Revision of Department of Homeland Security Acquisition Regulation; Contractor Billing and Subcontractor Labor Hour Rates Under Time and Materials Contracts (HSAR Case 2010-001), 50449-50454 [2012-20442]
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Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules
GSA Global Supply or online at
www.gsaglobalsupply.gsa.gov.
§ 102–37.590 In transferring donated
surplus vehicles, what is the responsibility
of the SASP?
The SASP is responsible for
facilitating the transfer of the surplus
vehicle to the donee in accordance with
this part. The SASP should not sign the
SF 97 as ‘‘transferee’’ unless the vehicle
will be used and titled by the SASP.
§ 102–37.595 When transferring donated
surplus vehicles, what is the responsibility
of the donee?
The donee is responsible for
processing the SF 97 in accordance with
state licensing and titling authorities.
The donee signs the SF 97 as
‘‘transferee.’’ The donee is responsible
for notifying the SASP if a SF 97 is not
provided by the Government within a
reasonable time after vehicle transfer.
§ 102–37.600 When does title to a surplus
donated vehicle change hands?
Title to the vehicle rests with the
holding agency until the SF 97 is signed
by the transferee. At that point, the
transferee will hold conditional title
until the end of the period of restriction,
if applicable, under the terms of the
donation.
Subpart J—Insuring Donated Surplus
Property
Sec.
102–37.605 Is insurance required for
liability purposes?
102–37.610 If there is a property loss
covered by insurance, who is entitled to
reimbursement?
Subpart J—Insuring Donated Surplus
Property
§ 102–37.605 Is insurance required for
liability purposes?
pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Yes, for vehicles, the SASP and/or the
transferee must follow state laws for
insurance requirements of state owned
vehicles and state minimum insurance
requirements for other than state owned
vehicles. For other assets, insurance
must be acquired to at least the
minimum amount as mandated by
applicable law or regulation.
(b) If the loss occurs while the
property is insured and in the
possession (or under the control) of the
donee, the donee may retain proceeds to
cover the costs that the donee incurred
to acquire and rehabilitate the property
prior to its loss. Entitlement to
insurance proceeds in excess of the
costs incurred by the donee depends on
the time of the loss in relation to the
period of restriction if the loss was
incurred:
(1) During the period of restriction
imposed by GSA (e.g., typically up to
the first year unless otherwise
designated), the U.S. Government is
entitled to the insurance proceeds, less
any interest provided by the
Government to the SASP to cover the
SASP’s expenses in enforcing the
restriction up to the time of the loss.
(2) During an additional period of
restriction imposed by the SASP (e.g.,
beyond the one year usually imposed by
GSA), the SASP is entitled to the
proceeds.
(3) After all periods of restriction
imposed by the GSA and/or SASP, the
donee is entitled to the proceeds.
12. Amend Appendix C to part 102–
37 by alphabetically adding the
definition of ‘‘Veterans Organizations’’
to read as follows:
Appendix C to Part 102–37—Glossary
of Terms for Determining Eligibility of
Public Agencies and Nonprofit
Organizations
*
*
*
*
*
Veterans Organizations means
organizations eligible to receive Federal
surplus property under Public Law 111–338,
as codified at 40 U.S.C. 549(c)(3)(B)(x),
whose (1) membership comprises
substantially veterans (as defined under 38
U.S.C.101); and (2) representatives are
recognized by the Secretary of Veterans
Affairs under 38 U.S.C. 5902. The
Department of Veterans Affairs maintains a
searchable Web site of recognized
organizations. The address is https://
www.va.gov/ogc/apps/accreditation/
index.asp.
[FR Doc. 2012–20441 Filed 8–20–12; 8:45 am]
§ 102–37.610 If there is a property loss
covered by insurance, who is entitled to
reimbursement?
BILLING CODE 6820–14–P
(a) If the loss occurs while the
property is insured and in the
possession (or under the control) of the
SASP, the SASP may retain proceeds to
cover the SASP’s costs incurred to
acquire and rehabilitate the property
prior to its loss. GSA is entitled to
proceeds in excess of the costs incurred
by the state.
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DEPARTMENT OF HOMELAND
SECURITY
48 CFR Parts 3016 and 3052
[Docket No. DHS–2012–0050]
RIN 1601–AA65
Revision of Department of Homeland
Security Acquisition Regulation;
Contractor Billing and Subcontractor
Labor Hour Rates Under Time and
Materials Contracts (HSAR Case 2010–
001)
Office of the Chief Procurement
Officer, DHS.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Department of Homeland
Security (DHS) is proposing to amend
its Homeland Security Acquisition
Regulation to require contracts for time
and material or labor hours to include
separate labor hour rates for
subcontractors and a description of the
method that will be used to record and
bill for labor hours for both contractors
and subcontractors.
DATES: Comments and related material
submitted electronically must be
submitted to the Federal eRulemaking
Portal https://www.regulations.gov on or
before October 22, 2012. Comments and
related material submitted by mail must
reach the Department of Homeland
Security, Office of the Chief
Procurement Officer, Acquisition Policy
and Legislation Branch at the address
shown below on or before October 22,
2012 to be considered in the formation
of the final rule.
ADDRESSES: You may submit comments
identified by DHS docket number DHS–
2012–0050, using any one of the
following methods:
(1) Via the Internet at the Federal
eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments
and use docket number DHS–2012–
0050.
(2) By mail to the Department of
Homeland Security, Office of the Chief
Procurement Officer, Acquisition Policy
and Legislation Branch, ATTN: Jeremy
Olson, 245 Murray Lane, Bldg. 410
(RDS), Washington, DC 20528.
FOR FURTHER INFORMATION CONTACT:
Jeremy Olson, Department of Homeland
Security, Office of the Chief
Procurement Officer, Acquisition Policy
and Legislation Branch, (202) 447–5197,
or by email at Jerry.Olson@dhs.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Request for Comments
II. Background
III. Discussion of Proposed Rule
IV. Regulatory Requirements
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A. Executive Order 12866 (Regulatory
Planning and Review)
B. Regulatory Flexibility Act
C. Assistance for Small Entities
D. Collection of Information
I. Request for Comments
Interested persons are invited to
participate in this rulemaking by
submitting comments and related
materials. Comments and related
materials should be organized by HSAR
Part, and indicate the specific section
that is being commented on. All
comments received will be posted
without change to https://
www.regulations.gov, including any
personal information provided. See
ADDRESSES above for information on
how to submit comments. If you submit
comments by mail, please submit them
in an unbound format, no larger than 8
1⁄2 by 11 inches, suitable for copying
and electronic filing. You may submit
comments either by mail or via the
internet as identified in the ADDRESSES
section above; but to avoid duplication,
DHS requests that you submit comments
and materials by only one method. If
you would like DHS to acknowledge
receipt of comments submitted by mail,
please enclose a self-addressed, stamped
postcard or envelope. DHS will consider
all comments and material received
during the comment period.
Viewing comments and documents:
To view comments and read background
documents related to this rulemaking,
go to https://www.regulations.gov, which
contains relevant instructions under the
FAQs tab on the home page.
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II. Background
This proposed rule augments two
existing Federal Acquisition Regulation
(FAR) policies to create a consistent
approach within DHS for awarding
Time and Materials/Labor Hours (T&M/
LH) contracts. Those two augmenting
policies include the requirement for
separate labor hour rates for T&M/LH
subcontractors and the requirement for
consistent practices for contractor labor
hour records and labor hour billing.
The first of the two existing FAR
policies provides the option to require
separate labor hour rates for each
subcontractor under a T&M/LH contract,
in addition to the labor hour rates
established for the prime contractor. See
FAR 16.601(e). The current FAR policy
authorizes an agency either to permit
individual contracting officers to decide
if separate labor hour rates are necessary
or to establish an agency procedure
making separate rates mandatory. This
rule proposes to establish a DHS-wide
procedure to make the FAR option for
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consistent use of separate rates
mandatory for DHS T&M/LH contracts.
Federal Acquisition Regulation (FAR)
16.601(e) further authorizes agencies to
amend the solicitation provision at FAR
52.216–29, Time-and-Materials/LaborHour (T&M/LH) Proposal RequirementsNon-commercial Item Acquisitions With
Adequate Price Competition, to require
offerors to submit offers that include
separate labor hour rates for
subcontractors and affiliates. The
purpose of requiring offers to include
such separate rates is to ensure the
resulting contract or order will have
individual labor hour rate schedules for
each individual subcontractor and
affiliate of the prime contractor and not
contain only a single set of rates
applicable to the prime contractor and
all subcontractors.
The second of the two augmenting
Homeland Security Acquisition
Regulation (HSAR) policies that are
included in this proposed rule refines
long-established FAR policies on
consistency between contractor
recordkeeping and contractor proposal
and billing practices. The proposed rule
establishes policies furthering those
existing FAR policies so that DHS
contractors will identify their method of
accounting for labor hours incurred and
agree to a price adjustment if their
billing practices under a T&M/LH
contract they enter into with DHS
results in overbilling because they had
not billed consistently with their
recordkeeping practices. To minimize
the burden of identifying the method of
recordkeeping used by a contractor, the
proposed rule includes a solicitation
provision in which each offeror will
check one of two blocks to designate
which of the two types of methods its
recordkeeping system uses, record only
the number of hours in a standard work
period (such as a 40 hour workweek) or
record all hours worked in a work
period. This will apply only to hours
incurred by employees who are exempt
from the Fair Labor Standards Act
(FLSA).
Contractors with a T&M/LH contract
would be required to substantiate the
number of hours billed in order to
support payment of a voucher. There
would be no mandatory requirement
that a contractor use one method or the
other; that would be the contractor’s
choice. However, the contractor must
consistently follow its chosen practice.
III. Discussion of Proposed Rule
The proposed rule would revise 48
CFR part 3016, Types of Contracts and
part 3052, Solicitation Provisions and
Contract Clauses.
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Fixed hourly rates—FAR 16.601(e)(1)
allows for three approaches in
structuring solicitations for T&M/LH
contracts and orders and allows
agencies to make mandatory one of the
three approaches identified in the
solicitation provision at FAR 52.216–
29(c). The proposed rule would make
the procedure at FAR 52.216–29(c)(1),
separate rates for each labor category,
mandatory for DHS T&M/LH contracts
and orders. The proposed rule provides
procedures applicable to solicitations
and awards for T&M/LH contracts and
orders for non-commercial items using
adequate price competition. The
proposed rule would require offerors to
propose separate, individual labor hour
rates for each category of labor to be
performed by the prime contractor, each
subcontractor, and other divisions or
subsidiaries or affiliates of the prime
contractor under common control. The
procedure would apply only to T&M/LH
actions for non-commercial items to be
awarded using adequate price
competition.
The purpose of these procedures is to
ensure appropriate labor hour rates are
paid under T&M/LH contracts and
orders. The procedures are intended to
eliminate unintentional windfall
payments to the prime contractor that
might otherwise result from work
performed by lower labor rate
subcontracts or affiliates that is billed at
a higher prime contractor labor hour
rate.
Recording and billing hours under
T&M/LH contracts and orders—The
proposed rule would require all offerors
seeking a T&M/LH contract or order to
include a description of their method
and their subcontractors’ methods of
accounting for uncompensated overtime
performed by employees who are
exempt from the Fair Labor Standards
Act (FLSA). It also includes a
requirement that billings and payments
under the resulting contracts or orders
be made consistent with that
description. The procedure would apply
to all T&M/LH contracts and orders that
exceed the Simplified Acquisition
Threshold (SAT).
The purpose of this procedure is to
eliminate potential disputes regarding
the hours that can be billed under T&M/
LH contracts by clearly stating in the
contract whether the contractor and
each subcontractor will be reimbursed
based on recording and billing for only
the number of hours worked not in
excess of a standard number of hours in
a standard work period (such as a 40
hour workweek) or recording all hours
worked. This procedure will ensure that
billings and payments under T&M/LH
contracts do not result in an unintended
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windfall to the contractor by ensuring
that the contractor does not bill the
Government for all hours worked when
its established practices are to record
only the number of hours in a standard
work period (such as a 40 hour
workweek).
IV. Regulatory Requirements
A. Executive Order 12866 (Regulatory
Planning and Review) and 13563
(Improving Regulation and Regulatory
Review).
This proposed rule is not a significant
regulatory action under section 3(f) of
Executive Order 12866, as
supplemented by Executive Order
13563. The Office of Management and
Budget has not reviewed it under those
Orders. This proposed rule is not a
major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
Under the Regulatory Flexibility Act
(RFA) (5 U.S.C. 601–612), we have
considered whether this proposed rule
would have a significant economic
impact on a substantial number of small
entities. The term ‘‘small entities’’
comprises small businesses, not-forprofit organizations that are
independently owned and operated and
are not dominant in their fields, and
governmental jurisdictions with
populations of less than 50,000.
This proposed rule, if made final, may
impact a substantial number of small
entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601,
et seq., and DHS has thus prepared an
initial regulatory flexibility analysis
consistent with 5 U.S.C. 604 as follows:
1. Description of the Reasons Why the
Action Is Being Considered
This proposed rule augments two
existing Federal Acquisition Regulation
(FAR) policies to create a consistent
approach within DHS for awarding
Time and Materials/Labor Hours (T&M/
LH) contracts. Those two augmenting
policies include the requirement for
separate labor hour rates for T&M/LH
subcontractors and the requirement for
consistent practices for contractor labor
hour records and labor hour billing.
The first of the two existing FAR
policies provides the option to require
separate labor hour rates for each
subcontractor under a T&M/LH contract,
in addition to the labor hour rates
established for the prime contractor. See
FAR 16.601(e). The current FAR policy
authorizes an agency either to permit
individual contracting officers to decide
if separate labor hour rates are necessary
or to establish an agency procedure
making separate rates mandatory. This
rule proposes to establish a DHS-wide
procedure to make the FAR option for
consistent use of separate rates
mandatory for DHS T&M/LH contracts.
Federal Acquisition Regulation (FAR)
16.601(e) further authorizes agencies to
amend the solicitation provision at FAR
52.216–29, Time-and-Materials/LaborHour (T&M/LH) Proposal RequirementsNon-commercial Item Acquisitions With
Adequate Price Competition, to require
offerors to submit offers that include
separate labor hour rates for
subcontractors and affiliates. The
purpose of requiring offers to include
such separate rates is to ensure the
resulting contract or order will have
individual labor hour rate schedules for
each individual subcontractor and
affiliate of the prime contractor and not
contain only a single set of rates
applicable to the prime contractor and
all subcontractors.
The second of the two augmenting
Homeland Security Acquisition
Regulation (HSAR) policies that are
included in this proposed rule refines
long-established FAR policies on
consistency between contractor
recordkeeping and contractor proposal
and billing practices. The proposed rule
establishes policies furthering those
existing FAR policies so that DHS
contractors will identify their method of
accounting for labor hours incurred and
agree to a price adjustment if their
billing practices under a T&M/LH
contract they enter into with DHS
results in overbilling because they had
not billed consistently with their
recordkeeping practices.
2. Succinct Statement of the Objectives
of, and Legal Basis for, the Proposed
Rule
This proposed rule would establish
the DHS procedure to make the FAR
option for consistent use of separate
rates mandatory for DHS T&M/LH
contracts. It would also establish a
requirement that a contractor must
consistently follow its method of record
keeping for labor hours billed to a DHS
contract. The legal bases for this rule are
5 U.S.C. 301–302, 41 U.S.C. 1707, 41
U.S.C. 1702, 48 CFR part 1, subpart 1.3,
and DHS Delegation Number 0702.
3. Description of and, Where Feasible,
an Estimate of the Number of Small
Entities To Which the Rule Will Apply
This proposed rule would apply to all
entities seeking a DHS contract or order
that would be either a Time and
Material or a Labor Hour type of
contract. DHS believes that this
proposed rule is not likely to have a
significant economic impact on a
substantial number of small entities
because the rule does not require
contractors or subcontractors to make
any substantial changes in their normal
business practices nor take any
substantial actions under a contract
beyond previously existing government
requirements.
Below are tables showing information
on FY 2010 DHS awards, based on data
contained in the Federal Procurement
Data System, which would have been
subject to this proposed rule had it been
in effect at the time. These tables give
a view into the numbers of entities that
would be impacted by this proposed
rule if the amount of contracting done
by DHS is consistent with the amount
performed during FY 2010.
NUMBERS AND DOLLAR VALUES OF AWARDS
Number of awards to other
than small
entities
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FY 2010 DHS awards
Labor Hours ..............................................................................................................................
Time and Materials ...................................................................................................................
Grand Total .......................................................................................................................
FY2010 DHS T&M/LH Awards
Number of awards to
small entities
808 $401,098,840
2507 $1,399,245,624
971 $250,578,045
1653 $483,677,645
3315
2624
Numbers of firms other
than small entities
382
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$1,800,344,464
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$1,800,344,464
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$734,255,690
Small Entities
261
$734,255,690
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4. Description of Projected Reporting,
Recordkeeping, and Other Compliance
Requirements of the Proposed Rule,
Including an Estimate of the Classes of
Small Entities Which Will Be Subject to
the Requirement and the Type of
Professional Skills Necessary for
Preparation of the Report or Record
The proposed rule contains no new
information collection or reporting
requirements. Offerors are already
required to provide information in
response to DHS solicitations and this is
authorized under an existing, approved
information collection. OMB Control
No. 1600–0005 (Offeror submissions).
5. Identification, to the Extent
Practicable, of all Relevant Federal
Rules Which May Duplicate, Overlap, or
Conflict With the Rule
The proposed rule would not
duplicate, overlap, or conflict with any
other Federal rules.
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6. Description of Any Significant
Alternatives to the Proposed Rule
Which Accomplish the Stated
Objectives of Applicable Statutes and
Which Minimize Any Significant
Economic Impact of the Rule on Small
Entities
The requirement proposed in this
rulemaking is that the prime contractor
will have to calculate and propose
separate rates for each such
subcontractor or affiliate rather than
calculating a single set of rates with all
labor hours wrapped into a single set of
rates covering labor provided by the
prime contractor as well as labor
provided by subcontractors and
affiliates. The FAR provides the option
to make this decision in agency
procedures or to leave this decision up
to the offeror or to the contracting
officer. DHS has chosen to revise its
agency-wide procedures and is not
aware of an alternative to this proposed
requirement that would accomplish the
goals of the proposed requirement.
Likewise, the new requirements
addressing contractors’ duties to record
and bill for hours under T&M/LH
contracts and orders imposes no new
duties or requirements on a contractor
other than to identify one of two
methods of record-keeping described in
a solicitation provision, use its current
system of recordkeeping and billing,
and agree to a price adjustment if it
inappropriately bills for all hours
worked when it disclosed that its
normal practice is to bill only for a fixed
number of hours per employee per
period. The only significant alternative
options DHS identified were not to issue
this portion of the rule or to apply the
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rule to all actions, rather than applying
it only to actions over the SAT. Not
issuing the rule was rejected because it
would forgo the benefits of the rule.
Applying the rule to actions under the
SAT was rejected because the benefits
would likely not be substantial enough
under those lower value contracts to
warrant the administrative effort that
DHS would have to expend to enforce
the clause.
DHS invites comments from small
businesses and other interested parties.
DHS also will consider comments from
small entities concerning the affected
HSAR subparts in accordance with 5
U.S.C. 610. Such comments should be
submitted separately and should cite
HSAR Case 2010–001.
C. Assistance for Small Entities
Under Section 213(a) of the Small
Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104–121),
we want to assist small entities in
understanding the rule so that they can
better evaluate its effects on them and
participate in the rulemaking. Small
businesses may send comments on the
actions of Federal employees who
enforce, or otherwise determine
compliance with, Federal regulations to
the Small Business and Agriculture
Regulatory Enforcement Ombudsman
and the Regional Small Business
Regulatory Fairness Boards. The
Ombudsman evaluates these actions
annually and rates each agency’s
responsiveness to small business. If you
wish to comment on actions by DHS
employees, call 1–888–REG–FAIR (1–
888–734–3247). The DHS will not
retaliate against small entities that
question or complain about this interim
rule or any DHS policy.
D. Collection of Information
This proposed rule contains no new
information collection requirements for
which OMB approval is necessary under
the Paperwork Reduction Act of 1995
(Pub. L. 104–13). Offerors are already
required to provide information in
response to DHS solicitations and the
burden for this is authorized under an
existing, approved information
collection. OMB Control No. 1600–0005
(Offeror submissions).
List of Subjects in 48 CFR Parts 3016
and 3052
Government procurement.
Daniel L. Clever,
Deputy Chief Procurement Officer,
Department of Homeland Security.
Accordingly, DHS proposes to amend
(HSAR) 48 CFR parts 3016 and 3052 as
follows:
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1. The authority citation for parts
3016 and 3052 are revised to read as
follows:
Authority: 5 U.S.C. 301–302, 41 U.S.C.
1707, 41 U.S.C. 1702, 48 CFR part 1, subpart
1.3, and DHS Delegation Number 0702.
PART 3016—TYPES OF CONTRACTS
2. Add section 3016.601 to subpart
3016.6 to read as follows:
3016.601 Time-and-materials and laborhour contracts.
(c)(2)(i) Fixed hourly rates. Each DHS
time and materials and labor hour
contract and order for non-commercial
items awarded with adequate price
competition (FAR 15.403–1(c)(1)) must
include individual, separate labor hour
rates for each category of labor hours
for:
(A) The prime contractor;
(B) Each subcontractor; and
(C) Each division, subsidiary and
affiliate of the prime contractor.
In order to require each offeror to
propose these separate rates for each of
those labor hour categories, the
contracting officer shall insert the
amended FAR solicitation provision as
provided in (e)(1) of this subsection.
The contracting officer shall also
include such separate labor hour rates
for each such category of labor hours in
the resulting contract(s) or order(s).
(d)(3) Limitations regarding recording
hours under time-and-material and
labor hour contracts and orders.
(i) Definitions.
Overtime means the number of hours
worked in excess of the standard
number of hours in a standard work
period (such as a 40 hour workweek) by
a contractor employee who is exempt
from the Fair Labor Standards Act
(FLSA).
Standard work period means the
minimum number of hours an FLSA
exempt employee is required to work
per week or some other defined period
(e.g., 40 hours per week) in accordance
with the contractor’s established
policies.
(ii) Policy. A time-and-materials and
labor hour contract or order exceeding
the Simplified Acquisition Threshold
may be used only if it includes a
description of the method that will be
used by the prime contractor and each
subcontractor to record and to bill for
hours worked by employees exempt
from the Fair Labor Standards Act
(FLSA) under the contract or order,
including overtime. The method used to
record and bill for hours worked must
be either to record and bill for all hours
worked, or to record and bill for only
the number of hours worked not in
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excess of a standard number of hours in
a standard work period (such as a 40
hour workweek). The description of the
method of recording and billing for
hours worked must be consistent with
one of the two descriptions in (HSAR)
48 CFR 3016.601(d)(3)(iii)(A) or (B), and
shall be incorporated into the contract
or order. Whichever method the
contractor states it will employ, those
labor hour recording and billing
practices must be consistent with the
contractor’s disclosed or established
practices at the time of contract award.
(iii) Descriptions of acceptable and
unacceptable labor hour recording and
billing practices. Paragraphs (A) and (B)
of this subsection provide descriptions
of acceptable practices that may be
incorporated into a covered action.
These paragraphs (A) and (B)
correspond to paragraphs (b)(i) and
(b)(ii) respectively of the clause at
(HSAR) 48 CFR 3052.216–76, Offeror
Selection of Labor Hour Recording and
Billing Practices for Time-andMaterials/Labor-Hour Contracts.
Paragraph (C) of this subsection
provides a description of an
unacceptable practice.
(A) Record and Bill for All Hours
Worked. It is an acceptable practice for
the contractor (subcontractor) providing
labor hours of employees exempt from
the Fair Labor Standards Act (FLSA) to
bill the hours under its contract (or
order) based on recording of all hours
worked by those employees, including
overtime. The contractor must state that
its established accounting practice is to
record all hours worked by those
employees, including overtime.
(1) However, if it is found after award
that the contractor’s established
accounting practices at the time of
award were not based on recording all
hours worked by employees, the
Government shall be entitled to a price
adjustment on all payments for labor
hours under the contract or order.
(2) The amount of the price
adjustment for payments shall be the
difference between the number of hours
billed based on recording all hours
worked and the hours that would have
been recorded using the contractor’s
established accounting practices at the
time of award, multiplied by the
applicable fixed hourly rates.
(B) Record and Bill for a Standard
Number of Hours per Standard Work
Period (e.g., 40 hours per week). It is an
acceptable practice for the contractor
(subcontractor) to bill the hours worked
by employees exempt from the Fair
Labor Standards Act (FLSA) under its
contract based on recording and billing
for only the number of hours worked
not in excess of a standard number of
VerDate Mar<15>2010
15:17 Aug 20, 2012
Jkt 226001
hours in a standard work period (such
as a 40 hour workweek). The contractor
must state that its established
accounting practice is to record only the
standard number of hours in a standard
work period. The contractor’s
(subcontractor’s) method of recording
hours worked must pro-rate the hours
among all jobs/functions performed by
an employee when an employee works
overtime. For example, under a standard
40 hour work period, if an employee
worked 25 hours on Contract A and 25
hours on Contract B during a work
period, the contractor would pro-rate
those hours to record 20 hours on
Contract A and 20 hours on Contract B
so that the total number of hours for the
period did not exceed the number of
hours in a standard work period, 40
hours.
(C) Unacceptable accounting and
billing practices. It is not an acceptable
practice for a contractor or
subcontractor that accounts for only a
standard number of hours worked in a
standard work period for employees
exempt from the Fair Labor Standards
Act (FLSA) (e.g., 40 hours per week), to
account for and bill for only the first 8
hours worked each day. All hours
worked in excess of the standard
number of hours in a standard work
period, including overtime hours, must
be pro-rated based on the total hours
worked for all jobs/functions performed
by the employee. If an offeror indicates
that this is their established accounting
practice, the Contracting Officer shall
not award the contract or order, but
instead shall notify the Office of the
Chief Procurement Officer at
procurement.support@dhs.gov for
guidance on how to proceed. If an
offeror provides a clarification to the
statement it checks within the provision
at (HSAR) 48 CFR 3016.216–75, and it
is not clear to the contracting officer that
the clarification is consistent with the
requirements of the HSAR provision,
the contracting officer shall notify the
Office of the Chief Procurement Officer
at procurement.support@dhs.gov for
guidance on how to proceed.
(e)(1) Solicitations and contracts:
(i) Insert the provision (HSAR) 48 CFR
3052.216–29, Time-and-Materials/
Labor-Hour Proposal RequirementsNon-Commercial Item Acquisition With
Adequate Price Competition, in the
place of the provision at FAR 52.216–
29, Time-and-Materials/Labor-Hour
Proposal Requirements-NonCommercial Item Acquisition With
Adequate Price Competition, in all
solicitations contemplating use of a
time-and-materials or labor-hour type of
contract for noncommercial items, if the
price is expected to be based on
PO 00000
Frm 00064
Fmt 4702
Sfmt 4702
50453
adequate competition (FAR 15.403–
1(c)(1)). This provision is authorized by
Federal Acquisition Regulation (FAR)
16.601(e)(1) which authorizes agency
procedures to require modification of
the FAR solicitation provision at FAR
52.216–29, Time and Materials/LaborHour Proposal Requirements-NonCommercial Item Acquisitions With
Adequate Price Competition. Insert the
HSAR provision whole text into the
solicitation to require separate proposed
rates for all subcontractors and
divisions, subsidiaries, and affiliates of
the prime contractor.
(ii) Insert the clause (HSAR) 48 CFR
3052.216–75, Offeror Selection of LaborHour Recording and Billing Practices for
Time-and-Materials/Labor-Hour
Contracts, into each solicitation
expected to result in a contract or order
for (T&M/LH) exceeding the simplified
acquisition threshold (SAT).
(iii) Insert the clause (HSAR) 48 CFR
3052.216–76, Time-and-Materials/
Labor-Hour Overtime Recording and
Billing Practices, (or a clause
substantially the same as) into time and
material or labor-hour solicitations,
contracts and orders exceeding the SAT
and include the mark or other
indication made by the contractor
which of the two methods (recording all
hours or prorating the excess over a
standard work period) it will use during
the performance of the contract/order to
record and bill for hours worked.
PART 3052—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
3. Amend subpart 3052.2 by adding
section 3052.216–29 to read as follows:
3052.216–29 Time-and-Materials/LaborHour Proposal Requirements-NonCommercial Item Acquisition With
Adequate Price Competition.
As prescribed in (HSAR) 48 CFR
3016.601(e)(1)(i), insert the following
provision:
Time-and-Materials/Labor-Hour Proposal
Requirements—Non-commercial Item
Acquisition With Adequate Price
Competition
(a) The Government contemplates award of
a Time-and-Materials or Labor-Hour type of
contract resulting from this solicitation.
(b) The offeror must specify fixed hourly
rates in its offer that include wages,
overhead, general and administrative
expenses, and profit. The offeror must
specify whether the fixed hourly rate for each
labor category applies to labor performed
by—
(1) The offeror;
(2) Subcontractors; and/or
(3) Divisions, subsidiaries, or affiliates of
the offeror under a common control;
(c) The offeror must establish fixed hourly
rates using separate rates for each category of
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Federal Register / Vol. 77, No. 162 / Tuesday, August 21, 2012 / Proposed Rules
labor to be performed by each subcontractor
and for each category of labor to be
performed by the offeror, and for each
category of labor to be transferred between
divisions, subsidiaries, or affiliates of the
offeror under a common control.
and billing Practices—Record and Bill For
All Hours Worked.
[ ] (Check if the paragraph describes the
offeror’s system)—Paragraph (ii) Record and
Bill For a Standard Number of Hours Per
Standard Work Period.
(End of provision)
4. Amend subpart 3052.2 by adding
section 3052.216–75 as follows:
(End of provision)
5. Amend subpart 3052.2 by adding
section 3052.216–76 as follows:
3052.216–75. Offeror Selection of Labor
Hour Recording and Billing Practices for
Time-and-Materials/Labor-Hour Contracts.
3052.216–76. Time-and-Materials/LaborHour Overtime Recording and Billing
Practices.
As prescribed in (HSAR) 48 CFR
3016.601(e)(1)(ii), insert the following
provision:
As prescribed in (HSAR) 48 CFR
3016.601(e)(1)(iii), insert the following
clause and designate either paragraph (i)
or (ii), or insert a paragraph
substantially the same as (i) or (ii), in
accordance with the successful offeror’s
selection from (HSAR) 48 CFR
3052.216–75, Offeror Selection of Labor
Hour Recording and Billing Practices for
Time-and-Materials/Labor-Hour
Contracts.
pmangrum on DSK3VPTVN1PROD with PROPOSALS-1
Labor Hour Recording and Billing
Practices for Time-and-Materials/
Labor-Hour Contracts. (XX 2010)
(a) The offeror must identify the practices
it intends to employ to record labor hours
worked by employees exempt from the Fair
Labor Standards Act (FLSA) and to bill for
those hours under the prospective contract or
order for which it is submitting its offer. The
offeror must select one of the two available
descriptions of acceptable methods as shown
in HSAR 3052.216–76, Time-and-Materials/
Labor-Hour Overtime Recording and Billing
Practices-Record. The two available
selections are: (i) Record and Bill For All
Hours Worked, or (ii) Record and Bill Based
on a Standard Number of Hours Per Standard
Work Period. Whichever of the two
descriptions the offeror selects will be
incorporated into any resulting contract or
order awarded to the offeror. By making the
selection, the offeror is indicating to the
Government that the selected description of
recording and billing practices is consistent
with the contractor’s established accounting
practices and this same method will be used
for billing hours under the contract or order.
(b) The offeror will not be eligible for
award if either:
(1) The offeror fails to indicate in its offer
which of the two descriptions in paragraphs
(c)(i) or (ii) below describe the offeror’s
method of recording and billing for labor
hours to be performed under the contract or
order; or
(2) The offeror submits a clarification of the
clause 3052.216–76 Time-and-Materials/
Labor-Hour Overtime Recording and Billing
Practices, and the Contracting Officer had not
agreed prior to submittal of offers that the
offeror’s clarification of the clause
substantially meets the requirements of the
clause.
(c) The offeror must select one of the two
below descriptions of the offeror’s system for
recording and billing hours to be worked by
employees exempt from the Fair Labor
Standards Act (FLSA) under the contract that
are included in either paragraph (i) or (ii) of
the clause at HSAR 3052.216–76, Time-andMaterials/Labor-Hour Overtime Recording
and Billing Practices. If a contract or order is
awarded to the offeror, the selected
description will be incorporated into the
contract or order.
[ ] (Check if the paragraph describes the
offeror’s system)—Paragraph (i) Recording
VerDate Mar<15>2010
18:59 Aug 20, 2012
Jkt 226001
Time-and-Materials/Labor-Hour
Overtime Recording and Billing
Practices—(Insert Date)
(a) Definitions:
Overtime means the number of hours
worked in excess of the number of hours in
a standard work period by a contractor
employee who is exempt from the Fair Labor
Standards Act (FLSA).
Standard work period means the minimum
number of hours a FLSA exempt employee is
required to work per week or some other
defined period (e.g., 40 hours per week) in
accordance with the contractor’s established
policies.
(b) Only the designated paragraph (i) or (ii)
applies.
[ ] (i) Recording and Billing Practices—
Record and Bill For All Hours Worked.
The contractor (subcontractor) providing
labor hours will bill the hours worked by
employees exempt from the Fair Labor
Standards Act (FLSA) under its contract (or
order) based on recording of all hours worked
by employees, including overtime. The
contractor states that its established
accounting practices are to record all hours
worked.
(1) If it is found after award that the
contractor’s established accounting practices
at the time of award were not based on
recording all hours worked by employees, the
Government shall be entitled to a price
adjustment on all payments for labor hours
under the contract or order.
(2) The amount of the price adjustment for
payments shall be the difference between the
number of hours billed based on recording all
hours worked and the hours that would have
been recorded using the contractor’s
established accounting practices at the time
of award, multiplied by the applicable fixed
hourly rates.
- or [ ] (ii) Record and Bill For a Standard
Number of Hours Per Standard Work Period.
The contractor (subcontractor) will bill the
hours worked by employees exempt from the
Fair Labor Standards Act (FLSA) under this
PO 00000
Frm 00065
Fmt 4702
Sfmt 4702
contract based on recording and billing for
only the number of hours worked not in
excess of a standard number of hours in a
standard work period (such as a 40 hour
workweek). The contractor states that its
established accounting practice is to record
only the number of hours worked by such an
employee not in excess of a standard number
of hours in a standard work period (such as
a 40 hour workweek). The contractor
(subcontractor) further states that the
accounting practices are based on pro-rating
the hours among all jobs/functions performed
by the employee when the employee works
overtime. For example, under a standard 40
hour work period, if the employee worked 25
hours on Contract A and 25 hours on
Contract B, the contractor would pro-rate
those hours to record 20 hours on Contract
A and 20 hours on Contract B so that the total
number of hours recorded for the work
period does not exceed the number of hours
in the 40 hour standard work period.
(c) Flow down to Subcontractors. The
contractor and each lower tier subcontractor
shall incorporate the substance of this clause,
selecting the pertinent paragraph (i) or (ii),
into each subcontract that exceeds the
Simplified Acquisition Threshold and is
either a Time and Materials or a Labor Hour
contract/order.
(End of clause)
[FR Doc. 2012–20442 Filed 8–20–12; 8:45 am]
BILLING CODE 9110–10–P
DEPARTMENT OF THE TREASURY
48 CFR Chapter 10
RIN 1505–AC40
Department of the Treasury
Acquisition Regulations; Contract
Clause on Minority and Women
Inclusion in Contractor Workforce
Departmental Offices, Treasury.
Notice of proposed rulemaking.
AGENCY:
ACTION:
The Department of the
Treasury (the Department) is proposing
to amend the Department of the
Treasury Acquisition Regulation
(DTAR) to include a contract clause on
minority and women inclusion, as
required by the Dodd-Frank Wall Street
Reform and Consumer Protection Act of
2010 (the Dodd-Frank Act).
DATES: Comment due date: October 22,
2012.
ADDRESSES: Interested persons are
invited to submit comments on all
aspects of this proposed rule through
one of these methods:
Electronic Submission of Comments.
Interested persons may submit
comments electronically through the
Federal eRulemaking Portal at https://
www.regulations.gov. Electronic
submission of comments allows the
commenter maximum time to prepare
SUMMARY:
E:\FR\FM\21AUP1.SGM
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]]>Agencies
[Federal Register Volume 77, Number 162 (Tuesday, August 21, 2012)]
[Proposed Rules]
[Pages 50449-50454]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20442]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
48 CFR Parts 3016 and 3052
[Docket No. DHS-2012-0050]
RIN 1601-AA65
Revision of Department of Homeland Security Acquisition
Regulation; Contractor Billing and Subcontractor Labor Hour Rates Under
Time and Materials Contracts (HSAR Case 2010-001)
AGENCY: Office of the Chief Procurement Officer, DHS.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Department of Homeland Security (DHS) is proposing to
amend its Homeland Security Acquisition Regulation to require contracts
for time and material or labor hours to include separate labor hour
rates for subcontractors and a description of the method that will be
used to record and bill for labor hours for both contractors and
subcontractors.
DATES: Comments and related material submitted electronically must be
submitted to the Federal eRulemaking Portal https://www.regulations.gov
on or before October 22, 2012. Comments and related material submitted
by mail must reach the Department of Homeland Security, Office of the
Chief Procurement Officer, Acquisition Policy and Legislation Branch at
the address shown below on or before October 22, 2012 to be considered
in the formation of the final rule.
ADDRESSES: You may submit comments identified by DHS docket number DHS-
2012-0050, using any one of the following methods:
(1) Via the Internet at the Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments
and use docket number DHS-2012-0050.
(2) By mail to the Department of Homeland Security, Office of the
Chief Procurement Officer, Acquisition Policy and Legislation Branch,
ATTN: Jeremy Olson, 245 Murray Lane, Bldg. 410 (RDS), Washington, DC
20528.
FOR FURTHER INFORMATION CONTACT: Jeremy Olson, Department of Homeland
Security, Office of the Chief Procurement Officer, Acquisition Policy
and Legislation Branch, (202) 447-5197, or by email at
Jerry.Olson@dhs.gov.
SUPPLEMENTARY INFORMATION:
I. Request for Comments
II. Background
III. Discussion of Proposed Rule
IV. Regulatory Requirements
[[Page 50450]]
A. Executive Order 12866 (Regulatory Planning and Review)
B. Regulatory Flexibility Act
C. Assistance for Small Entities
D. Collection of Information
I. Request for Comments
Interested persons are invited to participate in this rulemaking by
submitting comments and related materials. Comments and related
materials should be organized by HSAR Part, and indicate the specific
section that is being commented on. All comments received will be
posted without change to https://www.regulations.gov, including any
personal information provided. See ADDRESSES above for information on
how to submit comments. If you submit comments by mail, please submit
them in an unbound format, no larger than 8 \1/2\ by 11 inches,
suitable for copying and electronic filing. You may submit comments
either by mail or via the internet as identified in the ADDRESSES
section above; but to avoid duplication, DHS requests that you submit
comments and materials by only one method. If you would like DHS to
acknowledge receipt of comments submitted by mail, please enclose a
self-addressed, stamped postcard or envelope. DHS will consider all
comments and material received during the comment period.
Viewing comments and documents: To view comments and read
background documents related to this rulemaking, go to https://www.regulations.gov, which contains relevant instructions under the
FAQs tab on the home page.
II. Background
This proposed rule augments two existing Federal Acquisition
Regulation (FAR) policies to create a consistent approach within DHS
for awarding Time and Materials/Labor Hours (T&M/LH) contracts. Those
two augmenting policies include the requirement for separate labor hour
rates for T&M/LH subcontractors and the requirement for consistent
practices for contractor labor hour records and labor hour billing.
The first of the two existing FAR policies provides the option to
require separate labor hour rates for each subcontractor under a T&M/LH
contract, in addition to the labor hour rates established for the prime
contractor. See FAR 16.601(e). The current FAR policy authorizes an
agency either to permit individual contracting officers to decide if
separate labor hour rates are necessary or to establish an agency
procedure making separate rates mandatory. This rule proposes to
establish a DHS-wide procedure to make the FAR option for consistent
use of separate rates mandatory for DHS T&M/LH contracts.
Federal Acquisition Regulation (FAR) 16.601(e) further authorizes
agencies to amend the solicitation provision at FAR 52.216-29, Time-
and-Materials/Labor-Hour (T&M/LH) Proposal Requirements-Non-commercial
Item Acquisitions With Adequate Price Competition, to require offerors
to submit offers that include separate labor hour rates for
subcontractors and affiliates. The purpose of requiring offers to
include such separate rates is to ensure the resulting contract or
order will have individual labor hour rate schedules for each
individual subcontractor and affiliate of the prime contractor and not
contain only a single set of rates applicable to the prime contractor
and all subcontractors.
The second of the two augmenting Homeland Security Acquisition
Regulation (HSAR) policies that are included in this proposed rule
refines long-established FAR policies on consistency between contractor
recordkeeping and contractor proposal and billing practices. The
proposed rule establishes policies furthering those existing FAR
policies so that DHS contractors will identify their method of
accounting for labor hours incurred and agree to a price adjustment if
their billing practices under a T&M/LH contract they enter into with
DHS results in overbilling because they had not billed consistently
with their recordkeeping practices. To minimize the burden of
identifying the method of recordkeeping used by a contractor, the
proposed rule includes a solicitation provision in which each offeror
will check one of two blocks to designate which of the two types of
methods its recordkeeping system uses, record only the number of hours
in a standard work period (such as a 40 hour workweek) or record all
hours worked in a work period. This will apply only to hours incurred
by employees who are exempt from the Fair Labor Standards Act (FLSA).
Contractors with a T&M/LH contract would be required to
substantiate the number of hours billed in order to support payment of
a voucher. There would be no mandatory requirement that a contractor
use one method or the other; that would be the contractor's choice.
However, the contractor must consistently follow its chosen practice.
III. Discussion of Proposed Rule
The proposed rule would revise 48 CFR part 3016, Types of Contracts
and part 3052, Solicitation Provisions and Contract Clauses.
Fixed hourly rates--FAR 16.601(e)(1) allows for three approaches in
structuring solicitations for T&M/LH contracts and orders and allows
agencies to make mandatory one of the three approaches identified in
the solicitation provision at FAR 52.216-29(c). The proposed rule would
make the procedure at FAR 52.216-29(c)(1), separate rates for each
labor category, mandatory for DHS T&M/LH contracts and orders. The
proposed rule provides procedures applicable to solicitations and
awards for T&M/LH contracts and orders for non-commercial items using
adequate price competition. The proposed rule would require offerors to
propose separate, individual labor hour rates for each category of
labor to be performed by the prime contractor, each subcontractor, and
other divisions or subsidiaries or affiliates of the prime contractor
under common control. The procedure would apply only to T&M/LH actions
for non-commercial items to be awarded using adequate price
competition.
The purpose of these procedures is to ensure appropriate labor hour
rates are paid under T&M/LH contracts and orders. The procedures are
intended to eliminate unintentional windfall payments to the prime
contractor that might otherwise result from work performed by lower
labor rate subcontracts or affiliates that is billed at a higher prime
contractor labor hour rate.
Recording and billing hours under T&M/LH contracts and orders--The
proposed rule would require all offerors seeking a T&M/LH contract or
order to include a description of their method and their
subcontractors' methods of accounting for uncompensated overtime
performed by employees who are exempt from the Fair Labor Standards Act
(FLSA). It also includes a requirement that billings and payments under
the resulting contracts or orders be made consistent with that
description. The procedure would apply to all T&M/LH contracts and
orders that exceed the Simplified Acquisition Threshold (SAT).
The purpose of this procedure is to eliminate potential disputes
regarding the hours that can be billed under T&M/LH contracts by
clearly stating in the contract whether the contractor and each
subcontractor will be reimbursed based on recording and billing for
only the number of hours worked not in excess of a standard number of
hours in a standard work period (such as a 40 hour workweek) or
recording all hours worked. This procedure will ensure that billings
and payments under T&M/LH contracts do not result in an unintended
[[Page 50451]]
windfall to the contractor by ensuring that the contractor does not
bill the Government for all hours worked when its established practices
are to record only the number of hours in a standard work period (such
as a 40 hour workweek).
IV. Regulatory Requirements
A. Executive Order 12866 (Regulatory Planning and Review) and 13563
(Improving Regulation and Regulatory Review).
This proposed rule is not a significant regulatory action under
section 3(f) of Executive Order 12866, as supplemented by Executive
Order 13563. The Office of Management and Budget has not reviewed it
under those Orders. This proposed rule is not a major rule under 5
U.S.C. 804.
B. Regulatory Flexibility Act
Under the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), we
have considered whether this proposed rule would have a significant
economic impact on a substantial number of small entities. The term
``small entities'' comprises small businesses, not-for-profit
organizations that are independently owned and operated and are not
dominant in their fields, and governmental jurisdictions with
populations of less than 50,000.
This proposed rule, if made final, may impact a substantial number
of small entities within the meaning of the Regulatory Flexibility Act,
5 U.S.C. 601, et seq., and DHS has thus prepared an initial regulatory
flexibility analysis consistent with 5 U.S.C. 604 as follows:
1. Description of the Reasons Why the Action Is Being Considered
This proposed rule augments two existing Federal Acquisition
Regulation (FAR) policies to create a consistent approach within DHS
for awarding Time and Materials/Labor Hours (T&M/LH) contracts. Those
two augmenting policies include the requirement for separate labor hour
rates for T&M/LH subcontractors and the requirement for consistent
practices for contractor labor hour records and labor hour billing.
The first of the two existing FAR policies provides the option to
require separate labor hour rates for each subcontractor under a T&M/LH
contract, in addition to the labor hour rates established for the prime
contractor. See FAR 16.601(e). The current FAR policy authorizes an
agency either to permit individual contracting officers to decide if
separate labor hour rates are necessary or to establish an agency
procedure making separate rates mandatory. This rule proposes to
establish a DHS-wide procedure to make the FAR option for consistent
use of separate rates mandatory for DHS T&M/LH contracts.
Federal Acquisition Regulation (FAR) 16.601(e) further authorizes
agencies to amend the solicitation provision at FAR 52.216-29, Time-
and-Materials/Labor-Hour (T&M/LH) Proposal Requirements-Non-commercial
Item Acquisitions With Adequate Price Competition, to require offerors
to submit offers that include separate labor hour rates for
subcontractors and affiliates. The purpose of requiring offers to
include such separate rates is to ensure the resulting contract or
order will have individual labor hour rate schedules for each
individual subcontractor and affiliate of the prime contractor and not
contain only a single set of rates applicable to the prime contractor
and all subcontractors.
The second of the two augmenting Homeland Security Acquisition
Regulation (HSAR) policies that are included in this proposed rule
refines long-established FAR policies on consistency between contractor
recordkeeping and contractor proposal and billing practices. The
proposed rule establishes policies furthering those existing FAR
policies so that DHS contractors will identify their method of
accounting for labor hours incurred and agree to a price adjustment if
their billing practices under a T&M/LH contract they enter into with
DHS results in overbilling because they had not billed consistently
with their recordkeeping practices.
2. Succinct Statement of the Objectives of, and Legal Basis for, the
Proposed Rule
This proposed rule would establish the DHS procedure to make the
FAR option for consistent use of separate rates mandatory for DHS T&M/
LH contracts. It would also establish a requirement that a contractor
must consistently follow its method of record keeping for labor hours
billed to a DHS contract. The legal bases for this rule are 5 U.S.C.
301-302, 41 U.S.C. 1707, 41 U.S.C. 1702, 48 CFR part 1, subpart 1.3,
and DHS Delegation Number 0702.
3. Description of and, Where Feasible, an Estimate of the Number of
Small Entities To Which the Rule Will Apply
This proposed rule would apply to all entities seeking a DHS
contract or order that would be either a Time and Material or a Labor
Hour type of contract. DHS believes that this proposed rule is not
likely to have a significant economic impact on a substantial number of
small entities because the rule does not require contractors or
subcontractors to make any substantial changes in their normal business
practices nor take any substantial actions under a contract beyond
previously existing government requirements.
Below are tables showing information on FY 2010 DHS awards, based
on data contained in the Federal Procurement Data System, which would
have been subject to this proposed rule had it been in effect at the
time. These tables give a view into the numbers of entities that would
be impacted by this proposed rule if the amount of contracting done by
DHS is consistent with the amount performed during FY 2010.
Numbers and Dollar Values of Awards
----------------------------------------------------------------------------------------------------------------
Number of awards to other than small Number of awards to small
FY 2010 DHS awards entities entities
----------------------------------------------------------------------------------------------------------------
Labor Hours......................... 808 $401,098,840 971 $250,578,045
Time and Materials.................. 2507 $1,399,245,624 1653 $483,677,645
---------------------------------------------------------------------------
Grand Total..................... 3315 $1,800,344,464 2624 $734,255,690
----------------------------------------------------------------------------------------------------------------
FY2010 DHS T&M/LH Awards Numbers of firms other than small Small Entities
entities
----------------------------------------------------------------------------------------------------------------
382 $1,800,344,464 261 $734,255,690
----------------------------------------------------------------------------------------------------------------
[[Page 50452]]
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements of the Proposed Rule, Including an Estimate of
the Classes of Small Entities Which Will Be Subject to the Requirement
and the Type of Professional Skills Necessary for Preparation of the
Report or Record
The proposed rule contains no new information collection or
reporting requirements. Offerors are already required to provide
information in response to DHS solicitations and this is authorized
under an existing, approved information collection. OMB Control No.
1600-0005 (Offeror submissions).
5. Identification, to the Extent Practicable, of all Relevant Federal
Rules Which May Duplicate, Overlap, or Conflict With the Rule
The proposed rule would not duplicate, overlap, or conflict with
any other Federal rules.
6. Description of Any Significant Alternatives to the Proposed Rule
Which Accomplish the Stated Objectives of Applicable Statutes and Which
Minimize Any Significant Economic Impact of the Rule on Small Entities
The requirement proposed in this rulemaking is that the prime
contractor will have to calculate and propose separate rates for each
such subcontractor or affiliate rather than calculating a single set of
rates with all labor hours wrapped into a single set of rates covering
labor provided by the prime contractor as well as labor provided by
subcontractors and affiliates. The FAR provides the option to make this
decision in agency procedures or to leave this decision up to the
offeror or to the contracting officer. DHS has chosen to revise its
agency-wide procedures and is not aware of an alternative to this
proposed requirement that would accomplish the goals of the proposed
requirement.
Likewise, the new requirements addressing contractors' duties to
record and bill for hours under T&M/LH contracts and orders imposes no
new duties or requirements on a contractor other than to identify one
of two methods of record-keeping described in a solicitation provision,
use its current system of recordkeeping and billing, and agree to a
price adjustment if it inappropriately bills for all hours worked when
it disclosed that its normal practice is to bill only for a fixed
number of hours per employee per period. The only significant
alternative options DHS identified were not to issue this portion of
the rule or to apply the rule to all actions, rather than applying it
only to actions over the SAT. Not issuing the rule was rejected because
it would forgo the benefits of the rule. Applying the rule to actions
under the SAT was rejected because the benefits would likely not be
substantial enough under those lower value contracts to warrant the
administrative effort that DHS would have to expend to enforce the
clause.
DHS invites comments from small businesses and other interested
parties. DHS also will consider comments from small entities concerning
the affected HSAR subparts in accordance with 5 U.S.C. 610. Such
comments should be submitted separately and should cite HSAR Case 2010-
001.
C. Assistance for Small Entities
Under Section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding the rule so that they can better evaluate its
effects on them and participate in the rulemaking. Small businesses may
send comments on the actions of Federal employees who enforce, or
otherwise determine compliance with, Federal regulations to the Small
Business and Agriculture Regulatory Enforcement Ombudsman and the
Regional Small Business Regulatory Fairness Boards. The Ombudsman
evaluates these actions annually and rates each agency's responsiveness
to small business. If you wish to comment on actions by DHS employees,
call 1-888-REG-FAIR (1-888-734-3247). The DHS will not retaliate
against small entities that question or complain about this interim
rule or any DHS policy.
D. Collection of Information
This proposed rule contains no new information collection
requirements for which OMB approval is necessary under the Paperwork
Reduction Act of 1995 (Pub. L. 104-13). Offerors are already required
to provide information in response to DHS solicitations and the burden
for this is authorized under an existing, approved information
collection. OMB Control No. 1600-0005 (Offeror submissions).
List of Subjects in 48 CFR Parts 3016 and 3052
Government procurement.
Daniel L. Clever,
Deputy Chief Procurement Officer, Department of Homeland Security.
Accordingly, DHS proposes to amend (HSAR) 48 CFR parts 3016 and
3052 as follows:
1. The authority citation for parts 3016 and 3052 are revised to
read as follows:
Authority: 5 U.S.C. 301-302, 41 U.S.C. 1707, 41 U.S.C. 1702, 48
CFR part 1, subpart 1.3, and DHS Delegation Number 0702.
PART 3016--TYPES OF CONTRACTS
2. Add section 3016.601 to subpart 3016.6 to read as follows:
3016.601 Time-and-materials and labor-hour contracts.
(c)(2)(i) Fixed hourly rates. Each DHS time and materials and labor
hour contract and order for non-commercial items awarded with adequate
price competition (FAR 15.403-1(c)(1)) must include individual,
separate labor hour rates for each category of labor hours for:
(A) The prime contractor;
(B) Each subcontractor; and
(C) Each division, subsidiary and affiliate of the prime
contractor.
In order to require each offeror to propose these separate rates
for each of those labor hour categories, the contracting officer shall
insert the amended FAR solicitation provision as provided in (e)(1) of
this subsection. The contracting officer shall also include such
separate labor hour rates for each such category of labor hours in the
resulting contract(s) or order(s).
(d)(3) Limitations regarding recording hours under time-and-
material and labor hour contracts and orders.
(i) Definitions.
Overtime means the number of hours worked in excess of the standard
number of hours in a standard work period (such as a 40 hour workweek)
by a contractor employee who is exempt from the Fair Labor Standards
Act (FLSA).
Standard work period means the minimum number of hours an FLSA
exempt employee is required to work per week or some other defined
period (e.g., 40 hours per week) in accordance with the contractor's
established policies.
(ii) Policy. A time-and-materials and labor hour contract or order
exceeding the Simplified Acquisition Threshold may be used only if it
includes a description of the method that will be used by the prime
contractor and each subcontractor to record and to bill for hours
worked by employees exempt from the Fair Labor Standards Act (FLSA)
under the contract or order, including overtime. The method used to
record and bill for hours worked must be either to record and bill for
all hours worked, or to record and bill for only the number of hours
worked not in
[[Page 50453]]
excess of a standard number of hours in a standard work period (such as
a 40 hour workweek). The description of the method of recording and
billing for hours worked must be consistent with one of the two
descriptions in (HSAR) 48 CFR 3016.601(d)(3)(iii)(A) or (B), and shall
be incorporated into the contract or order. Whichever method the
contractor states it will employ, those labor hour recording and
billing practices must be consistent with the contractor's disclosed or
established practices at the time of contract award.
(iii) Descriptions of acceptable and unacceptable labor hour
recording and billing practices. Paragraphs (A) and (B) of this
subsection provide descriptions of acceptable practices that may be
incorporated into a covered action. These paragraphs (A) and (B)
correspond to paragraphs (b)(i) and (b)(ii) respectively of the clause
at (HSAR) 48 CFR 3052.216-76, Offeror Selection of Labor Hour Recording
and Billing Practices for Time-and-Materials/Labor-Hour Contracts.
Paragraph (C) of this subsection provides a description of an
unacceptable practice.
(A) Record and Bill for All Hours Worked. It is an acceptable
practice for the contractor (subcontractor) providing labor hours of
employees exempt from the Fair Labor Standards Act (FLSA) to bill the
hours under its contract (or order) based on recording of all hours
worked by those employees, including overtime. The contractor must
state that its established accounting practice is to record all hours
worked by those employees, including overtime.
(1) However, if it is found after award that the contractor's
established accounting practices at the time of award were not based on
recording all hours worked by employees, the Government shall be
entitled to a price adjustment on all payments for labor hours under
the contract or order.
(2) The amount of the price adjustment for payments shall be the
difference between the number of hours billed based on recording all
hours worked and the hours that would have been recorded using the
contractor's established accounting practices at the time of award,
multiplied by the applicable fixed hourly rates.
(B) Record and Bill for a Standard Number of Hours per Standard
Work Period (e.g., 40 hours per week). It is an acceptable practice for
the contractor (subcontractor) to bill the hours worked by employees
exempt from the Fair Labor Standards Act (FLSA) under its contract
based on recording and billing for only the number of hours worked not
in excess of a standard number of hours in a standard work period (such
as a 40 hour workweek). The contractor must state that its established
accounting practice is to record only the standard number of hours in a
standard work period. The contractor's (subcontractor's) method of
recording hours worked must pro-rate the hours among all jobs/functions
performed by an employee when an employee works overtime. For example,
under a standard 40 hour work period, if an employee worked 25 hours on
Contract A and 25 hours on Contract B during a work period, the
contractor would pro-rate those hours to record 20 hours on Contract A
and 20 hours on Contract B so that the total number of hours for the
period did not exceed the number of hours in a standard work period, 40
hours.
(C) Unacceptable accounting and billing practices. It is not an
acceptable practice for a contractor or subcontractor that accounts for
only a standard number of hours worked in a standard work period for
employees exempt from the Fair Labor Standards Act (FLSA) (e.g., 40
hours per week), to account for and bill for only the first 8 hours
worked each day. All hours worked in excess of the standard number of
hours in a standard work period, including overtime hours, must be pro-
rated based on the total hours worked for all jobs/functions performed
by the employee. If an offeror indicates that this is their established
accounting practice, the Contracting Officer shall not award the
contract or order, but instead shall notify the Office of the Chief
Procurement Officer at procurement.support@dhs.gov for guidance on how
to proceed. If an offeror provides a clarification to the statement it
checks within the provision at (HSAR) 48 CFR 3016.216-75, and it is not
clear to the contracting officer that the clarification is consistent
with the requirements of the HSAR provision, the contracting officer
shall notify the Office of the Chief Procurement Officer at
procurement.support@dhs.gov for guidance on how to proceed.
(e)(1) Solicitations and contracts:
(i) Insert the provision (HSAR) 48 CFR 3052.216-29, Time-and-
Materials/Labor-Hour Proposal Requirements-Non-Commercial Item
Acquisition With Adequate Price Competition, in the place of the
provision at FAR 52.216-29, Time-and-Materials/Labor-Hour Proposal
Requirements-Non-Commercial Item Acquisition With Adequate Price
Competition, in all solicitations contemplating use of a time-and-
materials or labor-hour type of contract for noncommercial items, if
the price is expected to be based on adequate competition (FAR 15.403-
1(c)(1)). This provision is authorized by Federal Acquisition
Regulation (FAR) 16.601(e)(1) which authorizes agency procedures to
require modification of the FAR solicitation provision at FAR 52.216-
29, Time and Materials/Labor-Hour Proposal Requirements-Non-Commercial
Item Acquisitions With Adequate Price Competition. Insert the HSAR
provision whole text into the solicitation to require separate proposed
rates for all subcontractors and divisions, subsidiaries, and
affiliates of the prime contractor.
(ii) Insert the clause (HSAR) 48 CFR 3052.216-75, Offeror Selection
of Labor-Hour Recording and Billing Practices for Time-and-Materials/
Labor-Hour Contracts, into each solicitation expected to result in a
contract or order for (T&M/LH) exceeding the simplified acquisition
threshold (SAT).
(iii) Insert the clause (HSAR) 48 CFR 3052.216-76, Time-and-
Materials/Labor-Hour Overtime Recording and Billing Practices, (or a
clause substantially the same as) into time and material or labor-hour
solicitations, contracts and orders exceeding the SAT and include the
mark or other indication made by the contractor which of the two
methods (recording all hours or prorating the excess over a standard
work period) it will use during the performance of the contract/order
to record and bill for hours worked.
PART 3052--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
3. Amend subpart 3052.2 by adding section 3052.216-29 to read as
follows:
3052.216-29 Time-and-Materials/Labor-Hour Proposal Requirements-Non-
Commercial Item Acquisition With Adequate Price Competition.
As prescribed in (HSAR) 48 CFR 3016.601(e)(1)(i), insert the
following provision:
Time-and-Materials/Labor-Hour Proposal Requirements--Non-
commercial Item Acquisition With Adequate Price Competition
(a) The Government contemplates award of a Time-and-Materials or
Labor-Hour type of contract resulting from this solicitation.
(b) The offeror must specify fixed hourly rates in its offer
that include wages, overhead, general and administrative expenses,
and profit. The offeror must specify whether the fixed hourly rate
for each labor category applies to labor performed by--
(1) The offeror;
(2) Subcontractors; and/or
(3) Divisions, subsidiaries, or affiliates of the offeror under
a common control;
(c) The offeror must establish fixed hourly rates using separate
rates for each category of
[[Page 50454]]
labor to be performed by each subcontractor and for each category of
labor to be performed by the offeror, and for each category of labor
to be transferred between divisions, subsidiaries, or affiliates of
the offeror under a common control.
(End of provision)
4. Amend subpart 3052.2 by adding section 3052.216-75 as follows:
3052.216-75. Offeror Selection of Labor Hour Recording and Billing
Practices for Time-and-Materials/Labor-Hour Contracts.
As prescribed in (HSAR) 48 CFR 3016.601(e)(1)(ii), insert the
following provision:
Labor Hour Recording and Billing Practices for Time-and-Materials/
Labor-Hour Contracts. (XX 2010)
(a) The offeror must identify the practices it intends to employ
to record labor hours worked by employees exempt from the Fair Labor
Standards Act (FLSA) and to bill for those hours under the
prospective contract or order for which it is submitting its offer.
The offeror must select one of the two available descriptions of
acceptable methods as shown in HSAR 3052.216-76, Time-and-Materials/
Labor-Hour Overtime Recording and Billing Practices-Record. The two
available selections are: (i) Record and Bill For All Hours Worked,
or (ii) Record and Bill Based on a Standard Number of Hours Per
Standard Work Period. Whichever of the two descriptions the offeror
selects will be incorporated into any resulting contract or order
awarded to the offeror. By making the selection, the offeror is
indicating to the Government that the selected description of
recording and billing practices is consistent with the contractor's
established accounting practices and this same method will be used
for billing hours under the contract or order.
(b) The offeror will not be eligible for award if either:
(1) The offeror fails to indicate in its offer which of the two
descriptions in paragraphs (c)(i) or (ii) below describe the
offeror's method of recording and billing for labor hours to be
performed under the contract or order; or
(2) The offeror submits a clarification of the clause 3052.216-
76 Time-and-Materials/Labor-Hour Overtime Recording and Billing
Practices, and the Contracting Officer had not agreed prior to
submittal of offers that the offeror's clarification of the clause
substantially meets the requirements of the clause.
(c) The offeror must select one of the two below descriptions of
the offeror's system for recording and billing hours to be worked by
employees exempt from the Fair Labor Standards Act (FLSA) under the
contract that are included in either paragraph (i) or (ii) of the
clause at HSAR 3052.216-76, Time-and-Materials/Labor-Hour Overtime
Recording and Billing Practices. If a contract or order is awarded
to the offeror, the selected description will be incorporated into
the contract or order.
[ ] (Check if the paragraph describes the offeror's system)--
Paragraph (i) Recording and billing Practices--Record and Bill For
All Hours Worked.
[ ] (Check if the paragraph describes the offeror's system)--
Paragraph (ii) Record and Bill For a Standard Number of Hours Per
Standard Work Period.
(End of provision)
5. Amend subpart 3052.2 by adding section 3052.216-76 as follows:
3052.216-76. Time-and-Materials/Labor-Hour Overtime Recording and
Billing Practices.
As prescribed in (HSAR) 48 CFR 3016.601(e)(1)(iii), insert the
following clause and designate either paragraph (i) or (ii), or insert
a paragraph substantially the same as (i) or (ii), in accordance with
the successful offeror's selection from (HSAR) 48 CFR 3052.216-75,
Offeror Selection of Labor Hour Recording and Billing Practices for
Time-and-Materials/Labor-Hour Contracts.
Time-and-Materials/Labor-Hour Overtime Recording and Billing
Practices--(Insert Date)
(a) Definitions:
Overtime means the number of hours worked in excess of the
number of hours in a standard work period by a contractor employee
who is exempt from the Fair Labor Standards Act (FLSA).
Standard work period means the minimum number of hours a FLSA
exempt employee is required to work per week or some other defined
period (e.g., 40 hours per week) in accordance with the contractor's
established policies.
(b) Only the designated paragraph (i) or (ii) applies.
[ ] (i) Recording and Billing Practices--Record and Bill For All
Hours Worked.
The contractor (subcontractor) providing labor hours will bill
the hours worked by employees exempt from the Fair Labor Standards
Act (FLSA) under its contract (or order) based on recording of all
hours worked by employees, including overtime. The contractor states
that its established accounting practices are to record all hours
worked.
(1) If it is found after award that the contractor's established
accounting practices at the time of award were not based on
recording all hours worked by employees, the Government shall be
entitled to a price adjustment on all payments for labor hours under
the contract or order.
(2) The amount of the price adjustment for payments shall be the
difference between the number of hours billed based on recording all
hours worked and the hours that would have been recorded using the
contractor's established accounting practices at the time of award,
multiplied by the applicable fixed hourly rates.
- or -
[ ] (ii) Record and Bill For a Standard Number of Hours Per
Standard Work Period. The contractor (subcontractor) will bill the
hours worked by employees exempt from the Fair Labor Standards Act
(FLSA) under this contract based on recording and billing for only
the number of hours worked not in excess of a standard number of
hours in a standard work period (such as a 40 hour workweek). The
contractor states that its established accounting practice is to
record only the number of hours worked by such an employee not in
excess of a standard number of hours in a standard work period (such
as a 40 hour workweek). The contractor (subcontractor) further
states that the accounting practices are based on pro-rating the
hours among all jobs/functions performed by the employee when the
employee works overtime. For example, under a standard 40 hour work
period, if the employee worked 25 hours on Contract A and 25 hours
on Contract B, the contractor would pro-rate those hours to record
20 hours on Contract A and 20 hours on Contract B so that the total
number of hours recorded for the work period does not exceed the
number of hours in the 40 hour standard work period.
(c) Flow down to Subcontractors. The contractor and each lower
tier subcontractor shall incorporate the substance of this clause,
selecting the pertinent paragraph (i) or (ii), into each subcontract
that exceeds the Simplified Acquisition Threshold and is either a
Time and Materials or a Labor Hour contract/order.
(End of clause)
[FR Doc. 2012-20442 Filed 8-20-12; 8:45 am]
BILLING CODE 9110-10-P
