I want to run this by the forum to get a check on my reading of the new Executive Order issued on April 27, requiring federal contractors and subcontractors to pay a minimum wage of $15 per hour to workers on a range of covered contracts for procuring services and construction. It supersedes the 2014 Obama EO that is implemented at FAR Subpart 22.19. That rule only applies to contracts covered by the Service Contract Act (for services) and the Davis Bacon Act (for construction)(see 22.903, "Applicability"). 

I read the new EO as applying to all contracts for services, including SCA and DBA-covered contracts. This would be an expansion to the current coverage. I base this on section 8 which defines covered contracts as (A) contracts for services or construction, or (B) contracts for services covered by the SCA, or others at (C) and (D). The only other requirement is that it applies to contacts covered by the FLSA, which frankly applies to almost everything. 

Here's my problem: several law firms have sent out alerts on the new EO, but none of them have noted the expansion that I am reading in it. Since SCA-covered services are a subset of all possible contracts for services, it would seem this is worth a comment. How does anyone here read the coverage of the new EO?

Executive Order on Increasing the Minimum Wage for Federal Contractors _ The White House.pdf

Here's what Section 8 says:

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Sec. 8.  Applicability.  (a)  This order shall apply to any new contract; new contract-like instrument; new solicitation; extension or renewal of an existing contract or contract-like instrument; and exercise of an option on an existing contract or contract-like instrument, if (i):  
          (A)  it is a procurement contract or contract-like instrument for services or construction;
          (B)  it is a contract or contract-like instrument for services covered by the Service Contract Act;
          (C)  it is a contract or contract-like instrument for concessions, including any concessions contract excluded by Department of Labor regulations at 29 C.F.R. 4.133(b); or
          (D)  it is a contract or contract-like instrument entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public; and
     (ii)  the wages of workers under such contract or contract-like instrument are governed by the Fair Labor Standards Act, the Service Contract Act, or the Davis-Bacon Act.
     (b)  For contracts or contract-like instruments covered by the Service Contract Act or the Davis-Bacon Act, this order shall apply only to contracts or contract-like instruments at the thresholds specified in those statutes.  Where workers’ wages are governed by the Fair Labor Standards Act of 1938, this order shall apply only to procurement contracts or contract-like instruments that exceed the micro-purchase threshold, as defined in 41 U.S.C. 1902(a), unless expressly made subject to this order pursuant to regulations or actions taken under section 4 of this order.
     (c)  This order shall not apply to grants; contracts, contract-like instruments, or agreements with Indian Tribes under the Indian Self-Determination and Education Assistance Act (Public Law 93-638), as amended; or any contracts or contract-like instruments expressly excluded by the regulations issued pursuant to section 4(a) of this order.

That seems clear, but it's not. It applies to "any" new, existing, extended, or renewed "procurement contracts and contract-like instruments" for services and construction, except as provided by paragraphs (b) and (c).

The question of what constitutes a "procurement contract" has been an issue in litigation several times at the GAO, the boards of contract appeals, the Court of Federal Claims, and the Federal Circuit. See, e.g., CMS Contract Management v. Massachusetts Housing Finance Agency, 745 F.3d 1379 (2016) for a case in which the GAO and the Federal Circuit disagreed with the Court of Federal Claims. The GAO and a district court have disagreed as to whether OTAs are procurement contracts. See Nash, "Postscript II: Protesting Other Transactions," The Nash & Cibinic Report, March 2020. Professors Nash and Cibinic have written 87 articles in which they discussed the meaning of "procurement contract."

See also Vanguard Business Solutions v. The Department of State, CBCA 6951, April 16, 2021:

Quote

In a matter of first impression for our Board, we must decide whether the contract that the appellant alleges it formed with the respondent agency (and which the agency denies ever came into being) is properly characterized as a procurement contract for transportation services subject to the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109 (2018). The agency maintains that we lack jurisdiction because the alleged instrument is a government bill of lading (GBL). As we explain, we deny the agency's motion to dismiss the appeal for lack of jurisdiction.

Who knows what "contract-like instrument" means? And does "extended" include extensions for excusable delays and other such matters?

Stand by for the implementation by the FAR councils, which, since they don't like to think, will probably just quote the language in the Executive Order.

And senior government officials wonder why innovative startups don't want to do business with the Federal government. My advice is that they run, don't walk, from Federal agency contracts and subcontracts.

I thought only Congress could raise the minimum wage. See Anderson, "Executive Orders, 'The Very Definition of Tyranny' and the Congressional Solution, The Separation of Powers Act," in Hastings Constitutional Law Quarterly (Spring 2002), 29 Hastings Const. L.Q. 589. If challenged in court on constitutional grounds, I wonder if the President's order would survive the current Supreme Court.

We are descending into chaos. Enjoy the ride.

Thanks Vern. What you said is very true, although I hadn't focused on those issues. I was more concerned with what seemed to be an expansion of the coverage. Whereas the current coverage is specifically limited to SCA- and DBA-covered services, the new EO applies to all services. While there is no definition of "service" in Part 2, Part 37 covers service contracting, and basically a service contract is for the performance of a task rather than the delivery of supplies. It then lists numerous examples, but it seems to cover just about anything that is not for the delivery of supplies. For the purpose of my question, 37.107 then says the SCA will not apply to all service contracts.

So, in addition to the other problems you pointed out, my question is whether the new EO is an expansion on the current minimum wage coverage. I think it is, but it didn't seem to draw much attention. For example, a contract for audit services, advisory and assistance, R&D, architect-engineer, etc would be covered, and every worker on those contracts, including employees working "in connection with" (another undefined term) the contract, would be covered. Same for all other services that are not covered by the SCA. 

Seems to me a big expansion that has slipped in unnoticed. That's why I'm wondering what others think. 

24 minutes ago, Fara Fasat said:

So, in addition to the other problems you pointed out, my question is whether the new EO is an expansion on the current minimum wage coverage.

I'm not sure it is an expansion on President Obama's order. I'll read and compare.

 

Thanks Vern.  A fresh perspective always helps. I see the expansion in how it lists services in one line (A), and then services covered by the SCA on another (B), but I could be reading too much into it.