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Mandatory E-Payroll


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All:

I am trying to figure out the authority for a contracting officer to require "Mandatory E-payroll" reporting. The email indicates the clause will be used "in all NEW solicitations (stand-alone, basic IDIQ JOC and associated task orders, basic IDIQ and associated task orders)". For example: http://bit.ly/2xOSpxz at p. 74: "The contractor shall use a supplemental electronic Construction Wage Rate Requirements statute payroll processing system". The "functional requirements" seem familiar, perhaps DCAA, but I couldn't find an exact match.

My research shows that the DOL encourages, but doesn't require, electronic payroll reporting. As you can see from the linked solicitation, reference is made to "compliance with far 52.222-8, payrolls and basic records and far 52.222-13" but no such mandate appears therein. I can't find anything in the congressional record, acquisition.gov, or a Navy directive authorizing use of this clause. The Army Corps has a similar clause, but it is not mandatory (PIL 2011-09).

On the other hand, it doesn't seem likely that the contracting officer would draft and insert such a clause without peer review or other safeguards. 

Any help would be most appreciated. Excerpt from solicitation attached in case the link doesn't work.

Mark

SWDiv Mandatory E-payroll.pdf

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There probably is no authority. This is likely an example of stealth regulation through the use of "local clauses". I checked the Federal Register and the CFR and found no such clause. If the clause has a significant effect beyond the internal operating procedures of the agency or has a significant cost or administrative impact on contractors or offerors, then 41 USC 1707, as implemented by FAR 1.301( b ) and FAR subpart 1.5, requires that it be published for comment in the Federal Register and codified in Title 48 of the CFR.  DoD must follow the procedures at DFARS PGI subpart 201.3. If you bring this to the attention of the contracting officer, they probably won't know what you are talking about. They will probably think that you are misunderstanding something.

Agency avoidance of the rulemaking process is quite common throughout the Federal Government. In acquisition, I would say that it's the norm. One paper found that compliance with rulemaking requirements tends to be directly related to litigation risk. I would say the risk of an agency getting sued by a prospective or actual contractor for its failure to comply with 41 USC 1707 is very low. Instead of suing, contractors are more likely to absorb additional costs or administrative impact imposed by a local clause and pass them on to the Government in the form of increased prices. 

One last thing. Courts have declined to enforce clauses that should have gone through rulemaking, but did not. See La Gloria, 56 Fed. Cl. 211.

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Thanks Don, great points. I didn't know this sort of thing was prevalent. I usually here about new rules/rulemaking that impact us, but this one came out of left field. You've given me some good statutory authority to push back if we decide to. It is somewhat of a burden given that we would likely have to outsource it to a payroll company as well as maintain our existing payroll system (to keep track of fringes, sick leave, etc.)

Mark

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My thoughts may not be as significant as Don's but in reading the clause I found it interesting there was no requirement for IT security issues as they relate to a system that the Government requests access to as well as protections with regard to that access where electronic access includes protected personal information (PPI).   Makes me wonder if the "local clause" requirement has be vetted with other entities within the Federal organization that would have an interest in knowing that such a system is being requested and is to allow direct "access" by the government via the internet.

Additionally, if I were a contractor I would be asking (maybe even demanding) for the "who" from the Government that will be accessing such information via the internet as the controls for such a system would seem to be important to all parties to the contract (subcontractors included). 

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Government construction contracts (including NAVFAC and USACE) have required submission of construction contractor and subcontractor payroll information containing some personal information for decades. Don can feel free to look for the required approvals to collect that info but it is IAW FAR, DOL regs and the applicable Labor Laws. I don't think that the employee's SSN is part of that data input but am not going to research that here.  Think that employee addresses are required.

For decades, it was paper based copies. The USACE maintained the paper copies as part of the official contract file, which weren't as secure, in my opinion, as the current electronic files are.  We had drawers and boxes full of payrolls, which we had to review and use for employee labor interviews, verification of compliance with the DB minimum wage decisions.  They were used for other CAB purposes - such as tracking overall labor hours for safety , and for verifying or estimating expended labor amounts and costs for changes, REAs or claims, evaluating self-performed labor, etc. 

The USACE is moving to or has  moved to fully electronic contracting.  The USACE contracts require the contractor to submit electronic payroll data to the USACE RMS (Resident Engineer Management System) software, using the Contractor "Quality Control System (QCS)"module/program.  The contractor can use commercially available payroll software or their own developed payroll software as long as it can feed an Excel spreadsheet format,  in the CQS module.

The contract says, naturally, for the Contractor to include the cost in the contract price. 

RMS is a DoD and Army approved contracting software system for security purposes

As far as I know, only those USACE Contract Admin personnel with approved access to the contract in RMS can physically access or view the payroll information. However, it remains a part of the official contract file for whatever the prescribed retention period is.

I'm not familiar with NAVFAC's electronic contract admin system and have not recently used the USACE RMS software. 

 

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11 hours ago, C Culham said:

My thoughts may not be as significant as Don's but in reading the clause I found it interesting there was no requirement for IT security issues as they relate to a system that the Government requests access to as well as protections with regard to that access where electronic access includes protected personal information (PPI).

For USACE, the government isn't requesting electronic access to or reaching into the construction contractor's internal "system".  The contractor inputs the data into the government's contract admin system program, "Resident Management System (RMS)" , via the contractor module or program, called  "Quality Control System (QCS)". The cost is to be included in the contract price.

I don't know what software NAVFAC is using to administer construction contracts. As stated above, it has been a valid requirement for construction contractors to submit payroll info to the government for decades.

Rather than asking for information in a contracting forum, I suggest that the OP address his/her questions and concerns to NAVFAC. There may be valid security concerns or questions about the NAVFAC's approach but I would address them to NAVFAC.

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16 hours ago, mccmark said:

All:

I am trying to figure out the authority for a contracting officer to require "Mandatory E-payroll" reporting. The email indicates the clause will be used "in all NEW solicitations (stand-alone, basic IDIQ JOC and associated task orders, basic IDIQ and associated task orders)". 

Please ask the person who sent the e-mail.

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Joel and ji - I do not disagree about asking the agency about the requirement nor the fact that payrolls in any format are required to be provided.  There is much written about SUBMISSION  of e-formatted payrolls inclusive of allowance of the Copeland Act of e-signature.    But all relates to  SUBMISSION not the fact that the Government should have ACCESS remotely to the system which the OP provided clause requires.  Whole different matter in my view. 

And yes SSN is required Joel, the WH-347 which a e-payrolling system is suppose to duplicate in information provided.   Last 4 digits of the SSN at least.  I won't research if providing partial SSN is PPI but I for one do not go around handing out the last four of my SSN to anyone that asks.

 

15 hours ago, mccmark said:

You've given me some good statutory authority to push back if we decide to.

I do disagree with a complete brush off ("get a life",  "please ask...") as every response in this forum could be "please contact the agency" but as noted in this particular case like many others it appears to me that the OP has posed a question to get thoughts to determine if the correct strategy is to ask the agency or simply comply.

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Perhaps had the wrong idea about the exchange of ideas on these forums. I'm surprised to see more than one suggestion to essentially "just ask the government". If that is legitimate advice, is there a need for these forums? 

I was hoping the actual RFP would provide context to my inquiry. Yes, we submit certified payroll to the government already, and yes, it's electronic. Typically, it's a pdf or xls and we email them in. The "mandatory e-payroll" clause is a different beast. It is not just uploading a spreadsheet to the government's site.  It requires use of a third party payroll system. It requires a system that contains the payroll data, which the government access via a unique login ID and password.

Sure, we're big boys; if we have to, we can comply. It's not something that will make us give up bidding on jobs. Not sure wether to take the "get a life" bait or not. Government work is our company life, and we take our obligations very seriously.

But whether or not there is authority to impose the clause is a different matter. I prefer to research an issue so I have some familiarity with the statutory and administrative context so if/when we submit an RFI or just call, we can frame the question properly. That way I won't have to just take their word for it when I receive an answer. 

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Guest Vern Edwards
19 hours ago, mccmark said:

I am trying to figure out the authority for a contracting officer to require "Mandatory E-payroll" reporting... Any help would be most appreciated.

I could find no authority for use of the clause in question. I, too, searched the Federal Register and the regulations. I also searched the United States Code.

You could protest the use of the requirement and the clause to the agency, the GAO, or the Court of Federal Claims after the solicitation comes out, but before the date set for submission of bids or proposals. You could protest the requirement and the use of the clause on the ground that it is an unauthorized FAR deviation, see FAR Subpart 1.4, and that inclusion of the clause violates 41 U.S.C. § 1707 and FAR 1.501. Unless Don Mansfield or I have missed something, your protest would almost certainly be successful. You could, instead, make a formal written inquiry citing the references that I have provided. Such an inquiry might make the agency back off.

A protest would be a public service,, but won't win any friends within the agency.

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3 hours ago, mccmark said:

[1] "The "mandatory e-payroll" clause is a different beast. It is not just uploading a spreadsheet to the government's site.  It requires use of a third party payroll system."

[2] "It requires a system that contains the payroll data, which the government access via a unique login ID and password."

mccmark, aside from the issue of authorization for the special contract requirement,  are the above requirements [1] & [2] your specific problems with the non-numbered Navy Special Contract Requirement? 

I presume that the second [2]  requirement would be a problem with the USACE Special Contract Requirement S-102, correct?

I can see a problem with mandating use of a supplemental, third party payroll system.

However, requirement [2]  might be consistent with paragraph (c) of Clause 52.222-8, which extends beyond simply submitting weekly payroll info .The clause requires the contractor to make payrolls and basic records available for inspection, copying, or transcription by specifically designated or identified government employees. I think that the contractor could restrict access to such personnel, if that is technically possible in the software. There could certainly be an issue of requiring remote access to the information.  

 

Quote

 

52.222-8  Payrolls and Basic Records.

(a) Payrolls and basic records relating thereto shall be maintained by the Contractor during the course of the work and preserved for a period of 3 years thereafter for all laborers and mechanics working at the site of the work. Such records shall contain the name, address, and social security number of each such worker, his or her correct classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in 40 U.S.C. 3141(2)(B) (Construction Wage Rate Requirement statute)), daily and weekly number of hours worked, deductions made, and actual wages paid. Whenever the Secretary of Labor has found, under paragraph (d) of the clause entitled Construction Wage Rate Requirements, that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in 40 U.S.C. 3141(2)(B), the Contractor shall maintain records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual cost incurred in providing such benefits. Contractors employing apprentices or trainees under approved programs shall maintain written evidence of the registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs.

(b)(1) The Contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the Contracting Officer. The payrolls submitted shall set out accurately and completely all of the information required to be maintained under paragraph (a) of this clause, except that full social security numbers and home addresses shall not be included on weekly transmittals. Instead the payrolls shall only need to include an individually identifying number for each employee (e.g., the last four digits of the employee’s social security number). The required weekly payroll information may be submitted in any form desired. Optional Form WH-347 is available for this purpose and may be obtained from the U.S. Department of Labor Wage and Hour Division website at http://www.dol.gov/whd/forms/wh347.pdf. The Prime Contractor is responsible for the submission of copies of payrolls by all subcontractors. Contractors and subcontractors shall maintain the full social security number and current address of each covered worker, and shall provide them upon request to the Contracting Officer, the Contractor, or the Wage and Hour Division of the Department of Labor for purposes of an investigation or audit of compliance with prevailing wage requirements. It is not a violation of this section for a Prime Contractor to require a subcontractor to provide addresses and social security numbers to the Prime Contractor for its own records, without weekly submission to the Contracting Officer... 

(c) The Contractor or subcontractor shall make the records required under paragraph (a) of this clause available for inspection, copying, or transcription by the Contracting Officer or authorized representatives of the Contracting Officer or the Department of Labor. The Contractor or subcontractor shall permit the Contracting Officer or representatives of the Contracting Officer or the Department of Labor to interview employees during working hours on the job. If the Contractor or subcontractor fails to submit required records or to make them available, the Contracting Officer may, after written notice to the Contractor, take such action as may be necessary to cause the suspension of any further payment. Furthermore, failure to submit the required records upon request or to make such records available may be grounds for debarment action pursuant to 29 CFR 5.12.

 

 

Carl, the contractor isn't required to use the last four digits of the SSN for identity numbers of its employees on the weekly submitted payrolls . That is only cited as an example.

 

 

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When the question is the authority that someone relied on for a specific action taken by that person, the very best answer is to ask that person.  Asking the contracting officer directly is very good advice -- sometimes it's the best advice.  

 

 

 

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Guest Vern Edwards

It does not matter by what authority the CO included the clause if the authority was granted in violation of the requirements of statute or regulation. I cannot think of any valid authority to establish a policy to use such a clause without first complying with 41 USC § 1707, FAR 1.501, and FAR Subpart 1.4. The agency should explain why it did not do so. (It did not. I checked with the agency today.)

While the agency might have an argument that they did not need to do so under statute and regulation, a requirement for a construction contractor to buy, install, and use special software for payroll submission is not a minor matter, and any such argument should be put to the test before the CO's superiors, the GAO, or the COFC.

Joel, the same goes for the USACE's use of any such clause.

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Vern,

Now that's the direct approach! Thanks for checking with them. As for the USACE, I did find this document http://bit.ly/2jKs5yv which appears to be valid (someone higher up the chain than the contracting officer). The USACE policy is mandatory in the sense that it has to be in the solicitations, but compliance by the contractor is voluntary, which alleviates issues that concern me. Thanks again, while I'm twiddling my thumbs figuring out what to do you dove right into the matter.

Mark

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It funny to me how officials from those agencies whose policies and procedures are questioned in the WIFCON Forum generally don't defend or otherwise justify or explain their procedures . 

I also wonder whether a contract requirement that simply implements an existing requirement of a standard contract  clause, , such as a special contract requirement which adopts a uniform approach for submitting otherwise required payroll information to a paperless contracting system,  or how to make information available for audit or review must be published in the Federal Register, etc., etc., etc. I suggest that such formality could be a bureaucratic crock.  However, perhaps such prescribed approaches should be put to the test as Vern mentioned. 

Concerning payroll information, the basic contract clause requiring submission of payroll information and for providing access to the basic payroll data has been in effect for decades.  What's the difference between specific procedures for already required payroll submission into a paperless contracting system system and contract specifications for contract construction schedules that implement a general contract clause requiring submission of a construction schedule?  I will guarantee that technical specs for construction schedules,  prescribing specific scheduling procedures for the construction schedule required by the contract clause aren't published in the Federal Register. 

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Guest Vern Edwards
11 hours ago, joel hoffman said:

I also wonder whether a contract requirement that simply implements an existing requirement of a standard contract  clause, , such as a special contract requirement which adopts a uniform approach for submitting otherwise required payroll information to a paperless contracting system,  or how to make information available for audit or review must be published in the Federal Register, etc., etc., etc. I suggest that such formality could be a bureaucratic crock.  However, perhaps such prescribed approaches should be put to the test as Vern mentioned.

Well, in response to your wonderment:

Quote

41 U.S.C. § 1707, Publication of proposed regulations

(a) Covered Policies, Regulations, Procedures, and Forms.—

(1)Required comment period.—Except as provided in subsection (d), a procurement policy, regulation, procedure, or form (including an amendment or modification thereto) may not take effect until 60 days after it is published for public comment in the Federal Register pursuant to subsection (b) if it—

(A) relates to the expenditure of appropriated funds; and

(B)(i) has a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure, or form; or

(ii) has a significant cost or administrative impact on contractors or offerors.

(2)Exception.—

A policy, regulation, procedure, or form may take effect earlier than 60 days after the publication date when there are compelling circumstances for the earlier effective date, but the effective date may not be less than 30 days after the publication date.

Emphasis added. The rest of the section goes on to prescribe procedures. It also allows waivers in "urgent and compelling circumstances."

Now, it seems to me that forcing contractors to buy third party software in order to submit information to an agency under a statute that does not require the purchase of such software would have a significant cost or administrative impact on contractors or offerors. You have to buy, learn how to use, maintain, and troubleshoot the software, and do data entry, and you might have to change existing company data management and reporting practices. See 41 U.S.C. § (a)(1)(B). 

Congress enacted 41 U.S.C. § 1707, and the president approved it, in 1984, in order to stop agencies and offices within agencies and contracting officers from individually launching policies and procedures willy-nilly without giving the public a chance to comment and object. Don Mansfield has written about this. See Postscript II: Agency Policy Memos, The Nash & Cibinic Report (February 2014), in which he said:

Quote

If one of the purposes of establishing the FAR System was to reduce the administrative burden on federal contractors and prospective contractors, then the system has failed in that respect. In the current environment, federal contractors must adapt to the unique tribal customs of each of the contracting activities with which they conduct business. These customs can vary significantly among contracting offices under the same contracting activity. Fearing reprisal, contractors tend to accept this reality and pass the increased administrative cost to the Government. As such, there is little likelihood that this problem will fix itself.

Now, a policy like "Mandatory E-Payroll" might be perfectly justifiable, which is what the public comment period is for, to give agencies a chance to explain what they want to do and why they want to do it. It gives the public a chance to complain to the agency and to its legislative representatives if they think the proposed policy is unreasonable or too burdensome.

What if an agency decides to ignore the law or argue that the policy does not meet the standard in (a)(1)(B)? Well, a prospective contractor can protest and force the agency to try to persuade an independent tribunal that publication was not required.

Really, government has to be under control and restraint or it will go crazy.

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Guest Vern Edwards
12 hours ago, joel hoffman said:

I will guarantee that technical specs for construction schedules,  prescribing specific scheduling procedures for the construction schedule required by the contract clause aren't published in the Federal Register. 

So what? Perhaps they should be.

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Although not directly on point, this article contains a good description of the agency practice of imposing nonlegislative rules as if they are legislative rules. In terms of acquisition, this is similar to the implementation of local policies via local clauses. The description for the motives and consequences of such behavior would seem applicable to acquisition:

Quote

Doubtless more costly yet is the tendency to overregulate that is nurtured when the practice of making binding law by guidances, manuals, and memoranda is tolerated. If such nonlegislative actions can visit upon the public the same practical effects as legislative actions do, but are far easier to accomplish, agency heads (or, more frequently, subordinate officials) will be enticed into using them. Where an agency can nonlegislatively impose standards and obligations that as a practical matter are mandatory, it eases its work greatly in several undesirable ways. It escapes the delay and the challenge of allowing public participation in the development of its rule. It probably escapes the toil and the discipline of building a strong rulemaking record. It escapes the discipline of preparing a statement of the basis and purpose justifying the rule. It may also escape APA publication requirements and Office of Management and Budget regulatory review. And if the agency can show that its informal document is not final or ripe, it will escape immediate judicial review. Indeed, for practical reasons it may escape judicial review altogether. One can readily understand how a governmental instrument so quick, cheap, largely unchecked and low in risk, and yet so effectual, may tempt some agencies to slight the APA's mandates.

Note that 41 USC 1707 imposes publication for acquisition rules, not the APA.

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I think that the two agencies were (are) working to implement procedures to implement paperless contracting procedures, which have been mandated at some higher level by (?) . It's a good thing to have to allow public comment and feedback concerning the particular procedures, as discussed herein. 

It appears that the Corps isn't mandating the use of an independent payroll service. If the contractor does use an independent payroll service, then those requirements would kick in. As mccmark indicated above, it wasn't deemed necessary to publish the SCR for public comment. 

The NAVFAC version appears to mandate use of an independent payroll service, even where the contractor has an internal electronic payroll process. If that is intentional, why?  

From my experience, NAVFAC is much more prescriptive than USACE or the Air Force in specifying construction means and methods anyway, so why should I be surprised?

 

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10 minutes ago, joel hoffman said:

As mccmark indicated above, it wasn't deemed necessary to publish the SCR for public comment.

Do you think the higher-ups in USACE even thought about 41 USC 1707? I'm not arguing that the clause in question should have been published for comment (I can't open that link), but I can' find a single USACE provision or clause in Title 48 of the CFR. Chapter 51 of Title 48 only lists three clauses:

Quote

 

5152.208-9001   Industrial preparedness planning.

5152.245-9000   Government property for installation support services (fixed-price contracts).

5152.245-9001   Government property for installation support services (cost-reimbursement contracts).

 

 

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16 hours ago, Don Mansfield said:

Do you think the higher-ups in USACE even thought about 41 USC 1707? I'm not arguing that the clause in question should have been published for comment (I can't open that link), but I can' find a single USACE provision or clause in Title 48 of the CFR. Chapter 51 of Title 48 only lists three clauses:

 

Don, Apparently they did. Try this link and see page two, in particular the comment that the issuance of the PIL was to implement higher level policy that has previously undergone the public comment process. That policy was not available at the URL nor was the USACE request that is referred to.

And to correct my earlier comment, the USACE clause does not appear to require either internal or third party electronic payroll software.  It describes the requirements for such a system or payroll service,  if used. 

http://media.swf.usace.army.mil/pubdata/ec/Payroll/PIL_2011-09_Electronic_Software_for_DBA_Payrolls.pdf 

The NAVFAC clause on page 74  at the below apparently requires use of a "supplemental electronic Construction Wage Rate Requirements statute payroll processing system to process and submit certified payrolls electronically to the Government that are compliant with appropriate Construction Wage Rate Requirements statute payroll provisions in the FAR. The contractor shall be responsible for obtaining and providing all access, licenses, and other services required..."

I don't know what the significance of the word "supplemental" is or if it requires use of a third party payroll service that complies with the technical requirements described in the (unnumbered) "clause".

http://4xstt2e0qzc1aqemd10fd9da.wpengine.netdna-cdn.com/wp-content/uploads/2017/07/RFP_WITH_WAGE_DEC.pdf

Just because one can't  find any evidence that the NAVFAC "clause" went through the public review process, doesn't necessarily mean that NAVFAC didn't use some similar process to that used by USACE for approval to use it. 

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If mccmark's thinks that the NAVFAC solicitation requires that his/her firm use a third party payroll service in addition to whatever the company's internal payroll system is, perhaps mccmark should seek clarification or confirmation of that interpretation, then decide what to do in response. 

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If any reader here has access to the "higher level policy for [DoD electronic payroll systems?] that has previously undergone the public comment process", would you please identify or provide a link to that policy?  

That might help mccmark better frame his question(s) to the soliciting agency.  

Thanks. 

This Forum method of communications and information seeking Is like texting sound/word bites vs. direct oral conversation. It is available to a wide audience but I'm still unclear about what mccmark's real, underlying concerns are. 

One appears to be that the NAVFAC is allegedly requiring use of a third party payroll system in addition to their own payroll system.

Mccmark hints that they have some type of electronic system, thus may or may not be concerned about having to directly furnish electronic payroll information submission.  

Another concern is having to provide some type of remote access to their payroll system for (certain? Only designated? Any? ) government personnel.

Is this a concern for third party payroll system or any electronic payroll system used? It is obvious to me that the DOL would have minimum technical requirements for determining compliance with the Labor Laws and for audit or inspection capability. Remote access might be open to debate. Such policies might have already been addressed by "higher authority" subject to public comment. 

Information Security? Remote vs obtaining controlled on-site access?  

As for access, the FAR and probably DOL and statutes already require that and/or the contractor to provide the information  and mention providing access to the KO, authorized reps of the KO and DOL - for certain official purposes.

Then, there is the question of authority for the "clause" (?), as written. 

 

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