Professional Documents
Culture Documents
Monday
August 5, 1996
Part III
Department of Labor
Office of the Secretary
Wage and Hour Division
40713
40714 Federal Register / Vol. 61, No. 151 / Monday, August 5, 1996 / Rules and Regulations
DEPARTMENT OF LABOR 1994 (FASA) (Pub. L. 103–355, 108 Stat. amendment required no changes in the
3243). Section 4104(c) of FASA regulations, the Department advised
Office of the Secretary amended sections 103 and 107 of the contracting agencies and contractors
Contract Work Hours an Safety that such contracts would, as a result, be
Wage and Hour Division
Standards Act (CWHSSA), 40 U.S.C. 327 subject to the Davis-Bacon Act, which
29 CFR Parts 4 and 5 et seq, to establish a threshold of applies to contracts in excess of $2,000
$100,000 or more for contracts subject to for the construction, alteration, and/or
41 CFR Part 50–201 and 50–206 CWHSSA’s overtime provisions. As a repair, including painting and
result of this new $100,000 statutory decorating, of a public building or a
RIN 1215–AA96 threshold, conforming revisions were public work, because marine vessels
proposed to § 4.181(b) of 29 CFR part 4 have historically been regarded as
Amendments to Federal Contract and §§ 5.5(b) and 5.15(b) (1) and (2) of ‘‘public works’’ for purposes of the
Labor Laws by The Federal Acquisition 29 CFR part 5. Davis-Bacon Act.
Streamlining Act of 1994 Section 7201 of FASA amended the In connection with the repeal of the
AGENCY: Wage and Hour Division, PCA to: (1) Repeal section 1(a) of the bidder eligibility requirements, section
Employment Standards Administration, PCA, which eliminates the requirement 7201(4) added a new provision to the
Labor. that covered contractors must be either PCA which provided that the Secretary
a ‘‘regular dealer’’ or ‘‘manufacturer,’’ 1 of Labor ‘‘* * * may [emphasis added]
ACTION: Final rule.
and to redesignate paragraphs (b), (c), prescribe in regulations the standards
SUMMARY: This rule revises regulations (d) and (e) to (a), (b), (c) and (d), for determining whether a contractor is
on Labor Standards for Federal Service respectively; (2) substitute, in section a manufacturer of or a regular dealer in
Contracts Davis-Bacon and Related Acts 10(b) of the PCA, the term ‘‘supplier of’’ materials, supplies, articles, or
Provisions and Procedures, General for the terms ‘‘regular dealer’’ and equipment to be manufactured or used
Regulations Under the Walsh-Healey ‘‘manufacturer’’; (3) strike, in section in the performance of a contract entered
Public Contracts Act, and the Walsh- 10(c) of the PCA, the terms ‘‘regular into by * * * (the United States).’’ The
Healey Public Contracts Act dealer’’ and ‘‘manufacturer’’; and (4) new section also provides for judicial
Interpretations to incorporate changes add new subsections (a) and (b) to review of any legal question regarding
necessitated by the Federal Acquisition section 11 of the PCA to provide for the the interpretation of manufacturer or
Streamlining Act of 1994, which raised Secretary’s authority to define the terms regular dealer as promulgated under this
the coverage threshold of the Contract ‘‘regular dealer’’ and ‘‘manufacturer.’’ new section. According to the legislative
Work Hours and Safety Standards Act Pursuant to these statutory history of FASA’s section 7201(b),
(CWHSSA) to $100,000 and, among amendments to the PCA, the authorizing the Secretary of Labor to
other things, eliminated the eligibility Department proposed the following define the terms ‘‘regular dealer’’ and
requirements of the Walsh-Healey modifications to 41 CFR parts 50–201 ‘‘manufacturer’’ was considered
Public Contracts Act (PCA). and 50–206: appropriate because the terms have been
1. Renumber § 50–201.1 of 41 CFR incorporated by reference into a number
DATES: These regulatory changes are
part 50–201 relating to contract of other statutes. (See H.R. Conf. Rep.
effective on September 4, 1996. stipulations as § 50–201.3;
FOR FURTHER INFORMATION CONTACT:
No. 712, 103d Cong., 2d Sess. 225
2. Delete the paragraph currently (1994).)
Richard M. Brennan, Deputy Director, designated as § 50–201.1(a) to remove Because only one statute was found
Office of Enforcement Policy, Wage and the ‘‘manufacturer of or regular dealer which explicitly incorporates PCA’s
Hour Division, Employment Standards in’’ requirement, and redesignate definition of the term ‘‘manufacturer’’
Administration, U.S. Department of subsequent paragraphs of this section; and/or ‘‘regular dealer’’ by reference,2
Labor, Room S–3506, 200 Constitution 3. Delete § 50–201.101 relating to the Department concluded that
Avenue, NW, Washington, DC 20210, definitions of the terms ‘‘manufacturer’’ maintaining special rules defining the
(202) 219–8412. This is not a toll-free and ‘‘regular dealer’’; terms ‘‘manufacturer’’ or ‘‘regular
number. 4. Delete § 50–201.604 relating to dealer’’ was not necessary, given
SUPPLEMENTARY INFORMATION:
partial administrative exemptions from FASA’s repeal of the eligibility
the manufacturer or regular dealer requirements; that the former
I. Paperwork Reduction Act requirement; and definitions could be adapted, if
This rule does not contain any new 5. Delete the entire part 50–206,
necessary, by other Federal agencies;
information collection requirements and which relates primarily to the
and that the former definitions could be
does not modify any existing qualifications of contractors and
used to resolve questions of PCA
requirements contained in 29 CFR parts interpretations of the terms
eligibility in contracts awarded prior to
4 and 5 and in 41 CFR parts 50–201 and ‘‘manufacturer’’ and ‘‘regular dealer,’’
the change in applicable law. This
206. Thus, this rule contains no and incorporate §§ 50–206.1 and 50–
conclusion was also supported by the
reporting or recordkeeping requirements 206.2 into the general regulations at part
fact that a review of the numerous
subject to the Paperwork Reduction Act 50–201 as new §§ 50–201.1 and 50–
of 1980 (Pub. L. 96–511). 201.2, respectively. 2 This statute, 15 U.S.C. 637, concerns contracting
In addition, section 3023 of FASA authority of the Small Business Administration and
II. Background repealed 10 U.S.C. 7299 to eliminate the the awarding of subcontracts to small businesses
The Department published a notice of applicability of the PCA to contracts for owned and controlled by socially and economically
the construction, alteration, furnishing, disadvantaged individuals. It provides at 15 U.S.C.
proposed rulemaking in the Federal 637(a)(17) that a responsible business concern may
Register on September 7, 1995 (60 FR or equipping of naval vessels. While this be the actual manufacturer or processor of the
46553), inviting public comments on product to be supplied under a contract or ‘‘* * *
1 Under the PCA as amended, an eligible bidder be a regular dealer, as defined pursuant to section
proposed revisions to 29 CFR parts 4
includes, in addition to a manufacturer or regular 35(a) of Title 41 (popularly referred to as the Walsh-
and 5, and 41 CFR parts 50–201 and 50– dealer, any supplier or distributor of the materials, Healey Public Contracts Act), in the product to be
206, to correspond to provisions of the supplies, articles, or equipment to be manufactured offered the Government * * *.’’ (See 15 U.S.C.
Federal Acquisition Streamlining Act of or supplied under the contract. 637(a)(17)(B)(iii).)
Federal Register / Vol. 61, No. 151 / Monday, August 5, 1996 / Rules and Regulations 40715
references to the ‘‘manufacturer’’ or Atmospheric Administration, and adversely affect in a material way the
‘‘regular dealer’’ provisions of the PCA Maritime Administration). Pursuant to economy, a sector of the economy,
throughout the Code of Federal 10 U.S.C. 7299, however, contracts in productivity, competition, jobs, the
Regulations (CFR) disclosed that they excess of $10,000 calling for environment, public health or safety, or
were only intended to implement these construction, alteration, furnishing or State, local, or tribal governments or
eligibility requirements through the equipping of naval vessels (U.S. Navy or communities; (2) create a serious
procurement process. U.S. Coast Guard) were heretofore inconsistency or otherwise interfere
A total of 3 comments were received subject to PCA. This statute had the with an action taken or planned by
in response to the notice. Two effect of removing Navy and Coast another agency; (3) materially alter the
commenters focused their remarks on Guard vessels from DBA coverage. The budgetary impact of entitlements,
the repeal of 10 U.S.C. 7299, which repeal of 10 U.S.C. 7299, however, grants, user fees, or loan programs or the
eliminated the applicability of the PCA caused the provisions of DBA to become rights and obligations of recipients
to contracts for the construction, applicable to Navy and Coast Guard thereof; or (4) raise novel legal or policy
alteration, furnishing, or equipping of vessels as with all other Federally- issues arising out of legal mandates, the
naval vessels. Both the Department of owned or operated marine vessels. President’s priorities, or the principles
Navy and Shipbuilders Council of Although this may have been an set forth in Executive Order 12866 and
America questioned the Department’s unintended consequence of the passage section 202 of the Unfunded Mandate
interpretation that, in the absence of 10 of FASA, the question of DBA coverage Reform Act of 1995. Therefore, no
U.S.C. 7299, the Davis-Bacon Act would is clear. Thus, contracts involving U.S. regulatory impact analysis has been
apply to shipbuilding and ship repair Navy or U.S. Coast Guard vessels, as for prepared.
contracts. The Department of Navy also all other U.S. Government marine
argued that the Congress intended to vessels historically, would also be Regulatory Flexibility Act
implement a Department of Defense 800 subject to DBA by statutory language in The final rule will not have a
panel recommendation on acquisition the absence of 10 U.S.C. 7299. In any
significant economic impact on a
reform which sought repeal of the PCA, case, however, this issue has become
substantial number of small entities.
including repeal of 10 U.S.C. 7299, and moot by the enactment of section 815 of
The rule implements statutory changes
a companion amendment to the Davis- the Fiscal Year 1996 DOD Authorization
enacted by FASA, and furthers its
Bacon Act to make clear that it was not Act (Pub. L. 104–106; February 10,
streamlining objectives. The repeal of
applicable to ship repair or construction 1996), which includes a provision
the ‘‘manufacturer’’ and ‘‘regular
contracts. This commenter further reinstating former 10 U.S.C. 7299. As a
dealer’’ requirements under PCA will
argued that the failure of FASA to result, each contract for the
likely increase the number of eligible
include an amendment to the Davis- construction, alteration, furnishing or
bidders on supply contracts, many of
Bacon Act does not alter Congressional equipping of a naval vessel is once again
subject to the PCA, unless the President whom would be small entities, which
intent. To clarify the situation,
determines that this requirement is not would have beneficial effects consistent
according to this commenter, the
in the interest of national defense. with the purpose of the Regulatory
Department of Navy expected 10 U.S.C.
Flexibility Act. The elimination of PCA
7299 to be reinstated in the upcoming Executive Order 12866/§ 202 of the bidder requirements will also simplify
FY 1996 appropriation authorization for Unfunded Mandates Reform Act of the processing of eligibility protests on
the Department of Defense. The third 1995 bidder eligibility and will otherwise
commenter, the Honorable Jan Meyer,
This final rule is not a ‘‘significant streamline the procurement process.
Chair, Committee on Small Business,
regulatory action’’ within the meaning While these and other benefits of the
U.S. House of Representatives,
of Executive Order 12866, nor does it rule would be difficult, if not
supported the Department’s view that
require a section 202 statement under impossible, to quantify, the rule is not
the promulgation of special rules
the Unfunded Mandates Reform Act of expected to have a ‘’significant
defining the terms ‘‘manufacturer’’ or
1995. The revisions adopted in this rule economic impact on a substantial
‘‘regular dealer’’ was not necessary.
After review of the comments, the are technical in nature as required by number of small entities’’ within the
Department has concluded that it is statutory language in FASA. While the meaning of the Regulatory Flexibility
appropriate to adopt the revisions new statutory threshold of $100,000 Act. Therefore, a regulatory flexibility
proposed in the September 1995 under the Contract Work Hours and analysis is not required.
rulemaking as a final rule. With respect Safety Standards Act can be expected to Document Preparation
to commenter concerns that contracts reduce procurement burdens on
for naval vessels, previously subject to purchases under $100,000, contractors This document was prepared under
the requirements of the PCA, would be awarded such contracts may continue to the direction and control of Maria
subject to the DBA in the absence of 10 be obligated to pay weekly overtime Echaveste, Administrator, Wage and
U.S.C. 7299, the Department lacks where the requirements of the Fair Hour Division, Employment Standards
authority to provide for an alternative Labor Standards Act (29 U.S.C. 201, et Administration, U.S. Department of
result. Marine vessels have historically seq.) apply. Likewise, the repeal of the Labor.
been regarded as ‘‘public works’’ for ‘‘manufacturer’’ and ‘‘regular dealer’’
requirements under PCA may be List of Subjects
purposes of the DBA.3 The DBA has
accordingly been applied to contracts expected to increase competition for 29 CFR Part 4
for the construction, alteration, or repair certain supply contracts; however, the
impact on procurement costs resulting Administrative practice and
of Federally-owned or operated marine
vessels (e.g., of the U.S. Army Corps of from an enlarged pool of eligible bidders procedure, Employee benefit plans,
Engineers, National Oceanic and is not clearly apparent, and could be Government contracts, Investigations,
minimal. Accordingly, these changes are Labor, Law enforcement, Minimum
3 See Title Guaranty and Trust Co. v. Crane Co., not expected to result in a rule that may: wages, Penalties, Recordkeeping
219 U.S. 24 (1910); 38 Op. Atty. Gen. 418; and 17 (1) Have an annual effect on the requirements, Reporting requirements,
Comp. Gen. 585. economy of $100 million or more or Wages.
40716 Federal Register / Vol. 61, No. 151 / Monday, August 5, 1996 / Rules and Regulations