Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.

This week: DOJ’s FOCUS program that pays your people to find your payroll mistakes. We break down the FOCUS initiative, what it targets, and what to fix before the first qui tam lands.

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TL;DR:

• FOCUS goes live: DOJ has launched a new intake and prioritization channel for data miners filing qui tam complaints under the False Claims Act, directing resources towards the most analytically rigorous relators. FOCUS does not create new financial incentives; the existing FCA qui tam bounty structure (15-25% of recovery) has been in place since 1986. actively recruiting qui tam relators to mine contractor data for False Claims Act violations, with financial incentives for tips that lead to recoveries.

• Fixed-price EO clock ticking: OMB guidance due June 14; FAR amendments follow August 28. If FAR 52.222-43 isn’t in your multi-year bids, your margin absorbs every WD increase.

• ACA penalties up: The 4980H(a) no-coverage penalty rises to $3,340/employee/year; 4980H(b) hits $5,010. Cash-in-lieu contractors face dual exposure from WHD and IRS.

• SAM.gov WD flag: Some April 29 Wage Determinations may have incomplete location data. Cross-reference before you price.

LEAD STORY

Your publicly available contract data is now a fraud detection input. DOJ just built the intake system.

On April 30, DOJ’s Civil Division announced the Fraud Oversight through Careful Use of Statistics (FOCUS) initiative, a structured program to improve DOJ’s ability to identify and prioritize the most credible data-driven False Claims Act qui tam complaints. FOCUS operates alongside the National Fraud Enforcement Division (NFED), launched April 7 as DOJ’s first-ever dedicated fraud prosecution unit. Together, they represent the most coordinated federal anti-fraud infrastructure in the statute’s history. FOCUS announcement on April 30.

What SCA contractors specifically need to understand

SCA contractors are required to maintain payroll records and make them available for inspection under 29 CFR Part 4. The FCA exposure runs not through a submitted document but through the contract’s underlying compliance representations. A data miner working entirely from public sources; contract award data, wage determinations, labor category listings, can construct a pattern-of-underpayment theory without ever accessing your internal records. FOCUS makes it easier for the strongest versions of those analyses to reach DOL quickly.

WHD enforcement data confirms the trend: EO-covered back wages jumped 77% to $563,326 in FY2025, workers receiving back wages rose from 709 to 1,070, and the audits that are happening are targeted. FOCUS adds a crowdsourced intake layer on top.

By the numbers

• $37,016,208 in SCA back wages recovered, FY 2025, up 45% from FY 2024 (DOL WHD)

• 16,902 workers received SCA back wages in FY 2025, up from 10,325

• $563,326 in PSL EO 13706 (Paid Sick Leave - Federal Contractors) back wages, FY 2025, up 77% from FY2024. This is separate enforcement category from SCA prevailing wage.

• $0 needed to file an FCA complaint. DOJ supplies the lawyers.

What to do now

1. Audit payroll records end-to-end. Timekeeping, payroll output, and internal records must be consistent across every covered labor category. Under 29 CFR Part 4, these must be available for inspection.

2. Audit H&W fringe documentation. Every deduction requires a bona fide plan. Cash-in-lieu requires a documented calculation and rate.

3. Brief subcontract managers. Primes inherit liability for sub-tier compliance failures.

4. Review voluntary disclosure posture. Documented compliance programs and prompt self-orrections place you in a materially different position at settlement.

5. Flag open conformance requests. Unresolved labor category conformances are a chronic audit entry point and an easy qui tam target.

In Brief

Fixed-price EO deadline: June 14.

We covered the April 30 EO in depth (Issue 008). The next milestone is OMB implementation guidance due June 14, followed by FAR amendments August 28. If you haven't pulled your multi-year pipeline and confirmed FAR 52.222-43 is in every solicitation and subcontract, do it before the guidance drops. (PilieroMazza analysis)

ACA penalties up, and cash-in-lieu contractors carry dual exposure:

IRS confirmed 2026 penalties: 4980H(a) rises to $3,340/employee/year, up from $2,900; 4980H(b) hits $5,010, up from $4,350. If paying your H&W as cash-in-lieu, the exposure question is not simply whether the cash amount is sufficient, it is whether the arrangement results in employees going to the Marketplace exchange and receiving a premium tax credit. If it does, and the amount does not support an offer of affordable, minimum-value coverage, you face two two separate enforcement tracks: SCA back wages from WHD and ACA penalties from IRS. These are different agencies with different penalty stacks, and both can hit the same contract.

SAM.gov WD data quality flag, April 29 batch:

SAM.gov issued a May 8 advisory that some Wage Determinations published April 29 may have incomplete location data. If you priced a bid using an April 29 WD, cross-reference against the prior revision now. Missing locations can mean missing covered classifications baked into your contract from day one. Discrepancies go to scasfe98@dol.gov; the SAM.gov e98 portal remains down since January 30.

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Know the Reg

31 USC 3730(b)

Qui tam relator

The provision that lets private citizens sue on behalf of the government for fraud. Under 31 USC 3730(b), any person with evidence of a false claim against the federal government can file a civil action in the government’s name. The filer, called a “relator,” submits the complaint under seal to DOJ, which has 60 days (extendable) to decide whether to intervene. If DOJ intervenes, the relator receives 15-25% of any recovery. If DOJ declines, the relator can proceed independently and collect 25-30%.

Key detail: The relator does not need to be a victim. An employee, subcontractor, competitor, or data analyst who identifies a pattern of false certifications has standing to file. The complaint is filed under seal, meaning the target company may not know it exists until DOJ acts.

Why it matters now: DOJ’sFOCUS initiative is actively recruiting relators with data-mining capabilities to build automated detection tools and file qui tam suits. For SCA contractors, clear , accurate, and consistent documentation is key. . A relator can build a case without a whistleblower or a WHD audit. The FCA’s qui tam mechanism is the enforcement engine behind FOCUS, and the bounty structure is the incentive. (Cornell LII)

Dates to remember

• Jun 10 Biggest Shifts in GovCon Law Conference. Labor, FAR changes, and enforcement trends.

• Jun 14 OMB Fixed-Price EO Guidance Deadline. Not a webinar. A hard date. Your pipeline review should be done before this lands.

• Jun 24 Labor Rules & Regulations: Federal Market Compliance. SCA and DOL regulatory update.

• Jul 24 FAR 52.222-90 DEI Clause Modification Deadline. Existing contracts must be modified; subcontract flowdowns updated. Noncompliance triggers FCA exposure. (Thompson Hine)

• Sep 23–24DOL WHD Free Prevailing Wage Seminar. Virtual, free. Essential for teams new to SCA/DBA compliance.

P31 takes its name from FAR Part 31, the Cost Principles, the part of the FAR that governs every dollar on every federal contract.

This newsletter is for informational purposes only and is not legal, compliance, or financial advice. For contract-specific guidance, consult qualified labor counsel.

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Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.

This week: DOL rewinds the overtime exemption clock, DOJ launches a data-mining program to surface certified payroll fraud, ACA premiums spike 18% ahead of the July H&W update, and a House markup could lock in small business set-asides.

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Quick Hits:

• Overtime exemption rollback: DOL rescinded Biden’s 2024 salary thresholds on May 14, restoring pre-2024 levels. If you reclassified SCA-covered workers, audit now.

• DOJ data-mining for fraud: The new FOCUS Initiative recruits tech-enabled qui tam filers to cross-reference certified payrolls against WD rates at scale.

• ACA premiums up 18%: Largest increase since 2018; ICHRA enrollment tripled in 2026. H&W rate update lands in ~45 days.

• Rule of Two markup this week:H.R. 2804 would codify mandatory set-aside analysis into statute. House Committee marks it up May 20.

LEAD STORY

REGULATORY ROLLBACK, EFFECTIVE MAY 14

DOL rescinds Biden overtime threshold. SCA contractors need to audit exempt classifications now.

DOL’s Wage and Hour Division restored the 2019 Trump-era FLSA white-collar exemption salary thresholds on May 14, unwinding Biden’s 2024 rule that raised the standard salary level to $684/week. If you reclassified employees from exempt to non-exempt under that rule, and those workers perform on SCA-covered contracts, their pay and overtime treatment needs re-evaluation. Non-exempt hourly workers trigger the full WD wage and H&W fringe obligation; get the classification wrong and you have a back-wage liability plus a false certified payroll problem.

TheOBBBA’s W-2 overtime reporting requirement (effective 2026) makes any misclassification increasingly visible on paper. WHD doesn’t need a full audit to spot the discrepancy.

What to do now

Pull the list of employees reclassified between September 2024 and May 2026, identify which ones perform on SCA contracts, and evaluate classification at the restored thresholds. Review certified payrolls filed during that window. If you find a gap, get labor counsel involved before the next WHD inspection cycle.

In Brief

DOJ FOCUS Initiative targets certified payroll fraud:

On April 30, DOJ's Civil Division launched FOCUS, a program recruiting "data miners" to build automated detection tools and file FCA qui tam suits. Certified payrolls are public documents. A tool that cross-references them against WD rates can flag systematic underpayment at scale, without a single whistleblower or WHD audit. The FCA's 30-day cure window requires knowing you have a problem. Pull a sample of recent certified payrolls against applicable WD rates and fringe schedules before someone else does it for you.

ACA premiums up 18%; model your fringe strategy before the July H&W update:

Across 312 ACA marketplace insurers, 2026 premiums rose a median 18%, the largest increase since 2018. Enhanced premium tax credits expired at year-end. ICHRA caps your employer H&W obligation at a defined dollar amount, satisfies the SCA bona fide fringe requirement, and shields you from ACA employer mandate exposure if structured above affordability thresholds. Enrollment tripled year-over-year in 2026. Current H&W rates: $5.55/hr (non-EO 13706), $5.09/hr (EO 13706). Model $0.20-0.40/hr higher for July. If you're bidding option years into FY2027, build that into your fringe line now.

Rule of Two codification markup this week:

The House Committee on Small Business marks up H.R. 2804 on May 20, codifying the Rule of Two into statute. Currently a regulatory requirement COs can waive; statutory codification makes mandatory set-aside analysis harder to bypass. Combined with SBA's March 2026 program restructuring (tribal 8(a) awards down 26%/$800M year-over-year), both dynamics favor small business primes on SCA service contract recompetes. Still markup stage, not law, but the direction of travel is clear.

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Know the Reg

FAR 52.222-43

Fair Labor Standards Act and Service Contract Labor Standards, Price Adjustment

FAR 52.222-43 is the price adjustment clause that protects SCA contractors from absorbing labor cost increases on multi-year and option-year contracts. When DOL updates H&W rates, WDs change at option exercise, or successor obligations shift labor costs, this clause lets you adjust contract price rather than eating the delta. The contractor notifies the CO of the increased cost; the CO modifies the contract.

This matters now: theApril 30 EO making fixed-price the default applies maximum labor cost pressure on SCA contractors. FAR 52.222-43 is your contractual protection. If it’s missing from a multi-year service contract, raise it with the CO before the next option exercise. UnderFAC 2026-01 (effective March 13), the clause was updated; verify your templates reference the current version.

Dates to remember

• May 28, Buy American Act and Trade Agreements Act Webinar (PilieroMazza / Jacqueline Unger).

• Jun 8-11, NSBGCA Alaska Regional Conference, Anchorage, AK

• Jun 10, Biggest Shifts in GovCon Law (PilieroMazza / Eric Valle)

• Jun 24,Labor Rules & Regulations: Federal Market Compliance (PilieroMazza / Nichole Atallah)

P31 takes its name from FAR Part 31, the Cost Principles, the part of the FAR that governs every dollar on every federal contract.

This newsletter is for informational purposes only and is not legal, compliance, or financial advice. For contract-specific guidance, consult qualified labor counsel.

Forward this article. It’s a fringe benefit.

We’re building the most useful SCA resource in the market. Help us reach the people who actually need it and you will be rewarded.

Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.

This week: The One Big Beautiful Bill Act created a W-2 overtime reporting requirement that compounds SCA misclassification risk, the EO 13658 floor went live today, a D.C. sub got hit with $596K in back wages and a debarment for a kickback scheme, and DOL’s independent contractor reclassification rule could redraw who falls under SCA coverage.

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In this issue:

• 📋 OBBBA Overtime Reporting Meets SCA Payroll Complexity

• ⚖ EO 13658 Floor at $13.65/hr, Live as of Today

• 🔍 D.C. HVAC Sub: $596K Back Wages, 3-Year Debarment

• 📑 DOL IC Rule Could Remove Workers from SCA Coverage

• 📖 Know the Reg · CICA Stay Override

• 📅 Dates to remember

LEAD STORY

The One Big Beautiful Bill has a buried overtime provision. SCA contractors need to deal with it now.

The OBBBA (enacted July 4, 2025) created a temporary federal tax deduction for employee overtime wages through 2028. What got no attention: a new W-2 reporting requirement for overtime wages, effective with 2026 tax returns, that forces employers to separately track and report overtime by employee.

Why SCA contractors should care

Isolating overtime by labor category across multiple wage determinations will surface misclassification errors that were previously invisible in aggregate payroll. Wrong base rate + wrong OT calculation + a federal tax document that records both = a WHD referral from IRS data.

What to do now

1. Confirm your payroll system can report overtime by employee for 2026 W-2 filing. If not, start the vendor conversation now.

2. Audit SCA workforce classifications. Focus on labor categories not reviewed since the last WD update.

3. Check overtime calculations against WD-specified base rates. SCA OT must use the WD rate, not a blended rate.

4. Brief CFO + compliance lead together. This crosses tax, payroll, and SCA. No single department owns it.

In Brief

1. ENFORCEMENT

EO 13658 floor hit $13.65/hr this week. Check whether you have contracts in the covered window.

The rate increase (tipped: $9.55/hr) took effect May 11 but only applies to contracts awarded between January 1, 2015, and January 29, 2022, that have not been renewed since January 30, 2022. Most active SCA contracts won’t be in this window. Run the date filter on your portfolio now; late implementation creates back-wage liability and FCA exposure on certified payroll.

Sources: DOL WHD EO 13658 Page | Federal Register Notice | Berkshire Associates

2. ENFORCEMENT

$596K back wages, 3-year debarment. A DBA case, but WHD runs the same playbook on SCA contracts.

J. Solano HVAC LLC paid D.C. construction workers prevailing wages by check, then required kickbacks of anything above $30/hr. Workers were also misclassified into lower-paid categories. This is a Davis-Bacon enforcement action, but the audit techniques WHD used here (payroll-to-payment reconciliation, worker interviews, classification verification) are the same ones they run on SCA service contracts. Prime liability for sub violations applies under both statutes. If you don’t have a sub-audit procedure, this case is your reason to build one.

Sources: PilieroMazza, Apr. 15 | JDSupra / PilieroMazza

3. REGULATORY

DOL’s IC reclassification rule is moving to the final stage. Some SCA labor categories could be at stake.

The proposed rule (comments closed April 28) reverts to a 2021 “economic reality” test that would make it easier to classify workers as independent contractors. SCA obligations attach to employees, so reclassification could pull labor categories out from under WD coverage. A reclassification that fails a WHD audit means back wages and FCA exposure on every certified payroll that excluded those workers. Don’t reclassify anyone until the final rule (expected Q3 2026) is published and labor counsel reviews it.

Sources: DOL NPRM

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Know the Reg

28 U.S.C. § 1491 / CICA, 31 U.S.C. § 3553

CICA Stay Override

When a contractor files a bid protest at GAO, CICA automatically triggers a “stay,” suspending award or performance during review. Agencies can override the stay with a written D&F documenting urgent/compelling circumstances or best interest of the U.S.

Why it matters now: The Federal Circuit’s Life Science Logistics decision (April 15, 2026) lowered the bar for challenging override D&Fs. But Active Deployment Systems (COFC, April 21) confirmed agencies can still prevail if the D&F reasoning is well-documented.

Operational implication: If you lose a recompete and file at GAO, do not assume the stay holds. Document D&F deficiencies contemporaneously, not retroactively. Price your protest decision, assuming performance may continue regardless.

Sources: Stan Hinton COFC Tracker

Dates to remember

• May 18–21: SOF Week 2026, Tampa, FL. Annual convention for the global special operations forces community. Exhibitions May 19–21.

• May 20–21: WHD Prevailing Wage Virtual Seminar (DOL/WHD). Free. Covers SCA, DBA, wage determinations, conformances, and enforcement. Best free training available on the subject.

• May 28: Buy American Act and Trade Agreements Act (PilieroMazza / Jacqueline Unger). Relevant if your service contracts have supply elements.

• June 8–11: NSBGCA Alaska Regional Conference & Golf Tournament, Anchorage, AK. Small business GovCon policy and SCA/DBA compliance updates.

• Sept. 23–24: WHD Prevailing Wage Virtual Seminar (Fall) (DOL/WHD). Free. Register early.

Forward this article. It’s a fringe benefit.

We’re building the most useful SCA resource in the market. Help us reach the people who actually need it and you will be rewarded.

Part 31 is a bi-weekly industry newsletter helping federal SCA contractors protect their margins and stay compliant on post-award operations.

P31 takes its name from FAR Part 31, the Cost Principles, the part of the FAR that governs every dollar on every federal contract.

This newsletter is for informational purposes only and is not legal, compliance, or financial advice. For contract-specific guidance, consult qualified labor counsel.

Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.

This week: The White House ordered agencies to default to fixed-price contracting, shifting all SCA cost risk to contractors. WHD’s FY2025 enforcement numbers are final. Fewer audits, bigger hits. And DOL’s new joint employer NPRM could make your sub’s wage violations your problem.

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In this issue:

• 🏛️ White House EO: Fixed-price is now the default

• ⚖️ WHD FY2025: Fewer investigations, bigger hits

• 🔗 Joint employer rule: Your sub’s problem is now yours

• 💊 ACA subsidies gone, ICHRA tripling

• 📖 Know the Reg: SCA fringe under fixed-price

• 📅 Dates to remember

LEAD STORY

The White House just made fixed-price the default. SCA fringe costs are now entirely contractor-borne.

What happened

President Trump signed an EO on April 30 directing agencies to default to fixed-price, performance-based contracting for new awards. Cost-reimbursement contracts above specific thresholds now require written head-of-agency approval:

• $10M for most civilian agencies,

• $25M for DHS, $35M for NASA,

• $100M for DoD.

FAR Council has 120 days to propose implementing amendments, but agencies can start preferring FFP in solicitations immediately. (White House EO, Apr. 30) | (Crowell & Moring, May 1)

Why it matters

SCA-heavy service contracts (facilities management, janitorial, food service, IT support, logistics) have historically been cost-reimbursable or T&M, letting contractors pass WD increases, H&W adjustments, and conformance costs through to the government. Under FFP, those costs are yours. A compliance mistake under cost-plus is a mod; under FFP, it’s a loss.

What to do now

Model an FFP baseline for every recompete bid you’re pricing over the next 6 months, with SCA wage determination rates, H&W fringe, and conformance costs as locked-in assumptions. Build in the July 2026 H&W rate update; it has increased every year since 2014. Flag this for your pricing team now. The FAR amendment is 120 days out, but agencies don’t have to wait.

In Brief

1. ENFORCEMENT

WHD’s FY2025 numbers are final. Fewer audits, bigger hits.

FY2025 SCA enforcement data is in:

• 125 compliance actions with violations (down from 188 in FY2024),

• 1,070 workers received back wages (up from 709),

• $563,326 total recovery (up from $317,979).

WHD is running fewer investigations but selecting them more carefully; if you’re audited, you’re a targeted case, not a random sweep. Pull your certified payroll records and confirm fringe contributions match your WD obligations. A self-audit is cheaper than an investigation. (DOL WHD Enforcement Data)

2. REGULATORY · COMMENT PERIOD OPEN

DOL’s joint employer rule would make your sub’s wage problem your problem.

WHD published an NPRM on April 22 proposing a single national standard for joint employer status under the FLSA, FMLA, and MSPA (Docket WHD-2026-0067). Under a broad standard, flowing down SCA clauses in your subcontract is not enough; if the sub pays workers below WD rates, the prime can be on the hook for back wages and debarment risk. Monitor the NPRM and consider submitting comments if your business model depends on sub-tier labor compliance. (DOL Press Release) | (On the Labor Front, Apr. 24)

3. FRINGE & BENEFITS

ACA enhanced credits are gone. ICHRA enrollment just tripled.

The ACA enhanced premium tax credits expired at year-end with no extension; premiums are up a median 18% in 2026, the largest jump since 2018. ICHRA adoption has tripled year-over-year as SCA contractors shift to defined-contribution models to cap fringe spend and give employees portable coverage. Two compliance numbers: the 2026 ACA affordability threshold is 9.96% of household income, and the FPL safe harbor for self-only ICHRA coverage is ~$129.89/month; if your allowance falls below that, employees can claim premium tax credits and your ACA exposure becomes real. (KFF/Health System Tracker) | (AJMC, Apr. 29) | (HRP Network, Apr. 27)

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Know the Reg

29 CFR Part 4, Subpart D

SCA Fringe Compliance Under a Firm-Fixed-Price Contract

Under 29 CFR Part 4, the SCA H&W and wage obligation attaches to the work, not the contract structure; if covered employees are performing services on a qualifying contract, you owe the full WD rate and fringe contribution for every hour worked regardless of whether the contract is cost-plus, T&M, or FFP. The difference is the funding mechanism: under cost-plus, a mid-contract WD update flows to a mod; under FFP, a $0.50/hr raise across 30 employees working 2,000 hours a year is $30,000 you don’t get back. FFP SCA contractors must build WD rate escalation, the annualized H&W rate ($5.55/hr standard), and conformance-driven wage adjustments into their pricing models at bid, not after award.

Dates to remember

• May 11: ⚠️ EO 13658 minimum wage ($13.65/hr) takes effect. Update payroll systems for legacy SCA/DBA contracts awarded Jan. 1, 2015 through Jan. 29, 2022 that have not been renewed or extended since Jan. 30, 2022. Hard date.

• May 12 — SCA Unlocked. Practical solutions for fringe, finance, and legal experts. Free. Vienna, VA. Presented by the MarshMcLennan Agency.

• May 20–21: DOL Virtual Prevailing Wage Seminar, SCA & DBA. Free. Two days. Covers wage determinations, conformances, enforcement. Forward to your contract managers.

• May 26: H-1B/PERM Prevailing Wage NPRM comments due. If you employ H-1B workers on SCA contracts, the proposed wage floor changes have layered implications. (Federal Register)

• Jul 24: ⚠️ Deadline: Modify all existing contracts to incorporate FAR 52.222-90 (DEI anti-discrimination clause). Missing this modification creates FCA exposure. Build it into your contract administration queue now.

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Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.

This week: DOL just proposed a national joint employer rule that could make your prime contract the target of your sub’s wage violation. A new FAR clause creates FCA exposure on DEI certifications and it’s already in new solicitations. The Federal Circuit made it materially easier to enforce a CICA stay on recompetes. And WHD’s FY2025 SCA enforcement data is now confirmed: $26.75M recovered, up 90% year-over-year.

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In this issue:

• ⚖️ Lead: DOL Joint Employer NPRM — prime contract liability for sub violations

• 🏛️ FAR 52.222-90: new DEI clause is live and creates FCA exposure

• ⚖️ Federal Circuit lowers the bar on CICA stay enforcement for incumbents

• 📊 WHD FY2025 SCA enforcement: $26.75M confirmed — 90% spike

• 📖 Know the reg: Joint employer under 29 CFR Part 791

• 📅 Dates to remember

LEAD STORY

DOL Just Proposed a Rule That Could Make Your Prime Contract Liable for Your Sub’s Wage Violations

On April 22, WHD published a proposed rule establishing a single national standard for determining joint employer status under the FLSA, the FMLA, and the MSPA. (DOL Press Release) The practical target: clarifying when a prime contractor on a federal service contract shares liability with a subcontractor for wage violations the sub commits.

Why it matters

Joint employer status under SCA isn’t new. But a codified national standard (replacing the current patchwork of circuit-by-circuit interpretations) changes how consistently WHD can pursue primes for sub violations. Right now, enforcement exposure depends heavily on where the contract is performed. A uniform federal rule removes that geography defense.

The rule pairs with DOL’s pending independent contractor NPRM (comment period closed April 28) to form the second major WHD classification rulemaking in 60 days. Together, they’re drawing tighter lines around who counts as an employee, who counts as an employer, and who’s on the hook when wages come up short. Both rules are pre-final; monitor for publication timelines.

The operational implication isn’t hypothetical. WHD’s FY2025 SCA enforcement data shows $26.75M recovered across 641 compliance actions, a 90% year-over-year spike in dollars despite fewer investigations. Targeted audits. Higher recovery per action. If your sub has a wage problem and a joint employer finding sticks, that recovery comes from your contract.

What to do now

Pull your subcontract templates. Do they require subs to maintain certified payroll records and provide direct access on request? A requirement for certified payroll summaries only is insufficient if WHD decides to look upstream.

Map your subcontracting arrangements on active SCA contracts. Which subs are performing work that would be SCA-covered if done by direct hires? Those are the relationships the joint employer rule is designed to reach.

Verify your flowdown provisions include the SCA labor standards clause (FAR 52.222-41) and any applicable wage determinations, not just references to them.

If you’re pricing a recompete that relies heavily on subcontracted labor, model joint employer exposure into your compliance overhead assumptions now.

In Brief

1. FAR/DFARS · FCA EXPOSURE

FAR 52.222-90 Is Live. New Solicitations Must Include It. Existing Contracts Have Until July 24.

Effective April 24, 2026, the FAR Council directed agencies to incorporate a new clause — FAR 52.222-90 — into all new solicitations and resulting contracts. The clause implements EO 14398 (Addressing DEI Discrimination by Federal Contractors, signed March 26). Existing contracts must be modified to include it by July 24, 2026.

The clause does three things:

1. Requires a contractor certification of no racially discriminatory DEI activity

2. Makes that certification “material to payment” under the False Claims Act

3. Enables debarment for noncompliance

The FCA angle is the one to flag. SCA contractors are already familiar with false certification exposure from certified payroll. This clause adds a separate certification track on the same contract. If your DEI practices are in any gray area under EO 14173 and 14398, this clause converts that gray area into a payment-integrity question. Add FAR 52.222-90 to your solicitation review checklist now. Review existing contracts for the July 24 modification deadline.

Sources: FAR Council Guidance, Apr. 17, 2026 | GRSM April 2026 Update

2. CASE LAW · PROTEST STRATEGY

The Federal Circuit Just Made It Easier to Hold Your Position on a Recompete. Here’s How.

In Life Science Logistics v. United States (Apr. 15, 2026), the Federal Circuit held that a contractor challenging an agency’s CICA stay override only needs to show the agency’s decision was arbitrary and capricious, not satisfying the four-factor injunctive relief test the Court of Federal Claims had previously required.

For SCA incumbents on recompetes, this is a direct upgrade to your protest toolkit. The CICA automatic stay kicks in when a GAO protest is filed within 10 days of contract award. Agencies can override that stay, but incumbents now face a substantially lower bar to challenge that override in court. The prior standard was a significant barrier to preserving an incumbent position during a protest. That barrier is lower now.

This doesn’t change GAO protest rules or timelines. What it changes is what happens if the agency tries to move past the stay while the protest is pending. If you have recompetes in protest or nearing that window, discuss the Life Science Logistics decision with counsel before the agency acts.

Sources: Government Contracts Legal Forum, Apr. 2026 | PilieroMazza Analysis

3. WAGE DETERMINATIONS · SYSTEMS

Two SAM.gov Outages Are Still Open. No Restoration Timeline for Either.

The SAM.gov e98 form for requesting SCA wage determinations has been offline since January 30, 2026. The Feb. 19 notice about CBA rate update delays on Davis-Bacon wage determinations is still active. Neither outage has a published restoration timeline as of April 27. (SAM.gov Wage Determinations)

For e98 requests: email the completed form to scasfe98@dol.gov. Don’t wait for the portal to come back.

For CBA-linked Davis-Bacon WDs: verify current rates manually before exercising options or bidding recompetes. The WD number may be live on SAM.gov but the rates on it may be stale.

Neither outage gets discussed much, but if you submitted an e98 in the last 90 days through the portal and never got a response, you may not have confirmation that the request was received. Follow up.

Source: SAM.gov Wage Determinations

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Know the Reg

29 CFR Part 791

Joint Employer

Under 29 CFR Part 791, two or more employers are “joint employers” when each has, separately or together, the right to control an employee’s terms and conditions of employment. The consequence: both employers are jointly and severally liable for wage violations, meaning WHD can pursue either one, or both, for the full amount of back wages owed.

In a federal service contracting context, this matters when a prime contractor exercises enough operational control over a subcontractor’s workforce to create a joint employer relationship. Factors WHD examines include who sets work schedules, who supervises day-to-day work, who has the power to hire and fire, and who controls the physical worksite.

Joint employer status is not triggered by every prime-sub arrangement. But SCA contracts where the prime provides direct supervision, sets shift schedules, or controls access to the worksite are higher risk than pure pass-through subcontracting. The new WHD joint employer NPRM (April 22) aims to establish a single national standard for this analysis, replacing a circuit-by-circuit patchwork that currently produces inconsistent outcomes depending on where the contract is performed.

Operational implication: if WHD finds joint employer status, your contract is the recovery vehicle, even if your sub is the one that underpaid. That’s not a hypothetical. It’s the mechanism behind prime contractor debarment exposure in cases where the sub is the direct employer.

Sources: 29 CFR Part 791 | DOL NPRM, Apr. 22, 2026

Dates to remember

• May 6–7 — DOL Forum: Protecting America’s Workforce. WHD-led forum with self-audit panels. Dallas, TX.

• May 11 — EO 13658 minimum wage effective date. $13.65/hr applies to legacy contracts (awarded Jan. 1, 2015–Jan. 29, 2022, not renewed after Jan. 30, 2022). Payroll system deadline, not a grace period.

• May 12 — SCA Unlocked. Practical solutions for fringe, finance, and legal experts. Free. Vienna, VA. Presented by the MarshMcLennan Agency.

• May 20–21 — DOL Virtual Prevailing Wage Seminar — SCA & DBA. Free. Two-day virtual seminar covering SCA, DBA, EO wage requirements, conformances, and enforcement. Registration via Eventbrite. Worth sending compliance staff.

• May 26 — H-1B/PERM Prevailing Wage NPRM Comments Due. Proposed rule would significantly raise prevailing wage floors for H-1B workers. If you use H-1B labor on SCA-covered IT or professional services contracts, model cost impact before this closes.

• Jul 24 — Deadline to modify existing contracts to include FAR 52.222-90 (DEI anti-discrimination clause). Mark the calendar now. Don’t let this come up at option exercise.

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Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.

This week: a D.C. subcontractor got hit with $596K in back wages and a three-year debarment for running a wage kickback scheme on affordable housing projects.

DOJ also stood up a new fraud enforcement division that puts certified payroll squarely in the crosshairs, DHS procurement is surging at 190% year-over-year (and almost all of it is SCA-covered service work), and California’s new fringe annualization law is live. Plus a hard payroll deadline in three weeks.

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In this issue:

⚖️ $596K recovery + debarment: the D.C. wage kickback case

🏛️ DOJ’s new National Fraud Enforcement Division

📈 DHS procurement surges 190% YoY, SCA implications

🏗️ California AB 889: mandatory fringe annualization is here

⏱ EO 13658 minimum wage deadline: May 11

📖 Know the reg: ERISA parallel exposure on bona fide benefit plans

📅 Dates to remember

LEAD STORY

A D.C. contractor paid prevailing wages by check, then demanded the money back in cash. $596K and a three-year ban later, here’s what went wrong.

WHD investigated J. Solano HVAC LLC, a subcontractor on two Washington, D.C. affordable housing projects, and found a textbook kickback scheme: the company paid 31 workers the required prevailing wage by check, then verbally demanded return of any wages above $30/hr. On top of that, WHD found the company had misclassified skilled sheet metal workers and pipefitters as lower-wage laborers to reduce its wage obligation on paper.

Result: $596,443 in back wages and fringe benefits recovered. Three-year debarment for the company and its owner. The violations were willful, the scheme was deliberate, and the penalties were maximum.

Why it matters

This is a Davis-Bacon case, but the enforcement mechanics are identical under SCA. Kickback schemes, wage misclassification, and dual payroll manipulation carry the same debarment exposure on service contracts. WHD doesn’t distinguish between DBA and SCA when it comes to willful violations. If a sub on your contract is running this kind of arrangement, your prime contract is the one that gets the audit letter.

The case also lands at a moment when wage theft enforcement is intensifying across multiple jurisdictions. LCPtracker’s April 2026 analysis documents criminal wage theft prosecutions in New York City and Westchester County, Idaho WHD recoveries of roughly $300K in unpaid overtime, and a broader pattern of certified payroll falsification being prosecuted criminally, not just civilly. The enforcement posture is no longer “pay back wages and move on.” It’s “pay back wages and lose your bidding eligibility.”

What to do now

1. Audit your subcontractor certified payroll submissions against actual wage disbursements. If a sub’s reported wages look correct on paper but worker complaints suggest otherwise, that’s the gap WHD is targeting.

2. Review your flowdown provisions. Are your subs required to provide direct access to payroll records, not just certified payroll summaries? If your subcontract only requires the summary, you’re flying blind on the actual disbursements.

3. Run a labor classification check on your active contracts. Are workers performing skilled trade work classified at the correct WD labor category, or slotted into a lower category? Misclassification is the second-fastest path to a back-wage finding after outright underpayment.

4. If you have reason to believe a sub is non-compliant, document your discovery and notify the CO. Knowing about a violation and failing to act on it is its own debarment risk.

In Brief

1. FCA ENFORCEMENT · STRUCTURAL SHIFT

DOJ just created a new division to coordinate fraud enforcement. Certified payroll is in scope.

The Department of Justice announced the creation of a National Fraud Enforcement Division on April 7. The division will coordinate False Claims Act enforcement across agencies, centralizing what was previously handled by individual U.S. Attorney offices.

For SCA contractors, the practical implication is more coordinated enforcement against false certifications, including certified payroll submissions. FCA fraud in government contracting is already the largest category of DOJ civil recovery ($6.8B in FY2025). A dedicated coordination unit means pattern-matching across contracts, agencies, and jurisdictions gets faster. If you’re submitting certified payroll on multiple contracts across multiple agencies and one of them has a compliance gap, the new structure makes it more likely that gap gets connected to your other work.

This also reinforces the FCA exposure attached to the DEI contract clause (Issue 003 lead story) and the broader trend of compliance certifications being treated as material to payment decisions.

Source: DOJ Press Release, Apr. 7, 2026

2. PROCUREMENT · SCA PIPELINE

DHS civilian procurement is up 190% year-over-year. Almost all of it is SCA-covered work.

Bloomberg Government data shows DHS border enforcement operations have driven civilian procurement spending to nearly equal all of FY2025’s total in just the first half of FY2026. Overall civilian agency procurement hit $139B through H1 FY2026, up 24% year-over-year. DHS is consuming a disproportionate share of that growth.

The SCA connection: DHS service contracts span facilities management, security, logistics, IT support, and base operations, all SCA-covered categories. If you’re an SCA contractor not currently tracking DHS solicitations on SAM.gov, you’re missing the fastest-growing segment of the federal service contract market.

Separately, multiple NAVFAC Base Operations Support (BOS) IDIQs awarded in 2021-2022 are entering recompete windows in Q2/Q3 FY2026. BOS contracts are heavily SCA-covered (facilities, grounds, custodial, security). Competitors should begin WD and workforce classification reviews now.

Sources: PilieroMazza Weekly Update, Apr. 16 | OppyHound

3. STATE LAW · FEDERAL SIGNAL

California AB 889: fringe annualization is now mandatory. Federal H&W auditors are watching.

California’s AB 889, effective January 1, 2026, rewrote how fringe benefit credit is calculated on state public works contracts. Two changes with federal implications: (1) fringe contributions must be annualized across an employee’s total hours, public and private, using any consistent 12-month period; (2) frontloading is eliminated. Contractors can no longer stack 100% of their fringe contributions against public project hours to maximize credit.

This mirrors the methodology WHD uses under Davis-Bacon. And it signals a direction of travel that could inform how federal auditors scrutinize SCA H&W fringe credit calculations going forward, particularly for contractors who run mixed books between public works and commercial work.

If you have California public works contracts with state funding triggers, audit your annualization methodology now. Violations under AB 889 can result in contract fund withholding, civil wage assessments, and CSLB debarment.

If you don’t have California state work, read this anyway. WHD has historically borrowed enforcement methodology from state labor agencies. California tends to go first.

Source: Seyfarth Shaw, Apr. 14, 2026

4. WAGE MINIMUMS · DEADLINE: MAY 11

EO 13658 minimum wage hits $13.65/hr on May 11. Check your legacy contracts now.

The Executive Order 13658 minimum wage rises to $13.65/hr effective May 11, 2026, three weeks out. The rate applies to contracts awarded between January 1, 2015 and January 29, 2022 that have not been renewed or extended on or after January 30, 2022. Tipped workers: $9.55/hr.

Most active SCA contracts will already exceed this threshold through their WD prevailing wages. The exposure sits in legacy, low-wage service contracts that haven’t been recompeted, facilities support, grounds maintenance, custodial work, where base wages may be close to minimum and fringe hasn’t been revisited. Also flag any contracts on federal property that aren’t formally covered by Davis-Bacon or SCA but fall under EO 13658 by virtue of federal nexus.

Payroll systems need to reflect the new rate on May 11 paychecks, not on the next convenient pay cycle after May 11.

Sources: DOL WHD EO 13658 | CWC.org

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Know the Reg

29 CFR Part 4

ERISA

When your bona fide benefit plan has a second regulator watching.

If you satisfy your SCA H&W obligation through a bona fide benefit plan (health insurance, pension, 401(k)), that plan is almost certainly subject to ERISA. Which means you have two compliance regimes running in parallel on the same fringe dollar.

On April 14, DOL’s Employee Benefits Security Administration published Field Assistance Bulletin 2026-01, updating ERISA enforcement priorities. The bulletin establishes guiding principles for how EBSA will prioritize investigations and enforcement actions on employee benefit plans.

For SCA contractors, the intersection matters because a bona fide benefit plan that satisfies WHD’s fringe requirements can still trigger ERISA violations independently. Excessive administrative fees, plan forfeitures that revert to the employer, or fiduciary failures in plan management create EBSA exposure even when your H&W dollar amount clears the WD floor.

Under 29 CFR Part 4, WHD evaluates whether the net benefit delivered to the employee meets the H&W obligation. If your plan charges fees that erode the actual benefit below the WD rate, WHD can find a fringe shortfall. EBSA can simultaneously investigate the same plan for fiduciary breaches. Two agencies, two statutes, same plan.

What to do: Ask your plan administrator for a current fee disclosure and confirm that net benefit delivery (after all administrative costs) still clears your WD H&W rate. If you haven’t reviewed plan documents since your last option exercise, do it before the next one.

Sources: DOL EBSA FAB 2026-01 | 29 CFR Part 4

Dates to remember

• Apr 28 — IC Rule Comment Period Closes. DOL’s proposed rule to rescind the 2024 independent contractor standard. If you use IC arrangements on SCA-covered work, this affects your classification exposure. Submit comments or notify counsel.

• Apr 28–30 — ABCs of the SCA Training — PilieroMazza. Three-day comprehensive SCA compliance training with Nichole Atallah and Sarah Nash. Most thorough program on the market.

• Apr 30 — Using JVs to Win Work with GSA — PilieroMazza. Webinar with Meghan Leemon on structuring joint ventures for GSA and beyond.

• May 6–7 — DOL Forum: Protecting America’s Workforce. WHD-led forum with self-audit panels. Dallas, TX.

• May 11 — EO 13658 minimum wage effective date. $13.65/hr applies to covered legacy contracts. Payroll system deadline, not a grace period.

• May 12 — SCA Unlocked: Practical Solutions for Fringe, Finance, and Legal Experts. Panel with Sarah Nash (PilieroMazza), Traci Shepps (Cherry Bekaert), Katie Bjornstad Amin (Groom Law Group), and Stephanie Craghead (CVRD Health). Moderated by Casey Nunneker (Marsh McLennan Agency). 4–7 PM ET at Patsy’s American, Vienna, VA.

• May 26 — H-1B/PERM Prevailing Wage NPRM Comments Due. If you use H-1B workers on SCA-covered IT or professional services contracts, model the cost impact before this window closes.

• Jun 8–11 — NSBGCA Alaska Regional Conference & Golf Tournament. Anchorage, AK.

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Thank you to our sponsor, SCA Unlocked. Register for their networking event in Vienna, VA on May 12th to engage with experts who will guide you through the complexities of fringe benefits, financial strategies, and legal obligations to optimize your organization's compliance and enhance employee satisfaction. Understand how to navigate risks and stay current with regulatory updates. Details here.

Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.

This week: WHD recovered 90% more in SCA back wages last year, on fewer cases. That’s not a typo. The ARB also reminded everyone that writing a check doesn’t keep you off the debarment list. And a hard DEI clause deadline lands in 11 days. Let’s get into it.

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In this issue:

⚖️ WHD back-wage numbers hit 90% year-over-year spike

🚨 ARB affirms debarment without willful intent

💊 ACA premiums are up 18–26%, does your fringe still work?

📖 Know the reg: FAR 52.222-43

WHD recovered 90% more in back wages last year, with fewer cases

FY2025 SCA enforcement data is final. The number: $26.75M in back wages recovered from SCA contractors, up from $14.1M in FY2024. But here’s the part that should get your attention: WHD opened fewer cases (641 vs. 765) and found violations in fewer of them (445 vs. 548). The per-case recovery nearly doubled.

Fewer audits. Bigger hits. That’s not an agency losing interest. That’s an agency getting selective.

Why it matters

• WHD is running a quality-over-quantity enforcement strategy. Fewer cases, higher dollar recoveries. If you think declining case volume means less risk, the data says you’re wrong.

• WHD Administrator Andrew Rogers confirmed at the Capital Summit that the agency is running two tracks: fast resolution on routine complaints, targeted pursuit of “egregious” violations. If you have gaps, you’re now easier to find, not harder.

• Total WHD back-wage recovery across all laws hit $259M in FY2025, the highest since FY2019. The enforcement appetite is structural. (DOL WHD Enforcement Data)

What to do now

1. Pull your SCA compliance posture by contract. Unimplemented WD modifications are the most common trigger for large back-wage recoveries. If there’s a contract mod you haven’t fully implemented, that’s your exposure.

2. Map your workforce classification. Anyone treated as an independent contractor on a covered contract is direct back-wage exposure under DOL’s pending independent contractor NPRM.

3. Run a fringe gap analysis across your active portfolio. If you’re within $0.50/hr of the H&W floor on any contract, close it before an audit finds it for you.

4. Review your certified payroll records. WHD increasingly requests these in targeted investigations. You want to know what’s in them before they do.

In Brief

ENFORCEMENT

The ARB just confirmed: paying back wages does not save you from debarment

A contractor paid every dollar of back wages and fringe benefits WHD asked for. No willful intent. Full cooperation. The ARB debarred them for three years anyway.

In Administrator, WHD v. Seven Hills, Inc. (ARB No. 2024-0005, decided January 30, 2026), the violation was straightforward: a contract modification incorporated a new wage determination, and the contractor didn’t implement it promptly. Nearly a decade of administrative proceedings later, the ARB’s holdings are worth reading slowly:

Why it matters:

• Debarment does not require intentional misconduct. “Culpable neglect,” meaning you should have known, is enough.

• Paying back wages resolves the monetary liability. It does not resolve the compliance failure. These are two different problems.

• Debarment exposure outlasts the corrected violation. There is no statute of limitations on the underlying conduct in administrative proceedings.

Bottom line: every contract modification that incorporates a new WD is a compliance event, not administrative mail. Assign it. Track it. Implement it. (ARB Decision) | (CWC Analysis)

2. REGULATORY

DEI clause hard deadline: April 25, 11 days out

By April 25, agencies must insert the mandatory DEI compliance clause into all new and modified contracts. The EO defines “racially discriminatory DEI activities” broadly: any disparate treatment based on race or ethnicity in hiring, promotions, vendor agreements, program participation (mentoring programs, leadership tracks, ERGs), or the allocation of an entity’s resources. That last bucket is wide open, and it’s the one that will catch people off guard.

Here’s the part that changes the math: compliance is deemed “material to the Government’s payment decisions” under the False Claims Act. Every invoice you submit after April 25 is also an implicit DEI certification.

Why it matters:

• The definition covers more than employment decisions. Mentorship programs with race-based eligibility, supplier diversity set-asides, and resource allocation tied to demographics all fall within scope.

• This isn’t just a contract clause. It’s FCA exposure on every payment request. The treble-damage math applies.

• Subcontractor flow-down obligations are included. You’re responsible for “known or reasonably knowable” noncompliance down the chain. Your subs’ DEI problem becomes your FCA problem.

• FAR Council interim guidance isn’t due until May 25. The clause deadline arrives a month before the implementation guidance. Don’t wait for the guidance to start your review.

Conduct a privileged internal audit of DEI policies, training programs, and vendor agreements now. PilieroMazza’s April 22 webinar is the most targeted guidance session before the deadline. (PilieroMazza Client Alert) | (Fox Rothschild FCA Analysis)

3. FRINGE & BENEFITS

ACA premiums spiked. If you’re using marketplace plans to deliver SCA fringe, check your math.

The setup: SCA contractors owe a Health & Welfare fringe benefit on every covered contract. Many satisfy that obligation by steering employees toward ACA marketplace plans, sometimes paying part of the premium, sometimes just pointing employees to healthcare.gov and calling it done.

The problem: enhanced ACA premium tax credits expired December 31, 2025. Congress hasn’t extended them. Marketplace premiums jumped 18–26% in 2026. That means your employees’ out-of-pocket costs went up significantly, and the fringe delivery mechanism you built your bids around may no longer hold.

These are two separate compliance exposures, and rising premiums can trigger both at once:

Why it matters:

• SCA fringe gap risk. Your H&W obligation is set by the wage determination on each contract. If you’re relying on marketplace plans to deliver that fringe and the employee’s actual cost now exceeds what you’re contributing, you have a gap. WHD doesn’t care how you structure it. They care whether the employee received the full H&W benefit.

• ACA affordability risk. Separately, the ACA employer mandate requires that coverage cost employees no more than 9.96% of household income (2026 threshold). The safe harbor monthly cap is $129.89. If your employees’ premiums now exceed that, you may owe ACA penalty taxes on top of any SCA back-wage exposure.

• ICHRA as an alternative. Individual Coverage HRAs let you set a fixed dollar contribution per employee class and let them pick their own plan. It’s the cleanest way to lock in your fringe cost and stay compliant on both the SCA and ACA side. One catch for 2026: ICHRA and Section 125 cafeteria plans cannot be combined. That integration was left out of the final budget legislation.

If you bid contracts assuming 2025 premium levels, remodel now. Don’t wait for option exercise. (AJMC) | (CBIZ)

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Know the Reg

FAR 52.222-43

Fair Labor Standards Act and Service Contract Labor Standards — Price adjustment (multiple year and option contracts)

This is the clause that lets you recover SCA wage and fringe cost increases on multi-year contracts and option renewals. It’s also one of the most underused tools in a contractor’s toolkit.

FAR 52.222-43 entitles you to a price adjustment for mandatory wage determination increases, but only the portion that’s truly mandatory (new WD rates or statutory minimums), not voluntary fringe enhancements or market-driven labor cost bumps.

Two things most contractors get wrong:

1. The adjustment is not automatic. You have to request it and document the methodology. Nobody’s going to hand it to you.

2. The government has been wildly inconsistent in how it evaluates these claims, which is exactly why NOAA issued an RFI on standardizing the methodology earlier this month.

FAC 2026-01 (effective March 13, 2026) updated the clause language for the FAR Overhaul. If your contracts still reference the old version, flag it with your CO. And a tip worth its weight in billing hours: structure your original pricing to track mandatory vs. voluntary fringe components separately. It makes adjustment claims vastly easier to defend when the CO pushes back. (Acquisition.gov — FAR 52.222-43)

Dates to remember

• Apr 22 — The New DEI Crackdown: What Federal Contractors Must Do Now (PilieroMazza webinar). Three days before the hard clause deadline — worth attending.

• Apr 23 — Future-Proofing Your Contracts: Legal Compliance Updates (PilieroMazza, Nichole D. Atallah). FAR overhaul, SCA compliance updates, and 2026 enforcement landscape.

• Apr 25 — HARD DEADLINE: DEI contract clause must be in all new and modified contracts (EO 14398). No grace period.

• Apr 28 — Comment deadline: DOL Independent Contractor NPRM (economic reality test for FLSA/SCA worker classification). Submit at regulations.gov.

• Apr 28–30 — ABCs of the SCA: Critical Path Training (PilieroMazza, Atallah & Nash). Three-day intensive covering WDs, fringe compliance, and WHD enforcement. Strongest SCA-specific training currently available.

• May 6–7 — 2026 DOL Forum: Protecting America’s Workforce (Free, virtual). WHD, OSHA, EBSA, EEOC, IRS panels. The self-audit session led by WHD is directly relevant for SCA program development.

• May 11 — EO 13658 minimum wage increases to $13.65/hr. Applies to pre-January 30, 2022 contracts not renewed under EO 14026.

• May 26 — Comment deadline: DOL H-1B/PERM Prevailing Wage NPRM. Proposed Level I wage floor would shift from 17th to 34th percentile — effectively doubling entry-level H-1B wages. (DOL ETA)

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Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.

This week: Your CPARS ratings just got a lot more consequential. As of April 1, past performance evaluations are no longer locked in a source selection vault. They follow you across the entire acquisition lifecycle.

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In this issue:

📋 CPARS Ratings Now Visible Across the Acquisition Lifecycle

⚖ Fourth Circuit Clears DEI Certification for Enforcement

🏛️ $30M FCA Settlement Signals No Letup

🤖 DOL’s AI Initiative Targets Federal Service Workforce

📖 Know the Reg

📅 On the Horizon

Your CPARS ratings just left the source selection room.

Every agency decision maker can see them now.

The FAR overhaul went into effect April 1, 2026. The critical change: past performance evaluations are no longer marked “Source Selection Information” and no longer restricted to future source selection decisions. Starting now, your CPARS ratings, narratives, and supporting data can be used throughout the entire acquisition lifecycle.

That means contract administrators, COs exercising options, program managers reviewing task order performance, and agency officials making responsibility determinations all have access to the same performance record that used to live behind a source selection wall. Wiley’s analysis calls this one of the few “substantive changes” in the Part 42 overhaul.

For SCA contractors, this shift is operationally significant. Labor compliance performance on covered contracts, including H&W fringe delivery, wage determination conformance, and WHD audit outcomes, now feeds directly into option exercise decisions, task order awards, and responsibility reviews. A marginal CPARS rating on one contract can follow you into every other conversation an agency has about your company.

Why it matters

Under the old rule, a mediocre past performance evaluation hurt you in the next source selection and nowhere else. Under the new rule, it can influence whether an agency exercises your option, assigns you the next task order, or questions your responsibility on an unrelated procurement. The change also eliminates the cautionary language that previously discouraged agencies from sharing performance data outside source selection contexts.

The Acquisition Alert confirms: “Evaluations of contractor performance developed on contracts awarded prior to April 1, 2026 should be marked ‘Source Selection Information.’” Contracts awarded after April 1 carry no such marking. Your performance record is now a portfolio-wide asset or liability.

What to do now

1. Pull your current CPARS evaluations across all active contracts. Read the narratives, not just the ratings. If any evaluation references SCA compliance issues, wage determination errors, or WHD findings, those are now visible to every agency decision maker, not just source selection teams.

2. If you have pending CPARS evaluations with unresolved contractor comments, escalate them. The new visibility makes contested ratings more consequential.

3. Brief your program managers. CPARS is no longer an annual administrative task. It’s a continuous performance record that affects option exercises, task orders, and responsibility determinations.

4. Document SCA compliance performance proactively. If your H&W delivery is clean, your WD conformances are current, and your WHD record is strong, make sure your CPARS narratives reflect it.

5. Monitor the final rule. FAR Case 2026-012 (Parts 34, 42, and 48) is still in draft. The deviation is live now, but the permanent rule may add further changes.

In Brief

1. DEI ENFORCEMENT

Fourth Circuit Clears the Path. The DEI Certification Provision Is Now Enforceable.

The U.S. Court of Appeals for the Fourth Circuit vacated the preliminary injunction that had blocked enforcement of the EO 14173 DEI certification requirement. The court held that certifying compliance with existing anti-discrimination laws does not compel or restrict protected speech. The certification provision is now live.

But the boundaries remain unsettled. Chief Judge Diaz’s concurrence acknowledged there is “absolutely” lawful DEI activity, and the court explicitly declined to define what constitutes “illegal DEI” at this stage. Dechert’s analysis notes that “litigation challenging the Trump Administration’s anti-DEI executive actions is ongoing, and the legal landscape remains fluid.”

Combined with the March 26 EO requiring the new mandatory contract clause by April 25, this creates a two-front enforcement posture: the certification provision from EO 14173 is enforceable now, and the new FCA-backed clause arrives in 19 days. If you haven’t completed your internal DEI audit, the window is closing. PilieroMazza’s April 22 webinar is the most targeted guidance session available before the deadline.

2. FCA ENFORCEMENT

$30M Settlement Reminds Everyone: FCA Enforcement Doesn’t Take Breaks.

Two Ohio asphalt companies paid $30 million combined to settle False Claims Act allegations of submitting fraudulent testing data on federally funded highway projects. The companies allegedly submitted false lab results certifying that materials met federal specifications when they did not.

This isn’t an SCA case. But the enforcement mechanism is identical to the one now attached to the DEI contract clause. FCA materiality means the government doesn’t need to prove you intended to defraud. It needs to prove you certified something material that wasn’t true. DOJ recovered a record $6.8 billion in FCA settlements in FY2025 with 1,297 qui tam filings. The enforcement appetite is structural, not cyclical. Every compliance shortcut on a federal obligation, whether it’s testing data, DEI certifications, or SCA fringe delivery, carries the same treble-damage math.

3. WORKFORCE

DOL Launches “Make America AI-Ready.” If You Manage a Federal Service Workforce, Take Note.

DOL announced a free AI literacy course for workers on March 24, aligned with its broader AI Literacy Framework. The initiative targets workers whose jobs may be affected by AI-driven changes, including federal service contract employees.

For SCA contractors, this signals DOL’s growing attention to how AI reshapes the work performed under service contracts. If AI tools automate tasks currently classified under SCA wage determinations, questions about worker classification, covered positions, and WD applicability follow. The initiative is voluntary today. The regulatory attention behind it is not. Track this alongside the independent contractor proposed rule (comments close April 28), which could further complicate worker classification on AI-augmented service contracts.

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FAR 42.1503 / FAR 2.101

Source Selection Information

Until April 1, 2026, contractor past performance evaluations were classified as “Source Selection Information” under FAR 2.101 — meaning they could only be used in future source selection decisions and were restricted from broader disclosure.

The Revolutionary FAR Overhaul’s Part 42 rewrite removed that designation. CPARS evaluations on contracts awarded after April 1 are no longer marked Source Selection Information and can now be used across the entire acquisition lifecycle: option exercises, task order decisions, responsibility determinations, and contract administration actions.

The practical shift is significant. Under the old framework, a poor CPARS narrative on one contract stayed in a source selection silo. Under the new framework, it follows you into every agency decision about your company. For SCA contractors, this means labor compliance performance — H&W delivery, WD conformance, and WHD audit history — is now visible to every decision maker, not just the next evaluation board. Your CPARS record is no longer a source selection data point. It’s a portfolio-wide reputation score.

Dates to remember

• Apr 15 — Labor Rules & Regulations: Federal Market Compliance (PilieroMazza). Virtual training with Sarah Nash on SCA/DBA labor compliance for federal contractors.

• Apr 22 — The New DEI Crackdown: What Federal Contractors Must Do Now (PilieroMazza). Nash, Feinberg, and Brier. The most targeted DEI compliance guidance before the April 25 clause deadline.

• Apr 23 — NCMA Warfighter Acquisition Forum. Ronald Reagan Building, Washington, D.C.

• Apr 25 — Deadline: Agencies must insert DEI contract clause into contracts (EO 14398). Internal audit should be complete before this date.

• Apr 28 — Deadline: Comments on DOL Independent Contractor Proposed Rule (DOL). The streamlined economic reality test could change SCA coverage determinations.

• Apr 28–30 — ABCs of the SCA: Critical Path SCA Training (PilieroMazza). Three-day virtual training with Atallah and Nash. 2 PM–4 PM ET daily.

• May 11 — EO 13658 minimum wage increase to $13.65/hr takes effect. Applies to pre-Jan 30, 2022 contracts not renewed under EO 14026. Hard effective date, not a grace period.

• May 21 — DOL Prevailing Wage Seminar: SCA (Virtual). Free WHD seminar covering wage determinations, conformances, and enforcement. 11 AM–5:30 PM ET.

• May 25 — Deadline: FAR Council DEI deviation guidance due. Agencies must issue interim guidance on the DEI contract clause within 60 days of the March 26 EO.

• Jul 26–29 — NCMA World Congress 2026. Walt Disney World Swan & Dolphin, Orlando.

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Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.

This week: DOL’s Administrative Review Board just upheld a three-year debarment for a contractor whose SCA violation wasn’t even intentional. “Culpable neglect” was enough.

In this issue:

⚖ Debarment for Non-Willful SCA Violations

💊 ACA Premiums Double, ICHRA Gains Ground

🏛️ FAR Overhaul Shifts to Outcome-Based Compliance

⚖ GAO Sustains WD Amendment Protest

🚨 New DEI EO Creates FCA Liability

📖 Know the Reg

📅 On the Horizon

The DOL Administrative Review Board affirmed a three-year debarment of Seven Hills, Inc. under the SCA (ARB No. 2024-0005, ALJ No. 2018-SCA-00002), even though the contractor did not act willfully and paid all back wages and fringe benefits once the violations were identified.

The violation: failing to promptly implement a new wage determination after a contract modification. The contractor argued it relied on guidance from the contracting activity (NEXCOM). The ARB rejected that defense outright. Contractors have an affirmative obligation to seek DOL guidance on SCA compliance, not agency guidance. The contracting officer is not your compliance department.

The standard that got them: “culpable neglect.” Not fraud. Not willful underpayment. Neglect. The ARB held that repayment of back wages is not a safe harbor against debarment. You can write every check WHD asks for and still lose your ability to bid for three years.

Why it matters

This resets the risk calculus for every SCA contractor. Most operators treat wage determination updates on contract modifications as routine paperwork. This decision says that’s exactly the attitude that triggers debarment. A three-year ban affects not just the contract in question but your entire federal portfolio. Teaming partners drop you. Primes won’t sub to you. The downstream revenue loss dwarfs whatever back wages you owed.

CWC’s follow-up guidance puts it plainly: treat contract modifications and WD updates as “critical compliance action items, not routine paperwork.”

What to do now

1. Audit your process for implementing wage determination changes on contract modifications. If your process is “the CO tells us,” you have a gap.

2. Build a documented compliance review trigger for every contract modification, not just the ones that look like they involve labor.

3. Verify that your team knows to seek DOL/WHD guidance on SCA questions, not contracting officer guidance. The ARB made the distinction explicit.

4. If you have unresolved WD discrepancies on any active contract, fix them now. Voluntary correction before an investigation is the strongest defense you have. WHD Administrator Rogers confirmed at the PayrollOrg Capital Summit that WHD rewards proactive self-correction.

5. Review WHD’s PAID (Payroll Audit Independent Determination) program as a self-audit safe harbor. Rogers flagged it specifically as a compliance tool for good-faith employers.

In Brief

1. FRINGE & BENEFITS

ACA Premiums Doubled. Your Employees Noticed. Your Fringe Strategy Should Too.

The enhanced ACA premium tax credits expired December 31, 2025. The House passed a three-year extension in January, but the Senate hasn’t acted. The result: subsidized enrollees’ premium payments more than doubled, a 114% average increase according to KFF. Unsubsidized benchmark premiums rose 26% in 2026, the largest jump in eight years.

If your SCA fringe strategy relies on employees using ACA marketplace plans to satisfy H&W obligations, those employees are now paying significantly more out of pocket. The math that worked in 2025 may not work in 2026.

ICHRA adoption is accelerating as a response. CBIZ published analysis positioning ICHRAs as a “strategic response” to subsidy changes. ICHRA allows per-class customization (full-time vs. part-time, geographic), which maps well to SCA workforce structures. The 2026 affordability threshold is 9.96%, with an FPL safe harbor monthly limit of $129.89.

Action: Model the impact of expired PTCs on employees using marketplace plans for H&W. Evaluate ICHRA as an alternative fringe delivery mechanism for FY2027 bids now, not at option exercise.

2. REGULATORY

The FAR Overhaul Is Live. Your Compliance Checklists Are Already Outdated.

Phase 1 of the Revolutionary FAR Overhaul is complete. The final batch of class deviations for Parts 8, 15, 16, 42, 45, and 47 went effective March 16. FAR Part 22 (which contains SCA provisions at Subpart 22.10) hasn’t been overhauled yet, but the surrounding framework has changed fundamentally. Clause numbers are renumbered. Thresholds have shifted: TINA up from $2M to $10M, CAS full coverage from $50M to $100M, CAS per-contract from $2.5M to $35M (effective after June 30, 2026).

The bigger shift is philosophical. Ogletree Deakins published analysis (March 13) flagging the move to “outcome-based accountability.” The principles-based framework relies on contractor judgment rather than prescriptive FAR checklists. Translation: your internal compliance processes now carry the weight that FAR specificity used to carry.

FAR Case 2025-007 also updated RFO Parts 1, 5, 10, 22, 25, and 52 for trade agreement thresholds, the first formal case to modify the RFO model deviation text.

Action: Pull updated RFO text from acquisition.gov. Update proposal templates, compliance matrices, and flowdown clauses that reference FAR/DFARS numbers. If you haven’t started, you’re already behind.

3. CASE LAW

GAO Hands Protesters a New Tool: Unacknowledged Wage Determination Amendments.

In Ryba Marine Construction Co. (B-423796.2), GAO sustained a protest where the awardee failed to acknowledge a solicitation amendment that updated the Davis-Bacon wage determination and revised structural specs. The GAO held that materiality is judged by substance, not dollar impact, and that acknowledging an amendment is a binding legal act with limited agency discretion to waive.

The nuance: GAO split its analysis element-by-element. The WD portion of the amendment only affected labor categories not required under the contract, so it was immaterial. The structural specs were material. Materiality is assessed per element, not in aggregate.

This applies directly to SCA wage determinations incorporated by amendment. If you lose an award and the winner didn’t acknowledge a WD amendment, check the labor categories. If any affected category is required under the contract, you may have a viable protest.

4. ENFORCEMENT · COMPLIANCE

New DEI Executive Order Creates FCA Liability for Federal Contractors. You Have 30 Days.

President Trump signed an executive order on March 26 requiring agencies to insert a new six-point clause into all contracts, subcontracts, and lower-tier subcontracts within 30 days (by April 25, 2026). Contractors must certify they do not engage in “racially discriminatory DEI activities,” defined as disparate treatment based on race or ethnicity in hiring, promotions, contracting, or resource allocation.

The teeth: compliance is deemed “material to the Government’s payment decisions” under the False Claims Act (31 USC §3729). Submitting an invoice while a prohibited activity exists could trigger FCA liability, not just contract termination or debarment. FortneyScott’s analysis breaks down the full six-point clause. WorldatWork’s federal roundup provides additional context.

Action: Audit employee programs, mentoring tracks, ERGs, and supplier diversity initiatives for race/ethnicity-based eligibility criteria now. Update subcontractor flowdown clauses. FAR Council must issue interim guidance within 60 days. Do not wait for the guidance to start your internal review.

Know the Reg

29 CFR § 4.187 · Term of the Issue

Culpable Neglect

Under the SCA’s debarment provisions, DOL does not need to prove a contractor intended to violate wage requirements. “Culpable neglect” is sufficient. It means the contractor should have known about its obligations but failed to take reasonable steps to comply. Relying on a contracting officer’s interpretation of SCA requirements rather than seeking DOL/WHD guidance qualifies. Paying back wages after the fact does not cure the neglect. The ARB’s recent decision in Seven Hills, Inc. confirmed this standard applies even when the contractor cooperated fully and remediated immediately. The practical implication: your compliance system must include affirmative monitoring of wage determinations, not reactive correction.

On the horizon

• Apr 15 — Labor Rules & Regulations: Federal Market Compliance (PilieroMazza). Covers labor compliance obligations in the federal market, including SCA and Davis-Bacon.

• Apr 28–30 — ABCs of the SCA: Critical Path SCA Training for GovCon (PilieroMazza). Three-day SCA deep dive from Atallah & Nash. If you’re new to SCA or onboarding compliance staff, this is the one.

• May 12–15 — Payroll Congress 2026 — Nashville, TN. PayrollOrg’s flagship conference. Four days of workshops on compliance, wage & hour, and government contracts.

• May 21 — DOL Prevailing Wage Seminar: SCA (Virtual). Free WHD seminar covering SCA coverage, wage determinations, conformances, and enforcement. 11 AM–5:30 PM ET.

• Jul 26–29 — NCMA World Congress 2026 — Orlando, FL. NCMA’s flagship event at Walt Disney World Swan & Dolphin. Acquisition, contracting, and compliance across the federal market.

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Welcome to Issue 001. This newsletter exists because the SCA community has always deserved a sharp, plain-English briefing and has never had one. We plan to fix that, bi-weekly, starting now.

Today: DOL just moved the minimum wage floor to $13.65 effective May 11th. Keep reading to learn exactly what that means for your contracts, your bids, and your fringe program.

In this issue:

💰 Minimum Wage Floor Raised to $13.65

⚖️ SCA Coverage & Staffing Workers

📋 EEO-1 & OFCCP Risk

📅 Successor Contract Window

📖 Know the Reg

Effective May 11, 2026, the hourly minimum wage for certain SCA contracts subject to area wage determinations rises to $13.65 per hour—up from $13.35. The $0.30 increase is modest on paper. Across a workforce of 50 covered employees working full-time, that’s roughly $31,000 in additional annual fringe obligations you didn’t price into existing contracts.

The new minimum wage rate applies to federal contracts entered into between January 1, 2015 and January 29, 2022, that were not renewed or extended on or after January 30, 2022. The new rate does not apply to contracts entered into after January 20, 2022. Specifically, Executive order 13658 (signed February 12, 2014) established a minimum wage for workers on covered federal contracts.

What to do before May 1st

Step 1. Audit your contract portfolio and identify all SCA covered contracts entered into between Jan 1, 2015 and Jan 29, 2022, that have not renewed or extended.

Step 2. Notify and coordinate with your payroll and HR teams to ensure wage systems are updated to reflect $13.65 effective May 11, 2026.

Step 3. Review subcontractor flow-downs.

Step 4. Update cost accounting and forecasting for affected contracts through the remaining period of performance.

Step 5. Post required notices. EO 13658 requires contractors to post notices of the applicable minimum wage rate in a prominent and accessible place at the worksite.

Context: EO 13658 vs 14026

Be aware that two separate EO wage schedules are currently in effect. EO 14026 (signed April 27, 2021) applies to contracts entered into, renewed, or extended on or after January 30, 2022, and carries a higher minimum wage rate. The $13.65 rate exclusively applies to the older EO 13658 population of contracts. Contractors who have both pre-2022 legacy contracts and newer contracts should maintain parallel compliance tracking to avoid applying the wrong rate to the wrong contract.

In Brief

1. SCA COVERAGE SCOPE

Your staffing agency workers may be SCA-covered. Most contractors assume they’re not.

SCA coverage isn’t determined by your contract structure — it’s determined by the nature of the work. If a worker placed by a staffing agency is performing services that would be SCA-covered if performed by a direct hire, WHD’s economic reality analysis often finds coverage applies anyway. The H&W obligation can follow the work, not the W-2. Contractors with a significant contingent workforce on federal sites should map their SCA coverage scope against their actual workforce arrangement—not just their payroll headcount. The gap between those two numbers is where WHD finds back wages.

2. OFCCP RISK

EEO-1 data is now public. OFCCP uses it. Do you know what yours shows?

Aggregated EEO-1 workforce data from recent filing cycles is now publicly accessible. This matters for SCA contractors because OFCCP increasingly cross-references industry workforce composition benchmarks when selecting contractors for compliance reviews. The data itself isn’t the risk. The risk is not knowing how your submission compares before an OFCCP scheduling letter arrives. Pull your last EEO-1 filing and look at your job group composition against the public aggregates for your NAICS code. Surprises are better found internally.

3. SUCCESSOR CONTRACTS

Q2 is the riskiest quarter for successor obligation failures. Here’s why.

Federal fiscal year runs October–September, which means January–March is when many contract recompetes transition. If you’ve recently won a successor contract and haven’t formally requested the predecessor’s seniority list within 10 days of contract award, you may already be in violation. That list determines which employees you’re obligated to offer employment. It’s not optional, and “we didn’t know” is not a WHD defense.

Know the Reg

29 CFR Part 4 · Term of the Issue

Bona Fide Fringe Benefit

Under 29 CFR Part 4, the H&W fringe obligation is only satisfied by a “bona fide” benefit. Meaning a genuine, ongoing commitment to employee welfare, not just an accounting entry. A plan that technically charges H&W contributions but returns forfeitures to the employer, layers excessive administrative fees, or provides coverage that never actually insures the worker does not qualify.

The WHD looks at the net benefit delivered to the employee, not the cost shown on the employer’s books. Plans that fail this test leave contractors liable for the full H&W fringe in cash, retroactively, plus potential back-wage penalties. If you’re not sure whether your plan qualifies, ask your plan administrator for a written bona fide determination.

On the Horizon

Apr 1

Q2 WHD reporting cycle closes. Begin pulling your certified payroll records for any audits pending from Q4 2025 activity.

May 11

Minimum wage rate effective date. $13.65/hour applies to all area WD contracts. This is not a grace period deadline; it’s a hard effective date.

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