(a) Authority of the Secretary. Section 4(b) of the Act as amended
in 1972 authorizes the Secretary to ``provide such reasonable
limitations'' and to ``make such rules and regulations allowing
reasonable variations, tolerances, and exemptions to and from any or all
provisions of this Act (other than Sec. 10), but only in special
circumstances where he
determines that such limitation, variation, tolerance, or exemption is
necessary and proper in the public interest or to avoid the serious
impairment of Government business, and is in accord with the remedial
purpose of this Act to protect prevailing labor standards.'' This
authority is similar to that vested in the Secretary under section 6 of
the Walsh-Healey Public Contracts Act (41 U.S.C. 40) and under section
105 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 331).
(b) Administrative action under section 4(b) of the Act. The
authority conferred on the Secretary by section 4(b) of the Act will be
exercised with due regard to the remedial purpose of the statute to
protect prevailing labor standards and to avoid the undercutting of such
standards which could result from the award of Government work to
contractors who will not observe such standards, and whose saving in
labor cost therefrom enables them to offer a lower price to the
Government than can be offered by the fair employers who maintain the
prevailing standards. Administrative action consistent with this
statutory purpose may be taken under section 4(b) with or without a
request therefor, when found necessary and proper in accordance with the
statutory standards. No formal procedures have been prescribed for
requesting such action. However, a request for exemption from the Act's
provisions will be granted only upon a strong and affirmative showing
that it is necessary and proper in the public interest or to avoid
serious impairment of Government business, and is in accord with the
remedial purpose of the Act to protect prevailing labor standards. If
the request for administrative action under section 4(b) is not made by
the headquarters office of the contracting agency to which the contract
services are to be provided, theviews of such office on the matter
should be obtained and submitted with the request or the contracting
officer may forward such a request through channels to the agency
headquarters for submission with the latter's views to the Administrator
of the Wage and Hour Division, Department of Labor, whenever any wage
payment issues are involved. Any request relating to an occupational
safety or health issue shall be submitted to the Assistant Secretary for
Occupational Safety and Health, Department of Labor.
(c) Documentation of official action under section 4(b). All papers
and documents made a part of the official record of administrative
action pursuant to section 4(b) of the Act are available for public
inspection in accordance with the regulations in 29 CFR part 70.
Limitations, variations, tolerances and exemptions of general
applicability and legal effect promulgated pursuant to such authority
are published in the Federal Register and made a part of the rules
incorporated in this part 4. For convenience in use of the rules, they
are generally set forth in the sections of this part covering the
subject matter to which they relate. (See, for example, Secs. 4.5(b),
4.6(o), 4.112 and 4.113.) Any rules that are promulgated under section
4(b) of the Act relating to subject matter not dealt with elsewhere in
this part 4 will be set forth immediately following this paragraph.
(d) In addition to the statutory exemptions in Sec. 7 of the Act
(see Sec. 4.115(b)), the following types of contracts have been exempted
from all the provisions of the Service Contract Act of 1965, pursuant to
section 4(b) of the Act, prior to its amendment by Public Law 92-473,
which exemptions the Secretary of Labor found to be necessary and proper
in the public interest or to avoid serious impairment of the conduct of
Government business:
(1) Contracts entered into by the United States with common carriers
for the carriage of mail by rail, air (except air star routes), bus, and
ocean vessel, where such carriage is performed on regularly scheduled
runs of the trains, airplanes, buses, and vessels over regularly
established routes and accounts for an insubstantial portion of the
revenue therefrom;
(2) Any contract entered into by the U.S. Postal Service with an
individual owner-operator for mail service where it is not contemplated
at the time the contract is made that such owner-operator will hire any
service employee to
perform the services under the contract except for short periods of
vacation time or for unexpected contingencies or emergency situations
such as illness, or accident; and
(3) Contracts for the carriage of freight or personnel where such
carriage is subject to rates covered by section 10721 of the Interstate
Commerce Act.
(e) The following types of contracts have been exempted from all
the provisions of the Service Contract Act of 1965, pursuant to section
4(b) of the Act, which exemptions the Secretary of Labor found are
necessary and proper in the public interest or to avoid serious
impairment of the conduct of Government business, and are in accord
with the remedial purpose of the Act to protect prevailing labor
standards:
(1)(i) Prime contracts or subcontracts principally for the
maintenance, calibration, and/or repair of:
(A) Automated data processing equipment and office information/word
processing systems;
(B) Scientific equipment and medical apparatus or equipment where
the application of microelectronic circuitry or other technology of at
least similar sophistication is an essential element (for example,
Federal Supply Classification (FSC) Group 65, Class 6515, ``Medical
Diagnostic Equipment''; Class 6525, ``X-Ray Equipment''; FSC Group 66,
Class 6630, ``Chemical Analysis Instruments''; Class 6665,
``Geographical and Astronomical Instruments'', are largely composed of
the types of equipment exempted under this paragraph);
(C) Office/business machines not otherwise exempt pursuant to
paragraph (e)(1)(i)(A) of this section, where such services are
performed by the manufacturer or supplier of the equipment.
(ii) The exemptions set forth in this paragraph (e)(1) shall apply
only under the following circumstances:
(A) The items of equipment are commercial items which are used
regularly for other than Government purposes, and are sold or traded by
the contractor (or subcontractor in the case of an exempt subcontract)
in substantial quantities to the general public in the course of normal
business operations;
(B) The prime contract or subcontract services are furnished at
prices which are, or are based on, established catalog or market prices
for the maintenance, calibration, and/or repair of such commercial
items. An ``established catalog price'' is a price included in a
catalog, price list, schedule, or other form that is regularly
maintained by the manufacturer or the contractor, is either published
or otherwise available for inspection by customers, and states prices
at which sales currently, or were last, made to a significant number of
buyers constituting the general public. An ``established market price''
is a current price, established in the usual course of trade between
buyers and sellers free to bargain, which can be substantiated from
sources independent of the manufacturer or contractor; and
(C) The contractor utilizes the same compensation (wage and fringe
benefits) plan for all service employees performing work under the
contract as the contractor uses for these employees and equivalent
employees servicing the same equipment of commercial customers;
(D) The contractor certifies to the provisions in this paragraph
(e)(1)(ii). Certification by the prime contractor as to its compliance
with respect to the prime contract also constitutes its certification
as to compliance by its subcontractor if it subcontracts out the exempt
services. The certification shall be included in the prime contract or
subcontract.
(iii)(A) Determinations of the applicability of this exemption to
prime contracts shall be made in the first instance by the contracting
officer on or before contract award. In making a judgment that the
exemption applies, the contracting officer shall consider all factors
and make an affirmative determination that all of the conditions in
paragraph (e)(1) of this section have been met.
(B) Determinations of the applicability of this exemption to
subcontracts shall be made by the prime contractor on or before
subcontract award. In making a judgment that the exemption applies, the
prime contractor shall consider all factors and make an affirmative
determination that all of the conditions in paragraph (e)(1) have been
met.
(iv)(A) If the Administrator determines after award of the prime
contract that any of the requirements in paragraph (e)(1) of this
section for exemption has not been met, the exemption will be deemed
inapplicable, and the contract shall become subject to the Service
Contract Act, effective as of the date of the Administrator's
determination. In such case, the corrective procedures in Sec. 4.5(c)
shall be followed.
(B) The prime contractor is responsible for compliance with the
requirements of the Service Contract Act by its subcontractors,
including compliance with all of the requirements of this exemption
(see Sec. 4.114(b)). If the Administrator determines that any of the
requirements in paragraph (e)(1) for exemption has not been met with
respect to a subcontract, the exemption will be deemed inapplicable,
and the prime contractor may be responsible for compliance with the Act
effective as of the date of contract award.
(2)(i) Prime contracts or subcontracts principally for the
following services where the services under the contract or subcontract
meet all of the criteria set forth in paragraph (e)(2)(ii) of this
section and are not excluded by paragraph (e)(2)(iii):
(A) Automobile or other vehicle (e.g., aircraft) maintenance
services (other than contracts to operate a Government motor pool or
similar facility);
(B) Financial services involving the issuance and servicing of
cards (including credit cards, debit cards, purchase cards, smart
cards, and similar card services);
(C) Contracts with hotels/motels for conferences, including lodging
and/or meals which are part of the contract for the conference (which
shall not include ongoing contracts for lodging on an as needed or
continuing basis);
(D) Maintenance, calibration, repair and/or installation (where the
installation is not subject to the Davis-Bacon Act, as provided in
Sec. 4.116(c)(2)) services for all types of equipment where the
services are obtained from the manufacturer or supplier of the
equipment under a contract awarded on a sole source basis;
(E) Transportation by common carrier of persons by air, motor
vehicle, rail, or marine vessel on regularly scheduled routes or via
standard commercial services (not including charter services);
(F) Real estate services, including real property appraisal
services, related to housing federal agencies or disposing of real
property owned by the Federal Government; and
(G) Relocation services, including services of real estate brokers
and appraisers, to assist federal employees or military personnel in
buying and selling homes (which shall not include actual moving or
storage of household goods and related services).
(ii) The exemption set forth in this paragraph (e)(2) shall apply
to the services listed in paragraph (e)(2)(i) only when all of the
following criteria are met:
(A) The services under the prime contract or subcontract are
commercial--i.e., they are offered and sold regularly to non-
Governmental customers, and are provided by the contractor (or
subcontractor in the case of an exempt subcontract) to the general
public in substantial quantities in the course of normal business
operations.
(B) The prime contract or subcontract will be awarded on a sole
source basis or the contractor or subcontractor will be selected for
award on the basis of other factors in addition to price. In such
cases, price must be equal to or less important than the combination of
other non-price or cost factors in selecting the contractor.
(C) The prime contract or subcontract services are furnished at
prices which are, or are based on, established catalog or market
prices. An established price is a price included in a catalog, price
list, schedule, or other form that is regularly maintained by the
contractor or subcontractor, is either published or otherwise available
for inspection by customers, and states prices at which sales are
currently, or were last, made to a significant number of buyers
constituting the general public. An established market price is a
current price, established in the usual course of trade between buyers
and sellers free to bargain, which can be substantiated from sources
independent of the manufacturer or contractor.
(D) Each service employee who will perform services under the
Government contract or subcontract will spend only a small portion of
his or her time (a monthly average of less than 20 percent of the
available hours on an annualized basis, or less than 20 percent of
available hours during the contract period if the contract period is
less than a month) servicing the government contract or subcontract.
(E) The contractor utilizes the same compensation (wage and fringe
benefits) plan for all service employees performing work under the
contract or subcontract as the contractor uses for these employees and
for equivalent employees servicing commercial customers.
(F) The contracting officer (or prime contractor with respect to a
subcontract) determines in advance, based on the nature of the contract
requirements and knowledge of the practices of likely offerors, that
all or nearly all offerors will meet the requirements in paragraph
(e)(2)(ii) of this section. Where the services are currently being
performed under contract, the contracting officer or prime contractor
shall consider the practices of the existing contractor in making a
determination regarding the requirements in paragraph (e)(2)(ii). If
upon receipt of offers, the contracting officer finds that he or she
did not correctly determine that all or nearly all offerors would meet
the requirements, the Service Contract Act shall apply to the
procurement, even if the successful offeror has certified in accordance
with paragraph (e)(2)(ii)(G) of this section.
(G) The contractor certifies in the prime contract or subcontract,
as applicable, to the provisions in paragraph (e)(2)(ii)(A) and (C)
through (E) of this section. Certification by the prime contractor as
to its compliance with respect to the prime contract also constitutes
its certification as to compliance by its subcontractor if it
subcontracts out the exempt services. If the contracting officer or
prime contractor has reason to doubt the validity of the certification,
SCA stipulations shall be included in the prime contract or
subcontract.
(iii)(A) If the Administrator determines after award of the prime
contract that any of the requirements in paragraph (e)(2) of this
section for exemption has not been met, the exemption will be deemed
inapplicable, and the contract shall become subject to the Service
Contract Act. In such case, the corrective procedures in Sec. 4.5(c)
shall be followed.
(B) The prime contractor is responsible for compliance with the
requirements of the Service Contract Act by its subcontractors,
including compliance with all of the requirements of this exemption
(see Sec. 4.114(b)). If the Department of Labor determines that any of
the requirements in paragraph (e)(2) for exemption has not been met
with respect to a subcontract, the exemption will be deemed
inapplicable, and the prime contractor may be responsible for
compliance with the Act, as of the date of contract award.
(iv) The exemption set forth in this paragraph (e)(2) does not
apply to solicitations and contracts:
(A) Entered into under the Javits-Wagner-O'Day Act, 41 U.S.C. 47;
(B) For the operation of a Government facility or portion thereof
(but may be applicable to subcontracts for services set forth in
paragraph (e)(2)(ii) that meet all of the criteria of paragraph
(e)(2)(ii)); or
(C) Subject to section 4(c) of the Service Contract Act, as well as
any options or extensions under such contract.
[48 FR 49762, Oct. 27, 1983 as amended at 65 FR 45903, July 26, 2000;
66 FR 5327, Jan. 18, 2001]
