he may conduct, or have conducted, such investigations, hold such hearings, make such findings, issue such recommendations and directives, order such sanctions and penalties, and take such other action as may be necessary or appropriate to achieve the purposes of the Order. The Director shall promptly notify the agency of any corrective action to be taken or any sanctions to be taken or any sanction to be imposed by the agency. The agency shall take such action, and report the results thereof to the Director within the time specified. § 1-12.805-9 Sanctions and penalties.

(a) General. (1) In every case where any complaint investigation or compliance review indicates the existence of a violation of the Equal Opportunity clause, the matter should be resolved by informal means, including conference, conciliation, mediation, and persuasion, whenever possible. This will also include, where appropriate, establishing a program for future compliance approved by the head of the agency. Where the apparent violation is not resolved by informal means, the agency shall afford the contractor or subcontractor an opportunity for a hearing (see § 1-12.807). If a prime contractor or subcontractor, without a hearing, has complied with the recommendations or orders of an agency or the Director and believes such orders or recommendations to be erroneous, he shall, upon filing a request therefor within 10 days of such compliance, be accorded an opportunity for a hearing and review as provided in § 1-12.807.

(2) The sanctions described in paragraphs (1), (5), and (6) of section 209 (a) of the Order regarding the (i) publication of the names of contractors or unions, (ii) cancellation, termination, and suspension of contracts, and (iii) entering into contracts or extensions or modifications of contracts with noncomplying contractors may be exercised only by or with the approval of the Director.

(b) Termination. (1) A contract or subcontract may be canceled or terminated, in whole or in part, for failure to comply with the provisions of the Equal Opportunity clause. Whenever the Director or the head of the agency, or his designee, upon prior notification to the Director proposes to cancel or terminate, or cause to be canceled or terminated, in whole or in part, a contract or contracts, a notice of the proposed action, signed

by the Director or head of the agency, or his designee, shall be sent to the last known address of the prime contractor or subcontractor, return receipt requested. A copy of such notice shall be sent to all agencies. The prime contractor or subcontractor shall be given at least 10 days from the receipt of the notice either to comply with the provisions of the contract or to mail a request for a hearing to the Director, or the agency, as appropriate, under § 1-12.807. During the 10day notice period, reasonable efforts shall continue to be made to secure compliance by conference, mediation, and persuasion.

(2) If at the end of the 10-day period no request for a hearing has been received, the Director or the head of the agency may cancel, suspend, or terminate, or cause to be canceled, suspended, or terminated, such contracts or subcontracts.

(c) Debarment. (1) A prime contractor or subcontractor may be debarred from receiving contracts for failure to comply with the provisions of the Equal Opportunity clause. Whenever the Director, or the head of an agency or his designee, upon prior notification to the Director, proposes to debar a prime contractor or subcontractor from further contracts or subcontracts under section 209 of the Order, a notice of the proposed action, in writing and signed by the Director or head of the agency or his designee, shall be sent to the last known address of the prime contractor or subcontractor, return receipt requested. A copy of such notice shall be sent to all agencies. The prime contractor or subcontractor shall be given at least 10 days from the receipt of such notice in which to mail a request for a hearing to the Director or the agency. During the 10-day notice period, reasonable efforts shall continue to be made to secure compliance by conference, mediation, and persuasion.

(2) If at the end of the 10-day period no request has been received, the Director or the head of the agency may enter an order debarring the contractor or subcontractor from further contracts, subcontracts, or extensions or other modifications of existing contracts, until such contractor or subcontractor shall have satisfied the Director that he has established and will carry out personnel and employment policies and practices in compliance with the provisions of the Equal Opportunity clause.

(d) Referrals. Referral of any matter arising under the Order to the Department of Justice or to the Equal Employment Opportunity Commission shall be made by the Director.

(e) Show cause notices. When the Director has reasonable cause to believe that a contractor has violated the Equal Opportunity clause he may issue a notice requiring the contractor to show cause, within 30 days, why monitoring, enforcement proceedings, or other appropriate action to ensure compliance should not be instituted.

§ 1-12.805-10 Disputed matters related to the equal opportunity program. Disputes related to matters pertaining to the equal opportunity program shall be handled pursuant to the provisions of the Equal Opportunity clause in Government contracts, agreements, and subcontracts, rather than the Disputes clause contained therein. This relationship stems largely from the provision "except as otherwise provided in this contract" which appears in the standard Disputes clauses (see clauses 6 and 12 of Standard Forms 23-A and 32, respectively). The Equal Opportunity clause prescribed by § 1-12.803 does so "otherwise provide" in paragraph (d), which specifies that the contractor shall comply with the rules, regulations, and relevant orders of the Secretary of Labor. Those rules, regulations, and relevant orders prescribe particular procedures for handling disputed matters pertaining to the equal opportunity program (see 41 CFR ch. 60) which are implemented by §§ 1-12.805 and 1-12.807 (see also 41 CFR 60-1.1). § 1-12.805-11

Preaward notices.

(a) Preaward compliance reviews. Upon the request of the Director, agencies shall not enter into contracts or approve the entry into contracts or subcontracts with any bidder, prospective prime contractor, or proposed subcontractor named by the Director, until a preaward compliance review has been conducted and the Director or designated agency head or his designee has approved a determination that the bidder, prospective prime contractor, or proposed subcontractor will be able to comply with the provisions of the Equal Opportunity clause.

(b) Other special preaward procedures. Upon the request of the Director, agencies shall not enter into contracts or approve the entry into subcontracts with

§ 1-12.807-1 General.

An opportunity for a formal hearing shall be afforded to a prime contractor or a subcontractor by the Director or by the agency where:

(a) An apparent violation of the Equal Opportunity clause by a contractor, as shown by any complaint investigation or compliance review, is not resolved by informal means and a hearing is requested pursuant to § 1-12.805-9(a).

(b) The prime contractor or subcontractor, without a hearing, shall have complied with the recommendations or orders of the agency, believes such recommendations or orders to be erroneous and requests a hearing and review pursuant to § 1-12.805-9(a).

(c) The Director or an agency proposes to cancel or terminate a contract or subcontract, in whole or in part, and a hearing is requested pursuant to § 1-12.805-9 (b). The contract or subcontract may be suspended, in the discretion of the Director, during the pendency of the hearing.

(d) The Director or an agency proposes to debar the prime contractor or subcontractor and a hearing is requested pursuant to § 1-12.805-9(c). The contract or subcontract may be suspended, in the discretion of the Director, during the pendency of the hearing.

§ 1-12.807-2 Informal hearings.

(a) Purpose. The Director or any agency head, with the approval of the Director, may convene such informal hearings as may be deemed appropriate for the purpose of inquiring into the status of compliance by any prime contractor or subcontractor with the terms of the Equal Opportunity clause.

(b) Notice. Contractors and subcontractors shall be advised in writing as to the time and place of the informal hearing and may be directed to bring specific documents and records, or furnish other relevant information concerning their compliance status. When so requested, the prime contractor or subcontractor

shall attend and bring requested documents and records, or other requested information.

(c) Conduct of hearings. The hearing shall be conducted by hearing officers appointed by the Director or an agency head. Parties to informal hearings may be represented by counsel and shall have a fair opportunity to present any relevant material. Formal rules of evidence will not apply to such proceedings. § 1-12.807-3 Formal hearings.

(a) General procedure. The Director or the agency head, with the approval of the Director, may convene formal hearings pursuant to this Subpart 1-12.8. Such hearings shall be conducted in accordance with procedures prescribed by the Director or the agency head. Reasonable notice of a hearing shall be sent by registered mail, return receipt requested, to the last known address of the prime contractor or subcontractor complained against. Such notice shall contain the following:

(1) The time and place of hearing; (2) A statement of the provisions of the Order and regulations pursuant to which the hearing is to be held; and

(3) A concise statement of the matters pursuant to which the action furnishing the basis of the hearing has been taken or is proposed to be taken.

Copies of such notice shall be sent to all agencies. Hearings shall be held before a hearing officer designated by the Director or an agency head. Each party shall have the right to counsel, a fair opportunity to present evidence and argument, and to cross-examine. Whenever a formal hearing is based in whole or in part on matters subject to a collective bargaining agreement and compliance may necessitate a revision of such agreement, any labor organization which is a signatory to the agreement shall have the right to participate as a party. Any other person or organization shall be permitted to participate upon a showing that such person or organization has an interest in the proceedings and may contribute materially to its proper disposition. The hearing officer shall make his proposed findings and conclusions upon the basis of the record before him.

(b) Suspension during pendency of hearing. Whenever the prime contractor or subcontractor requests a hearing in accordance with § 1-12.805-9 (b) and (c), his contracts or subcontracts may

be suspended, in the discretion of the Director, during the pendency of the hearing.

(c) Decision following hearing. When the hearing is conducted by an agency, the hearing officer shall make recommendations to the head of the agency who shall make a decision. No decision by the head of the agency, or his representatives, shall be final without the prior approval of the Director. When the hearing is conducted by a hearing officer appointed by the Director, the hearing officer shall make recommendations to the Director, who shall make the final decision. Parties shall be furnished with copies of the hearing officer's recommendations, and shall be given an opportunity to submit their views.

The sanctions and penalties contained in Subpart D of the Order may be exercised by the agency or the Director against any prime contractor, subcontractor, or applicant who fails to take all necessary steps to ensure that no person intimidates, threatens, coerces, or discriminates against any individual for the purpose of interfering with the filing of a complaint, furnishing information, or assisting or participating in any manner in an investigation, compliance review, hearing, or any other activity related to the administration of the Order or any other Federal, State, or local laws requiring equal employment opportunity.

and a subcontract of $50,000 or more to develop a written affirmative action compliance program for each of its establishments. A necessary prerequisite to the development of a satisfactory affirmative action program is the identification and analysis of problem areas inherent in minority employment and an evaluation of opportunities for utilization of minority group personnel. The contractor programs shall provide in detail for specific steps to guarantee equal employment opportunity keyed to the problems and needs of members of minority groups, including, when there are deficiencies, the development of specific goals and time tables for the prompt achievement of full and equal employment opportunity. Each contractor shall include in his affirmative action compliance program a table of job classifications. This table should include, but need not be limited to, job titles, principal duties (and auxiliary duties, if any), rates of pay, and where more than one rate of pay applies (because of length of time in the job or other factors), the applicable rates. The affirmative action compliance program shall be signed by an executive official of the contractor.

(b) Utilization evaluation. The evaluation of utilization of minority group personnel shall include the following:

(1) An analysis of minority group representation in all job categories;

(2) An analysis of hiring practices for the past year, including recruitment sources and testing, to determine whether equal employment opportunity is being afforded in all job categories; and

(3) An analysis of upgrading, transfer, and promotion for the past year to determine whether equal employment opportunity is being afforded.

(c) Maintenance of programs. Within 120 days from the commencement of the contract, each contractor shall maintain a copy of separate affirmative action compliance programs for each establishment, including evaluations of utilization of minority group personnel and the job classification tables, at each local office responsible for the personnel matters of such establishment. An affirmative action compliance program shall be part of the manpower and training plans for each new establishment and shall be developed and made available prior to the staffing of such establishment. A report of the results of such program shall be compiled annually and the program shall be updated at that time, This information

The requirements of the Equal Opportunity clause regarding solicitations or advertisements for employees placed by or on behalf of a contractor or subcontractor will be satisfied whenever the contractor or subcontractor complies with any of the following:

(a) States expressly in the solicitations or advertising that all qualified applicants will receive consideration for employment without regard to race, creed, color, or national origin;

(b) Uses display or other advertising, and the advertising includes an appropriate insignia prescribed by the Director. The use of the insignia is considered subject to the provisions of 18 U.S.C. 701;

(c) Uses a single advertisement, and the advertisement is grouped with other advertisements under a caption which clearly states that all employers in the group assure all qualified applicants equal consideration for employment

1 On and after Oct. 14, 1968, the term "race, color, religion, sex, or national origin" is substituted for the term "race, creed, color, or national origin,' as provided by Executive Order No. 11375, Oct. 13, 1967 (32 F.R. 14303).

without regard to race, creed, color, or national origin; and

(d) Uses a single advertisement in which appears in clearly distinguishable type the phrase "an equal opportunity employer."

§ 1-12.814 Existing contracts and subcontracts.

All contracts and subcontracts in effect prior to October 24, 1965, which are not subsequently modified shall be administered in accordance with the nondiscrimination provisions of any prior applicable Executive orders. Any contract or subcontract modified on or after October 24, 1965, shall be subject to Executive Order No. 11246. Complaints received by and violations coming to the attention of agencies regarding contracts and subcontracts which were subject to Executive Orders Nos. 10925 and 11114 shall be processed as if they were complaints regarding violations of this Order. Subpart 1-12.9-Service Contract Act of 1965

SOURCE: The provisions of this Subpart 1-12.9 appear at 31 F.R. 11, Jan. 4, 1966, unless otherwise noted.

1. Section 1-12.900 is added, as follows: § 1-12.900

Scope of subpart.

This subpart sets forth policies and procedures for carrying out the provisions of the Service Contract Act of 1965 (41 U.S.C. 351-357), the provisions of the Fair Labor Standards Act of 1938, as amended (29 U.S.C. 201-219), as they pertain to service contracts, and the implementing regulations prescribed in 29 CFR Parts 4 and 1516, and instructions issued by the Secretary of Labor. [33 F.R. 19080, Dec. 21, 1968]

§ 1-12.901 Statutory requirements.

The Service Contract Act of 1965 (P.L. 89-286, sometimes hereinafter referred to in this subpart as the "Act") embraces two general requirements with respect to service contracts entered into by Federal agencies.

(a) Regardless of contract amount, no contractor or subcontractor holding a Federal service contract shall pay any of his 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 (29 U.S.C. 201, et seq.).

(b) Federal service contracts in excess

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of $2,500 shall contain the provisions required by the Act with respect to such matters as minimum wages, including fringe benefits, to be paid the various classes of service employees engaged in the performance of the contract, safe and sanitary working conditions, and notification to employees of the compensation required under the Act.

§ 1-12.902 Applicability.

Subject to statutory exemptions (see § 1-12.902-3) or administrative exemptions by the Secretary of Labor under section 4(b) of the Act (see § 1-12.902-4):

(a) The requirement set forth in § 1-12.901(a) applies to any contract with the Federal Government, the principal purpose of which is to furnish services through the use of service employees (as defined in § 1-12.902-2).

(b) The requirement set forth in § 112.901(b) applies to every contract (and any bid specification therefor) entered into by the Federal Government in excess of $2,500, whether negotiated or advertised, the principal purpose of which is to furnish services through the use of service employees (as defined in § 1-12.902-2).

(a) (1) Inside the United States, the Act is applicable to all service contracts irrespective of amount.

(2) Outside the United States, the Act is applicable to service contracts under $2,500. However, the regulations of the Secretary of Labor (see 29 CFR 4.6 (m) and 4.7) have exempted such contracts from the provisions of the Act.

(b) When used in a geographical sense, the term "United States" is defined in the Act to include any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf lands as defined in the Outer Continental Shelf Lands Act, American Samoa, Guam, Wake Island, Eniwetok Atoll, Kwajalein Atoll, Johnston Island, but shall not include any other territory under the jurisdiction of the United States or any United States base or possession within a foreign country.

[31 F.R. 11, Jan. 4, 1966, as amended at 33 F.R. 19080, Dec. 21, 1968]

§ 1-12.902-2 Service employee.

As defined in the Act, the term "service employee" means guards, watchmen,