
[Code of Federal Regulations]
[Title 29, Volume 1]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR4]

[Page 29-45]
 
                             TITLE 29--LABOR
 
PART 4--LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS--Table of Contents
 
Subpart A--Service Contract Labor Standards Provisions and Procedures

Sec. 4.1  Purpose and scope.

    This part contains the Department of Labor's rules relating to the 
administration of the McNamara-O'Hara Service Contract Act of 1965, as 
amended, referred to hereinafter as the Act. Rules of practice for 
administrative proceedings under the Act and for the review of wage 
determinations are contained in parts 6 and 8 of this chapter. See part 
1925 of this title for the safety and health standards applicable under 
the Service Contract Act.

Sec. 4.1a  Definitions and use of terms.

    As used in this part, unless otherwise indicated by the context--
    (a) Act, Service Contract Act, McNamara-O'Hara Act, or Service 
Contract Act of 1965 shall mean the Service Contract Act of 1965 as 
amended by Public Law 92-473, 86 Stat. 789, effective October 9, 1972, 
Public Law 93-57, 87 Stat. 140, effective July 6, 1973, and Public Law 
94-489, 90 Stat. 2358, effective October 13, 1976 and any subsequent 
amendments thereto.
    (b) Secretary includes the Secretary of Labor, the Deputy Under 
Secretary for Employment Standards, and their authorized 
representatives.
    (c) Wage and Hour Division means the organizational unit in the 
Employment Standards Administration of the Department of Labor to which 
is assigned the performance of functions of the Secretary under the 
Service Contract Act of 1965, as amended.
    (d) Administrator means the Administrator of the Wage and Hour 
Division, or authorized representative.
    (e) Contract includes any contract subject wholly or in part to the 
provisions of the Service Contract Act of 1965 as amended, and any 
subcontract of any tier thereunder. (See Secs. 4.10-4.134.)
    (f) Contractor includes a subcontractor whose subcontract is subject 
to provisions of the Act. Also, the term employer means, and is used 
interchangeably with, the terms contractor and subcontractor in various 
sections in

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this part. The U.S. Government, its agencies, and instrumentalities are 
not contractors, subcontractors, employers or joint employers for 
purposes of compliance with the provisions of the Act.
    (g) Affiliate or affiliated person includes a spouse, child, parent, 
or other close relative of the contractor or subcontractor; a partner or 
officer of the contractor or subcontractor; a corporation closely 
connected with a contractor or subcontractor as a parent, subsidiary, or 
otherwise; and an officer or agent of such corporation. An affiliation 
is also deemed to exist where, directly or indirectly, one business 
concern or individual controls or has the power to control the other or 
where a third party controls or has the power to control both.
    (h) Wage determination includes any determination of minimum wage 
rates or fringe benefits made pursuant to the provisions of sections 
2(a) and/or 4(c) of the Act for application to the employment in a 
locality of any class or classes of service employees in the performance 
of any contract in excess of $2,500 which is subject to the provisions 
of the Service Contract Act of 1965.

Sec. 4.1b  Payment of minimum compensation based on collectively 
          bargained wage rates and fringe benefits applicable to 
          employment under predecessor contract.

    (a) Section 4(c) of the Service Contract Act of 1965 as amended 
provides special minimum wage and fringe benefit requirements applicable 
to every contractor and subcontractor under a contract which succeeds a 
contract subject to the Act and under which substantially the same 
services as under the predecessor contract are furnished in the same 
locality. Section 4(c) provides that no such contractor or subcontractor 
shall pay any service employee employed on the contract work less than 
the wages and fringe benefits provided for in a collective bargaining 
agreement as a result of arms-length negotiations, to which such service 
employees would have been entitled if they were employed under the 
predecessor contract, including accrued wages and fringe benefits and 
any prospective increases in wages and fringe benefits provided for in 
such collective bargaining agreement. If, however, the Secretary finds 
after a hearing in accordance with the regulations set forth in 
Sec. 4.10 of this subpart and parts 6 and 8 of this title that in any of 
the foregoing circumstances such wages and fringe benefits are 
substantially at variance with those which prevail for service of a 
character similar in the locality, those wages and/or fringe benefits in 
such collective bargaining agreement which are found to be substantially 
at variance shall not apply, and a new wage determination shall be 
issued. If the contract has been awarded and work begun prior to a 
finding that the wages and/or fringe benefits in a collective bargaining 
agreement are substantially at variance with those prevailing in the 
locality, the payment obligation of such contractor or subcontractor 
with respect to the wages and fringe benefits contained in the new wage 
determination shall be applicable as of the date of the Administrative 
Law Judge's decision or, where the decision is reviewed by the 
Administrative Review Board, the date of the decision of the 
Administrative Review Board. (See also Sec. 4.163(c).)
    (b) Pursuant to section 4(b) of the Act, the application of section 
4(c) is made subject to the following variation in the circumstances and 
under the conditions described: The wage rates and fringe benefits 
provided for in any collective bargaining agreement applicable to the 
performance of work under the predecessor contract which is consummated 
during the period of performance of such contract shall not be effective 
for purposes of the successor contract under the provisions of section 
4(c) of the Act or under any wage determination implementing such 
section issued pursuant to section 2(a) of the Act, if--
    (1) In the case of a successor contract for which bids have been 
invited by formal advertising, notice of the terms of such new or 
changed collective bargaining agreement is received by the contracting 
agency less than 10 days before the date set for opening of bids, 
provided that the contracting agency finds that there is not reasonable 
time still available to notify bidders; or

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    (2) Notice of the terms of a new or changed collective bargaining 
agreement is received by the agency after award of a successor contract 
to be entered into pursuant to negotiations or as a result of the 
execution of a renewal option or an extension of the initial contract 
term, provided that the contract start of performance is within 30 days 
of such award or renewal option or extension. If the contract does not 
specify a start of performance date which is within 30 days from the 
award, and/or performance of such procurement does not commence within 
this 30-day period, any notice of the terms of a new or changed 
collective bargaining agreement received by the agency not less than 10 
days before commencement of the contract will be effective for purposes 
of the successor contract under section 4(c); and
    (3) The limitations in paragraph (b)(1) or (2) of this section shall 
apply only if the contracting officer has given both the incumbent 
(predecessor) contractor and his employees' collective bargaining 
representative written notification at least 30 days in advance of all 
applicable estimated procurement dates, including issue of bid 
solicitation, bid opening, date of award, commencement of negotiations, 
receipt of proposals, or the commencement date of a contract resulting 
from a negotiation, option, or extension, as the case may be.

Sec. 4.2  Payment of minimum wage specified in section 6(a)(1) of the 
          Fair Labor Standards Act of 1938 under all service contracts.

    Section 2(b)(1) of the Service Contract Act of 1965 provides in 
effect that, regardless of contract amount, no contractor or 
subcontractor performing work under any Federal contract the principal 
purpose of which is to furnish services through the use of service 
employees shall pay any employees engaged in such work less than the 
minimum wage specified in section 6(a)(1) of the Fair Labor Standards 
Act of 1938, as amended.

[61 FR 68663, Dec. 30, 1996]

Sec. 4.3  Wage determinations.

    (a) The minimum monetary wages and fringe benefits for service 
employees which the Act requires to be specified in contracts and bid 
solicitations subject to section 2(a) thereof will be set forth in wage 
determinations issued by the Administrator. Wage determinations shall be 
issued as soon as administratively feasible for all contracts subject to 
section 2(a) of the Act, and will be issued for all contracts entered 
into under which more than 5 service employees are to be employed.
    (b) Such wage determinations will set forth for the various classes 
of service employees to be employed in furnishing services under such 
contracts in the appropriate localities, minimum monetary wage rates to 
be paid and minimum fringe benefits to be furnished them during the 
periods when they are engaged in the performance of such contracts, 
including, where appropriate under the Act, provisions for adjustments 
in such minimum rates and benefits to be placed in effect under such 
contracts at specified future times. The wage rates and fringe benefits 
set forth in such wage determinations shall be determined in accordance 
with the provisions of sections 2(a)(1), (2), and (5), 4(c) and 4(d) of 
the Act from those prevailing in the locality for such employees, with 
due consideration of the rates that would be paid for direct Federal 
employment of any classes of such employees whose wages, if federally 
employed, would be determined as provided in 5 U.S.C. 5341 or 5 U.S.C. 
5332, or from pertinent collective bargaining agreements with respect to 
the implementation of section 4(c). The wage rates and fringe benefits 
so determined for any class of service employees to be engaged in 
furnishing covered contract services in a locality shall be made 
applicable by contract to all service employees of such class employed 
to perform such services in the locality under any contract subject to 
section 2(a) of the Act which is entered into thereafter and before such 
determination has been rendered obsolete by a withdrawal, modification, 
or supersedure.
    (c) Generally, wage determinations issued for solicitations or 
negotiations

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for any contract where the place of performance is unknown will contain 
minimum monetary wages and fringe benefits for the various geographic 
localities where the work may be performed which were identified in the 
initial solicitation (see Sec. 4.4(a)(2)(i)).
    (d) Wage determinations will be available for public inspection 
during business hours at the Wage and Hour Division, Employment 
Standards Administration, U.S. Department of Labor, Washington, DC, and 
copies will be made available on request at Regional Offices of the Wage 
and Hour Division.

Sec. 4.4  Notice of intention to make a service contract.

    (a)(1) For any contract exceeding $2,500 which may be subject to the 
Act, the contracting agency shall file with the Wage and Hour Division, 
Employment Standards Administration, Department of Labor, its notice of 
intention to make a service contract. With respect to recurring or known 
requirements, such notices shall be filed not less than 60 days (nor 
more than 120 days, except with the approval of the Wage and Hour 
Division) prior to: (i) Any invitation for bids, (ii) request for 
proposals, (iii) commencement of negotiations, (iv) exercise of option 
or contract extension, (v) annual anniversary date of a multi-year 
contract subject to annual fiscal appropriations of the Congress, or 
(vi) each biennial anniversary date of a multi-year contract not subject 
to such annual appropriations, if so authorized by the Wage and Hour 
Division. (See Sec. 4.4(d).) Notices with regard to solicitations where 
such planning is not feasible shall be submitted as soon as possible, 
but not later than 30 days prior to the above contracting actions. Such 
notice shall be submitted on Standard Form 98, Notice of Intention to 
Make a Service Contract, and Standard Form 98-A or a statement 
containing the information in paragraph (b) of this section and shall be 
completed in accordance with the instruction provided and shall be 
supplemented by the information required under paragraphs (c) and (d) of 
this section. Supplies of Standard Forms 98 and 98-A are available in 
all GSA supply depots under stock numbers 7540-926-8972 and 7540-118-
1008, respectively. If there exists any question or doubt as to the 
possible application of the Act to a particular procurement, the 
contracting agency shall submit such question in a timely manner to the 
Administrator for determination.
    (2)(i) Where the place of performance of a contract for services 
subject to the Act is unknown at the time of solicitation, the 
solicitation need not initially contain a wage determination. The 
contracting agency shall, upon identification of firms participating in 
the procurement in response to an initial solicitation, file with the 
Wage and Hour Division, Employment Standards Administration, Department 
of Labor, its notice of intention to make a service contract. In 
addition to the requirements contained in paragraph (a)(1) of this 
section, such submission shall identify each location where the work may 
be performed as indicated by participating firms. Subsequent amendments 
to the solicitation setting forth the wage determinations and any 
necessary change in the date and time for submission of final bids shall 
be made upon receipt of wage determinations. An applicable wage 
determination must be obtained for each firm participating in the 
bidding for the location in which it would perform the contract. The 
appropriate wage determination shall be incorporated in the resultant 
contract documents and shall be applicable to all work performed 
thereunder (regardless of whether the successful contractor subsequently 
changes the place(s) of contract performance).
    (ii) There may be unusual situations, as determined by the 
Department of Labor upon consultation with a contracting agency, where 
the procedure in paragraph (a)(2)(i) of this section is not practicable 
in a particular situation, in which event the Department may authorize a 
modified procedure which may result in the subsequent issuance of wage 
determinations for one or more composite localities.
    (b) The contracting agency shall file with its Notice of Intention 
to Make a Service Contract (SF-98) either a Standard Form 98-A or a 
statement in

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writing, containing the following information concerning the service 
employees expected by the agency to be employed by the contractor and 
any subcontractors in performing the contract:
    (1) The number of such employees of all classes, or a statement 
indicating whether such number will or will not exceed 5, the number for 
which the inclusion of a wage determination in the contract is mandatory 
under the provisions of section 10 of the Act as set forth in 
Sec. 4.3(a); and
    (2) A listing of those classes of service employees expected to be 
employed under the contract which, if employed by the agency, would be 
subject to the wage provisions of 5 U.S.C. 5341 or 5 U.S.C. 5332, 
together with a specification of the rates of wages and fringe benefits 
that would be paid by the Government to employees of each such class if 
such statute were applicable to them. (Under section 2(a)(5) of the Act 
and Sec. 4.6 the inclusion of such a statement in the service contract 
is also required.)
    (c) If the services to be furnished under the proposed contract will 
be substantially the same as services being furnished in the same 
locality by an incumbent contractor whose contract the proposed contract 
will succeed, and if such incumbent contractor is furnishing such 
services through the use of service employees whose wage rates and 
fringe benefits are the subject of one or more collective bargaining 
agreements, the contracting agency shall file with its Notice of 
Intention to Make a Service Contract (SF-98) a copy of each such 
collective bargaining agreement together with any related documents 
specifying the wage rates and fringe benefits currently or prospectively 
payable under such agreement. If the place of contract performance is 
unknown, the contracting agency will submit the collective bargaining 
agreement of the incumbent contractor for incorporation into a wage 
determination applicable to a potential bidder located in the same 
geographic area as the predecessor contractor (section 4.4(a)(2)). If 
such services are being furnished at more than one locality and the 
collectively bargained wage rates and fringe benefits are different at 
different localities or do not apply to one or more localities, the 
agency shall identify the localities to which such agreements have 
application. If the collective bargaining agreement does not apply to 
all service employees under the contract, the agency shall identify the 
employees and/or work subject to the collective bargaining agreement. In 
the event that the agency has reason to believe that any such collective 
bargaining agreement was not entered into as a result of arm's-length 
negotiations, a full statement of the facts so indicating shall be 
transmitted with the copy of such agreement. See Sec. 4.11. If the 
agency has information indicating that any such collectively bargained 
wage rates and fringe benefits are substantially at variance with those 
prevailing for services of a similar character in the locality, the 
agency shall so advise the Wage and Hour Division and, if it believes a 
hearing thereon pursuant to section 4(c) of the Act is warranted, shall 
file its request for such hearing pursuant to Sec. 4.10 at the time of 
filing the Notice of Intention to Make a Service Contract (Form SF-98).
    (d) If the proposed contract is for a multi-year period subject to 
other than annual appropriations, the contracting agency shall file with 
its Standard Form 98 a statement in writing concerning the type of 
funding and the contemplated term of the proposed contract. Unless 
otherwise advised by the Wage and Hour Division that a Standard Form 98 
must be filed on the annual anniversary date, a new Standard Form 98 
shall be submitted on each biennial anniversary date of the proposed 
multi-year contract in the event its term is for a period in excess of 
two years.
    (e) Any Standard Form 98 submitted by a contracting agency without 
the information required under paragraphs (b), (c), or (d) of this 
section will be returned to the agency for further action.
    (f) If exceptional circumstances prevent the filing of the notice of 
intention and supplemental information required by this section on a 
date at least 60 days (or 30 days in the case of unplanned procurements) 
prior to any

[[Page 34]]

invitation for bids, request for proposals, or commencement of 
negotiations, the notice shall be submitted to the Wage and Hour 
Division as soon as practicable with a detailed explanation of the 
special circumstances which prevented timely submission. In the event 
the proposed contract involves performance by more than 5 service 
employees and an emergency situation requires an immediate award, the 
contracting agency shall contact the Wage and Hour Division by telephone 
for guidance prior to any such award. In no event may a contract subject 
to the act on which more than 5 service employees are contemplated to be 
employed be awarded without an appropriate wage determination. (Section 
10 of the Act.)
    (g) If any invitation for bids, request for proposals, bid opening, 
or commencement of negotiations for a proposed contract for which a wage 
determination was provided in response to a Standard Form 98 has been 
delayed, for whatever reason, more than 60 days from the date of such 
procurement action as indicated on the submitted Standard Form 98, the 
contracting agency shall contact the Wage and Hour Division for the 
purpose of determining whether the wage determination issued pursuant to 
the initial submission is still current. Any revision of a wage 
determination received by the contracting agency as a result of such 
communication or upon discovery by the Department of Labor of a delay, 
shall supersede and replace the earlier response as the wage 
determination applicable to such procurement, subject to the time frames 
set forth in Sec. 4.5(a)(2).

Sec. 4.5  Contract specification of determined minimum wages and fringe 
          benefits.

    (a) Any contract in excess of $2,500 shall contain, as an 
attachment, the applicable, currently effective wage determination 
specifying the minimum wages and fringe benefits for service employees 
to be employed thereunder, including any document referred to in 
paragraphs (a)(1) or (2) of this section;
    (1) Any communication from the Wage and Hour Division, Employment 
Standards Administration, Department of Labor, responsive to the notice 
required by Sec. 4.4; or
    (2) Any revision of a wage determination issued prior to the award 
of the contract or contracts which specifies minimum wage rates or 
fringe benefits for classes of service employees whose wages or fringe 
benefits were not previously covered by wage determinations, or which 
changes previously determined minimum wage rates and fringe benefits for 
service employees employed on covered contracts in the locality. 
However, revisions received by the Federal agency later than 10 days 
before the opening of bids, in the case of contracts entered into 
pursuant to competitive bidding procedures, shall not be effective if 
the Federal agency finds that there is not a reasonable time still 
available to notify bidders of the revision. In the case of procurements 
entered into pursuant to negotiations (or in the case of the execution 
of an option or an extension of the initial contract term), revisions 
received by the agency after award (or execution of an option or 
extension of term, as the case may be) of the contract shall not be 
effective provided that the contract start of performance is within 30 
days of such award (or execution of an option or extension of term). If 
the contract does not specify a start of performance date which is 
within 30 days from the award, and/or if performance of such procurement 
does not commence within this 30-day period, the Department of Labor 
shall be notified and any notice of a revision received by the agency 
not less than 10 days before commencement of the contract shall be 
effective. In situations arising under section 4(c) of the Act, the 
provisions in Sec. 4.1b(b) apply.
    (b)(1) The following exemption from the compensation requirements of 
section 2(a) of the Act applies, subject to the limitations set forth in 
paragraphs (b)(2), (3), and (4) of this section: To avoid serious 
impairment of the conduct of Government business it has been found 
necessary and proper to provide exemption from the determined wage and 
fringe benefits section of the Act (section 2(a)(1), (2)) but not the 
minimum wage specified under section 6(a)(1) of the Fair Labor Standards 
Act of 1938, as amended (section 2(b) of

[[Page 35]]

this Act), of contracts under which five or less service employees are 
to be employed, and for which no such wage or fringe benefit 
determination has been issued;
    (2) The exemption provided in paragraph (b)(1) of this section, 
which was adopted pursuant to section 4(b) of the Act prior to its 
amendment by Public Law 92-473, does not extend to undetermined wages or 
fringe benefits in contracts for which one or more, but not all, classes 
of service employees are the subject of an applicable wage 
determination. The procedure for determination of wage rates and fringe 
benefits for any classes of service employees engaged in performing such 
contracts whose wages and fringe benefits are not specified in the 
applicable wage determination is set forth in Sec. 4.6(b).
    (3) The exemption provided in paragraph (b)(1) of this section does 
not exempt any contract from the application of the provisions of 
section 4(c) of the Act as amended, concerning successor contracts.
    (4) The exemption provided in paragraph (b)(1) of this section does 
not apply to any contract for which section 10 of the Act as amended 
requires an applicable wage determination.
    (c)(1) If the notice of intention required by Sec. 4.4 is not filed 
with the required supporting documents within the time provided in such 
section, the contracting agency shall, through the exercise of any and 
all of its power and authority that may be needed (including, where 
necessary, its authority to negotiate, its authority to pay any 
necessary additional costs, and its authority under any provision of the 
contract authorizing changes), include in the contract any wage 
determinations communicated to it by the Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, within 30 
days of the receipt of such wage determination(s). With respect to any 
contract for which section 10 of the Act requires an applicable wage 
determination, the Administrator may require retroactive application of 
such wage determination.
    (2) Where the Department of Labor discovers and determines, whether 
before or subsequent to a contract award, that a contracting agency made 
an erroneous determination that the Service Contract Act did not apply 
to a particular procurement and/or failed to include an appropriate wage 
determination in a covered contract, the contracting agency, within 30 
days of notification by the Department of Labor, shall include in the 
contract the stipulations contained in Sec. 4.6 and any applicable wage 
determination issued by the Administrator or his authorized 
representative through the exercise of any and all authority that may be 
needed (including, where necessary, its authority to negotiate or amend, 
its authority to pay any necessary additional costs, and its authority 
under any contract provision authorizing changes, cancellation, and 
termination). With respect to any contract subject to section 10 of the 
Act, the Administrator may require retroactive application of such wage 
determination. (See 53 Comp. Gen. 412, (1973); Curtiss-Wright Corp. v. 
McLucas, 381 F. Supp. 657 (D NJ 1974); Marine Engineers Beneficial 
Assn., District 2 v. Military Sealift Command, 86 CCH Labor Cases 
para.33,782 (D DC 1979); Brinks, Inc. v. Board of Governors of the 
Federal Reserve System, 466 F. Supp. 112 (D DC 1979), 466 F. Supp. 116 
(D DC 1979).) (See also 32 CFR 1-403.)
    (d) In cases where the contracting agency has filed its SF-98 within 
the time limits discussed in Sec. 4.4(a) and has not received a response 
from the Department of Labor, the contracting agency shall, with respect 
to any contract for which section 10 of the Act and Sec. 4.3 of this 
part mandate the inclusion of an applicable wage determination, contact 
the Wage and Hour Division by telephone for guidance.

Sec. 4.6  Labor standards clauses for Federal service contracts 
          exceeding $2,500.

    The clauses set forth in the following paragraphs shall be included 
in full by the contracting agency in every contract entered into by the 
United States or the District of Columbia, in excess of $2,500, or in an 
indefinite amount, the principal purpose of which is to furnish services 
through the use of service employees:
    (a) Service Contract Act of 1965, as amended: This contract is 
subject to the Service Contract Act of 1965, as

[[Page 36]]

amended (41 U.S.C. 351 et seq.) and is subject to the following 
provisions and to all other applicable provisions of the Act and 
regulations of the Secretary of Labor issued thereunder (29 CFR part 4).
    (b)(1) Each service employee employed in the performance of this 
contract by the contractor or any subcontractor shall be paid not less 
than the minimum monetary wages and shall be furnished fringe benefits 
in accordance with the wages and fringe benefits determined by the 
Secretary of Labor or authorized representative, as specified in any 
wage determination attached to this contract.
    (2)(i) If there is such a wage determination attached to this 
contract, the contracting officer shall require that any class of 
service employee which is not listed therein and which is to be employed 
under the contract (i.e., the work to be performed is not performed by 
any classification listed in the wage determination), be classified by 
the contractor so as to provide a reasonable relationship (i.e., 
appropriate level of skill comparison) between such unlisted 
classifications and the classifications listed in the wage 
determination. Such conformed class of employees shall be paid the 
monetary wages and furnished the fringe benefits as are determined 
pursuant to the procedures in this section.
    (ii) Such conforming procedure shall be initiated by the contractor 
prior to the performance of contract work by such unlisted class of 
employee. A written report of the proposed conforming action, including 
information regarding the agreement or disagreement of the authorized 
representative of the employees involved or, where there is no 
authorized representative, the employees themselves, shall be submitted 
by the contractor to the contracting officer no later than 30 days after 
such unlisted class of employees performs any contract work. The 
contracting officer shall review the proposed action and promptly submit 
a report of the action, together with the agency's recommendation and 
all pertinent information including the position of the contractor and 
the employees, to the Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, for review. The Wage and Hour 
Division will approve, modify, or disapprove the action or render a 
final determination in the event of disagreement within 30 days of 
receipt or will notify the contracting officer within 30 days of receipt 
that additional time is necessary.
    (iii) The final determination of the conformance action by the Wage 
and Hour Division shall be transmitted to the contracting officer who 
shall promptly notify the contractor of the action taken. Each affected 
employee shall be furnished by the contractor with a written copy of 
such determination or it shall be posted as a part of the wage 
determination.
    (iv)(A) The process of establishing wage and fringe benefit rates 
that bear a reasonable relationship to those listed in a wage 
determination cannot be reduced to any single formula. The approach used 
may vary from wage determination to wage determination depending on the 
circumstances. Standard wage and salary administration practices which 
rank various job classifications by pay grade pursuant to point schemes 
or other job factors may, for example, be relied upon. Guidance may also 
be obtained from the way different jobs are rated under Federal pay 
systems (Federal Wage Board Pay System and the General Schedule) or from 
other wage determinations issued in the same locality. Basic to the 
establishment of any conformable wage rate(s) is the concept that a pay 
relationship should be maintained between job classifications based on 
the skill required and the duties performed.
    (B) In the case of a contract modification, an exercise of an option 
or extension of an existing contract, or in any other case where a 
contractor succeeds a contract under which the classification in 
question was previously conformed pursuant to this section, a new 
conformed wage rate and fringe benefits may be assigned to such 
conformed classification by indexing (i.e., adjusting) the previous 
conformed rate and fringe benefits by an amount equal to the average 
(mean) percentage increase (or decrease, where appropriate) between the 
wages and fringe benefits specified for all classifications to be

[[Page 37]]

used on the contract which are listed in the current wage determination, 
and those specified for the corresponding classifications in the 
previously applicable wage determination. Where conforming actions are 
accomplished in accordance with this paragraph prior to the performance 
of contract work by the unlisted class of employees, the contractor 
shall advise the contracting officer of the action taken but the other 
procedures in paragraph (b)(2)(ii) of this section need not be followed.
    (C) No employee engaged in performing work on this contract shall in 
any event be paid less than the currently applicable minimum wage 
specified under section 6(a)(1) of the Fair Labor Standards Act of 1938, 
as amended.
    (v) The wage rate and fringe benefits finally determined pursuant to 
paragraphs (b)(2)(i) and (ii) of this section shall be paid to all 
employees performing in the classification from the first day on which 
contract work is performed by them in the classification. Failure to pay 
such unlisted employees the compensation agreed upon by the interested 
parties and/or finally determined by the Wage and Hour Division 
retroactive to the date such class of employees commenced contract work 
shall be a violation of the Act and this contract.
    (vi) Upon discovery of failure to comply with paragraphs (b)(2)(i) 
through (v) of this section, the Wage and Hour Division shall make a 
final determination of conformed classification, wage rate, and/or 
fringe benefits which shall be retroactive to the date such class of 
employees commenced contract work.
    (3) If, as authorized pursuant to section 4(d) of the Service 
Contract Act of 1965 as amended, the term of this contract is more than 
1 year, the minimum monetary wages and fringe benefits required to be 
paid or furnished thereunder to service employees shall be subject to 
adjustment after 1 year and not less often than once every 2 years, 
pursuant to wage determinations to be issued by the Wage and Hour 
Division, Employment Standards Administration of the Department of Labor 
as provided in such Act.
    (c) The contractor or subcontractor may discharge the obligation to 
furnish fringe benefits specified in the attachment or determined 
conformably thereto by furnishing any equivalent combinations of bona 
fide fringe benefits, or by making equivalent or differential payments 
in cash in accordance with the applicable rules set forth in subpart D 
of 29 CFR part 4, and not otherwise.
    (d)(1) In the absence of a minimum wage attachment for this 
contract, neither the contractor nor any subcontractor under this 
contract shall pay any person performing work under the contract 
(regardless of whether they are service employees) less than the minimum 
wage specified by section 6(a)(1) of the Fair Labor Standards Act of 
1938. Nothing in this provision shall relieve the contractor or any 
subcontractor of any other obligation under law or contract for the 
payment of a higher wage to any employee.
    (2) If this contract succeeds a contract, subject to the Service 
Contract Act of 1965 as amended, under which substantially the same 
services were furnished in the same locality and service employees were 
paid wages and fringe benefits provided for in a collective bargaining 
agreement, in the absence of the minimum wage attachment for this 
contract setting forth such collectively bargained wage rates and fringe 
benefits, neither the contractor nor any subcontractor under this 
contract shall pay any service employee performing any of the contract 
work (regardless of whether or not such employee was employed under the 
predecessor contract), less than the wages and fringe benefits provided 
for in such collective bargaining agreements, to which such employee 
would have been entitled if employed under the predecessor contract, 
including accrued wages and fringe benefits and any prospective 
increases in wages and fringe benefits provided for under such 
agreement. No contractor or subcontractor under this contract may be 
relieved of the foregoing obligation unless the limitations of 
Sec. 4.1b(b) of 29 CFR part 4 apply or unless the Secretary of Labor or 
his authorized representative finds, after a hearing as provided in 
Sec. 4.10 of 29 CFR part 4 that

[[Page 38]]

the wages and/or fringe benefits provided for in such agreement are 
substantially at variance with those which prevail for services of a 
character similar in the locality, or determines, as provided in 
Sec. 4.11 of 29 CFR part 4, that the collective bargaining agreement 
applicable to service employees employed under the predecessor contract 
was not entered into as a result of arm's-length negotiations. Where it 
is found in accordance with the review procedures provided in 29 CFR 
4.10 and/or 4.11 and parts 6 and 8 that some or all of the wages and/or 
fringe benefits contained in a predecessor contractor's collective 
bargaining agreement are substantially at variance with those which 
prevail for services of a character similar in the locality, and/or that 
the collective bargaining agreement applicable to service employees 
employed under the predecessor contract was not entered into as a result 
of arm's-length negotiations, the Department will issue a new or revised 
wage determination setting forth the applicable wage rates and fringe 
benefits. Such determination shall be made part of the contract or 
subcontract, in accordance with the decision of the Administrator, the 
Administrative Law Judge, or the Administrative Review Board, as the 
case may be, irrespective of whether such issuance occurs prior to or 
after the award of a contract or subcontract. 53 Comp. Gen. 401 (1973). 
In the case of a wage determnation issued solely as a result of a 
finding of substantial variance, such determination shall be effective 
as of the date of the final administrative decision.
    (e) The contractor and any subcontractor under this contract shall 
notify each service employee commencing work on this contract of the 
minimum monetary wage and any fringe benefits required to be paid 
pursuant to this contract, or shall post the wage determination attached 
to this contract. The poster provided by the Department of Labor 
(Publication WH 1313) shall be posted in a prominent and accessible 
place at the worksite. Failure to comply with this requirement is a 
violation of section 2(a)(4) of the Act and of this contract.
    (f) The contractor or subcontractor shall not permit any part of the 
services called for by this contract to be performed in buildings or 
surroundings or under working conditions provided by or under the 
control or supervision of the contractor or subcontractor which are 
unsanitary or hazardous or dangerous to the health or safety of service 
employees engaged to furnish these services, and the contractor or 
subcontractor shall comply with the safety and health standards applied 
under 29 CFR part 1925.
    (g)(1) The contractor and each subcontractor performing work subject 
to the Act shall make and maintain for 3 years from the completion of 
the work records containing the information specified in paragraphs 
(g)(1) (i) through (vi) of this section for each employee subject to the 
Act and shall make them available for inspection and transcription by 
authorized representatives of the Wage and Hour Division, Employment 
Standards Administration of the U.S. Department of Labor:
    (i) Name and address and social security number of each employee.
    (ii) The correct work classification or classifications, rate or 
rates of monetary wages paid and fringe benefits provided, rate or rates 
of fringe benefit payments in lieu thereof, and total daily and weekly 
compensation of each employee.
    (iii) The number of daily and weekly hours so worked by each 
employee.
    (iv) Any deductions, rebates, or refunds from the total daily or 
weekly compensation of each employee.
    (v) A list of monetary wages and fringe benefits for those classes 
of service employees not included in the wage determination attached to 
this contract but for which such wage rates or fringe benefits have been 
determined by the interested parties or by the Administrator or 
authorized representative pursuant to the labor standards clause in 
paragraph (b) of this section. A copy of the report required by the 
clause in paragraph (b)(2)(ii) of this section shall be deemed to be 
such a list.
    (vi) Any list of the predecessor contractor's employees which had 
been furnished to the contractor pursuant to Sec. 4.6(l)(2).

[[Page 39]]

    (2) The contractor shall also make available a copy of this contract 
for inspection or transcription by authorized representatives of the 
Wage and Hour Division.
    (3) Failure to make and maintain or to make available such records 
for inspection and transcription shall be a violation of the regulations 
and this contract, and in the case of failure to produce such records, 
the contracting officer, upon direction of the Department of Labor and 
notification of the contractor, shall take action to cause suspension of 
any further payment or advance of funds until such violation ceases.
    (4) The contractor shall permit authorized representatives of the 
Wage and Hour Division to conduct interviews with employees at the 
worksite during normal working hours.
    (h) The contractor shall unconditionally pay to each employee 
subject to the Act all wages due free and clear and without subsequent 
deduction (except as otherwise provided by law or Regulations, 29 CFR 
part 4), rebate, or kickback on any account. Such payments shall be made 
no later than one pay period following the end of the regular pay period 
in which such wages were earned or accrued. A pay period under this Act 
may not be of any duration longer than semi-monthly.
    (i) The contracting officer shall withhold or cause to be withheld 
from the Government prime contractor under this or any other Government 
contract with the prime contractor such sums as an appropriate official 
of the Department of Labor requests or such sums as the contracting 
officer decides may be necessary to pay underpaid employees employed by 
the contractor or subcontractor. In the event of failure to pay any 
employees subject to the Act all or part of the wages or fringe benefits 
due under the Act, the agency may, after authorization or by direction 
of the Department of Labor and written notification to the contractor, 
take action to cause suspension of any further payment or advance of 
funds until such violations have ceased. Additionally, any failure to 
comply with the requirements of these clauses relating to the Service 
Contract Act of 1965, may be grounds for termination of the right to 
proceed with the contract work. In such event, the Government may enter 
into other contracts or arrangements for completion of the work, 
charging the contractor in default with any additional cost.
    (j) The contractor agrees to insert these clauses in this section 
relating to the Service Contract Act of 1965 in all subcontracts subject 
to the Act. The term contractor as used in these clauses in any 
subcontract, shall be deemed to refer to the subcontractor, except in 
the term Government prime contractor.
    (k)(1) As used in these clauses, the term service employee means any 
person engaged in the performance of this contract other than any person 
employed in a bona fide executive, administrative, or professional 
capacity, as those terms are defined in part 541 of title 29, Code of 
Federal Regulations, as of July 30, 1976, and any subsequent revision of 
those regulations. The term service employee includes all such persons 
regardless of any contractual relationship that may be alleged to exist 
between a contractor or subcontractor and such persons.
    (2) The following statement is included in contracts pursuant to 
section 2(a)(5) of the Act and is for informational purposes only:
    The following classes of service employees expected to be employed 
under the contract with the Government would be subject, if employed by 
the contracting agency, to the provisions of 5 U.S.C. 5341 or 5 U.S.C. 
5332 and would, if so employed, be paid not less than the following 
rates of wages and fringe benefits:

------------------------------------------------------------------------
                                                               Monetary
                       Employee class                        wage-fringe
                                                               benefits
------------------------------------------------------------------------
                                                             ...........
                                                             ...........
                                                             ...........
------------------------------------------------------------------------

    (l)(1) If wages to be paid or fringe benefits to be furnished any 
service employees employed by the Government prime contractor or any 
subcontractor under the contract are provided for in a collective 
bargaining agreement which is or will be effective during any period in 
which the contract is being performed, the Government prime contractor 
shall report such fact

[[Page 40]]

to the contracting officer, together with full information as to the 
application and accrual of such wages and fringe benefits, including any 
prospective increases, to service employees engaged in work on the 
contract, and a copy of the collective bargaining agreement. Such report 
shall be made upon commencing performance of the contract, in the case 
of collective bargaining agreements effective at such time, and in the 
case of such agreements or provisions or amendments thereof effective at 
a later time during the period of contract performance, such agreements 
shall be reported promptly after negotiation thereof.
    (2) Not less than 10 days prior to completion of any contract being 
performed at a Federal facility where service employees may be retained 
in the performance of the succeeding contract and subject to a wage 
determination which contains vacation or other benefit provisions based 
upon length of service with a contractor (predecessor) or successor 
(Sec. 4.173 of Regulations, 29 CFR part 4), the incumbent prime 
contractor shall furnish to the contracting officer a certified list of 
the names of all service employees on the contractor's or 
subcontractor's payroll during the last month of contract performance. 
Such list shall also contain anniversary dates of employment on the 
contract either with the current or predecessor contractors of each such 
service employee. The contracting officer shall turn over such list to 
the successor contractor at the commencement of the succeeding contract.
    (m) Rulings and interpretations of the Service Contract Act of 1965, 
as amended, are contained in Regulations, 29 CFR part 4.
    (n)(1) By entering into this contract, the contractor (and officials 
thereof) certifies that neither it (nor he or she) nor any person or 
firm who has a substantial interest in the contractor's firm is a person 
or firm ineligible to be awarded Government contracts by virtue of the 
sanctions imposed pursuant to section 5 of the Act.
    (2) No part of this contract shall be subcontracted to any person or 
firm ineligible for award of a Government contract pursuant to section 5 
of the Act.
    (3) The penalty for making false statements is prescribed in the 
U.S. Criminal Code, 18 U.S.C. 1001.
    (o) Notwithstanding any of the clauses in paragraphs (b) through (m) 
of this section relating to the Service Contract Act of 1965, the 
following employees may be employed in accordance with the following 
variations, tolerances, and exemptions, which the Secretary of Labor, 
pursuant to section 4(b) of the Act prior to its amendment by Public Law 
92-473, found to be necessary and proper in the public interest or to 
avoid serious impairment of the conduct of Government business:
    (1) Apprentices, student-learners, and workers whose earning 
capacity is impaired by age, physical, or mental deficiency or injury 
may be employed at wages lower than the minimum wages otherwise required 
by section 2(a)(1) or 2(b)(1) of the Service Contract Act without 
diminishing any fringe benefits or cash payments in lieu thereof 
required under section 2(a)(2) of that Act, in accordance with the 
conditions and procedures prescribed for the employment of apprentices, 
student-learners, handicapped persons, and handicapped clients of 
sheltered workshops under section 14 of the Fair Labor Standards Act of 
1938, in the regulations issued by the Administrator (29 CFR parts 520, 
521, 524, and 525).
    (2) The Administrator will issue certificates under the Service 
Contract Act for the employment of apprentices, student-learners, 
handicapped persons, or handicapped clients of sheltered workshops not 
subject to the Fair Labor Standards Act of 1938, or subject to different 
minimum rates of pay under the two acts, authorizing appropriate rates 
of minimum wages (but without changing requirements concerning fringe 
benefits or supplementary cash payments in lieu thereof), applying 
procedures prescribed by the applicable regulations issued under the 
Fair Labor Standards Act of 1938 (29 CFR parts 520, 521, 524, and 525).
    (3) The Administrator will also withdraw, annul, or cancel such 
certificates in accordance with the regulations in parts 525 and 528 of 
title 29 of the Code of Federal Regulations.
    (p) Apprentices will be permitted to work at less than the 
predetermined

[[Page 41]]

rate for the work they perform when they are employed and individually 
registered in a bona fide apprenticeship program registered with a State 
Apprenticeship Agency which is recognized by the U.S. Department of 
Labor, or if no such recognized agency exists in a State, under a 
program registered with the Bureau of Apprenticeship and Training, 
Employment and Training Administration, U.S. Department of Labor. Any 
employee who is not registered as an apprentice in an approved program 
shall be paid the wage rate and fringe benefits contained in the 
applicable wage determination for the journeyman classification of work 
actually performed. The wage rates paid apprentices shall not be less 
than the wage rate for their level of progress set forth in the 
registered program, expressed as the appropriate percentage of the 
journeyman's rate contained in the applicable wage determination. The 
allowable ratio of apprentices to journeymen employed on the contract 
work in any craft classification shall not be greater than the ratio 
permitted to the contractor as to his entire work force under the 
registered program.
    (q) Where an employee engaged in an occupation in which he or she 
customarily and regularly receives more than $30 a month in tips, the 
amount of tips received by the employee may be credited by the employer 
against the minimum wage required by Section 2(a)(1) or 2(b)(1) of the 
Act to the extent permitted by section 3(m) of the Fair Labor Standards 
Act and Regulations, 29 CFR Part 531. To utilize this proviso:
    (1) The employer must inform tipped employees about this tip credit 
allowance before the credit is utilized;
    (2) The employees must be allowed to retain all tips (individually 
or through a pooling arrangement and regardless of whether the employer 
elects to take a credit for tips received);
    (3) The employer must be able to show by records that the employee 
receives at least the applicable Service Contract Act minimum wage 
through the combination of direct wages and tip credit;
    (4) The use of such tip credit must have been permitted under any 
predecessor collective bargaining agreement applicable by virtue of 
section 4(c) of the Act.
    (r) Disputes concerning labor standards. Disputes arising out of the 
labor standards provisions of this contract shall not be subject to the 
general disputes clause of this contract. Such disputes shall be 
resolved in accordance with the procedures of the Department of Labor 
set forth in 29 CFR parts 4, 6, and 8. Disputes within the meaning of 
this clause include disputes between the contractor (or any of its 
subcontractors) and the contracting agency, the U.S. Department of 
Labor, or the employees or their representatives.

(The information collection, recordkeeping, and reporting requirements 
contained in this section have been approved by the Office of Management 
and Budget under the following numbers:

------------------------------------------------------------------------
                                                             OMB control
                         Paragraph                              number
------------------------------------------------------------------------
(b)(2) (i)--(iv)...........................................    1215-0150
(e)........................................................    1215-0150
(g)(1) (i)--(iv)...........................................    1215-0017
(g)(1) (v), (vi)...........................................    1215-0150
(l) (1), (2)...............................................    1215-0150
(q)(3).....................................................    1215-0017
------------------------------------------------------------------------


[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983, as amended at 61 
FR 68663, Dec. 30, 1996]

Sec. 4.7  [Reserved]

Sec. 4.8  Notice of awards.

    Whenever an agency of the United States or the District of Columbia 
awards a contract subject to the Act which may be in excess of $10,000 
and such agency does not submit Standard Form 279, FPDS Individual 
Contract Action Report, or its equivalent, to the Federal Procurement 
Data System, it shall furnish the Wage and Hour Division, ESA, an 
original and one copy of Standard Form 99, Notice of Award of Contract, 
unless it makes other arrangements with the Wage and Hour Division for 
notifying it of such contract awards. The form shall be completed as 
follows:
    (a) Items 1 through 7 and 12 and 13: Self-explanatory;
    (b) Item 8: Enter the notation ``Service Contract Act;''
    (c) Item 9: Leave blank;
    (d) Item 10: (1) Enter the notation ``Major Category,'' and indicate 
beside this entry the general service area into

[[Page 42]]

which the contract falls (e.g., food services, grounds maintenance, 
computer services, installation or facility support services, custodial-
janitorial service, garbage collection, insect and rodent control, 
laundry and drycleaning services, etc.);
    (e) Item 11: Enter the dollar amount of the contract, or the 
estimated dollar value with the notation ``estimated'' (if the exact 
amount is not known). If neither the exact nor the estimated dollar 
value is known, enter ``indefinite,'' or ``not to exceed $____.'' 
Supplies of Standard Form 99 are available in all GSA supply depots 
under stock number 7540-634-4049.

Sec. 4.9  [Reserved]

Sec. 4.10  Substantial variance proceedings under section 4(c) of the 
          Act.

    (a) Statutory provision. Under section 4(c) of the Act, and under 
corresponding wage determinations made as provided in section 2(a)(1) 
and (2) of the Act, contractors and subcontractors performing contracts 
subject to the Act generally are obliged to pay to service employees 
employed on the contract work wages and fringe benefits not less than 
those to which they would have been entitled under a collective 
bargaining agreement if they were employed on like work under a 
predecessor contract in the same locality. (See Secs. 4.1b, 4.3, 
4.6(d)(2).) Section 4(c) of the Act provides, however, that ``such 
obligations shall not apply if the Secretary finds after a hearing in 
accordance with regulations adopted by the Secretary that such wages and 
fringe benefits are substantially at variance with those which prevail 
for services of a character similar in the locality''.
    (b) Prerequisites for hearing. (1)(i) A request for a hearing under 
this section may be made by the contracting agency or other person 
affected or interested, including contractors or prospective contractors 
and associations of contractors, representatives of employees, and other 
interested Governmental agencies. Such a request shall be submitted in 
writing to the Administrator, Wage and Hour Division, Employment 
Standards Administration, U.S. Department of Labor, Washington, DC 
20210, and shall include the following:
    (A) The number of any wage determination at issue, the name of the 
contracting agency whose contract is involved, and a brief description 
of the services to be performed under the contract;
    (B) A statement regarding the status of the procurement and any 
estimated procurement dates, such as bid opening, contract award, 
commencement date of the contract or its follow-up option period;
    (C) A statement of the applicant's case, setting forth in detail the 
reasons why the applicant believes that a substantial variance exists 
with respect to some or all of the wages and/or fringe benefits, 
attaching available data concerning wages and/or fringe benefits 
prevailing in the locality;
    (D) Names and addresses (to the extent known) of interested parties.
    (ii) If the information in paragraph (b)(1)(i) of this section is 
not submitted with the request, the Administrator may deny the request 
or request supplementary information, at his/her discretion. No 
particular form is prescribed for submission of a request under this 
section.
    (2) The Administrator will respond to the party requesting a hearing 
within 30 days after receipt, granting or denying the request or 
advising that additional time is necessary for a decision. No hearing 
will be provided pursuant to this section and section 4(c) of the Act 
unless the Administrator determines from information available or 
submitted with a request for such a hearing that there may be a 
substantial variance between some or all of the wage rates and/or fringe 
benefits provided for in a collective bargaining agreement to which the 
service employees would otherwise be entitled by virtue of the 
provisions of section 4(c) of the Act, and those which prevail for 
services of a character similar in the locality.
    (3) Pursuant to section 4(b) of the Act, requests for a hearing 
shall not be considered unless received as specified below, except in 
those situations where the Administrator determines that extraordinary 
circumstances exist:

[[Page 43]]

    (i) For advertised contracts, prior to ten days before the award of 
the contract;
    (ii) For negotiated contracts and for contracts with provisions 
extending the initial term by option, prior to the commencement date of 
the contract or the follow-up option period, as the case may be.
    (c) Referral to the Chief Administrative Law Judge. When the 
Administrator determines from the information available or submitted 
with a request for a hearing that there may be a substantial variance, 
the Administrator on his/her own motion or on application of any 
interested person will by order refer the issue to the Chief 
Administrative Law Judge, for designation of an Administrative Law Judge 
who shall conduct such a fact finding hearing as may be necessary to 
render a decision solely on the issue of whether the wages and/or fringe 
benefits contained in the collective bargaining agreement which was the 
basis for the wage determination at issue are substantially at variance 
with those which prevail for services of a character similar in the 
locality. However, in situations where there is also a question as to 
whether the collective bargaining agreement was reached as a result of 
``arm's-length negotiations'' (see Sec. 4.11), the referral shall 
include both issues for resolution in one proceeding. No authority is 
delegated under this section to hear and/or decide any other issues 
pertaining to the Service Contract Act. As provided in section 4(a) of 
the Act, the provisions of section 4 and 5 of the Walsh-Healey Public 
Contracts Act (41 U.S.C. 38, 39) shall be applicable to such proceeding, 
which shall be conducted in accordance with the procedures set forth at 
29 CFR part 6.
    (d) The Administrator shall be an interested party and shall have 
the opportunity to participate in the proceeding to the degree he/she 
considers appropriate.

Sec. 4.11  Arm's length proceedings.

    (a) Statutory provision. Under section 4(c) of the Act, the wages 
and fringe benefits provided in the predecessor contractor's collective 
bargaining agreement must be reached ``as a result of arm's-length 
negotiations.'' This provision precludes arrangements by parties to a 
collective bargaining agreement who, either separately or together, act 
with an intent to take advantage of the wage determination scheme 
provided for in sections 2(a) and 4(c) of the Act. See Trinity Services, 
Inc. v. Marshall, 593 F.2d 1250 (D.C. Cir. 1978). A finding as to 
whether a collective bargaining agreement or particular wages and fringe 
benefits therein are reached as a result of arm's-length negotiations 
may be made through investigation, hearing or otherwise pursuant to the 
Secretary's authority under section 4(a) of the Act.
    (b) Prerequisites for hearing. (1) A request for a determination 
under this section may be made by a contracting agency or other person 
affected or interested, including contractors or prospective contractors 
and associations of contractors, representatives of employees, and 
interested Governmental agencies. Such a request shall be submitted in 
writing to the Administrator, Wage and Hour Division, Employment 
Standards Administration, U.S. Department of Labor, Washington, DC 
20210. Although no particular form is prescribed for submission of a 
request under this section, such request shall include the following 
information:
    (i) A statement of the applicant's case setting forth in detail the 
reasons why the applicant believes that the wages and fringe benefits 
contained in the collective bargaining agreement were not reached as a 
result of arm's-length negotiations;
    (ii) A statement regarding the status of the procurement and any 
estimated procurement dates, such as bid opening, contract award, 
commencement date of the contract or its follow-up option period;
    (iii) Names and addresses (to the extent known) of interested 
parties.
    (2) Pursuant to section 4(b) of the Act, requests for a hearing 
shall not be considered unless received as specified below except in 
those situations where the Administrator determines that extraordinary 
circumstances exist:
    (i) For advertised contracts, prior to ten days before the award of 
the contract;

[[Page 44]]

    (ii) For negotiated contracts and for contracts with provisions 
extending the term by option, prior to the commencement date of the 
contract or the follow-up option period, as the case may be.
    (c)(1) The Administrator, on his/her own motion or after receipt of 
a request for a determination, may make a finding on the issue of arm's-
length negotiations.
    (2) If the Administrator determines that there may not have been 
arm's-length negotiations, but finds that there is insufficient evidence 
to render a final decision thereon, the Administrator may refer the 
issue to the Chief Administrative Law Judge in accordance with paragraph 
(d) of this section.
    (3)(i) If the Administrator finds that the collective bargaining 
agreement or wages and fringe benefits at issue were reached as a result 
of arm's-length negotiations or that arm's-length negotiations did not 
take place, the interested parties, including the parties to the 
collective bargaining agreement, will be notified of the Administrator's 
findings, which shall include the reasons therefor, and such parties 
shall be afforded an opportunity to request that a hearing be held to 
render a decision on the issue of arm's-length negotiations.
    (ii) Such parties shall have 20 days from the date of the 
Administrator's ruling to request a hearing. A detailed statement of the 
reasons why the Administrator's ruling is in error, including facts 
alleged to be in dispute, if any, shall be submitted with the request 
for a hearing.
    (iii) If no hearing is requested within the time mentioned in 
paragraph (c)(3)(ii) of this section, the Administrator's ruling shall 
be final, and, in the case of a finding that arm's-length negotiations 
did not take place, a new wage determination will be issued for the 
contract. If a hearing is requested, the decision of the Administrator 
shall be inoperative.
    (d) Referral to the Chief Administrative Law Judge. The 
Administrator on his/her own motion, under paragraph (c)(2) of this 
section or upon a request for a hearing under paragraph (c)(3)(ii) of 
this section where the Administrator determines that material facts are 
in dispute, shall by order refer the issue to the Chief Administrative 
Law Judge for designation of an Administrative Law Judge, who shall 
conduct such hearings as may be necessary to render a decision solely on 
the issue of arm's-length negotiations. However, in situations where 
there is also a question as to whether some or all of the collectively 
bargained wage rates and/or fringe benefits are substantially at 
variance (see Sec. 4.10), the referral shall include both issues for 
resolution in one proceeding. As provided in section 4(a) of the Act, 
the provisions of sections 4 and 5 of the Walsh-Healey Public Contracts 
Act (41 U.S.C. 38, 39) shall be applicable to such proceeding, which 
shall be conducted in accordance with the procedures set forth at 29 CFR 
part 6.
    (e) Referral to the Administrative Review Board. When a party 
requests a hearing under paragraph (c)(3)(ii) of this section and the 
Administrator determines that no material facts are in dispute, the 
Administrator shall refer the issue and the record compiled thereon to 
the Administrative Review Board to render a decision solely on the issue 
of arm's-length negotiations. Such proceeding shall be conducted in 
accordance with the procedures set forth at 29 CFR part 8.

Sec. 4.12  Substantial interest proceedings.

    (a) Statutory provision. Under section 5(a) of the Act, no contract 
of the United States (or the District of Columbia) shall be awarded to 
the persons or firms appearing on the list distributed by the 
Comptroller General giving the names of persons or firms who have been 
found to have violated the Act until 3 years have elapsed from the date 
of publication of the list. Section 5(a) further states that ``no 
contract of the United States shall be awarded * * * to any firm, 
corporation, partnership, or association in which such persons or firms 
have a substantial interest * * * .'' A finding as to whether persons or 
firms whose names appear on the debarred bidders list have a substantial 
interest in any other firm, corporation, partnership, or association may 
be made through investigation, hearing,

[[Page 45]]

or otherwise pursuant to the Secretary's authority under section 4(a) of 
the Act.
    (b) Ineligibility. See Sec. 4.188 of this part for the Secretary's 
rulings and interpretations with respect to substantial interest.
    (c)(1) A request for a determination under this section may be made 
by any interested party, including contractors or prospective 
contractors, and associations of contractors, representatives of 
employees, and interested Government agencies. Such a request shall be 
submitted in writing to the Administrator, Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, 
Washington, DC 20210.
    (2) The request shall include a statement setting forth in detail 
why the petitioner believes that a person or firm whose name appears on 
the debarred bidders list has a substantial interest in any firm, 
corporation, partnership, or association which is seeking or has been 
awarded a contract of the United States or the District of Columbia. No 
particular form is prescribed for the submission of a request under this 
section.
    (d)(1) The Administrator, on his/her own motion or after receipt of 
a request for a determination, may make a finding on the issue of 
substantial interest.
    (2) If the Administrator determines that there may be a substantial 
interest, but finds that there is insufficient evidence to render a 
final ruling thereon, the Administrator may refer the issue to the Chief 
Administrative Law Judge in accordance with paragraph (e) of this 
section.
    (3) If the Administrator finds that no substantial interest exists, 
or that there is not sufficient information to warrant the initiation of 
an investigation, the requesting party, if any, will be so notified and 
no further action taken.
    (4)(i) If the Administrator finds that a substantial interest 
exists, the person or firm affected will be notified of the 
Administrator's finding, which shall include the reasons therefor, and 
such person or firm shall be afforded an opportunity to request that a 
hearing be held to render a decision on the issue of substantial 
interest.
    (ii) Such person or firm shall have 20 days from the date of the 
Administrator's ruling to request a hearing. A detailed statement of the 
reasons why the Administrator's ruling is in error, including facts 
alleged to be in dispute, if any, shall be submitted with the request 
for a hearing.
    (iii) If no hearing is requested within the time mentioned in 
paragraph (d)(4)(ii) of this section, the Administrator's finding shall 
be final and the Administrator shall so notify the Comptroller General. 
If a hearing is requested, the decision of the Administrator shall be 
inoperative unless and until the Administrative Law Judge or the 
Administrative Review Board issues an order that there is a substantial 
interest.
    (e) Referral to the Chief Administrative Law Judge. The 
Administrator on his/her own motion, or upon a request for a hearing 
where the Administrator determines that relevant facts are in dispute, 
shall by order refer the issue to the Chief Administrative Law Judge, 
for designation of an Administrative Law Judge who shall conduct such 
hearings as may be necessary to render a decision solely on the issue of 
substantial interest. As provided in section 4(a) of the Act, the 
provisions of sections 4 and 5 of the Walsh-Healey Public Contracts Act 
(41 U.S.C. 38, 39) shall be applicable to such proceedings, which shall 
be conducted in accordance with the procedures set forth at 29 CFR part 
6.
    (f) Referral to the Administrative Review Board. When the person or 
firm requests a hearing and the Administrator determines that relevant 
facts are not in dispute, the Administrator will refer the issue and the 
record compiled thereon to the Administrative Review Board to render a 
decision solely on the issue of substantial interest. Such proceeding 
shall be conducted in accordance with the procedures set forth at 29 CFR 
part 8.

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