Standard Form (SF) 1413 Statement and Acknowledgement Compliance Tips

Overview

On 30 August 2013 I wrote an article describing submission requirements and compliance considerations for SF 1413s.  Since that time I have assisted a number of clients completing SF 1413s (for all tiers) and the post has had over a 1000 views, so I thought it is time to provide several additional tips.  As I mentioned in August, the SF 1413 is used by all executive agencies for all applicable subcontractors at all tiers to acknowledge they are aware of the required clauses stipulated in Federal Acquisition Regulation (FAR) 52.222-11.  Unfortunately there is very little published guidance available to assist contractors in completing the form.  The good news is it isn’t a complex form and with a few helpful tips the process can be more easily understood.

Compliance Tips

In the example below “Prime Contractor, Inc.” is the prime contractor, “1st Tier Subcontractor” is a first tier subcontractor, and “XYZ Plumbing” is a second tier contractor under “1st Tier Subcontractor”.  As this example progresses, I will highlight how lower tier subs are added to the process.

  1.  The Prime Contractor always goes in block 4 and executes blocks 10a through 12.  The subcontractor, regardless of tier, signing and acknowledging intent to comply with the listed clauses “Part II – Acknowledgement of Subcontractor” goes in block 5.SF 1413_EXAMPLE_1st tier Sub - Part I Graphic
  2. The firm awarding the work to the Subcontractor in block 5 is listed in 7.a. – “Name of Awarding Firm”.  At this point in the process it is “Prime Contractor, Inc.
  3. Any lower tier subcontractors are added in block 14:SF 1413_EXAMPLE_1st tier Sub - Part II Graphic
  4. Lower tier subcontractors listed in block 14 must complete a SF 1413 Statement and Acknowledgement form.  It is with the lower tier subcontractors I see the most mistakes made.  The prime contractor remains listed in block 4, however the new lower tier subcontractor, XYZ Plumbing, is now list in block 5.  The subcontractor (1st Tier Subcontractor) awarding the contract to XYZ Plumbing is listed in block 7a:SF 1413_EXAMPLE_2nd tier sub part I_Graphic
  5. XYZ Plumbing completes blocks 15 – 17 and forwards the prime contractor to complete the process and submit to the contracting officer.  According to regulation, the SF 1413s are required to completed within 14 days of subcontract award.

SF 1413_EXAMPLE_2nd tier sub part II_Graphic

Resources:

Several state level contracting offices, such as Arizona or Wisconsin, have published guidance on completing the form for their contracts.  In addition, the USACE Sacrmento District and the Fort Worth have published some guidance, but both documents are 12 and 14 years old, respectively.

Advertisements

Certified Payroll Compliance Tips

After a short break my next two articles will address certified payroll requirements and theCrane Hoist SF-1413 – Statement and Acknowledgement form.  Both have been areas of focus recently and the timing appears right to share my thoughts with the Federal contracting community at large.  This post will address three issues with certified payroll:

  1. When to start the submissions
  2. How to address gaps or breaks when work is not performed on site
  3. When to stop submissions

Overview

When prescribed in a contract (per FAR 22.407(a) the Payrolls and Basic Records clause is required in solicitations and contracts in excess of $2,000 for construction within the United States), Federal contractors are required to comply with Federal Acquisition Regulations (FAR) 52.222-8 – Payrolls and Basic Records.  This contract clause contains several requirements, but the essence of the clause as it relates to this post, stipulates that contractors accomplish the following:

  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.  Paragraph 52.222-8(b) provides direction for the submission requirements.
  2. The records must be maintained for a period of three (3) years for all laborers and mechanics’ work at the site of work.

Beyond the guidance included in the FAR and provided by the Department of Labor Wage and Hour Division (WHD), specific instructions or procedures on how to address gaps in certified payroll submissions and when to stop collecting certified payroll the regulations are silent.  The rules simply state what is contained in the bullet #1 above.  In light of this, I advise clients, if they have not already done so, to develop a corporate policy and corresponding procedures for staff, project teams, and subcontractors to follow.

Policy and Procedures Recommendations (Underlined / Bold)

Current Federal Acquisition Regulations and Department of Labor instructions offer only general guidelines instructing contractors and subcontractors (all tiers) to submit certified payroll and a statement of compliance on Davis-Bacon and Davis-Bacon Related Acts covered contracts for the preceding work week.  This creates some ambiguity of how to address breaks in work by some subcontractors and when reporting is no longer required.

To provide standardized procedures for certified payroll we have issued the following guidance.  The intent is to provide a clear process to augment existing guidance.  Please refer to the instructions provided to our subcontractors for the submission of certified payroll:

  1. Submit reports and statement of compliance in a timely manner for all tiers.  The initial report and all subsequent reports are due the week following when work was performed on site.
  2. Submit “no work” performed reports for breaks in work if a sub has a short term break (for example less than three to four weeks) on the project.
  3. Submit a memo or letter stating “no work” to be performed for long term breaks (greater than four weeks) on this project.
  4. When a subcontractor or subsequent sub tier subcontractor is complete with their assigned work on the project, further reports are NOT required.  The last report will be marked as “final” to communicate their departure from the project site.  If they are called back then reporting would be required.

References:

Federal Acquisition Regulations

Department of Labor Wage and Hour Division

Department of Labor Field Operations Handbook – Chapter 15

Naval Facilities Engineering Command Davis-Bacon Contractors Guide (20070815)

Department of Housing and Urban Development – Making Davis-Bacon Work (June 2006)

The Value of Developing a Federal Acquisition Regulation (FAR) Matrix Review During Proposal Development

Eagle with flag

Overview

Maintaining a proactive compliance stance in federal contracting is a tedious task requiring constant diligence and regular reviews.  Administrative reporting requirements and critically important performance requirements are sprinkled throughout the typical federal Request for Proposal (RFP).  Therefore, a key step in the proposal process is conducting a complete review of the FAR clauses in the proposal to set the stage for an active contract management and contract compliance stance.  There are numerous items for the home office and project teams to track.  For example, reporting requirements for subcontracts (which are reported on three separate occasions in many instances), small business reporting, improper business practices, annual representation and certification, I-9 verification requirements, cost & pricing certification requirements, and prompt payment issues (withholding procedures).  A detailed review provides several benefits highlighted below in addition to highlighting the previously mentioned requirements.

Benefits

  1. The overall benefit is it establishes the right mindset for a strong compliance program which reduces friction and interference from the contracting office.  Not only are there contractual requirements for completing certain reports, every contractor is required to annually assert they have complied with Previous Contracts and Compliance Reports as stipulated in clause 52.222-22.  Not doing so could expose a firm to problems associated with making a false statement.
  2. It provides an objective estimation of the level of effort the project team and corporate staff will incur as a result of a successful offer (the amount of required reporting increases with the size and complexity of the project).
  3. A review conducted during the proposal stage allows contractors to communicate with the procuring agency to eliminate errant clauses included in the RFP.
  4. Helps identity mandatory versus recommended FAR clauses for flowdown.
  5. Highlights actions required to comply with the various requirements.

Solutions

There are two solutions (actually there are three if you count doing nothing as an option) to conducting a FAR clause review and documenting the outcome.

  • One option is to build a FAR matrix manually using Excel, Word, or another software tool.  This option is the most time intensive since it involves reviewing the RFP, recording the clauses included in the contract, and briefly outlining each clause, its applicability, required reporting, flowdown requirements (mandatory or recommended), and other information your organization deems relevant.  When I used this method several years ago I slowly built a master file of clauses typically found in RFPs based on the procurement to help save time and effort.  An example is included below:

Article 12 FM Image

  • A second option is to use an automated tool that stores and updates all of the FAR and DFAR clauses for you.  Then all that is left is for your compliance team to do is review the RFP, select the clauses from the electronic list of clauses, and print the results.  I have found this option reduces the level of effort substantially.  An automated tool is not free of course, but it quickly makes up for itself in time saved.  Currently, I use a system designed by Wolters Kluwer (I am not affiliated with Wolters Kluwer and this is not a paid endorsement), and included a snapshot below:

Article 12 WK Image

Regardless of the option you select, either method will drive the compliance team to conduct a detailed review of the RFP developing a clear understanding of the contractual requirements upon award.  Also, it provides decision makers with the information needed to staff the project appropriately, identify any required training for the project team, subcontractors, or consultants, and ensure the company is complying with all applicable regulations.

Standard Form (SF) 1413 Statement and Acknowledgement Form – Compliance and Reporting Tips

MC900188527

Overview

The SF 1413 is used by all executive agencies, including the Department of Defense and it fulfills several purposes in federal contracting.  First, it is used by the prime contractor to identify and report all applicable subcontracts (all tiers) awarded under the prime contract. Second, it identifies specific scopes of work the subcontractors will be performing, subcontract award date, and subcontract number.  Third, it provides formal notification to the applicable subcontractors of the labor laws and associated clauses they are responsible for complying with.  Since the form provides formal notification it is acknowledged by both parties and becomes a part of the contract.

Submission Requirements

The requirement for completing and submitting the SF 1413 is stipulated by Federal Acquisition Regulation (FAR) 52.222-11.  The clause states that contractors and subcontractors (all tiers) performing on a Federal contract involving construction in excess of $2,000 are required to submit a fully executed SF 1413 Statement and Acknowledgement within 14 days of award of each subcontract to the Contracting Officer.  In addition, the clause states the prime contractor is responsible for compliance by any subcontractor (all tiers) performing construction (within the United States) with the following contract clauses as listed in 52.222-11(b):

  1. Davis Bacon Act (52.222-6);
  2. Contract Work Hours and Safety Standards Act— Overtime Compensation (if the clause is included) (52.222-4);
  3. Apprentices and Trainees (52.222-9);
  4. Payrolls and Basic Records (52.222-8);
  5. Compliance with Copeland Act Requirements (52.222-10);
  6. Withholding of Funds (52.222-7);
  7. Subcontracts (Labor Standards) (52.222-11);
  8. Contract Termination—Debarment (52.222-12);
  9. Disputes Concerning Labor Standards (52.222-14);
  10. Compliance with Davis-Bacon and Related Act Regulations (52.222-13); and
  11. Certification of Eligibility (52.222-15)

Compliance Considerations

  1. Frequently I get questions such as “I am only providing painting or final cleaning services, why do I need to comply?”  Good question, and FAR 52.222-11 provides further clarification on additional scopes of work included along with other construction trades.  Without repeating the entire definition, the following bullets highlight the main elements included:
    1. Construction, alteration, or repair
    2. Remodeling and installation (items installed on site)
    3. Painting and decorating
  2. On larger more complex projects it is important for the project staff, or personnel responsible for compliance, to establish a well-defined process for distributing, collecting, and tracking completed forms for two main reasons:
    1. The 14 day timeframe doesn’t allow much time to complete and route the form for signature and submission; and
    2. The volume of forms required for multiple tiers may quickly overwhelm normal tracking methodologies used on small projects resulting in wasted time spent double checking the completion status.
  3. Other than the applicable FAR clauses there is not a significant amount of information readily available to provide guidance on completing the form should one have questions.  Although dated, several USACE districts (Corps of Engineers) have some helpful information posted on their sites.  In addition, several state level contracting offices, such as Arizona or Wisconsin, have published guidance on completing the form for their contracts.  However, I recommend caution as some information available on government websites for download is quite old and not helpful.  For example, the Secretary of Air Force Acquisition website has a version of the SF 1413 posted from 1992.  Therefore it is important to do a little research beyond the first hit on Google.

Overwhelmed with stacks of paper

Office of Federal Contract Compliance Programs (OFCCP) Compliance and Reporting

The summer break is over after a trip to the Delaware beaches to celebrate America’s Independence and a spectacular drive along the Beartooth Highway through Wyoming and Montana.  The Beartooth Highway is probably one of the most scenic drives I have taken.  But, back to Federal contracting reality…

The objective to this post is to provide a general overview of the OFCCP, with a focus on the construction industry, while covering a few specific areas to improve your company’s understanding of the compliance requirements.

EEO Poster Clip 2

What is OFCCP

OFCCP was created by Executive Order 11246 in 1965 and expanded by the Rehabilitation Act (1973) and the Vietnam Veterans’ Readjustment Assistance Act (1974).  OFCCP provides compliance enforcement and oversight for contractors and subcontractors compliance with the three laws.  Further, they must not discriminate in their employment practices on the basis of gender, race, color, religion, national origin, disability, or status as a protected veteran.

OFCCP is an agency within the Department of Labor with a national network of offices.  The National Office is located in Washington DC and there are six regional offices located in large metropolitan areas (Northeast, Mid-Atlantic, Southeast, Midwest, Southwest & Rocky Mountain, and Pacific).  Each region contains numerous district offices that carry out the mission of OFCCP.

The OFCCP mission

“The purpose of the Office of Federal Contract Compliance Programs is to enforce, for the benefit of job seekers and wage earners, the contractual promise of affirmative action and equal employment opportunity required of those who do business with the Federal government.”

In the context of OFCCP’s mission, it provides the following services:

Compliance Assistance

To minimize violations OFCCP has an extensive compliance assistance program to assist Federal contractors.  OFCCP uses its national network of regional, district, and area offices to provide compliance assistance to contractors.  OFCCP conducts seminars and workshops around the country, maintains a website with resources and tips, operates a help desk line during work hours, and provides an e-mail address for inquiries and feedback.  OFCCP also facilitates agreements between contractors and Department of Labor job training programs to help contractors identify and recruit qualified workers.

Compliance Evaluations

To monitor and ensure Federal contractors are in compliance with the EEO laws, OFCCP conducts compliance evaluations that review contractors’ employment practices.  Contractors are scheduled for review on a periodic basis, generally not more frequently than every two years.  OFCCP examines whether the contractor maintains hiring and employment practices that are nondiscriminatory, and determines whether the contractor is taking affirmative action to ensure that applicants and employees have an equal employment opportunity without regard to race, color, religion, sex, national origin, disability, or status as a protected veteran.  Typical practices reviewed include: job placement, employee training, promotion, compensation, and termination.  OFCCP also occasionally conducts other types of compliance evaluations, such as a Corporate Management Compliance Evaluation to determine whether qualified minorities, women, persons with disabilities, and protected veterans have encountered artificial barriers to advancement into mid-level and senior corporate management.

Complaint Investigations

OFCCP conducts investigations of complaints of discrimination filed by applicants or employees against Federal contractors.  OFCCP works in coordination with the EEOC when processing discrimination complaints.  OFCCP’s website provides information regarding how to file a complaint and how it will be processed at http://www.dol.gov/esa/ofccp/regs/compliance/pdf/pdfstart.htm.

Conciliation and Enforcement Action

If a compliance evaluation or complaint investigation yields a finding that a contractor violated any part of the regulations, OFCCP will attempt to first negotiate with the contractor to reach an appropriate remedy (“conciliation process”).  Generally, if the conciliation process is successful the contractor and OFCCP will sign a Conciliation Agreement.  The contractor will be expected to comply with the Agreement’s terms. If conciliation efforts fail, OFCCP and the Department of Labor’s Office of the Solicitor may pursue an enforcement action.

Basic Compliance Requirements

In most situations a company can remain compliant following the basic EEO requirements outlined in the Small Business Guide:

  • Don’t discriminate
  • Post an EEO poster
  • Include the EEO tagline in employment advertising:  “Federal contractors are required to state in all solicitations or advertisements for employment that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin.”
  • Keep detailed records
  • Open your books and records to OFCCP during an investigation or evaluation
  • File the required reports

References