FAR Interim Rule Implements Executive Order Raising Federal Government Contractor Minimum Wage

On January 26, 2022, Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA), issued an Interim Rule amending the Federal Acquisition Regulation (FAR) in order to implement the Biden administration’s Executive Order (E.O. 14026), titled “Increasing the Minimum Wage for Federal Contractors.”  As we discussed in a prior GovCon Bulletin™ (here), E.O. 14026, signed on April 27, 2022, sought to raise the hourly minimum wage paid by federal government contractors to workers performing work on or in connection with federal government contracts to $15.00 per hour beginning January 30, 2022, and annually thereafter, beginning January 1, 2023, to an amount determined by the Secretary of Labor.

The Interim Rule, which becomes effective on January 30, 2022, amends the minimum wage provisions contained in FAR subpart 22.19 and in FAR clause 52.222-55, which sets forth an initial federal contractor minimum wage of $10.10 that has increased over time to $11.25 as of January 1, 2022.  The Interim Rule now implements E.O. 14026 by raising the federal contractor minimum hourly wage to $15.00 per hour, subject to annual increases determined by the Secretary of Labor.

The Interim Rule applies to: solicitations that are issued on or after January 30, 2022, and any resulting contracts; contracts awarded without a prior solicitation on or after January 30, 2022 (e.g., FAR Part 13 purchase orders); new contracts awarded on or after March 31, 2022, without a prior solicitation; and existing contracts - through bilateral modifications - when the contracts are extended, renewed or their options are exercised on or after the Interim Rule’s effective date.  If a contracting officer is unable to obtain a bilateral contract modification, the Interim Rule requires the contracting officer to decline to extend, renew, or exercise an option under the contract.

As for contracts that were awarded prior to March 31, 2022, the Interim Rule strongly encourages contracting officers to include an amended FAR clause setting forth the increased minimum wage “with appropriate consideration.”

The Interim Rule does not alter any of the already existing exemptions from minimum wage requirements under FAR subpart 22.19, which incorporates exemptions available under the Fair Labor Standards Act for certain workers, including individuals employed in a bona fide executive, administrative, or professional capacity. 

Comments to the Interim Rule are due by March 28, 2022.  To read the Interim Rule go here.  To read other articles from The GovCon Bulletin™ go here.