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Acquisition Policy Flash! 15-09

Reminder!

Revision of Acquisition Policy Flash! 15-03 Implementation of EO13658, Establishing a Minimum Wage for Contractors

Purpose:  To provide clarification of the application of Basic Ordering Agreements (BOA’s), and Blanket Purchasing Agreements (BPA’s), in relation to VA Class Deviation - Implementation of Executive Order 13658, Establishing a Minimum Wage for Contractors (VAIQ 7486549), dated September 9, 2014, implements Executive Order 13658, dated February 12, 2014, and OMB Policy Memorandum M-14-09, Implementation of the President’s Executive Order Establishing a Minimum Wage for Contractors, dated June 12, 2014.

Dated:  December 23, 2014

Federal Acquisition Regulation (FAR) Parts Impacted:  FAR part 22, Application of Labor Laws to Government Acquisitions, and FAR part 52, Solicitation Provisions and Contract Clauses.

Effective Date:  Immediately for BOA’s and BPA's with a performance period on or after January 1, 2015.

Background:  On June 25, 2014, the CAAC issued a memorandum regarding a Class Deviation to implement Executive Order 13658, Establishing a Minimum Wage for Contractors.  Executive Order 13658, signed February 12, 2014, seeks to increase efficiency and cost savings in the work performed by parties who contract with the Federal Government by increasing to $10.10 the hourly minimum wage paid by those contractors.  The Executive Order requires agencies, to the extent permitted by law, to include a clause in new solicitations and resultant contracts, specifying, as a condition of payment, that the minimum wage to be paid to workers, in the performance of the contract or any subcontract there under, shall be at least $10.10 per hour beginning January 1, 2015.

As a result of the Executive Order, numerous inquiries were submitted in relation to the applicability of this Executive Order in relation to BOA’s and BPA’s.

The Executive Order does not apply to BOAs or BPAs that were in existence prior to January 1, 2015.  Executive Order 13658 applies only to “new contracts” with the Federal Government that result from solicitations issued on or after January 1, 2015, or that are awarded outside the solicitation process on or after January 1, 2015.  A BOA or BPA that is entered into before January 1, 2015 is not subject to the Executive Order.  The Executive Order similarly does not apply to a Federal agency’s exercise of a pre-negotiated option period on or after January 1, 2015 pursuant to a BOA or BPA that was in existence prior to January 1, 2015.

Service contracts or orders that are entered into on or after January 1, 2015 pursuant to a BOA or BPA that was in existence prior to January 1, 2015 are similarly not covered by the Executive Order.  Pursuant to the Department’s final rule, service orders that are issued under BOAs or BPAs entered into prior to January 1, 2015 will thus only be covered by the Order if and when the BOA or BPA itself is modified to include the minimum wage requirement.

For example, on February 5, 2014, a Federal agency entered into a BOA (or BPA) with a medical clinic to provide rehabilitative care to veterans.  The BOA has a contract period of one base year plus four option years.  The BPA is not subject to the minimum wage requirements of the Executive Order during the base year or any of the option years.  Similarly, specific service orders that are entered into pursuant to that BOA will not be covered by the Executive Order unless/until the BOA itself becomes covered by the Executive Order.

Action Required:  No action necessary if the BOA or BPA meets the requirements above.

Additional Information:  Questions or concerns should be addressed to the Office of Acquisition and Logistics (003A), Procurement Policy and Warrant Management Service (003A2A) at (202) 632-5288 or va.procurement.policy@va.gov.