Government Contractors

Companies that do government work face a complex web of HR policies, manuals, and compliance requirements that go far beyond standard private sector practices. These requirements stem from various federal regulations, contract clauses, and oversight mechanisms designed to ensure fair labor practices, workplace safety, and proper use of taxpayer funds.

Core Regulatory Frameworks

Federal Acquisition Regulation (FAR) Requirements

Government contractors must comply with numerous FAR clauses that flow down to HR practices:

•  FAR 52.222-41 (Service Contract Act/SCA): Requires payment of prevailing wages and fringe benefits for service employees, with specific record-keeping for hours worked and wages paid

•  FAR 52.222-50 (Combating Trafficking in Persons): Mandates awareness programs, reporting hotlines, and compliance plans for contracts over $500K

•  FAR 52.222-35/36 (Veterans and Disabled Veterans) and FAR 52.222-37 (Disabled Individuals): Require affirmative action for veteran and disability hiring with annual reporting

•  FAR 52.222-40 (Notification of Employee Rights) and FAR 52.222-54 (Pay Transparency): Protect employee organizing rights and prohibit pay secrecy policies

Davis-Bacon Act and Related Acts

For construction contracts, contractors must pay prevailing wages and maintain:

•  Certified payroll records submitted weekly

•  Detailed wage determination classifications

•  Fringe benefit calculations or cash equivalents

Executive Order Compliance

Recent executive orders create ongoing compliance obligations:

•  EO 14042/13991: COVID-19 safety protocols and vaccination requirements (status varies by contract date and court rulings)

•  EO 13665: Pay transparency and non-retaliation for wage discussions

•  EO 11246 (as amended): Affirmative action and non-discrimination requirements

Required HR Manuals and Policies

Affirmative Action Plans (AAPs)

Contractors with 50+ employees and $50K+ in contracts must maintain written AAPs including:

•  Workforce analysis by job group and minority/women representation

•  Availability analysis using census data

•  Goals and timetables for underutilized groups

•  Narrative explaining good faith efforts

Equal Employment Opportunity (EEO) Policies

Must include specific language prohibiting discrimination based on:

•  Race, color, religion, sex, sexual orientation, gender identity, national origin

•  Disability and veteran status

•  Retaliation for protected activity

Code of Conduct and Ethics

Government contracts often require:

•  Gift and gratuity policies (strict limits on accepting anything of value from government officials)

•  Conflict of interest disclosures

•  Procurement integrity training

•  Whistleblower protection procedures

Drug-Free Workplace Policy

Required by the Drug-Free Workplace Act of 1988 for contracts over $100K:

•  Written policy statement

•  Employee education programs

•  Notification of conviction reporting requirements

•  Disciplinary actions for violations

Specialized Compliance Areas

Security Clearance and Personnel Security

For classified contracts:

•  Personnel security questionnaires (SF-86 processing)

•  Continuous evaluation procedures

•  Foreign contact reporting requirements

•  Insider threat programs

Timekeeping and Labor Charging

DCAA (Defense Contract Audit Agency) compliance requires:

•  Detailed timekeeping policies with labor distribution requirements

•  Supervisor approval of timesheets

•  Policies prohibiting "borrowing" labor between contracts

•  Uncompensated overtime tracking for salaried employees

Compensation and Benefits

•  Executive compensation caps: Limits on reimbursable executive salaries (currently around $700K+ annually, adjusted for inflation)

•  Fringe benefit allocation: Proper distribution of benefits across direct/indirect costs

•  Leave policies: Must track leave by project for cost accounting

Record-Keeping and Reporting Requirements

Mandatory Reports

•  VETS-4212: Annual veteran employment report

•  EEO-1: Annual demographic workforce data

•  OFCCP compliance evaluations: Random audit selection

•  Incurred Cost Submissions: Annual indirect cost proposals for flexibly priced contracts

Retention Periods

•  Payroll records: 3 years minimum (often longer for open contracts)

•  AAPs and supporting documentation: Duration of contract plus specified periods

•  Timekeeping records: Subject to DCAA audit indefinitely

Industry-Specific Considerations

Defense Contractors

Additional requirements through DFARS (Defense Federal Acquisition Regulation Supplement):

•  NIST SP 800-171 cybersecurity compliance affecting HR data handling

•  CMMC (Cybersecurity Maturity Model Certification) personnel screening

•  ITAR (International Traffic in Arms Regulations) citizenship requirements

Healthcare and Research

•  IRB (Institutional Review Board) policies for human subjects research

•  HIPAA compliance for handling protected health information

•  FDA regulations for clinical trial personnel qualifications

Practical Implementation

Companies should organize these into a Compliance Library containing:

1.  Master index of applicable contract clauses by award

2.  Annual AAPs with workforce analyses

3.  Policy manuals with government-specific addenda

4.  Training records and completion certificates

5.  Audit response protocols and historical filings

The Office of Federal Contract Compliance Programs (OFCCP) and DCAA conduct random and complaint-driven audits, making proactive documentation essential rather than reactive preparation.

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Sources:

: Federal Acquisition Regulation (FAR) official text and clause matrix

: Defense Contract Audit Agency (DCAA) audit guidelines and contractor business system requirements

: Office of Federal Contract Compliance Programs (OFCCP) technical assistance guides and AAP development resources