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Keeping an Eye on HR Compliance as a Contractor

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As the U.S. economy continues its gradual return to a growth path, it’s always important to recognize the role federal contractors play in driving economic growth and vitality across Maryland, Virginia and the District of Columbia.

Even during the recent sequestration budget era, our region continues to stand among the nation’s top recipients of federal contracting activity. Maryland, Virginia and Washington, D.C., in fact, are among the top five states (including the District) in total federal procurement dollars from 2010–14, according to a Northern Virginia Regional Commission report that was released last fall.

What this means, of course, is our region benefits from an almost continually replenished jobs machine for many people in the Baltimore-Washington corridor. While Virginia is home to many defense-related agencies and Washington is the seat of the federal government, Maryland is home to 30 federal agencies with headquarters or major operations located within its boundaries.

All told, while the federal government awards more than $500 billion annually to federal contractors, fewer than 200,000 companies win federal contracts annually, according to an estimate by the Government Contractors Association.

‘A Good Time’

With this in mind, consider the vital work federal contractors conduct, whether to meet myriad defense, intelligence and national security needs or to meet the wide range of civilian agency needs, such as public health, emergency management, law enforcement and more. The talent and experience federal contractor teams bring to advancing our government agencies’ complex missions at home and abroad is critical to maintaining our nation’s overall strength and prosperity.

As it stands now, it’s a good time to be a government contractor. The opportunities to get involved with selling your products or services to the government remain manifold. Indeed, for those companies that have succeeded in winning and conducting government contracting work, they know it’s a hard road to travel.

The bottom line is that doing business with the federal government means adhering to a complex and comprehensive array of rules and regulations. Chief among those are in the human resources (HR) area.

Know the Rules

While there are many HR regulations government contractors need to comply with, here are the main areas that are critical to heed if you are a federal contractor or aim to become one.

First, Affirmative Action Programs: Under Executive Order 11246, administered by the U.S. Office of Federal Contract Compliance Programs (OFCCP), federal contractors and subcontractors who do more than $10,000 in government business in one year are prohibited from discriminating in employment decisions on the basis of race, color, religion, sex or national origin.

This Executive Order requires government contractors “to take affirmative action to insure that equal opportunity is provided in all aspects of their employment.” To comply with this rule, all government contractors with 50 or more employees, and $50,000 or more in government contracts, are required to develop written affirmative action programs (AAP). As the OFCCP says, a “written affirmative action program helps the contractor identify and analyze potential problems in the participation and utilization of women and minorities in the contractor’s workforce.”

There are also related rules in place prohibiting employment discrimination against veterans and persons with disabilities.

Second, the Service Contract Act (SCA): ormally known as the McNamara-O’Hara Service Contract Act, the SCA requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees the local prevailing wage (including benefits and overtime) paid on similar work and projects. The SCA, administered by the U.S. Department of Labor’s Wage and Hour Division, stipulates that federal contractors are required to pay the federal minimum wage to their employees for contracts at or below $2,500.

Third, the Defense Contracting Audit Agency (DCAA): If you do contracting work for the U.S. Department of Defense, you likely know of the DCAA. This DoD agency, established in 1965 to avoid overcharges and overpayments on defense-related contracting expenditures, performs contract audits to ensure taxpayer dollars are spent “on fair and reasonable contract prices.”

The DCAA also ensures contractors adhere to the Federal Acquisition Regulations, including those for HR, that apply to all federal contractors serving defense and civilian agencies and departments. It’s critical for federal contractors to stay in compliance with DCAA. With non-compliance, your overall contracting status with the federal government can be revoked.

Know This

While this is just a brief review of several key HR-related regulations pertinent to federal contractors, this regulatory landscape is nearly always in flux. One new proposed rule, for example, would provide covered employees working on federal contracts the right to accrue up to seven days of paid sick leave each year.

The key to succeeding as a federal contractor is maintaining the balance between providing your product or service offering to the federal government while staying in compliance with its contractor rules and regulations.

Kelly Mitchell is principal of impactHR, in Columbia. She can be contacted at 410-312-7882 and kmitchell@impacthrllc.com.