Photo of Hal J. Perloff

Hal J. Perloff

Hal focuses his practice on complex construction law and government contract matters, including bid protests, administration counseling, compliance, claims and disputes. He represents prime and subcontractors in litigation before the Government Accountability Office (GAO), boards of contract appeals, the U.S. Court of Federal Claims and federal district courts nationwide.

 

Contact:Read more about Hal J. Perloff

President Obama signed an Executive Order raising the minimum wage for employees of federal contractors on February 12, 2014. Our earlier entry on the issue discusses how a higher minimum wage will affect current contractors. It looks like more waiting will be required before the true impact will be known.

The Executive Order calls for the Secretary of Labor and the FAR Council to draft regulations and contract provisions implementing the new minimum wage and to publish them later this year. But the Executive Order also includes some useful guidance.

Here are the key takeaways—

As part of the Obama Administration’s push to raise the minimum wage, the President announced during his State of the Union speech that he intends to issue an Executive Order raising the minimum wage for workers on federal contracts to $10.10 per hour. We’ll wait for the Executive Order itself before offering specific guidance on its requirements, but it’s not too early for contractors to begin thinking about how this might impact their business. Here are a few things to consider—

1.  The new minimum wage could apply to some current contracts.

The Obama Administration has asserted that the wage increase will apply only to new federal contracts—i.e., those awarded after the effective date of the Order. But the regulations implementing the prevailing wage requirements could mean that the $10.10 minimum will also apply to some current contracts.

The McNamara-O’Hara Service Contract Act requires contractors and subcontractors performing service contracts to pay their workers not less than the locally prevailing wage or the amount paid by the predecessor contractor under a collective bargaining agreement. The Department of Labor prepares wage determinations establishing the minimum wages and fringe benefits based on surveys of local prevailing wages or existing collectively bargaining agreements.

FAR provisions implementing the Service Contract Act contemplate that the prevailing wages may change during the course of a service contract. Under FAR 22.1007, the contracting officer is required to obtain and incorporate a new wage determination for modifications that extend the term of an existing contract or make a change in the scope of work “whereby labor requirements are affected significantly.” FAR 22.1007(b). A new wage determination is also required on the annual or biennial anniversary date of multi-year service contracts. FAR 22.1007(c). Depending on how the Executive Order implementing the new minimum wage is worded, the wage determination applicable to contract modifications or to multi-year service contracts could require current contractors to pay the new $10.10 minimum wage.

By Hal Perloff

Energy is a national security issue. The U.S. defense industry represents one of the world’s largest markets for energy, and the cost and availability of energy directly affects military capabilities and readiness. Department of Defense leaders are revamping how DOD uses energy and determining which fuels offer the best overall investment, prices,…

Just in time for Thanksgiving, the federal government has withdrawn its False Claim Act suit against KBR alleging $100 million in improper charges for private security costs under KBR’s LOGCAP III contract. We criticized the court’s August 3, 2011 decision denying KBR’s motion to dismiss the case last summer. While KBR has good reason…

As part of the much-publicized $26 billion mortgage foreclosure settlement between the five largest mortgage lenders, 49 states attorneys general, and the United States, Bank of America has agreed to pay $1 billion to resolve False Claims Act allegations relating to its mortgage lending practices. According to the press release issued by United States Attorney for the Eastern District of New York Loretta E. Lynch, federal prosecutors had been investigating Bank of America since 2009.

Is every routine contract dispute a potential false claim? Is it a false claim to adopt an interpretation of an ambiguous contract provision that was the subject of debate within the company? As a matter of law and common sense, the answer to these questions must be “no.” But Chief Judge Royce Lamberth’s August 3 decision in United States v. Kellogg Brown & Root Services, Inc., No. 10-cv-530 (D.D.C. Aug. 3, 2011) [pdf], casts sobering doubt on this answer.

Even a dog knows the difference between being accidentally stepped on and intentionally kicked.  Having your contract terminated by the government is similar. If it happens because circumstances have changed, it’s like being accidentally stepped on. You don’t like it, but you know it wasn’t intentionally done to harm you. But if your contract is terminated solely because the agency seeks a better price—that is an intentional kick to the gut. Does the law recognize the difference between these two scenarios? Read on.