FedSubK Feature: Service Contract Labor Standards (SCLS) - The "Very" Basics (Part 1 of 3)
Updated: Dec 6, 2024
Wages are a hot topic these days with the post-COVID economy and hybrid work environment now prevalent in many industries. It's important for contractors providing services to the Federal government to familiarize themselves with the Service Contract Labor Standards (SCLS). These standards govern labor requirements for certain service contracts awarded by the federal government. You may see the SCLS also referred to as the McNamara-O’Hara Service Contract Act (SCA) or “Act”, particularly by the Department of Labor, since it is the originating statute of the SCLS; they are all one and the same.
How do I know if my contract is a covered contract? The Government will determine if the contract is covered by the SCLS, based on the scope of services. The SCLS typically applies to contracts–
- valued over $2,500,
- entered into by the Federal Government, and
- the principal purpose of which is to furnish services in the U.S. through the use of service employees. (NOTE: The SCLS applies to the 50 states, DC, Puerto Rico, the Virgin Islands, Outer Continental Shelf lands as defined in the Outer Continental Shelf Lands Act, American Samoa, Guam, Wake Island, Eniwetok Atoll, Kwajalein Atoll, Johnston Island, Canton Island, and the Northern Marianas.)
If the services of the contract are covered by the SCLS, the contract will contain the FAR Clause 52.222-41, Service Contract Labor Standards, and a Department of Labor (DOL) Wage Determination will be provided as part of the contract, based on the location of performance.
What types of services are typically subject to the SCLS? The following examples, while not definitive or exclusive, illustrate some of the types of services that have been found to be covered by the Service Contract Labor Standards statute (see 29 CFR4.130 for additional examples):
- Motor pool operation, parking, taxicab, and ambulance services.
- Packing, crating, and storage.
- Custodial, janitorial, housekeeping, and guard services.
- Food service and lodging.
- Laundry, dry-cleaning, linen-supply, and clothing alteration and repair services.
- Snow, trash, and garbage removal.
- Aerial spraying and aerial reconnaissance for fire detection.
- Some support services at installations, including grounds maintenance and landscaping.
- Certain specialized services requiring specific skills, such as drafting, illustrating, graphic arts, stenographic reporting, or mortuary services.
- Electronic equipment maintenance and operation and engineering support services.
- Maintenance and repair of all types of equipment, for example, aircraft, engines, electrical motors, vehicles, and electronic, office, and related business and construction equipment, with some exceptions found at FAR 22.1003-4(c)(1) and (d)(1)(iv).
- Operation, maintenance, or logistics support of a Federal facility.
- Data collection, processing, and analysis services.
Are any services excepted from the SCLS or any industries excluded? Yes, they include:
- Contracts outside the U.S. The term “United States” excludes any U.S. base or possession within a foreign country. Work performed outside the geographic limits of the U.S., even if pursuant to a contract for services that are performed in part in the U.S., is not subject to the requirements of the SCLS.
- Contracts performed exclusively by bona fide professional employees. The Fair Labor Standards Act (FLSA) sets parameters for the exclusion of employees that perform certain executive, professional, administrative, or other duties such as IT or outside sales duties. However, if the contract involves any covered work outside of those areas, the performance of that work must still comply with the SCLS requirements.
- Construction, alteration, or repair of public buildings or public works, including painting and decorating services;
- Services for transporting freight or personnel by vessel, aircraft, bus, truck, express, railroad, or oil or gas pipeline where published tariff rates are in effect;
- Furnishing services by radio, telephone, or cable companies subject to the Communications Act of 1934;
- Public utility services;
- Employment contracts providing for direct services to a Federal agency by an individual or individuals; and
- Services to operate postal contract stations for the U.S. Postal Service.
The Secretary of Labor has also exempted from the SCLS statute the following service contracts and subcontracts in which the primary purpose is to provide the following, under certain circumstances.
- Automobile or other vehicle (e.g., aircraft) maintenance services (other than contracts or subcontracts to operate a Government motor pool or similar facility).
- Financial services involving the issuance and servicing of cards (including credit cards, debit cards, purchase cards, smart cards, and similar card services).
- Hotel/motel services for conferences, including lodging and/or meals, that are part of the contract or subcontract for the conference (which must not include ongoing contracts for lodging on an as-needed or continuing basis).
- Maintenance, calibration, repair, and/or installation (where the installation is not subject to the Construction Wage Rate Requirements statute, as provided in 29 CFR 4.116(c)(2)) services for all types of equipment where the services are obtained from the manufacturer or supplier of the equipment under a contract awarded on a sole source basis.
- Transportation by common carrier of persons by air, motor vehicle, rail, or marine vessel on regularly scheduled routes or via standard commercial services (not including charter services).
- Real estate services, including real property appraisal services, related to housing Federal agencies or disposing of real property owned by the Government.
- Relocation services, including services of real estate brokers and appraisers to assist Federal employees or military personnel in buying and selling homes (which shall not include actual moving or storage of household goods and related services).
It's important to note that the applicability of the SCLS depends on the specific terms and conditions of each federal service contract. Not all service contracts will be considered “covered contracts” nor may all services under a covered contract require compliance with the SCLS.
What are the Minimum Wage Requirements for SCLS-covered Contracts? The SCLS requires contractors pay their covered employees no less than the prevailing wage rates and fringe benefits, as determined by the DOL and found in the DOL Wage Determination incorporated as a material part of the contract and provided to the contractor. These rates are specific to various job classifications and geographic areas. It's crucial to review the wage determinations applicable to your contract to ensure compliance. The first few pages of wage determinations look like this:
You'll see the employee job classification (as defined in the DOL SCA Directory of Occupations at https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/SCADirectVers5.pdf). Employers should review the Directory and classify each non-exempt employee. The prevailing wage for the position is also shown and is based on a DOL survey of wages for the performance location annotated on page one. In the absence of a wage determination, the minimum wage set forth in the Fair Labor Standards Act must be paid.
What are Fringe Benefits? In addition to the basic hourly wage, contractors are required to provide certain fringe benefits to covered employees. These benefits may include health insurance, retirement plans, vacation and holiday pay, and other provisions. The exact fringe benefits are specified in the applicable wage determinations (illustration shown below).
Fringe benefit obligations may be discharged by furnishing any equivalent combination of cash or bona fide fringe benefits (see below). If the contractor furnished a lesser amount of the fringe benefit called for by the applicable wage determination, the contractor must furnish the employee with the difference between the amount stated in the wage determination and the actual cost of the fringe benefit which the contractor provided. The contractor may make up the difference in cash to the employee, or furnish equivalent benefits, or a combination thereof.
No contribution toward fringe benefits made by employees, or deducted from their wages, may be included or used by an employer in satisfying any part of any fringe benefit obligation under the SCLS. A contractor cannot offset an amount of fringe benefits paid in excess of the fringe benefits required under a wage determination in order to satisfy its minimum monetary wage obligations, and vice versa.
The cost incurred by a government contractor’s insurance carrier (or third-party trust fund) in its administration and delivery of benefits to service employees can be credited toward the contractor’s fringe benefit obligations under an SCLS wage determination. But, contractors may not take credit for any benefit required by federal, state, or local law such as workers’ compensation, unemployment compensation, and social security contributions.
Bona Fide Fringe Benefit Plans. To be considered bona fide for SCLS purposes, a fringe benefit plan, fund, or program must constitute a legally enforceable obligation that meets certain criteria. The primary purpose of a fringe benefit plan under the SCLS must be to provide systematically for the payment of benefits to employees on account of death, disability, advanced age, retirement, illness, medical expenses, hospitalization, supplemental employment benefits, and the like. Supplemental unemployment plans and prepaid legal plans are considered bona fide fringe benefits for purposes of the SCLS. However, unfunded, self-insured fringe benefit plans under which a contractor allegedly makes out-of-pocket payments to provide benefits for employees as costs are incurred, rather than making irrevocable contributions to a trust or other funded arrangements, are not normally considered bona fide plans or equivalent benefits except for plans to provide paid vacation and holiday fringe benefits.
What Recordkeeping is Required for SCLS Compliance? Contractors must maintain accurate records of their employees' hours worked, wages paid, and fringe benefits provided. Contractors may choose the fringe benefits to be provided, whether an employee accepts or refuses the fringe benefits offered. If an employee desires cash payments or benefits other than those chosen by the contractor, that is a matter for discussion and resolution between the employee and the employer. Records must be kept for a specified period, usually three years (unless otherwise indicated in the contract), and be available for inspection by authorized representatives, such as the Contracting Officer, Contracting Officer’s Representative (COR), or DOL.
Do I Need to Notify My Employees? The SCLS mandates contractors to inform their employees of the applicable wage rates and fringe benefits. This can be accomplished by prominently displaying the applicable wage determination at the worksite. Additionally, contractors must provide each covered employee with a wage statement detailing the hours worked, wages paid, and fringe benefits provided.
Are SCLS-covered Contracts Subject to Compliance Monitoring? The DOL's Wage and Hour Division (WHD) is responsible for enforcing the SCLS. They may conduct investigations, audits, or interviews to ensure compliance with SCLS. It's essential to cooperate with WHD representatives and provide them with the requested information during compliance assessments. Non-compliance with the SCLS can result in penalties, including back wages, liquidated damages, and potential contract termination. In severe cases of willful violations, contractors may be debarred from future federal contracting opportunities.
What about Subcontracts? If you subcontract any portion of the work covered by the SCLS, you are responsible for ensuring that your subcontractors comply with the labor standards. It's important to include appropriate clauses in your subcontracts that reflect the SCLS requirements and monitor subcontractor compliance.
Where Can I Find Out More? To ensure compliance with the Service Contract Labor Standards, it's advisable to seek guidance from legal counsel or consult the resources provided by the DOL. Here are a few comprehensive references for service contractors to have at hand:
- DOL’s WHD Compliance Assistance Webpage: https://www.dol.gov/agencies/whd/compliance-assistance
- DOL McNamara-O’Hara Service Contract Act (SCA) site: https://www.dol.gov/agencies/whd/government-contracts/service-contracts
- Frequently Asked Questions on SCLS (SCA): https://www.dol.gov/agencies/whd/government-contracts/service-contracts/faq
- Fair Labor Standards Act (FLSA): https://www.dol.gov/agencies/whd/flsa
Watch FedSubK for future installments of this series that will cover the SCA Directory of Occupations, Fair Labor Standards Act (FLSA) exemptions for bona fide professional services, and more! And as a subscriber, you'll receive exclusive notification when they are available!
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Market Research Isn't About Checking A Box (Weathering the RFO - Part 4)
"I guess FAR Part 10 is gone."
I've seen statements like that in a few posts floating around LinkedIn. And yes, on the surface that's true.
But in practice, market research just became more important and has moved upstairs to live with FAR Part 7 where it belonged all along, in acquisition planning. It's now woven directly in there and no longer seen as a separate activity. I mean, as a Contracting Officer, this is how we have approached it for decades. Good acquisition planning always depends on good market research. You can't develop a sound acquisition strategy without understanding the marketplace you're buying from.
From my perspective, that's not a bad thing.
While acquisition planning encompassing market research is a change in structure, we really need to take it a step further and look at...Why did the Revolutionary FAR Overhaul (RFO) bring them together while simultaneously reducing much of the prescriptive language that historically guided how market research was conducted and documented?
For years, we taught acquisition planning and market research as two separate FAR parts. But they never really lived separately, though industry might think that:
“First, the Government conducts market research then it plans the acquisition.”
Not so quick.
If you’ve been around the inside of the Federal acquisition lifecycle as a member of the acquisition team – the requiring activity, the small business specialist, the end user, or in contracting – you know that's not how good acquisitions worked for real. Planning never stops once a need is put into the budget. It only ramps up on a trajectory that gets faster and steeper the closer to you to either the need date or the end of fiscal year. That trajectory includes market research throughout the pre-solicitation phase.
We used market research to shape, then adjust the acquisition strategy and acquisition plan with what we learned. And that learning didn’t always come in the form of an RFI. We refined requirements, reconsidered contract types, identified capable small businesses we hadn't previously considered, discovered commercial solutions that changed the direction of the procurement, and poured through acquisition history in our agency and others.
In other words, market research isn't one step.
It is always on your mind as the budget becomes known, the requirements start to materialize, and the opportunity becomes known to industry.
The RFO recognizes that reality by integrating market research now into FAR Part 7. That's a positive evolution. It reflects how acquisition professionals do the work.
But something else changed, too.
The rewritten framework is noticeably less prescriptive…intentionally. The FAR Council has been very clear that one of the objectives of the FAR re-write is to reduce unnecessary procedural requirements, simplify the regulation, and place greater reliance on professional judgment.
I understand that objective and I support it. BUT… I keep thinking about the fact that federal contracting isn't just about making good business decisions. It's about making decisions that are FAIR.
And those two things aren't always the same.
When people outside Government hear the word “process”, they often think “bureaucracy”. Federal employees like little hamsters on wheels running the cogs of a system where they are looking for ways to slow down, do less, take up more time, eat up more industry dollars, and short cut the system.
As a Contracting Officer, “process” to me meant “fairness”. And it provides certain tests you have to meet.
Could another company look at this acquisition and conclude it had a fair opportunity to compete?
Could GAO understand why we selected this acquisition strategy?
Could an Inspector General reconstruct our thinking?
Could my supervisor understand my rationale for this acquisition strategy?
Could I defend this decision six months from now if someone challenged it?
THAT STILL MATTERS.
Those questions are part of what makes federal procurement DIFFERENT from commercial buying, EVEN WHEN the Government's version of commercial processes are used.
It’s precisely why market research evolved into more than simply learning about the marketplace.
It also became one of the ways agencies demonstrated that acquisition decisions were informed, deliberate, and fair.
Not perfect, but fair.
From the Contracting Officer's Chair
One of the themes you'll continue to see throughout Weathering the RFO is a simple question: Why was this process or procedure there in the first place? That's very different from asking whether it was statutory.
Many of the historical procedures surrounding market research weren't created simply to generate more documentation. They evolved because they promoted thoughtful decision-making, encouraged agencies to explore commercial solutions, supported small business participation, and helped acquisition teams avoid unnecessarily restrictive requirements.
And most importantly, they created a record explaining how the Government arrived at its acquisition decisions.
Understanding why they evolved in the first place is equally important as putting process and procedure through a woodchipper. Because we all know – because it’s been said – that this is all about clearing perceived dead wood. But dead wood holds history. Trees grow through resilience. Every ring a year; a set of seasons that tested its endurance. The nonstatutory language shifted out of FAR holds years of lessons learned, protest wins and losses, shifting markets, and economic and national crises. While some may still be in the FAR Companion and Practitioners' Albums, they no longer carry the same weight.
It should carry some weight. It must inform judgement -- good judgement.
"Trust the acquisition workforce" is now basically what the RFO says.
The rewritten framework relies more heavily on judgment – but not professional experience, education, business acumen, and common sense.
Just less prescriptive lingo and little to no instruction.
Experienced Contracting Officers are capable of not missing a beat and exercising that good judgment. Many do daily. The larger question is how we develop that judgment across the workforce. Judgment doesn't appear because regulations shrink. It comes from experience, mentoring, training, discussion, successes, mistakes, and protests.
If we reduce regulatory prescription, we need equally strong investments in developing professional judgment. They go hand in hand.
As a Chief, I never just asked, “Did you complete your market research?"
This list of questions were almost always asked to at least one project manager in our Advanced Acquisition Planning Boards (AAPBs) in USACE and FAA.
“What do we know about the differences in the market between this procurement and the last.”
“Who is in the market now and who has left? Who is emerging?”
“What economic factors could change this acquisition throughout its lifecycle?”
“What are current trends and market indicators in this industry telling us?”
“What don’t we know and how are we getting that information?”
If the answer was, "Nothing," I usually wasn't encouraged but I also didn’t just let it slide because good judgement and due diligence demands these questions be asked and the answers found and considered.
Good market research should occasionally prove us wrong. It should challenge assumptions. It should make us rethink a requirement, reconsider a contract type, or discover capability we didn't know existed.
If market research never changes the acquisition strategy, we need to ask ourselves if we are really studying the right marketplace or simply documenting decisions we've already made to fit a solution we already know we want.
The VALUE of market research is that the "THINKING" piece of it MADE ACQUISITIONS BETTER. The report you spit out to check a box is not the value.
What I see working through the RFO is that there is strength in integrating market research into acquisition planning. However…we need to pay close attention is the corresponding reduction in prescriptive procedures. Those procedures didn’t only historically tell contracting officers what to do. They promoted consistency, transparency, and fairness in how acquisition decisions were made and documented.
The question isn't whether procedures should remain. It’s whether acquisition teams will continue to approach market research with the same discipline now that the RFO has created a less prescriptive process.
If acquisition teams can maintain discipline, consistency, transparency, and fairness, then the RFO changes have real potential to improve acquisition planning. But if market research becomes something we document after the important decisions have already been made, we'll have missed the opportunity the RFO, I believe, intended to create.
Ultimately, success won’t be measured by deleting FAR Part 10 and shifting it to FAR Part 7 to say we eliminated redundancy for some quick Administration win. It needs to be measured by whether acquisition planning becomes more informed because market research is fully integrated into it and not treated as a compliance exercise that happens alongside it.
Some measures of RFO success related to market research include assessing if:
• Agencies create ways to encourage thoughtful market research while reducing costs for industry. No more RFIs that are mini-RFPs.
• Tools, training, and leadership develop the critical thinking skills needed for newer contracting professionals in a less prescriptive market research environment. Moving beyond checklists to business acumen.
• Agency acquisition strategies demonstrate fairness and consistency.
• Market research is integrated into acquisition planning earlier, resulting in more meaningful engagement -- and new methods for that engagement -- with industry.
• Five years from now, acquisition professionals aren’t viewing market research as a report but an innate requirement for good acquisition planning.
It’s up to industry and Government to keep market research fair and real versus it being relegated to a claim of less pages or a shorter FAR.
What’s Coming Next -- When Judgment Carries More Weight
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Author: Shauna Weatherly, President, Federal Subcontract Solutions LLC (dba FedSubK). Shauna is a small business advocate and owner of FedSubK. FedSubK exists to simplify federal contracting, empowering small businesses with practical, understandable resources. We bring first-hand experiences in Federal contracting from multiple perspectives derived from roles held both in and out of Government over almost four decades of Federal service.
Visit us at fedsubk.com to learn more about--
Getting Started in Federal Contracting: fedsubk.com/begin-your-journey-here
Solutions and Our Trusted Support Provider Network: fedsubk.com/solutions-services
Insights from a Contracting Officer: fedsubk.com/insights
Free Webinars and Resources: fedsubk.com/webinars-training
Where Good Procurements Really Begin (Weatherly the RFO - Part 3)
Before I got my first warrant (required to sign contracts), I was a Contract Specialist writing my first acquisition plan. It was for a large Total Environmental Restoration Contract (TERC) that included A-E, Services, and Construction terms and conditions. I was told, "follow FAR Part 7." I thought, "Okay, looks like I'll be doing a lot of these in the coming years. Figure it out." With a few years under my belt, I learned quickly that acquisition planning is the foundation for every successful procurement.
When I moved into leadership roles, we built acquisition planning into our entire program and project lifecycle. We implemented Advanced Acquisition Planning Boards (AAPBs) before writing lengthy acquisition strategy and planning documents. We invited stakeholders like Contracting to attend the budget request preparation meetings for the next FY. We started shaping an understanding and a plan of action months and years in advance of analyses and research.
Anyone who has spent time around acquisitions in the Federal space knows that most procurement problems begin at the beginning, before any procurement forecast goes into Acquisition Gateway or on the agency’s small business page, or any Sources Sought notice is issued in SAM. Long before a solicitation is issued and proposals arrive. And long before anyone files a protest.
You can almost always pin-point where, if you are going to have a problem, it will begin.
When an agency hasn't fully thought through what it's buying, why it's buying it, how the requirement should be structured, who might be capable of performing it, or what risks need to be managed before the acquisition ever reaches the marketplace.
Acquisition planning is preparation. If that’s not what we’re doing, we’re already creating problems for every acquisition phase that follows.
And that's why this topic in federal acquisition and the proposed RFO rules deserves attention, especially now that FAR Part 10, Market Research, has been combined with FAR Part 7, Acquisition Planning. Combining acquisition planning and market research recognizes something practitioners have known for years -- they're inseparable.
But it also means that changes to planning now ripple directly into how agencies understand the marketplace before they ever write a solicitation.
Congress never cared whether agencies produced acquisition plans. Congress cared whether agencies made good acquisition decisions. They care about competition, stewardship of taxpayer dollars, thoughtful use of small businesses, commercial buying, performance-based acquisitions, and risk management.
Those are the objectives.
Acquisition planning has been the primary tool for achieving them. But the plan itself was never the goal. The effort behind the plan was. Acquisition planning is simply one of the first steps in the procurement process. It is the place where the most important decisions have already been made.
Consider the examples I gave above about the discussions in the AAPB and budget request preparation. All of that is well before anything was put into writing. And heck, by the time the RFI was released (if we released one), just about every big question was already answered.
• Will this be a small business set-aside?
• Have commercial solutions been considered?
• Should the requirement be bundled?
• What's the acquisition strategy?
• What contract type makes the most sense?
• How will proposals be evaluated?
• How much performance risk is acceptable?
Those decisions are a product of discussions very early in acquisition planning. By the time industry reads the solicitation, many of the biggest decisions have already been made. The solicitation simply makes those decisions visible. So that begs the question…
…If acquisition planning changes, doesn’t everything downstream change, too?
I have a ton of notes in the margins of my electronic copies of the RFO parts issued so far. Most center around... Where is the acquisition leadership expecting contracting specialists and contracting officers to learn how to think through these decisions? I'm not talking training sessions, listening sessions, leadership briefings, webinars, the FAR Companion, Practitioners' Albums.
We are overwhelmed by data these days -- there is no shortage. Collection of data isn't the issue. it's what to do with it once we have it. What is meaningful and what isn't? That's a legitimate concern from the perspective of a contract specialist working different types of contracts in their cradle-to-grave office set-up. Or the specialist or contracting officer moved as a result of agency realignments and now buying something new, with no training whatsoever.
With the FAR Council is intentionally moving away from detailed procedural direction in favor of shorter regulations supported by guidance outside the FAR, we have to acknowledge that, historically, the FAR didn't just tell contracting officers what it needed to comply with, but often explained how to ensure compliance and answered questions about how to get it done.
From the Contracting Officer's Chair
Let’s start with a discussion about curiosity. Bring me a purchase requestion and I would have a list of questions ready for you. I know from experience that my answers and how this action continues hinges on what those answers are. That includes everything that goes right and wrong, long before I use any AI tool and ask questions.
• What problem(s) are we trying to solve?
• Is there another way to buy this?
• Has it been purchased before?
• Who in industry might already be doing it and how is it procured?
• What risks are we creating and mitigating?
• What opportunities are we overlooking and creating?
• What is it that we don’t know yet but need answers for?
And then the standard "dollar value", "when do you need it", and "do you have money yet" questions.
Every profession has it and the contracting craft is no different. Knowing what questions to ask is part of the craft. Also part of the craft is learning how best to pass information from one experienced professional to the next. The RFO is forcing us to reconsider where and how that institutional knowledge should live going forward. And, how we preserve it in market research and acquisition planning.
Written acquisition plans preserve all discussion and decisions points. It is the ultimate fallback for the building of the solicitation and the justifications of what we are doing and why in the pre-award phase leading to the solicitation. It is never seen by industry but relied upon by acquisition. Making preservation discretionary means documentation practices could vary significantly across agencies, depending on each agency's implementation decisions and tolerance for risk.
What gets lost are rationales, alternatives considered, risk discussions, disagreements, lessons learned, why things changed from the last procurement, and what outside influences impacted current decisions. Acquisition plans in their written form allow that information to be inherited by future acquisition teams. This deserves more attention than it's receiving in the RFO.
The RFO made the changes in FAR Part 7 about the laundry list of what had to go in the plan.
Wrong argument.
It is ALL about careful consideration of facts and circumstances before acting. How much consideration is required to make informed decisions, preserve those decisions so we have them as a guide moving forward, and actually use them to improve and streamline the process. Contracting officers know that their judgment can't be regulated. They stop relying on checklists and start recognizing patterns. They know the questions to ask end users, requiring activities, legal counsel, budget, and small business specialists because seeing the patterns for a poor acquisition form. That's because most know where acquisitions tend to go off track from living through it.
If the FAR is going to become shorter, the acquisition workforce needs a deliberate and consistent strategy across the board for preserving the judgment, rationale, and historical knowledge that good acquisition planning has always provided.
Otherwise, while we simplify the rulebook, it will -- for now -- make the profession harder to master.
What’s Coming Next -- Article Four: Market Research Isn't About Checking a Box
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Author: Shauna Weatherly, President, Federal Subcontract Solutions LLC (dba FedSubK). Shauna is a small business advocate and owner of FedSubK. FedSubK exists to simplify federal contracting, empowering small businesses with practical, understandable resources. We bring first-hand experiences in Federal contracting from multiple perspectives derived from roles held both in and out of Government over almost four decades of Federal service.
Visit us at fedsubk.com to learn more about--
Getting Started in Federal Contracting: fedsubk.com/begin-your-journey-here
Solutions and Our Trusted Support Provider Network: fedsubk.com/solutions-services
Insights from a Contracting Officer: fedsubk.com/insights
Free Webinars and Resources: fedsubk.com/webinars-training
What Does Nonstatutory Really Mean? (Weathering the RFO Series - Part 2)
In my last article, I talked about one of the biggest misconceptions surrounding the Revolutionary FAR Overhaul (RFO) is the idea that the Federal Acquisition Regulation (FAR) itself creates procurement policy. It doesn't. And if you are in GovCon, you should know that basic truth. Congress creates procurement policy. The FAR implements it. That distinction changes how we should think about the RFO. Instead of asking, "Why did they delete that?" I think we should first ask, "What purpose was that requirement serving?"
That question brings me to one of the most overused words appearing in every conversation or Government briefing about the RFO (aside from "empowering")...
Nonstatutory.
But it really is the most misunderstood word in the current conversation.
You'd think it was pretty straightforward. When you hear that the FAR Council was removing nonstatutory requirements from the FAR, the reaction was pretty simple. “Well, okay. If Congress didn't require it, why should it stay?" Just one thing...that assumes something that isn't necessarily true --
...if Congress didn't specifically require a process or procedure, the process or procedure isn't important.
Whoa! Think about that for a minute.
I spent most of my career implementing FAR, not just reading it, and that is NOT the right conclusion.
Being a Contracting Officer teaches you is that two questions can sound almost identical while leading to very different answers. And as Contracting Officers, we’ve been taught to pay attention to words very carefully.
In this case, the first question is a legal question: "Did Congress require this? " But the next is an acquisition question: "Why did this process or procedure exist to begin with?" Sometimes the answer to both questions is the same. Congress required it. Case closed. But more than not, they aren't. And that comes out when you sit in a FAR policy working group meeting. You hear the discussion and debate over what Congress said is the law and the intent of that law, versus how we implement the law and ensure compliance with the law. In that room, the conversation always went back to Congress established the objective and intent or outcomes. The FAR established the procedure with which to ensure objective or intent was achieved.
And THAT requires consistency to get there Governmentwide. So, how do you get consistency? Processes and procedures.
Ouch! There are those pesky processes and procedures again. Those "nonstatutory" actions.
Congress rarely dictates via law how to get from point A to point B for something like acquisition planning. Or market research. Or documenting a responsibility determination.
The FAR has historically translated policy into repeatable acquisition practices. And for good reason. Left to their own devices, agencies have as many ways to do acquisition as the number of acquisition professionals they have on staff.
Honestly -- how many times have you worked with two Contracting Officers in the same office that didn't do the same thing the exact same way, even with processes and procedures in place.
Often.
How FAR Actually Evolves
FAR didn't appear one day as a finished document. It evolved. And that evolution was expressly the oversight of the FAR Council which allowed the document to grow to into a perceived answer book, versus a regulation. And every acquisition professional has lived some part of that evolution. We've seen the legislation, been involved in protests, participated in IG reviews and seen the reports (and responded to them), instituted best practices and lessons learned...and more. Over time one-off procurement issues in a single agency or type of acquisition across Government become a way to migrate fixes into regulatory language in an effort to reduce risk. If Contracting Officer's weren't taking risks it was because the FAR kept the lanes narrow to the point there couldn't be an innovation race to streamline acquisition. The grey area in FAR become harder to find. Not because Congress required it but because acquisition leaders across Government kept watering the regulatory jungle of the FAR.
The thread of consistency is created in the rulemaking process.
Congress passes a law requiring agencies to maximize practicable opportunities for small businesses. Congress doesn't necessarily prescribe every analytical step a Contracting Officer should take before deciding whether a procurement should be set aside.
But take that law, give it to SBA, they write a rule, and upon finalization...if the FAR Council believes it should be incorporated into the regulation, it creates a FAR case and tasks one of two councils – the Civilian Agency Acquisition Council (CAAC) or the Defense Acquisition Regulations Council (DARC) – to lead the process of drafting, coordination, and agreement on the text of the rule.
The entity on point (CAAC or DARC) and its co-chair (whichever isn't the lead) herd procurement analysts in working groups to write FAR changes that include PROCESSES for implementation. These acquisition professionals from across government talk about interpretations and context. And they are sorting out the commonality all of what they all do. That's where process and procedure start to become important.
Interpretation and context is everything in the acquisition business. The words are chosen carefully and the decision to create a process or procedure within the FAR is the way to ensure consistency and the outcome / intent is achieved.
Once rules become final and their processes were implemented, they become tied to other processes and you get a series of procedures that tie across types of contracts, use of certain funding, types of buying methods, and types of evaluation processes... and more.
Those processes and procedures become threads of consistency across government.
But that doesn't mean every process or procedure put into place should remain forever. I mean, the RFO just now got rid of the American Reinvestment and Recovery Act (ARRA) language from awards made in 2009 and 2010. Why did that take so long?
From the Contracting Officer's Chair
We need to understand what role processes and procedures have been playing before deciding they are no longer needed. Particularly with an acquisition workforce turned upside down through "The Fork" and DRP and people jumping ship. We don't have the same level of historical knowledge now. Face it. Things are different. Not bad, just different.
Without process and procedures in place, how do they learn? By making bad decisions and getting your neck chopped in a time of threats to your livelihood coming from several directions? Behavior isn't likely to include a new level of taking risks in that environment.
Government acquisition leadership (and some of those hosting Government acquisition leaders in their think-tanks) simply aren't facing reality.
Now, I'm not arguing against simplification. Frankly, it is the exact opposite. Ive wanted a more readable and user-friendly FAR for years. That part of the RFO is worthwhile. But simplification being good, isn't what this is all about. It's about -- Now that “X” has disappeared, what else disappears with it? It's about distinguishing between simplifying regulations and building better outcomes. It's really easy to simplify something when you're looking at it from 30,000 feet. It's much harder when you're the Contracting Officer responsible for defending the acquisition file two years later.
Will Contract Specialists and Contracting Officers still have the same training, historical knowledge, management support, and tools available in while operating in the shell of the former workforce capacity -- especially at the end of fiscal year?
Did you notice the thing missing in my take versus the FAR Council's take?
I'm not asking whether the provision was statutory.
I'm asking questions the acquisition workforce is asking.
If someone had walked into my office twenty years ago and said, "Shauna, this thing you're making me do, it isn't statutory." My next question probably would have been, "Okay...but it helps accomplish X, so why wouldn't we use it?" Not because I was defending regulations but because I was trying to understand whether not doing something changes how I approached an acquisition and create efficiencies. Should I push back and how far can I push the envelope? Or could I defend taking a different action and argue I'm still compliant?
Some procedures existed because they genuinely improved decision-making. Others existed because they reflected old ways of doing business that no longer made sense. One of the responsibilities of a good Contracting Officer is learning to tell the difference. Working in the grey area. Understanding where it lives and not get rid of it when it is needed to achieve the outcomes intended by Congress.
That is our charge as acquisition professionals - exercising business judgement. That often involves a process to ensure we hit the mark and do our due diligency. And you Contracting Officer's know just how often you used processes and procedures in the FAR to fall back on when they actually helped streamline decision-making, efficiency, and consistency.
The RFO now revolves the conversation around statutory information that remains which short-circuits the discussion we need to have.
Statute tells us where a requirement came from, but experience helps us understand why the nonstatutory stuff mattered. And why it might still be needed.
We need that both perspectives as we move forward reviewing proposed RFO changes.
What's Coming Next -- Article Three: Where Good Procurements Really Begin?
One of the first places it gets real is acquisition planning. The FAR has historically translated procurement objectives put in place by Congress into how we determine acquisition planning requirements. And that influences everything from competition to market research to small business participation.
Next, I’ll be talking about why acquisition planning became one of the foundations of federal procurement and what it means when many of those implementation details move from regulation to guidance…again, two very different things.
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Author: Shauna Weatherly, President, Federal Subcontract Solutions LLC (dba FedSubK). Shauna is a small business advocate and owner of FedSubK. FedSubK exists to simplify federal contracting, empowering small businesses with practical, understandable resources. We bring first-hand experiences in Federal contracting from multiple perspectives derived from roles held both in and out of Government over almost four decades of Federal service.
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