President Trump’s executive order requiring enhanced enforcement of the Buy American Act (BAA) may be directed at executive agencies, however, it is also applicable to government contractors as well. The executive order requires each agency to assess its compliance with the BAA, especially in the area of waivers, and to develop a plan to maximize its enforcement. It is contractors, not the agencies, who will be subjected to maximum enforcement. Each agency’s current assessment and plans for maximizing enforcement need to be submitted to the Office of Management and Budget by September 15, 2017. Most experts agree that as a result, contractors are likely to see more “red tape,” longer procurement lead times, more costly proposals, and fewer waivers. Increased enforcement may include default terminations, suspension, debarment, and prosecutions under the False Claims Act.
Under these circumstances, contractors subject to BAA requirements should review their compliance now before the plans for enhanced enforcement are implemented. Although several FAR clauses address foreign source restrictions, the principal clause 52.225-1 Buy American – Supplies states that contractors must furnish end products mined, produced, or manufactured in the U.S. A product is manufactured in the U.S. is defined as having at least 50% of the cost of its components mined, manufactured, or produced in the U.S. FAR Part 25.103 offers some exceptions to the BAA requirement, including non-availability and unreasonable costs.
The government has effectively warned contractors that they will soon be aggressively enforcing the requirements of the BAA. We recommend that contractors develop or review their written policies and procedures related to the BAA requirement, review applicable purchasing files to verify compliance with the BAA, and provide BAA training to the purchasing staff. In some cases, market research to find domestic end products to replace products that previously received a waiver may be appropriate.
Forewarned is fair warned. Contractors should take this opportunity to ensure their BAA house is in order. For assistance in accessing your BAA compliance and other purchasing best practices, please contact Principal Consultant, Tom Marcinko at 301.231.6237 or firstname.lastname@example.org.
President Trump revoked the Fair Pay and Safe Workplaces Executive Order 13673 on March 27, 2017, and ordered that any associated rules and regulations be rescinded. The order required federal contractors to report labor law violations at the time of contract bidding and semiannually thereafter to include: 1) civil judgements, 2) administrative merits determinations, and 3) arbitral awards including awards that are not final or are subject to court review. The rule never went into effect as a federal district court in Texas filed a preliminary injunction on October 24, 2016, the day before the rule was to go into effect. Federal contractors are relieved of a huge compliance burden, as they will be spared the time and cost of reporting labor law violations, including alleged violations, at the time of bidding and subsequently thereafter.
As a follow-up to Aronson’s webinar on Service Contract Act Compliance in Real Business Government Contractor Environments, we provided answers to several attendee questions below.
In accordance with Executive Order 13658, the minimum wage for certain Federal contractors increased to $10.20 an hour effective January 1, 2017. Generally, the increased wage rate must be paid to workers performing on or in connection with covered Federal contracts whose wages are governed by the Fair Labor Standards Act (FLSA), the Service Contract Labor Standards (SCLS), or the Davis-Bacon Act (DBA).
Covered contracts include:
Companies doing business with US tax payer dollars need to understand the government regulations governing their government contracts. They need to represent themselves correctly and take action to maintain compliance throughout the life of each contract. Company officials who don’t may receive prison sentences and may be required to forfeit millions of dollars. A massive investigation involving Internal Revenue Service-Criminal Investigation, the Employee Benefit Security Administration (EBSA), the Defense Criminal Investigative Service, the Small Business Administration-OIG, and the Air Force Office of Special Investigations uncovered a government contracting fraud scheme involving embezzlement of employee benefits and procurement fraud dating back to 2007.