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.

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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

Davis-Bacon Part III

The last part of the Davis-Bacon series provides an overview of compliance tips, a wage calculation review, and helpful references.  A useful reference I use regularly is Chapter 15 of the Department of Labor’s Field Operations Handbook (FOH).  The FOH provides an easy to understand review of the Act as well as the related Acts.  It also offers practical examples of exclusions and interpretations of labor categories.

Construction Worker_3

Coverage and Compliance Principals:

  1. Does the Government furnished wage determination meet the project’s needs?
  2. To whom do the Davis-Bacon prevailing wage requirements apply?
  3. Was each laborer and mechanic paid the proper predetermined prevailing rate?
  4. Did employees receive one and one-half their basic rates of pay for hours worked on the contract over 40 hours per week?
  5. Were laborers and mechanics employed on the site properly?
  6. Were contributions to “bona fide” fringe benefit plans creditable towards meeting the prevailing rate requirements?

Required Records To Be Maintained:

Under the DBA, covered contractors must maintain payrolls and basic records and submit certified weekly payrolls.  The Form WH-347 (attached) is optional, however it satisfies the requirements of Parts 3 & 5 29 CFR Subtitle A.  In connection with submitted payrolls the following are required to be maintained:

  1. Name, address, and social security number of each employee;
  2. Each employee’s work classification(s);
  3. Hourly rate(s) of pay (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents);
  4. Daily and weekly numbers of hours worked;
  5. Deductions made; and
  6. Actual wages paid

Subcontractor Compliance Checklist:

When the subcontractor submits their monthly billing (pay request), review for the following:

  1. Ensure that properly titled and approved “Certified Payroll” documents were provided.
  2. Compare the individual worker’s Straight Time Work Classifications and Pay Rates to the corresponding Wage Determination rates on the project Wage Scale.
  3. Utilize your familiarity of the workers to determine that they are performing the proper work duties for their Work Classifications.
  4. Ensure that hours were recorded on a daily basis, per worker.
  5. Determine that workers received one and one-half times their Straight Time rates of pay for all hours worked over 40 hours per week.

Wage Determination Example:

DBA Article C Graphic

References:

  1. Department of Labor Field Operations Handbook – Chapter 15 (10/25/2010)
  2. Prevailing Wage Resource Book (November 2002)
  3. Federal Government Construction Contracts, 2nd Edition 2010
  4. Federal Acquisition Regulations (FAR)

FAR contract clauses referenced:

  1. 22.407             Solicitation provision and contract clauses
  2. 52.222-5          Davis-Bacon Act – Secondary site of the work (FAR 22.407(h))
  3. 52.222-6          Davis Bacon Act (22.407(a)) (40 U.S.C. 3141)
  4. 52.222-11        Subcontracts (Labor Standards) (FAR 22.407(a)
  5. 52.222-13        Compliance with Davis-Bacon and Related Act Regulations
  6. 52.222-30        Davis-Bacon Act – Price Adjustment (None or Separately Specified Method) (22.407(e))
  7. 52.222-31        Davis-Bacon Act – Price Adjustment (Percentage Method) (22.407(f))
  8. 52.222-32        Davis-Bacon Act – Price Adjustment (Actual Method) (22.407(g))

Davis-Bacon Compliance

Time for a break from small business programs for a short time, the focus of the next three posts addresses considerations of the Davis-Bacon Act (DBA) for general contractors and subcontractors.  The posts provide a brief review of the history, wage determinations, apprentice and trainee programs, Federal Acquisition Regulation (FAR) clauses, and recommended compliance principles.

Overview:

The DBA was enacted in 1931 to protect communities and workers from economic disruption caused by non-local contractors entering an area and obtaining federal construction contracts by underbidding local wage levels.  It was modeled on the prevailing wage law enacted in Kansas in 1891.  The DBA, as amended, requires that each contract over $2,000.00 to which the United States or the District of Columbia is a party for the construction, alteration, and/or repair, of public buildings or public works shall contain a clause setting forth the minimum wage to be paid including fringe benefits.  Since 1931 the DBA has been suspended four times by executive order; the last two suspensions were issued to aid recovery efforts during natural disasters (Hurricane Andrew 09/1992 & and Hurricane Katrina 09/2005).

In addition to direct construction contracts, Congress extended coverage of the DBA to approximately 60 other “Related Acts” (Davis-Bacon Related Acts).  The distinguishing factor between DBA covered projects and DBRA covered projects is the signer of the contract.  DBA covered projects are signed by an agency of the Federal Government and DBRA projects will be signed by some other entity such as a city or county entity.

The Request for Proposal (RFP) review is an important part of the contract process when proposal teams should review the minimum wages required while developing cost estimates.  It is the responsibility of the federal agency that funds or financially assists DBA covered construction:

  1. To ensure the proper DBA wage determinations are applied.
  2. To advise contractors which schedule of prevailing wages applies to various construction items if a contract includes multiple wage schedules.
  3. To be available to advise bidders regarding the duties performed by the various crafts in the wage determination.
  4. Appropriately, contractors are encouraged to review the wage determinations included in the Request for Proposal (RFP) and raise any questions, comments, or concerns during the solicitation period.  Identified errors are often corrected prior to contract award and facilitate more accurate pricing.

Wage Determinations Overview:

  1. General Wage Determinations (GWD)
    1. Issued and in effect throughout most of the country for each general type of construction.
    2. General wage determinations are published each February with weekly updates sent to subscribers listing determinations that are issued, modified, or withdrawn.
  2. Project Wage Determinations (PWD) are obtained on a case by case basis for individual projects where there is not a general wage determination, virtually all the work is to be performed by a classification not listed in the general wage determination, and bid opening / award has not yet occurred.  It is the responsibility of the applicable Federal Agency to submit the “Request for Determination and Response Request”.  A PWD is only applicable to the project for which it was requested and is valid for 180 days.
  3. Modifications” made to Davis-Bacon wage determinations after contract award do not apply to contracts in place.  I.e. Davis-Bacon wage determinations establish the minimum wage rates and fringe benefits which must be paid for the entire term of the contract.

Apprentices and Trainees Overview:

Apprentices and Trainees are two categories of laborers and mechanics on DBA/DBRA project that are not listed in the wage determination.  They are allowed to work on the project under very controlled circumstances:

  1. The apprentices or trainees are individually registered in an approved apprenticeship or trainee plan.
  2. The apprenticeship program has to be approved by the Bureau of Apprenticeship and Training (BAT) or by a state apprenticeship agency recognized by BAT.
  3. The training program has to be approved by BAT.
  4. The worker is paid a percent of the basic hourly rate in accordance with the plan and their respective level of progression.
  5. The number of apprentices and trainees is limited based on a ratio of journeymen to apprentices and trainees specified in the approved program.  The ratio is determined on a daily basis.