, movement,control, display, switching, interchange,transmission, or reception of data orinformation. For example, HVAC(heating, ventilation, and airconditioning) equipment such asthermostats or temperature controldevices and medical equipment whereinformation technology is integral to itsoperation, is not informationtechnology.This proposal would also addinstallation services to the currentregulatory exemption where thoseservices are not subject to the Davis-Bacon Act, 40 U.S.C. 276a
et seq.
See 29CFR 4.116(c)(2). Service contracts ofteninvolve installation of informationtechnology (IT) equipment, for exampleinstalling and maintaining a local areanetwork, or installing and maintainingnew telephones or a telephone system.The same employees are performinginstallation as are performingmaintenance and repair services. Thus,the same conditions that support theexemption for the maintenance servicesalso support an exemption forinstallation services, and the addition of installation services will simply reflectwhat is happening in the market place.Finally, the current exemption wouldindicate that the exemption applies tosubcontracts meeting the regulatorycriteria as well as prime contracts. TheDepartment requests comments onwhether there is any reason that theexemption at the prime contract levelshould not apply equally tosubcontracts which meet the criteria, aswell as on the other proposedmodifications to §4.123(e)(1). Becausethe prime contractor is responsible forcompliance with all of the contractrequirements, including the SCA, if theDepartment determines that theexemption has been incorrectly appliedto a subcontract, the proposedregulation provides that it may requirethat SCA stipulations be included in thesubcontract effective as of the date of contract award.
New Exemption for Certain Commercial Service Contracts
In certain situations, an employee’swork on a government contractrepresents a small portion of his or hertime and the balance of the time is spenton commercial work. In such cases, theFAR Council represents that theGovernment loses the full benefits of competition for its service contracts because some contractors decline tocompete for Government work due tospecific government requirements. Toremedy this situation, the FAR Councilhas recommended an exemptionframework that it believes will protectprevailing labor standards and avoid theundercutting of such standards bycontractors. The factual basis for theFAR Council’s view that the proposedexemption is necessary and proper inthe public interest or to avoid theserious impairment of Government business is set forth below. In addition,in order that the exemption comportwith the statutory requirement that it bein accord with the remedial purposes of the Act to protect prevailing laborstandards, the proposed regulationprovides a number of criteria whichmust be satisfied. The rationale for these
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criteria is also explained below.Comments are requested for each listedservice as to whether the proposedexemption, given its criteria andlimitations, is necessary and proper inthe public interest or to avoid theserious impairment of Government business, and in accord with theremedial purpose of the SCA to protectprevailing labor standards.As recommended by the FAR Council,this proposal would exempt from SCAa short list of services, when theprocurement for those services meetsthe criteria below. The recommendedcriteria are intended to limit theexemption to those procurements wherethe services being procured are suchthat it would be more efficient andpractical for an offeror to perform theservices with a workforce that is notprimarily assigned to the performance of government work. Thus, contracts for base support services where the work isperformed by an on-site dedicatedworkforce would not meet theexemption criteria, and contracts wherethe services have been performed by adedicated group of federal employees(A–76 procurements) would be unlikelyto meet the exemption criteria since thenature of the services would not meetthe requirement that the workersperform only a small part of their timeon the contract; however, it is possiblethat some subcontracts for a portion of those services might meet the criteria forexemption.The criteria are designed to ensurethat the remedial purpose of the Act toprotect prevailing labor standards ispreserved. This would be accomplishedin two ways. First, the proposedexemption would apply only when thecontract award is not determinedprimarily upon the factor of cost.Therefore, the contractor providing the best service at a somewhat higher orlower cost would not be at a competitivedisadvantage. Second, the criteriawould limit the application of theexemption to circumstances where thenature of the procurement dictates thatthe most efficient and practicalperformance of the workload can beaccomplished with a workforce that isnot dedicated to working primarily onthe Government contract. Thus, thecompetitive pressures upon employeewages that might exist if the serviceswere performed by a workforcededicated to the Government contractwould not come into play on thecontracts within the scope of therecommended exemption. Furthermore,even if a contractor might be inclined toreduce wages to secure the Governmentcontract, the criteria would forbid thatpractice.Under this proposal, the followingcriteria for the new exemption would beapplied to a short list of services. Theexemption would apply only if theservices under the contract orsubcontract meet all of the criteria. TheDepartment seeks comments regardingwhether these criteria are appropriate toprotect prevailing labor standards.(1) The services under the contract arecommercial—
i.e.,
they are offered andsold regularly to non-Governmentalcustomers, and are provided by thecontractor (or subcontractor in the caseof an exempt subcontract) to the generalpublic in substantial quantities in thecourse of normal business operations.The basic underlying purpose of theproposed exemption is to permit aprospective contractor to utilize itscommercial compensation practices for both Government and privatecommercial work. If the prospectivecontractor does not currently performthe solicited services, then conformingto the SCA requirements would notcause the contractor to alter itscommercial compensation practices.(2) The prime contract or subcontractwill be awarded on a sole source basisor the contractor will be selected foraward on the basis of other factors inaddition to price. In such cases, pricemust be equal to or less important thanthe combination of other non-price orcost factors in selecting the contractor.One of the basic purposes of theService Contract Act is to counteract thenegative impact that competition basedon price alone may have upon wages. If a contract is awarded on a sole source basis, there is no competition and priceis clearly not the basis for awarding thecontract.For the majority of other contractsthat are competitively awarded, thiscriterion would attempt to largelyremove wages from consideration bymaking quality of service and other non-cost factors equal to or more importantthan the bottom line price. If oneassumes that the best employees(contractors) are paid (pay) higherwages, then this criterion would allowthese employees (contractors) tocompete on the basis of the employees’increased productivity and higherquality service. These employees/contractors should not be disadvantagedeven though the employee wages andpossibly the resulting contract price aresomewhat higher than the lowest offer.(3) The prime contract or subcontractservices are furnished at prices whichare, or are based on, established catalogor market prices. An established price isa price included in a catalog, price list,schedule, or other form that is regularlymaintained by the contractor, is eitherpublished or otherwise available forinspection by customers, and statesprices at which sales are currently, orwere last, made to a significant numberof buyers constituting the generalpublic. An established market price is acurrent price, established in the usualcourse of trade between buyers andsellers free to bargain, which can besubstantiated from sources independentof the manufacturer or contractor.Normally, market price information istaken from independent market reports, but market price could be established bysurveying the firms in a particularindustry or market.This criterion ensures that thecontractor will provide the services tothe Government on the same basis thatthe contractor services commercialaccounts. Combined with the othercriteria, this requirement should ensurethat contractors do not decreaseemployee compensation as a part of thecompetitive contracting process.(4) All of the service employees whowill perform the services under theGovernment contract or subcontractspend only a small portion of their time(a monthly average of less than 20percent of the available hours on anannualized basis, or less than 20 percentof available hours during the contractperiod if the contract period is less thana month) servicing the Governmentcontract.If the employees spend only a smallportion of their available work hours onthe Government contract, the contractorwould not likely be willing to alter itscompensation practices simply to obtainthe Government contract. (Note:Criterion 5 would also specificallypreclude any such change incompensation practices.) Furthermore,the criteria for exemption will not besatisfied by rotating the workforce andhaving different employees work on thecontract each day of the week. In theDepartment’s experience it would beextraordinary for a contractor to staff acontract in this manner. Therefore insuch a case, although each individualemployee would spend less than 20% of his/her work hours on the Governmentcontract, a contracting officer or primecontractor (in the case of a subcontract)could not certify—as required byCriterion 6—that all or nearly allofferors would staff the contract withservice employees who spend only asmall portion of their time on theproject.(5) The contractor utilizes the samecompensation (wage and fringe benefits)plan for all service employeesperforming work under the contract orsubcontract as the contractor uses forthese employees and for equivalent
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