An analysis from Censeo Consulting Group says an increase in the minimum wage for federal contract workers as directed by an executive order will have a minor impact on government contract spending but will likely result in agencies reviewing and modifying 30,520 contracts.
“We project that analyzing and modifying these contracts will add 450,000 additional hours to the workload of contracting offices, which is the equivalent of over 240 additional full-time roles,” the Censeo report states.
In late April, President Biden signed an executive order that will require government contractors to raise the minimum wage of employees working on federal contracts from $10.95 to $15 per hour by 2022.
The departments of Defense (DOD), Veterans Affairs (VA), Agriculture (USDA) and State are among the agencies that will be the most impacted by the executive order.
The report estimates the new policy’s impact on federal spending to be between $1 billion and $2 billion and recommends that agencies take several measures to prepare for the EO, including segmenting contract portfolio by delivery location and spend category to determine contracts most likely to be impacted, developing a policy and process for addressing such contracts and analyzing vendor price structures to identify contracts that will need modifications.