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GovCon Updates of the Week Part 7

5/10/2021 - By Saltmarsh, Cleaveland & Gund

Raises All Around! Back in 2015, President Barack Obama signed an executive order that raised the minimum wage for federal contractors from $7.25 to $10.95 an hour. Now, in a similar move, President Joe Biden has signed an executive order raising the minimum wage for federal contractors and tipped employees who work on government contracts to $15 an hour.

This raise is slated to take effect in January 2022, and agencies must implement the measure no later than March 2022.  The executive order also raises the tipped minimum hourly wage to $15 by 2024.  This is done to ensure that tipped employees working on federal contracts cannot be paid less than the minimum wage required for other employees working on federal contracts. Finally, this new order increases the minimum wage to $15 for federal contract workers with disabilities and, beginning in 2022, includes a yearly cost-of-living increase.

The executive order does not change the national federal minimum wage, which is currently $7.25 per hour. An effort to change the federal minimum wage to $15 an hour fell flat in Congress in February 2021.

According to a White House official, next steps will include the Labor Department and the Federal Acquisition Regulatory Council issuing these rules to agencies. Once the rules are developed and issued, they will be applied to new contracts and contracts up for renewal. At that time, they will be revised to include the new minimum wage threshold.

With this new directive, it is more important than ever for contractors to review the wages of their employees working on federal contracts that may be up for renewal to ensure they hit this mark. Additionally, contractors should be sure to keep this new minimum wage number in mind when building out and submitting proposals for government work.

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Army’s Augmented Reality Success Makes a Case for OTA’s: In last week’s edition, we discussed the Department of Defense Office of Inspector General’s (DoD OIG) audit findings over acquisitions made using Other Transaction Authority (OTA). The report highlighted several regulatory failures and 13 recommendations were made to Defense Pricing and Contracting (DPC). Although the findings will likely be viewed negatively, there are others on the opposite end of the spectrum that have recently praised acquisitions through OTAs.

John Whitley, the acting U.S. Army secretary, referred the Army’s recent augmented reality project as a success story, made possible using OTAs and the integration of real-time feedback during the development process. At the end of March 2021, the Army awarded Microsoft a $22 billion contract to take its Integrated Visual Augmentation System (IVAS) to production. A recent press release stated, “The IVAS aggregates multiple technologies into an architecture that allows the soldier to fight, rehearse and train using a single platform. The suite of capabilities leverages existing high-resolution night, thermal and soldier-borne sensors integrated into a unified heads-up display to provide the improved situational awareness, target engagement and informed decision-making,” or, in layman’s terms, it sounds like something you would see in Call of Duty or Iron Man.

Technology aside, the Army has publicly credited the success of the project to OTA, and the ability to have Microsoft work “hand-in-glove with soldiers.”  Whitley praised these two factors in overcoming what’s known in the DoD world as the valley of death, which is the time period between proving a prototype is successful, and when it can receive budgetary support. As technology continues to rapidly evolve, getting a prototype to production needs to happen quickly as it may soon be obsolete.

The Army stated that its “partnership with Microsoft redefined the timeline for rapid development and production of a major defense program by taking advantage of the middle tier of acquisition and Other Transaction Authorities, and partnering with a nontraditional defense contractor that is an industry leader in developing innovative technology.”

Although OTAs may require additional oversight and will likely become less flexible in the near term, the Army’s success story makes quite a strong case for the acquisition vehicle going forward.

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A Goal without a Plan Is Just a Wish: In February 2021, we highlighted some of the plans and actions that would be implemented as a result of the “Made in America” Executive Order (E.O.). One of the key steps to be taken was to appoint someone to the newly created Made in America director position and, last week, the first-ever appointee, Celeste Drake, was announced.

Drake, formerly of the AFL-CIO and the executive in charge of government affairs at the Directors Guild of America, has long been considered an advocate for American manufacturing, working families and worker-centered policies. Now, Drake will be asked to shape and implement policies that are aligned with this Administration’s goals for a future made in America, by American workers.

Drake’s office will be responsible for reviewing waivers that would permit goods and services to be purchased outside of the United States, using government funds. It seems likely that fewer of these waivers will be granted as the Biden administration continues to work toward its goals of building a more robust domestic supply chain, while getting small and minority-owned businesses more involved.

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