Service Contract Act; Labor Standards for Federal Service Contracts
[Proposed Rules] [07/26/2000]
Service Contract Act; Labor Standards for Federal Service Contracts
[07/26/2000]
Volume 65, Number 144, Page 45943-45952
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DEPARTMENT OF LABOR
Office of the Secretary
29 CFR Part 4
RIN 1215-AB26
Service Contract Act; Labor Standards for Federal Service
Contracts
AGENCY: Wage and Hour Division, Employment Standards Administration,
Labor.
ACTION: Proposed rule.
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SUMMARY: Pursuant to Section 4(b) of the McNamara-O'Hara Service
Contract Act (SCA), the Department of Labor (DOL or the Department) is
proposing exemptions from coverage for certain contracts for commercial
services. The proposed exemptions were requested by the Administrator
for Federal Procurement Policy, Office of Federal Procurement Policy
(OFPP), in a May 12, 1999, letter to the Secretary of Labor
representing that the requested exemptions were both necessary and
proper in the public interest, and in accord with the remedial purpose
of the SCA to protect prevailing labor standards.
DATES: Comments are due on or before August 25, 2000.
ADDRESSES: Submit written comments to John R. Fraser, Deputy
Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, Room S-3502, 200 Constitution
Avenue, N.W., Washington, DC 20210. Commenters who wish to receive
notification of receipt of comments are requested to include a self-
addressed, stamped postcard, or to submit them by certified mail,
return receipt requested. As a convenience to commenters, comments may
be transmitted by facsimile (``FAX'') machine to (202) 693-1432 (this
is not a toll-free number). If transmitted by facsimile and a hard copy
is also submitted by mail, please indicate on the hard copy that it is
a duplicate copy of the facsimile transmission.
FOR FURTHER INFORMATION CONTACT: William W. Gross, Director, Office of
Wage Determinations, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, Room S-3028, 200 Constitution
Avenue, N.W., Washington, D.C. 20210; telephone (202) 693-0062. This is
not a toll-free number.
SUPPLEMENTARY INFORMATION:
I. Paperwork Reduction Act
This rule contains no reporting or recordkeeping requirements
subject to the Paperwork Reduction Act of 1980 (Pub. L. 96-511). The
existing information collection requirements contained in Regulations,
29 CFR Part 4 were previously approved by the Office of Management and
Budget under OMB control number 1215-0150.
II. Background
On October 1, 1995, the Federal Acquisition Regulations were
amended to implement provisions of the Federal Acquisition Streamlining
Act (FASA). One provision of the final regulation, 48 CFR
12.504(a)(10), provided that the requirements of the McNamara-O'Hara
Service Contract Act (SCA) are not applicable to subcontracts at any
tier for the acquisition of commercial items or services.
After a subsequent review of the issue by the FAR Council the
Administrator for Federal Procurement Policy wrote to the Secretary of
Labor and requested that the Department propose an exemption for a more
limited group of commercial service contracts (both prime contracts and
subcontracts). The Administrator stated that the FAR Council had
concluded that a blanket exemption of all subcontracts for commercial
items may not adequately serve the Administration's policy of
supporting exemptions of the SCA only where they do not undermine the
purposes for which the SCA was enacted. Therefore the FAR Council
agreed that any exemption from the coverage of SCA for subcontracts for
the acquisition of commercial items or components should be
accomplished under the Secretary of Labor's authority in the SCA, and
stated that it would withdraw the FAR provision.
The FAR Council indicated that the adoption of their
recommendations will further the commitment of the Administration to be
more commercial-like, encourage broader participation in government
procurement by companies doing business in the commercial sector, and
reinforce their commitment to reduce government-unique terms and
conditions from their contracts. Furthermore, the FAR Council
represented that the limited exemptions that it proposed could be
accomplished without compromising the remedial purpose of the SCA to
protect prevailing labor standards.
The Department of Labor has reviewed the requested exemptions and
the representations of the FAR Council and has concluded that a
sufficient showing has been made to propose to
[[Page 45944]]
implement the exemptions requested by the FAR Council. Based on the
representations, the Department has preliminarily determined that the
exemption would meet the requirements of Section 4(b) of the Act that
exemptions be necessary and proper in the public interest or to avoid
serious impairment of Government business, and in accord with the
remedial purpose of the SCA to protect prevailing labor standards.
Comments are requested on this determination.
Contemporaneously with publication of this NPRM in the Federal
Register, the FAR Council is publishing a final rule removing the SCA
from the list of laws inapplicable to subcontracts for commercial
items, currently in the FAR at 48 CFR 12.504(a)(10). As a result, a
small group of commercial subcontracts that were previously exempted
under the FAR rule and that also meet the requirements of DOL's
proposed rule could change from exempt to nonexempt and back to exempt
if the DOL proposal becomes final as it is currently proposed. To
prevent the disruption that could be caused by such changes, including
the possible disruption of services if the current subcontractor does
not agree to continue the subcontract services under the requirements
of SCA, the Department has published a final rule in today's Federal
Register, temporarily exempting from the SCA those commercial
subcontracts which meet the criteria of this NPRM. This final rule will
remain in effect for one year from today's date or until the Department
completes its rulemaking on this NPRM, whichever occurs first. The
Department notes that it intends to proceed expeditiously with this
rulemaking and anticipates that a final rule, after review of all of
the comments, will be issued within six months.
III. Summary of the Proposed Exemptions
This proposal, as requested by the FAR Council, addresses two
separate but somewhat related issues. First, the current exemption for
the maintenance and repair of Automated Data Processing (ADP)
equipment, 29 CFR 4.123(e)(1), is proposed to be modified to reflect
terminology changes in law that have occurred since the exemption was
originally established; broaden the exemption to cover information
technology as currently defined; apply the exemption to installation
services; and apply the exemption to subcontracts as well as prime
contracts. Second, a new exemption is proposed, similar to the current
ADP exemption, to exempt both prime contractors and subcontractors for
a specified subset of commercial services that meet certain criteria.
Proposed Revision of the Current ADP Exemption
The Clinger-Cohen Act of 1996, Divisions D and E of Pub. L. 104-
106, repealed the Brooks Automatic Data Processing Act, 40 U.S.C. 759,
and set forth a new framework for the management and acquisition of
information technology, replaced the ``ADP'' terminology originally in
the Brooks ADP Act with ``information technology'' to reflect the
convergence of ADP and telecommunications equipment and technology. See
40 U.S.C. 1401 et seq. This proposal would reflect this change in the
regulations.
Further, as recommended by the FAR Council, the exemption would be
updated to reflect the current statutory definition of ``information
technology'' and be consistent with other regulations. As defined at 40
U.S.C. 1401(3) and incorporated in the FAR, 48 CFR 2.101, the term
``information technology,'' with respect to an executive agency, means
``any equipment or interconnected system or subsystem of equipment that
is used in the automatic acquisition, storage, manipulation,
management, movement, control, display, switching, interchange,
transmission, or reception of data or information.'' Under this
definition, equipment is considered to be used by an executive agency
if the agency uses the equipment directly or if the equipment is used
by a contractor under a contract which requires the use of such
equipment, or requires the use of such equipment to a significant
extent in the performance of a service or the furnishing of a product.
The term ``information technology'' does not include any equipment that
is acquired by a contractor incidental to a contract; or any equipment
that contains imbedded information technology that is used as an
integral part of the product, but the principal function of which is
not the acquisition, storage, manipulation, management, movement,
control, display, switching, interchange, transmission, or reception of
data or information. For example, HVAC (heating, ventilation, and air
conditioning) equipment such as thermostats or temperature control
devices and medical equipment where information technology is integral
to its operation, is not information technology.
This proposal would also add installation services to the current
regulatory exemption where those services are not subject to the Davis-
Bacon Act, 40 U.S.C. 276a et seq. See 29 CFR 4.116(c)(2). Service
contracts often involve installation of information technology (IT)
equipment, for example installing and maintaining a local area network,
or installing and maintaining new telephones or a telephone system. The
same employees are performing installation as are performing
maintenance and repair services. Thus, the same conditions that support
the exemption for the maintenance services also support an exemption
for installation services, and the addition of installation services
will simply reflect what is happening in the market place.
Finally, the current exemption would indicate that the exemption
applies to subcontracts meeting the regulatory criteria as well as
prime contracts. The Department requests comments on whether there is
any reason that the exemption at the prime contract level should not
apply equally to subcontracts which meet the criteria, as well as on
the other proposed modifications to Sec. 4.123(e)(1). Because the prime
contractor is responsible for compliance with all of the contract
requirements, including the SCA, if the Department determines that the
exemption has been incorrectly applied to a subcontract, the proposed
regulation provides that it may require that SCA stipulations be
included in the subcontract effective as of the date of contract award.
New Exemption for Certain Commercial Service Contracts
In certain situations, an employee's work on a government contract
represents a small portion of his or her time and the balance of the
time is spent on commercial work. In such cases, the FAR Council
represents that the Government loses the full benefits of competition
for its service contracts because some contractors decline to compete
for Government work due to specific government requirements. To remedy
this situation, the FAR Council has recommended an exemption framework
that it believes will protect prevailing labor standards and avoid the
undercutting of such standards by contractors. The factual basis for
the FAR Council's view that the proposed exemption is necessary and
proper in the public interest or to avoid the serious impairment of
Government business is set forth below. In addition, in order that the
exemption comport with the statutory requirement that it be in accord
with the remedial purposes of the Act to protect prevailing labor
standards, the proposed regulation provides a number of criteria which
must be satisfied. The rationale for these
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criteria is also explained below. Comments are requested for each
listed service as to whether the proposed exemption, given its criteria
and limitations, is necessary and proper in the public interest or to
avoid the serious impairment of Government business, and in accord with
the remedial purpose of the SCA to protect prevailing labor standards.
As recommended by the FAR Council, this proposal would exempt from
SCA a short list of services, when the procurement for those services
meets the criteria below. The recommended criteria are intended to
limit the exemption to those procurements where the services being
procured are such that it would be more efficient and practical for an
offeror to perform the services with a workforce that is not primarily
assigned to the performance of government work. Thus, contracts for
base support services where the work is performed by an on-site
dedicated workforce would not meet the exemption criteria, and
contracts where the services have been performed by a dedicated group
of federal employees (A-76 procurements) would be unlikely to meet the
exemption criteria since the nature of the services would not meet the
requirement that the workers perform only a small part of their time on
the contract; however, it is possible that some subcontracts for a
portion of those services might meet the criteria for exemption.
The criteria are designed to ensure that the remedial purpose of
the Act to protect prevailing labor standards is preserved. This would
be accomplished in two ways. First, the proposed exemption would apply
only when the contract award is not determined primarily upon the
factor of cost. Therefore, the contractor providing the best service at
a somewhat higher or lower cost would not be at a competitive
disadvantage. Second, the criteria would limit the application of the
exemption to circumstances where the nature of the procurement dictates
that the most efficient and practical performance of the workload can
be accomplished with a workforce that is not dedicated to working
primarily on the Government contract. Thus, the competitive pressures
upon employee wages that might exist if the services were performed by
a workforce dedicated to the Government contract would not come into
play on the contracts within the scope of the recommended exemption.
Furthermore, even if a contractor might be inclined to reduce wages to
secure the Government contract, the criteria would forbid that
practice.
Under this proposal, the following criteria for the new exemption
would be applied to a short list of services. The exemption would apply
only if the services under the contract or subcontract meet all of the
criteria. The Department seeks comments regarding whether these
criteria are appropriate to protect prevailing labor standards.
(1) The services under the contract 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.
The basic underlying purpose of the proposed exemption is to permit
a prospective contractor to utilize its commercial compensation
practices for both Government and private commercial work. If the
prospective contractor does not currently perform the solicited
services, then conforming to the SCA requirements would not cause the
contractor to alter its commercial compensation practices.
(2) The prime contract or subcontract will be awarded on a sole
source basis or the contractor 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.
One of the basic purposes of the Service Contract Act is to
counteract the negative impact that competition based on price alone
may have upon wages. If a contract is awarded on a sole source basis,
there is no competition and price is clearly not the basis for awarding
the contract.
For the majority of other contracts that are competitively awarded,
this criterion would attempt to largely remove wages from consideration
by making quality of service and other non-cost factors equal to or
more important than the bottom line price. If one assumes that the best
employees (contractors) are paid (pay) higher wages, then this
criterion would allow these employees (contractors) to compete on the
basis of the employees' increased productivity and higher quality
service. These employees/contractors should not be disadvantaged even
though the employee wages and possibly the resulting contract price are
somewhat higher than the lowest offer.
(3) 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, 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. Normally, market price information is taken from
independent market reports, but market price could be established by
surveying the firms in a particular industry or market.
This criterion ensures that the contractor will provide the
services to the Government on the same basis that the contractor
services commercial accounts. Combined with the other criteria, this
requirement should ensure that contractors do not decrease employee
compensation as a part of the competitive contracting process.
(4) All of the service employees who will perform the services
under the Government contract or subcontract spend only a small portion
of their 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.
If the employees spend only a small portion of their available work
hours on the Government contract, the contractor would not likely be
willing to alter its compensation practices simply to obtain the
Government contract. (Note: Criterion 5 would also specifically
preclude any such change in compensation practices.) Furthermore, the
criteria for exemption will not be satisfied by rotating the workforce
and having different employees work on the contract each day of the
week. In the Department's experience it would be extraordinary for a
contractor to staff a contract in this manner. Therefore in such a
case, although each individual employee would spend less than 20% of
his/her work hours on the Government contract, a contracting officer or
prime contractor (in the case of a subcontract) could not certify--as
required by Criterion 6--that all or nearly all offerors would staff
the contract with service employees who spend only a small portion of
their time on the project.
(5) 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
[[Page 45946]]
employees servicing commercial customers.
This criterion ensures that the employees servicing the government
contract will be compensated exactly as they would be if they were
servicing a commercial account. Thus, the prevailing labor standards
for private work would not be impacted in any way by the award of the
Government contract. Furthermore, because contract award is not
determined primarily on the basis of cost (Criterion 2), the contractor
paying the lowest wages will not have a competitive advantage over
other employers who pay average or above average wages. These
contractors will compete for the Government work on the same basis that
they compete for private work: quality of service and overall value.
(6) 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 above requirements. If 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 above
requirements.
This requirement is designed to ensure that all contractors compete
on an equal basis, and eliminate the possibility that a contractor
subject to SCA would be forced to compete against a contractor that
would be exempt from SCA. Furthermore, as noted in the discussion of
Criterion 4, this requirement, which takes into consideration not only
the practices of likely offerors but also the nature of the contract
requirements, is a necessary safeguard to prevent individual offerors
from juggling staffing patterns simply in an effort to avoid SCA
coverage. This criterion also serves to protect those employees (either
contractor or Federal employees) who might currently be engaged in
performing the solicited services on a full-time basis.
(7) The exempted contractor or subcontractor certifies in the
contract to the provisions in paragraphs (1), and (3) through (5). The
contracting officer or prime contractor, as appropriate, shall review
available information concerning the contractor or subcontractor and
the manner in which the contract will be performed. If the contracting
officer or prime contractor has reason to doubt the validity of the
certification, SCA stipulations shall be included in the contract or
subcontract.
This criterion provides a mechanism for addressing and correcting
situations where the exemption may have been misapplied. (It is not
anticipated that the contracting officer or prime contractor will do a
complete investigation into the application of the exemption to the
contractor, but rather will do a review based on known information
regarding the contractor or subcontractor, including information
submitted in the solicitation process.) Furthermore, if the Department
of Labor, in its enforcement, determines that the contract is not in
fact exempt, it shall require that SCA stipulations be included in the
contract. In the case of a subcontract, the prime contractor, who in
almost all cases will have SCA stipulations included in its contract,
will be ultimately responsible for compliance with the requirements of
the Act. The Department may therefore require that the SCA requirements
be effective as of the date of contract award. The Department notes
that an exempt contractor or subcontractor is not required to keep any
particular records to meet its burden of showing that the criteria are
satisfied.
The FAR Council has recommended that these criteria be applied only
to a small group of commercial services which it believes would
constitute the overwhelming majority of cases meeting the above
criteria for the proposed exemption. The FAR Council and the Department
of Labor agree that it is appropriate to consider comments not only
regarding the services for which the exemption is being proposed, but
also for any additional services that commenters believe should be
added to the list. If sufficient justification is received for adding
any additional services to the list, the Department of Labor will issue
a proposal to add the new service. If the proposed rule is adopted in
whole or in part, the final rule will not apply to any service for
which the opportunity for public comment was not provided.
As recommended by the FAR Council, the proposed exemption would not
be applied to any contract entered into under the Javits-Wagner-O'Day
Act, or to any contract subject to the provisions of Section 4(c) of
SCA. Furthermore, contracts for operation of a Government facility or a
portion thereof would not meet the required criteria, and are also
excluded from the proposed exemption; however, it is possible that some
subcontracts under such procurements would be for the listed services,
and would fall within the scope of the proposed exemption, provided all
the criteria are met.
In selecting the services to which it believed the new exemption
should apply, the FAR Council focused on services which the Government
is having difficulty acquiring or for which the Government is getting
limited competition, or where the Government is unable to acquire the
quality of services needed because commercial sources are reluctant to
do business with the Government, thereby causing impairment to
Government business. The FAR Council stated that it avoided selecting
services where the Government may be in a position to motivate the
payment of less than prevailing wages by contractors striving to win
Government contracts. The Department agrees that it is appropriate to
propose to exempt such a limited group of services.
For each of the services included on the list of services to which
the new exception would apply, the type of services covered is
explained and the difficulties which the FAR Council stated have been
encountered in procuring the services are cited.
Automatic data processing and telecommunications services.
For several years the Department of Labor regulations implementing
the Service Contract Act have contained an exemption for contracts
principally for the maintenance, calibration and/or repair of (1)
automated data processing and office information/word processing
systems; (2) scientific equipment and medical apparatus or equipment of
microelectronic circuitry or other technology of at least similar
sophistication; and (3) office/business machines not otherwise exempt
where services are performed by the manufacturer or supplier of the
equipment. In short, the current exemption applies exclusively to
hardware maintenance when certain criteria are met. In addition to the
recommendation that the current ADP exemption be expanded to include
installation services as well as hardware maintenance, the FAR Council
has recommended that an exemption for software and other ADP support
services be considered in conjunction with the criteria listed above.
Provided the specified criteria are met, the proposed new exemption
would cover a broader range of automatic data processing and
telecommunications services including: ADP facility operation and
maintenance services provided at the contractor's facility, ADP
telecommunications and transmission services, ADP teleprocessing and
timesharing services, ADP systems analysis services, information and
data broadcasting or data distribution services, ADP backup and
security services, ADP data conversion services, computer aided
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design/computer aided manufacturing (CAD/CAM) services, digitizing
services (including cartographic and geographic information),
telecommunications network management services, automated news
services, data services or other information services (e.g., buying
data, the electronic equivalent of books, periodicals, newspapers,
etc.) and data storage on tapes, compact disks, etc. As recommended by
the FAR Council, however, the new exemption would not apply to ADP data
entry services or ADP optical scanning services.
The FAR Council explains that in this information age, the Federal
Government is contracting for more and more information technology (IT)
services. This is driven by the need to maximize the use of technology
to improve the efficiency and effectiveness of agency performance.
However, increasingly the Government is less of a player in the IT
marketplace in terms of market share (less than 3%). IT providers have
an abundance of work in an industry with a tight labor market. IT
providers are often reluctant or unwilling to deal with Government
unique requirements such as the Service Contract Act when they have an
abundance of work available and are experiencing difficulty keeping
pace with their commercial work.
The FAR Council states that unless the Federal Government can more
closely align the Government's contracting practices and requirements
with commercial practice, it will not be able to generate enough
interest to permit the Federal Government to take full advantage of the
opportunities to use information technology and to obtain the requisite
quality of services needed to satisfy critical agency mission needs.
Automobile or other vehicle (e.g., aircraft) maintenance services
(other than contracts to operate a Government motor pool or similar
facility).
Federal agencies that maintain a fleet of automobiles have a need
for services such as normal maintenance (e.g., changing oil and
filters, rotating tires, etc.), mechanical repairs, paint and body
work, glass replacement, and other repairs needed to maintain the
automobile or other vehicle. Unless the agency has a dedicated
Government facility for such work, it is contracted out to commercial
firms.
The FAR Council states that the General Services Administration
(GSA), which is responsible for providing Interagency Fleet Management
Services, has been unsuccessful in contracting for these services
because of the unwillingness of commercial sources to deal with
Government unique requirements such as the Service Contract Act for the
small amount of Government work involved. As a result, GSA and other
agencies often acquire these services on an as needed basis using
micro-purchase procedures and the Government Purchase Card.
The FAR Council states that unless GSA and other agencies can more
closely align the Government's contracting practices and requirements
with commercial practice, it will not be able to generate enough
interest or business to permit the Federal Government to take advantage
of the quality improvements and lower prices that will likely result
from establishing contractual relationships with commercial service
centers. While the individual transactions are small (typically under
$2,500), the aggregate volume and dollar value of transactions across
the nation is substantial. The real benefit for the Federal Government
of a contractual relationship is the lower prices it can negotiate for
parts and supplies used to service vehicles if it is able to contract
for services rather than treat each transaction individually.
Additionally, the Federal Government can expect to receive better
service because it will be viewed as a ``corporate'' customer who gives
its business to a particular contractor(s) in a certain location. The
FAR Council states that an exemption is necessary to permit the
Government to enhance the quality of service while reducing its cost
through leveraging the Federal Government's collective buying power.
For example, the Department of Interior's Office of Aircraft
Services in Boise, ID, contracts for maintenance of about 100 of its
own aircraft and also provides contract support for other agencies such
as the U.S. Forest Service. The Office of Aircraft Services reports
that it has about a dozen contracts at various locations around the
country. These are commercial services procured from commercial sources
where the maintenance of Government aircraft is performed alongside
regular non-government aircraft. Contractors' work is predominantly
non-government. Some commercial contractors have refused to do work for
the Government because of concerns with the SCA requirements. The
result has been limited competition for such contracts.
Financial services involving the issuance and servicing of cards
(including credit cards, debit cards, purchase cards, smart cards, and
similar card services).
Increasingly, the Government is contracting for and using the
services of financial institutions that provide credit, debit, or
purchase cards. These cards are used by Federal employees while
traveling or to make small purchases for commercial items to meet the
day-to-day needs of their organizations. The providers of these
services use the financial networks of firms like VISA, MASTERCARD, and
American Express to provide the services. While the Federal
Government's use of these services is significant, it represents a
small fraction of the transactions that flow through the financial
infrastructure. Transactions flowing through the networks are processed
in the same fashion and by the same workforce regardless of the
ultimate user of the cards. As a result, the FAR Council states that it
is very difficult to get competition for these services when the
Federal Government imposes unique requirements on the contractors. They
state that contractors will not change their way of doing business to
accommodate a customer that represents a small portion of their
business; it is impossible for them to segregate what is done for the
Federal Government from commercial activity.
Lodging at hotels/motels and contracts with hotels/motels for
conferences, including lodging and/or meals, which are part of the
contract for the conference.
Agencies of the Federal Government often contract with hotels/
motels for meeting rooms for conferences of limited duration (e.g., one
to five days). These contracts may be for conferences where attendance
is limited to Government employees or may involve attendance by other
organizations and/or the public. These contracts may also involve
furnishing lodging and meals to those participating in the conference.
In other cases, agencies establish contractual arrangements with
hotels/motels to obtain special rates for lodging when the agency has a
large number of employees that frequently travel to a particular
location. The hotel/motel agrees to special reduced rates in exchange
for being designated a preferred provider for the agency travelers to
that city/location.
In both of these cases, the FAR Council states that hotels/motels
are unwilling to agree to contract with the Government when it would
mean they would have to pay different rates to employees as a result of
a Service Contract Act wage determination or would have to keep
special/different payroll or other records. Typically these contracts
are for relatively small dollar amounts (less than $25,000). The FAR
Council states that this severely limits the Governments ability to
contract for these services when needed.
[[Page 45948]]
Maintenance services for all types of specialized building or
facility equipment such as elevators, escalators, temperature control
systems, security systems, smoke and/or heat detection equipment, etc.
Agencies that operate and maintain Government owned and/or operated
buildings often contract for operation and maintenance of the building
or facility and the prime contractor will then typically subcontract
for services related to specialized equipment. In other cases, the
Government will contract directly for the maintenance and servicing of
such equipment. In either case, the FAR Council reports that it is very
difficult to acquire the quality of service needed from contractors who
are not authorized representatives of the manufacturer and therefore do
not have access to parts needed for repairs and training that is
essentially only available from the original equipment manufacturer.
While there may be other contractors who indicate they have the
capability to provide the service, experience often shows that the
quality of service obtained from such sources is not satisfactory.
The FAR Council states that the Government, as a result of the
reluctance of some of the best contractors to accept Government unique
requirements such as those related to the Service Contract Act, is
deprived of the opportunity to improve the quality of service for the
maintenance and servicing of critical building equipment and systems.
Installation, maintenance, calibration or repair services for all
types of equipment where services are obtained from the equipment
manufacturer or supplier of the equipment.
Agencies acquire a wide range of equipment and often have a need to
acquire services to install, maintain, calibrate, service or repair the
equipment from the manufacturer or original supplier in order to avoid
compromising a warranty or because proprietary information needed to
perform the work is only available from the manufacturer, an authorized
representative of the manufacturer or the supplier of the equipment.
Typically, these contracts involve sophisticated equipment that
requires access to proprietary information or requires employees
involved in performing the work to have extensive training that is
often only available through the manufacturer or equipment supplier. In
such cases, the Government's need to contract with a particular source
or a limited number of sources must be properly justified and approved,
if applicable, under the statutory competition requirements outlined in
48 CFR Part 6 of the Federal Acquisition Regulation. Examples of the
type of equipment include automated building control systems, HVAC
equipment, building security systems, and elevators or escalators.
The FAR Council reports that in many of these cases, the Government
has limited leverage to negotiate with the contractor to accept
Government unique requirements such as those related to the Service
Contract Act and has had great difficulty obtaining services from
commercial sources who are unwilling to accommodate such requirements.
Transportation of persons by air, motor vehicle, rail, or marine on
regularly scheduled routes or via standard commercial services (not
including charter services).
The General Services Administration (GSA) enters into contracts
with airlines called ``City Pairs'' so that Federal employees traveling
on Government business can get discount air fares. Under these
contracts, Federal employees typically obtain tickets through travel
management contracts awarded by GSA or other agencies and the Federal
employee travels on regularly scheduled routes of commercial airlines
but receive tickets at a substantial discount. While the Federal
Government's use of these services is significant, it represents a
small fraction of the transactions that flow through the airlines.
Tickets that are issued to Federal travelers flow through the same
networks and are processed in the same fashion as other travelers. As a
result, the FAR Council reports that it is very difficult to get
competition for these services if the Federal Government imposes unique
requirements like those in the Service Contract Act on the contractors.
The airlines will not change their way of doing business to accommodate
a customer that represents a small portion of their business. It is
impossible for them to segregate what is done for the Federal
Government from commercial activity. The Federal Government also enters
into similar contracts for the carriage of passengers by other modes of
transportation.
Real estate services, including real property appraisal services,
related to housing federal agencies or disposing of real property owned
by the Federal Government.
Federal agencies involved in acquiring and disposing of real
property often contract for real estate services, including lease
acquisition, real property appraisal, broker, space planning, lease re-
negotiation, tax abatement, and real property disposal services. The
primary classes of workers that are involved in performing the work are
appraisers, leasing specialists, brokers, space planners, interior
designers, fire safety engineers, and project managers. In many cases,
the employees are required by contracts with the Government to be
licensed. In many cases, the Department of Labor has not established
wage determinations that apply to these classes of workers.
The individual requirements are typically relatively low dollar
value (under $25,000) and require that services be performed in a
variety of different geographic locations. Knowledge of the local real
estate market is required to effectively perform the services.
Therefore, individual employees, particularly in rural areas, spend
only a small fraction of their time working on Government contracts.
While the Federal Government's use of these services is
significant, it represents a small fraction of the transactions that
flow through the industry/commercial sources. As a result, the FAR
Council reports that it is very difficult to get competition for these
services where the Federal Government imposes unique requirements like
those in the Service Contract Act on the contractors. The contractors
will not change their way of doing business to accommodate a customer
that represents a small portion of their business. The FAR Council
states that as the Government continues to downsize, it must rely more
and more on commercial sources for these services and it is critical
that the Federal Government has access to well-qualified sources of
supply for these types of services.
Relocation services, including services of real estate brokers and
appraisers, to assist federal employees or military personnel in buying
and selling homes.
Employee relocation services are available for Federal employees or
military personnel and their families being transferred to new duty
stations anywhere within the continental United States and Puerto Rico.
These contracts offer a multitude of flexible services to customize a
solution that best meets the employee's needs. The contracts save time
and money and reduce stress by offering Federal employees and military
these services: home marketing assistance, home sales services,
destination area services, management reporting services, mortgage
counseling, property management services, and other related services.
The individual requirements are typically relatively low dollar
value (under $25,000) and require that
[[Page 45949]]
services be performed in a variety of different geographic locations.
Knowledge of the local real estate market is required to effectively
perform the services. Therefore, individual employees, particularly in
rural areas, spend a fraction of their time working on Government
contracts.
While the Federal Government's use of these services is
significant, the FAR Council states that it represents a small fraction
of the transactions that flow through the industry/commercial sources.
As a result, it is very difficult to get competition for these services
if the Federal Government imposes unique requirements like those in the
Service Contract Act on the contractors. The contractors will not
change their way of doing business to accommodate a customer that
represents a small portion of their business. The FAR Council states
that it is in the Government's interest to maximize the availability of
these services to its personnel; accordingly it is detrimental to the
Government's interests when it is unable to attract commercial sources
as providers of these services
IV. Regulatory Flexibility Act
Under the Regulatory Flexibility Act, Public Law 96-354 (94 Stat.
1164; 5 U.S.C. 601 et. seq.), Federal Agencies are required to prepare
and make available for public comment and initial regulatory
flexibility analysis that describes the anticipated impact of proposed
rules on small entities. The Department has prepared the following
Regulatory Flexibility Analysis regarding this rule.
(1) Reasons Why Action Is Being Considered
The current proposal is made at the request of the Administrator
for Federal Procurement Policy, OFPP, in her letter of May 12, 1999.
The Administrator, on behalf of the FAR Council, stated that the
proposed exemption ``will further the commitment of the Administration
to be more commercial-like, encourage broader participation in
government procurement by companies doing business in the commercial
sector, and reinforce our commitment to reduce government-unique terms
and conditions from our contracts. We believe that all of this can be
accomplished without compromising the purpose of the SCA to protect
prevailing labor standards.'' The FAR Council has developed a short
list of services to which it believes an exemption should apply in the
best interest of the Government and to avoid impairment to Government
business. Based on the representations of the FAR Council, the
Department has made a preliminary determination that such an exemption
is appropriate, and therefore is issuing this proposed rule.
(2) Objectives of and Legal Basis for Rule
Pursuant to Section (4)(b) of SCA, the Secretary of Labor may grant
reasonable exemptions to the provisions of the Act, but only in special
circumstances where the ``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.''
After a review of the representations of the FAR Council, the
Department of Labor has made a preliminary determination that the
exemption would be ``necessary and proper in the public interest'' and
would also be ``in accord with the remedial purpose of th[e] Act to
protect prevailing labor standards.'' Therefore the Department has
determined that it is appropriate to seek comment on the proposed
criteria and services which are proposed to be exempted from the Act.
(3) Number of Small Entities Covered Under the Rule
The definition of ``small business'' varies considerably depending
upon the policy issues and circumstances under review, the industry
being studied, and the measures used. The Small Business
Administration's Office of Advocacy generally uses employment data as a
basis for size comparisons, with firms having fewer than 100 employees
or fewer than 500 employees defined as small. The types of services
covered by the proposed exemptions span a variety of industries. Based
upon analyses done by the U.S. Small Business Administration, Office of
Advocacy, some of the industries affected by the proposed exemptions
are characterized as ``large-business-dominated industries'' (e.g., air
transportation and business credit institutions) and others are
characterized as ``small-business-dominated industries'' (e.g.,
automotive repair and real estate).\1\ Thus, at least some of the
services covered by the proposed exemption would be performed primarily
by small businesses. In fact, with the exception of those contracts for
financial services involving the issuance and servicing of cards, the
contracts for the transportation of persons, and contracts with
equipment manufacturers, it would appear that a majority of the
contracts affected by the proposed exemption likely would be performed
by small businesses.
---------------------------------------------------------------------------
\1\ The State of Small Business: A Report of the President, 1996
(1997).
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It is also difficult to determine with precision the value of
Federal contracts that would be affected by the proposed exemption.
Federal Procurement Data System (FPDS) compiles and reports information
on approximately 500,000 annual transactions exceeding $25,000;
however, as discussed above, many of the contracts covered by the
proposed exemption (e.g., food and lodging contracts for conferences)
are currently or would likely be less that $25,000. Also, the criteria
that must be met for the specified services to be within the scope of
the proposed exemption will limit the application of the proposed
exemptions to a relatively small subset of contracts within a specific
SIC code. Thus, FPDS data does not provide an accurate estimate of the
contracts potentially covered by the proposed exemption. Nevertheless,
in view of the limiting criteria that have been proposed for the listed
services, the total value of the exempt contracts should be relatively
small, and it is believed that the SCA would no longer apply to only a
relatively small number of contracts that currently contain SCA wage
determination provisions.
(4) Reporting, Recordkeeping and Other Compliance Requirements of the
Rule
The proposed exemption does not contain any new reporting,
recordkeeping, or other compliance requirements applicable to small
business. Rather, the proposed exemption would relieve small businesses
and other contractors from the requirements of the SCA on certain
contracts where the contractor certifies that the requirements of the
exemption have been met. Furthermore, any contractor performing on a
contract within the scope of the proposed exemption may elect to
perform the contract under the requirements of SCA rather than make the
necessary certifications. Because application of the exemption will
have been determined in advance by the contracting officer, the
Department anticipates that questions regarding proper application of
the exemption will be rare. Contractors will not be required to
maintain any records to support the exemption, although they may be
required to furnish payroll and other existing records to the
Department in the event of an investigation.
(5) Relevant Federal Rules Duplicating, Overlapping or Conflicting With
the Rule
The Federal Acquisition Regulation provision regarding the
application of
[[Page 45950]]
SCA to subcontracts for commercial services has been withdrawn, and
there are no Federal rules duplicating, overlapping or conflicting with
the proposed exemption.
(6) Differing Compliance or Reporting Requirements for Small Entities
The proposed exemptions do not contain any differing compliance or
reporting requirements for small entities.
(7) Clarification, Consolidation and Simplification of Compliance and
Reporting Requirements
The proposed exemption does not impose any new reporting or
recordkeeping requirements. Although offerors are required to certify
that the criteria for exemption are met, offerors are not required to
maintain records to support the certification. The certification, which
can be submitted as part of the bid package, is an important element to
satisfy the statutory requirement that exemptions be ``in accordance
with the remedial purpose of the Act to protect prevailing labor
standards.'' Contractors and subcontractors to whom the exemption
applies will not be required to comply with the wage and reporting
requirements of the SCA.
(8) Use of Other Standards
The Service Contract Act requires that any exemption be in
accordance with the remedial purpose of the act to protect prevailing
labor standards. The proposed exemptions are structured to satisfy this
requirement; however, the exemption is not mandatory and any contractor
may choose to perform the services in accordance with the SCA
requirements.
(9) Exemption From Coverage for Small Entities
The proposed rule is an exemption from coverage under the Service
Contract Act. The proposed exemption would apply equally to both small
and large entities. In addition to protecting prevailing labor
standards, a key element of SCA is to ensure that all bidders are on an
equal footing, and the proposed exemption is consistent with that
purpose.
V. Executive Order 12866 and 13132; Sec. 202 of the Unfunded
Mandates Reform Act of 1995; Small Business Regulatory Enforcement
Fairness Act
This proposed rule is being treated as a ``significant regulatory
action'' within the meaning of Executive Order 12866 because of the
significant impact of this rule on other agencies. Therefore, the
Office of Management and Budget has reviewed the proposed rule.
However, the Department has determined that this proposed rule is not
``economically significant'' as defined in section 3(f)(1) of E.O.
12866, and therefore it does not require a full economic impact
analysis under section 6(a)(3)(C) of the Order. Under the new exemption
proposed by this rule, contracts would not be exempt unless price is
equal to or less important than the combination of other non-price or
cost factors in selecting the contractor. Therefore it is not
anticipated that the changes proposed by this rule will have an annual
effect on the economy of $100 million or more or adversely affect in a
material way the economy, a sector of the economy, productivity, jobs,
the environment, public health or safety, or State, local, or tribal
governments or communities.
The Department has similarly concluded that this proposed rule is
not a ``major rule'' requiring approval by the Congress under the Small
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et
seq.). It will not likely result in (1) an annual effect on the economy
of $100 million or more; (2) a major increase in costs or prices for
consumers, individual industries, Federal, State or local government
agencies, or geographic regions; or (3) significant adverse effects on
competition, employment, investment, productivity, innovation, or on
the ability of U.S.-based enterprises to compete with foreign-based
enterprises in domestic or export markets.
For purposes of the Unfunded Mandates Reform Act of 1995, this rule
does not include any federal mandate that may result in excess of $100
million in expenditures by state, local and tribal governments in the
aggregate, or by the private sector. Furthermore, the requirements of
the Unfunded Mandates Reform Act, 2 U.S.C. 1532, do not apply here
because the proposed rule does not include a ``Federal mandate.'' The
term ``Federal mandate'' is defined to include either a ``Federal
intergovernmental mandate'' or a ``Federal private sector mandate.'' 2
U.S.C. 658(6). Except in limited circumstances not applicable here,
those terms do not include an enforceable duty which is ``a duty
arising from participation in a voluntary program.'' 2 U.S.C.
658(7)(A). A decision by a contractor to bid on Federal service
contracts is purely voluntary in nature, and the contractor's duty to
meet Service Contract Act requirements arises ``from participation in a
voluntary Federal program.''
The Department has also reviewed this rule in accordance with
Executive Order 13132 regarding federalism, and has determined that it
does not have ``federalism implications.'' The rule does not ``have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.''
VI. Document Preparation
This document was prepared under the direction and control of John
R. Fraser, Deputy Administrator, Wage and Hour Division, Employment
Standards Administration, U.S. Department of Labor.
List of Subjects in 29 CFR Part 4
Administrative practice and procedures, Employee benefit plans,
Government contracts, Investigations, Labor, Law enforcement, Minimum
wages, Penalties, Recordkeeping requirements, Reporting requirements,
wages.
Accordingly, for the reasons set out in the preamble, 29 CFR part 4
is proposed to be amended as set forth below:
PART 4--LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS
1. The authority citation for Part 4 continues to read as follows:
Authority: 41 U.S.C. 351, et seq., 79 Stat. 1034, as amended in
86 Stat. 789, 90 Stat. 2358: 41 U.S.C. 38 and 39; 5 U.S.C. 301; and
108 Stat. 4101(c).
2. Section 4.123(e) is proposed to be amended by revising paragraph
(e)(1)(i) introductory text and paragraphs (e)(1)(i)(A), (e)(1)(ii),
(e)(1)(iii), (e)(1)(iv), and (e)(2) to read as follows:
Sec. 4.123 Administrative limitations, variances, tolerances, and
exemptions.
* * * * *
(e) * * *
(1)(i) Prime contracts or subcontracts principally for the
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) of this part) of:
(A) Information technology--The term ``information technology''
means any equipment or interconnected system or subsystem of equipment
that is used in the automatic acquisition, storage, manipulation,
management, movement, control, display, switching, interchange,
transmission, or reception of data or information. The term information
technology does not include equipment that contains imbedded
information technology that is used as an integral part of the product,
but the principal function of which is not the acquisition, storage,
manipulation, management,
[[Page 45951]]
movement, control, display, switching, interchange, transmission, or
reception of data or information. For example, HVAC (heating,
ventilation, and air conditioning) equipment such as thermostats or
temperature control devices and medical equipment where information
technology is integral to its operation, are not information
technology.
* * * * *
(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, repair, and/or installation 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 in the contract or subcontract, as
applicable, to the provisions in this paragraph (e)(1)(ii).
(iii)(A) Determinations of the applicability of this exemption to
prime contracts shall be made in the first instance by the contracting
officer prior to 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 above conditions
have been met.
(B) Determinations of the applicability of this exemption to
subcontracts shall be made by the prime contractor prior to 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 above conditions have been met.
(iv)(A) If the Department of Labor determines after award of the
prime contract that any of the above requirements 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 Department of Labor determination. In such case, the
corrective procedures in section 4.5(c)(2) of this part 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) of this part). If the Department of Labor determines
that any of the above requirements 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 for the following services
where the services under the contract or subcontract meet all of the
criteria set forth in paragraph (e)(2)(ii) and are not excluded by
paragraph (e)(2)(iii):
(A) Automated data processing and telecommunications services,
including ADP facility operation and maintenance services provided at
the contractor's facility, ADP telecommunications and transmission
services, ADP teleprocessing and timesharing services, ADP systems
analysis services, information and data broadcasting or data
distribution services, ADP backup and security services, ADP data
conversion services, computer aided design/computer aided manufacturing
(CAD/CAM) services, digitizing services (including cartographic and
geographic information), telecommunications network management
services, automated news services, data services or other information
services (e.g., buying data, the electronic equivalent of books,
periodicals, newspapers, etc.) and data storage on tapes, compact
disks, etc. This category does not include ADP data entry services or
ADP optical scanning services;
(B) Automobile or other vehicle (e.g., aircraft) maintenance
services (other than contracts to operate a Government motor pool or
similar facility);
(C) Financial services involving the issuance and servicing of
cards (including credit cards, debit cards, purchase cards, smart
cards, and similar card services);
(D) Lodging at hotels/motels and contracts with hotels/motels for
conferences, including lodging and/or meals, which are part of the
contract for the conference;
(E) Maintenance services for all types of specialized building or
facility equipment such as elevators, escalators, temperature control
systems, security systems, smoke and/or heat detection equipment, etc;
(F) Maintenance, calibration, repair or installation (where the
installation is not subject to the Davis-Bacon Act, as provided in
Sec. 4.116(c)(2) of this part) services for all types of equipment
where the services are obtained from the manufacturer or supplier of
the equipment;
(G) Transportation of persons by air, motor vehicle, rail, or
marine vessel on regularly scheduled routes or via standard commercial
services (not including charter services);
(H) Real estate services, including real property appraisal
services, related to housing federal agencies or disposing of real
property owned by the Federal Government; and
(I) Relocation services, including services of real estate brokers
and appraisers to assist federal employees or military personnel in
buying and selling homes.
(ii) The exemption set forth in this paragraph (e)(2) shall apply
to the services listed in paragraph (e)(2)(i) of this section 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
[[Page 45952]]
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. Normally, market price
information is taken from independent market reports, but market price
could be established by surveying the firms in a particular industry or
market;
(D) All of the service employees who will perform the services
under the Government contract or subcontract spend only a small portion
of their 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 above requirements. If 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 above
requirements; and
(G) The exempted contractor certifies in the prime contract or
subcontract to the provisions in paragraphs (e)(2)(ii) (A) and (C)
through (E) of this section. The contracting officer or prime
contractor, as appropriate, shall review available information
concerning the contractor or subcontractor and the manner in which the
contract will be performed. If the contracting officer or prime
contractor has reason to doubt the validity of the certification, SCA
stipulations shall be included in the contract or subcontract.
(iii)(A) If the Department of Labor determines after award of the
prime contract that any of the above requirements 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 Department of Labor determination. In such case, the
corrective procedures in Sec. 4.5(c)(2) of this part 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) of this part). If the Department of Labor determines
that any of the above requirements 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.
(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 (3)(2)(ii) that meet all of he criteria of paragraph
(e)(2)(ii)); or
(C) Subject to Section 4(c) of the Service Contract Act.
Signed at Washington, D.C., on this 19th day of July, 2000.
T. Michael Kerr,
Administrator, Wage and Hour Division.
[FR Doc. 00-18636 Filed 7-25-00; 8:45 am]
BILLING CODE 4510-27-P
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