Which wage is which?

[Xactly]

Recently, there has been an issue regarding how to appropriately pay for a service being performed on a BOSC. Here?s the deal: The contract has rates with foundations from Service Contract Act and Davis Bacon, but not Walsh Healey. The work in question is to purchase and install carpeting. The guidelines for the purchase of a supply would indicate that Walsh Healey act applies. Under Walsh Healey, the wage requirement is equivalent to minimum wage. Finding someone to install carpet for minimum wage is not reasonable (and likely, not possible). If, however, we use a higher wage rate (say we negotiate with the contractor and agreement to pay SCA wages), the contractor would not be obligated to pay their employees the higher wage, at least not from a DOL standpoint. The contractor is required only to meet the guidelines associated with Walsh Healey. Additionally, the contractor would not be obligated to meet any other standard, such as Health and Welfare, or, in the case of Davis Bacon, a submittal of certified payrolls. So, my question is, where in Federal Contracting is there language that protects the government from paying more to a contractor than they may be paying to their employees? How can we insure that what we pay for a labor rate is what the employee will actually receive? Or is that even possible?

[jason_a]

Xactly, the Air Force looks at it as below. This was taken from the Davis Bacon desktop guide.

(d) Carpeting: DBA applies if carpet installation is performed in connection with a construction or general renovation project. For purchase and installation of carpeting not covered above, installation is considered incidental to the purchase of the carpet (neither DBA nor SCA apply). SCA only applies to installation of government-furnished carpet. Incidental amounts of tile or linoleum work in entryways and/or restrooms would not normally affect coverage.

[Jacques]

Deleted. Missed the boat yet again.

Vern's question below is based on the right analysis, which is to first ask, what is the principal purpose of the contract.

[Guest Vern Edwards]

Is the contract for supplies, with installation part of the deal, or is the contract solely for installation services?

[Xactly]

Trying to reply again (first time didn't go through):

Thank you for the fast responses! Vern, the contract is for services to include carpet installation. The purchase of the carpet is a rare exception to the rule, but one that comes up once every year or two.

To respond to Jason_A's post, I agree full-heartedly with the thought that Walsh Healey would normally be the appropriate WD under a supply contract. The problem is, one, we are using a service contract that does not have Walsh Healey included and, two, we would be hard-pressed to find a contractor that would install carpet for minimum wage, thus bringing me back full circle...

[Guest Vern Edwards]

This was your question:

So, my question is, where in Federal Contracting is there language that protects the government from paying more to a contractor than they may be paying to their employees? How can we insure that what we pay for a labor rate is what the employee will actually receive? Or is that even possible?

There is no standard language for a firm-fixed-price contract that will protect the Government from paying a contractor more than it pays to its employees. If all you want to do is reimburse the contractor for its actual, allowable labor costs, then you have to negotiate a cost-reimbursement contract.

[joel hoffman]

This was your question:

There is no standard language for a firm-fixed-price contract that will protect the Government from paying a contractor more than it pays to its employees. If all you want to do is reimburse the contractor for its actual, allowable labor costs, then you have to negotiate a cost-reimbursement contract.

While there is no standard language to assure that the contractor pays the wage rates that the parties negotiated, you could write into the agreement (contract) something to the effect that "[t]he Contractor shall pay its labor $ x.xx /hr for carpet installation." Of course, that would introduce a new problem if the contractor has to pay more than this to get the job done. Who is then responsible if he can't enough labor at that rate to fulfill the contract requirements. You could try saying "[t]he Contractor shall pay its labor at least $ x.xx /hr for carpet installation." However, you are then requiring the contractor to assume all risk in case it can't get carpet laid for that labor rate. Unless the contractor is well assured that the negotiated rate is plenty adequate, it probably won't accept that risk.

But if the contractor is willing to accept the risk that the negotiated rate is adequate, it might well agree to the first statement.

[Xactly]

Thank you Vern and Joel. I admit, there's a bit of square-peg/round-hole syndrome going on here. I will present all comments to the ACO for this contract and see how they wish to proceed. Thank you again for the fast responses!

[Guest Vern Edwards]

My frank opinion is that you should focus on whether or not the rates are fair and reasonable and let the contractor focus on what it pays its workers.