of a similar nature in the locality in which the work is being performed.

(4) Non-Federal prisoners under the conditions provided in § 1-12.203(c)(3) where the Attorney General has certified that the work release laws or regulations of the jurisdiction are in conformity with the requirements of Executive Order 11755. The order also provides that after notice and opportunity for hearing, the Attorney General shall revoke any such certification if he finds that the work-release program of the jurisdiction involved is not being conducted in conformity with the requirements of Executive Order 11755 or with its intent or purpose.

§1-12.204 Contract clause.

The contract clause required is as follows:

CONVICT LABOR

In connection with the performance of work under this contract, the Contractor agrees not to employ any person undergoing sentence of imprisonment except as provided by Public Law 89-176, September 10, 1965 (18 U.S.C. 4082(c)(2)) and Executive Order 11755, December 29, 1973.

Subpart 1-12.3-Contract Work Hours and Safety Standards Act (Other Than Construction Contracts)

§ 1-12.300 Scope of subpart.

This subpart deals with the requirements of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333) insofar as they apply to contracts other than construction contracts dealt with in Subpart 1-12.4. [38 FR 6673, Mar. 12, 1973]

§1-12.301 Statutory requirement.

The Contract Work Hours and Safety Standards Act provides that the wages of every laborer and mechanic employed by any contractor or subcontractor in his performance of work on any contract of the character specified in section 103 of that Act shall be computed on the basis of a standard workday of 8 hours and a standard workweek of 40 hours. Work in excess of such standard workday or workweek is permissible, provided that the wages of any laborer or mechanic so employed include compensation at

a rate not less than one and one-half times the basic rate of pay for all hours worked in any workweek in excess of 8 hours in any calendar day or in excess of 40 hours in the workweek, as the case may be. "Laborers and mechanics" include apprentices, trainees, watchmen, guards, and workmen, other than seamen, performing services in connection with dredging or rock excavation in rivers or harbors. [38 FR 6674, Mar. 12, 1973] § 1-12.302 Applicability.

The requirement set forth in § 112.301 applies, except as stated in this § 1-12.302, to all contracts which may require or involve the employment of laborers or mechanics either by a prime contractor subcontractor. The requirement does not apply to the following:

or

(a) Contracts of $2,500 or less (but see Subpart 1-12.4 as to construction contracts over $2,000).

(b) Contracts for the purchase of supplies or materials or articles ordinarily available in the open market.

(c) Contracts for transportation by land, air, or water, or for the transmission of intelligence.

(d) Contracts under which work is to be performed solely within a foreign country or within a territory under the jurisdiction of the United States other than a State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf Lands defined in the Outer Continental Shelf Lands Act (43 U.S.C. 1331), American Samoa, Guam, Wake Island, Eniwetok Atoll, Kwajalein Atoll, Johnston Island, and the Canal Zone.

(e) Contracts under which all work to be performed is subject to the provisions of the Walsh-Healey Public Contracts Act.

12.301 and 1-12.302. The clause may be modified as necessary in order to comply with the provisions of § 112.304(b).

CONTRACT WORK HOURS AND SAFETY STANDARDS ACT-OVERTIME COMPENSATION

This contract, to the extent that it is of a character specified in the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), is subject to the following provisions and to all other applicable provisions and exceptions of such Act and the regulations of the Secretary of Labor thereunder. (a) Overtime requirements. No Contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers, mechanics, apprentices, trainees, watchmen, and guards shall require or permit any laborer, mechanic, apprentice, trainee, watchman, or guard in any workweek in which he is employed on such work to work in excess of 8 hours in any calendar day or in excess of 40 hours in such workweek on work subject to the provisions of the Contract Work Hours and Safety Standards Act unless such laborer, mechanic, apprentice, trainee, watchman, or guard receives compensation at a rate not less than one and one-half times his basic rate of pay for all such hours worked in excess of 8 hours in any calendar day or in excess of 40 hours in such workweek, whichever is the greater number of overtime hours.

(b) Violation; liability for unpaid wages; liquidated damages. In the event of any violation of the provisions of paragraph (a), the Contractor and any subcontractor responsible therefor shall be liable to any affected employee for his unpaid wages. In addition, such Contractor and subcontractor shall be liable to the United States for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer, mechanic, apprentice, trainee, watchman, or guard employed in violation of the provisions of paragraph (a) in the sum of $10 for each calendar day on which such employee was required or permitted to be employed on such work in excess of 8 hours or in excess of his standard workweek of 40 hours without payment of the overtime wages required by paragraph (a).

(c) Withholding for unpaid wages and liquidated damages. The Contracting Officer may withhold from the Government Prime Contractor, from any moneys payable on account of work performed by the Contractor or subcontractor, such sums as may administratively be determined to be necessary to satisfy any liabilities of such Contractor or subcontractor for unpaid wages and liquidated damages as provided in the provisions of paragraph (b).

(d) Subcontracts. The Contractor shall insert paragraphs (a) through (d) of this clause in all subcontracts, and shall require their inclusion in all subcontracts of any tier.

(e) Records. The Contractor shall maintain payroll records containing the information specified in 29 CFR 516.2(a). Such records shall be preserved for 3 years from the completion of the contract.

[38 FR 6674, Mar. 12, 1973]

§ 1-12.304 Variations and tolerances.

Variations and tolerances from the provisions of this subpart which are granted under section 105 of the Contract Work Hours and Safety Standards Act by the Secretary of Labor in the case of any contract work for which such variations and tolerances have been provided (29 CFR 5.14) shall be deemed to satisfy the requirements of § 1-1.009.

[38 FR 6674, Mar. 12, 1973]

Subpart 1-12.4—[Reserved]

Subpart 1-12.5—[Reserved] Subpart 1-12.6—Walsh-Healey Public Contracts Act 1

§ 1-12.601 Statutory requirement.

In accordance with the requirement of the Walsh-Healey Public Contracts Act (41 U.S.C. 35-45), all contracts subject to said Act entered into by any executive agency for the manufacture or furnishing of supplies in any amount exceeding $10,000 (a) will be with manufacturers or regular dealers, and (b) shall incorporate by reference the representations and stipulations required by said Act pertaining to such matters as minimum wages, maximum hours, child labor, convict labor, and safe and sanitary working conditions.

§ 1-12.602 Applicability.

§ 1-12.602-1 General.

The requirement set forth in § 112.601 applies to contracts for the manufacture or furnishing of "materi

'For a document relating to these sections see, Appendix-Temporary Regulations, appearing at the end of Chapter 1.

als, supplies, articles, and equipment" which are to be performed within the United States, Puerto Rico, or the Virgin Islands, and which exceed or may exceed $10,000 in amount unless exempt pursuant to § 1-12.602-2 or exempted by the Secretary of Labor (see § 1-12.602-3(a)).

§1-12.602-2 Statutory exemptions.

(a) The following transactions are exempt from the Walsh-Healey Public Contracts Act:

(1) Purchases of generally available commercial items, negotiated pursuant to the authority set forth in § 1-3.202 or pursuant to similar authority under other laws;

(2) Purchases of perishables including dairy, livestock, and nursery products;

(3) Purchases of agricultural or farm products processed for first sale by the original producers; and

(4) Purchases of agricultural commodities or the products thereof made by the Secretary of Agriculture under the Agricultural Adjustment Act program or for purposes within the general scope and aim of that program, such as stabilization and increase of market prices to farmers.

(b) Contracting officers are cautioned to refer to the Department of Labor regulations and interpretations (see § 1-12.602-3(a)) in order to ascertain the applicability of the exemptions.

§1-12.602-3 Department of Labor regula

tions and interpretations.

(a) Pursuant to the Walsh-Healey Public Contracts Act, the Secretary of Labor has issued detailed regulations and interpretations as to the coverage of said Act, and exemptions and procedures thereunder. The regulations are issued in the Code of Federal Regulations, Title 41, Chapter 50. The interpretations are compiled in a document entitled "Walsh-Healey Public Contracts Act, Rulings and Interpretations."

(b) Attention is directed to the following which give the substance of certain Department of Labor opinions:

(1) Contracts which are originally $10,000 or less, but are subsequently modified to increase the price to an

amount in excess of $10,000, are subject to the Walsh-Healey Public Contracts Act after date of such modification; and contracts in an amount exceeding $10,000, which are subsequently modified to a figure of $10,000 or less, are not subject to said Act with respect to work performed after such modification, if modification is effected by mutual agreement. (Opinion of August 9, 1944.)

(2) When a contract awarded to a primary contractor contains a provision making him an agent of the Government, the primary contractor is required to include the stipulations of the Walsh-Healey Public Contracts Act in contracts he awards for and on behalf of the Government for materials, supplies, articles, or equipment in excess of $10,000 to be used in the construction and equipment of Government facilities. (Opinion of September 6, 1941.)

(3) The stipulations of the WalshHealey Public Contracts Act, incorporated into and made a part of Government contracts for the manufacture and furnishing of materials, supplies, articles, or equipment, awarded to persons or companies operating Government-owned facilities, affect the employees of such contractors in the same manner and to the same extent as those affecting employees of contractors operating privately-owned facilities. (Opinion of August 21, 1942.) § 1-12.603 Determinations of eligibility as manufacturer or regular dealer.

§ 1-12.603-1 Manufacturer.

As used in § 1-12.601 a manufacturer is a person who owns, operates, or maintains a factory or establishment that produces on the premises the materials, supplies, articles, or equipment required under the contract and of the general character described by the specifications. In order to qualify as a manufacturer, a bidder must be able to show before the award (a) that he is an established manufacturer of the particular goods or goods of the general character sought by the Government, or (b) if he is newly entering into such manufacturing activity, that he has made all necessary prior arrangements for space, equipment, and

personnel to perform the manufacturing operations required for the fulfillment of the contract. A new firm which, prior to the award of the contract, has made such definite commitments in order to enter a manufacturing business which will later qualify it, shall not be barred from receiving the award because it has not yet done any manufacturing; however, this interpretation is not intended to qualify a firm whose arrangements to use space, equipment, or personnel are contingent upon the award of a Government contract.

§ 1-12.603-2 Regular dealer.

(a) Except as set forth in paragraph (b) of this § 1-12.603-2, as used in § 112.601 a regular dealer is a person who owns, operates, or maintains a store, warehouse, or other establishment in which materials, supplies, articles, or equipment of the general character described by the specifications and required under the contract are bought, kept in stock, and sold to the public in the usual course of business. In order to qualify as a regular dealer, a bidder must be able to show before the award:

(1) That he has an establishment or leased or assigned space in which he regularly maintains a stock of goods in which he claims to be a dealer; if the space is in a public warehouse, it must be maintained on a continuing, and not on a demand, basis;

(2) That the stock maintained is a true inventory from which sales are made; the requirement is not satisfied by a stock of sample or display goods, or by a stock consisting of surplus goods remaining from prior orders, or by a stock unrelated to the supplies which are the subject of the bid, or by a stock maintained primarily for the purpose of token compliance with the Act from which few, if any, sales are made;

(3) That the goods stocked are of the same general character as the goods to be supplied under the contract; to be of the same general character the items to be supplied must be either identical with those in stock or be goods for which dealers in the same line of business would be an obvious source;

(4) That sales are made regularly from stock on a recurring basis; they cannot be only occasional and constitute an exception to the usual operations of the business; the proportion of sales from stock that will satisfy the requirements will depend upon the character of the business;

(5) That sales are made regularly in the usual course of business to the public, i.e., to purchasers other than Federal, State, or local government agencies; this requirement is not satisfied if the contractor merely seeks to sell to the public but has not yet made such sales; if government agencies are the sole purchasers, the bidder will not qualify as a regular dealer; the number and amount of sales which must be made to the public will necessarily vary with the amount of total sales and the nature of the business; and

(6) That his business is an established and going concern; it is not suf ficient to show that arrangements have been made to set up such a busi

ness.

(b) For certain specific products, there are alternative definitions of regular dealers. The qualifications required under the alternative definitions are listed in the regulations of the Secretary of Labor (41 CFR 50201.101(b)).

§ 1-12.603-3 Coal dealers.

Coal dealers are exempted from the regular dealer requirements if they meet the terms and conditions set forth by the Secretary of Labor in his regulations (41 CFR 50-201.604(a)). If these terms and conditions are not met, coal dealers must meet the requirements set forth in § 1-12.603-2 in order to be considered regular dealers. § 1-12.603-4 Agents.

A manufacturer or regular dealer may bid, negotiate, and contract through an authorized agent if the agency is disclosed, and the agent acts and contracts in the name of his principal. In this connection, see the clause entitled "Covenant Against Contingent Fees" set forth in § 1-1.503 and the procedures prescribed for obtaining information concerning contingent fees, as set forth in Subpart 1-1.5.

§ 1-12.604 Responsibilities of contracting officers.

(a) The responsibility for applying the eligibility requirements set forth in § 1-12.601 rests, in the first instance, with the contracting officer. The Department of Labor does not conduct preaward investigations. It does not render final determinations of eligibility until the contracting officer initially has determined whether the eligibility requirements have been met and any negative determinations involving small business concerns have been confirmed by the Small Business Administration.

(b) When the contracting officer determines that a concern is not responsible (due to ineligibility under the provisions of the Walsh-Healey Public Contracts Act) and that the concern is a small business concern, the determination shall be forwarded to the Small Business Administration in accordance with the procedures in § 1-1.708. If SBA agrees with the contracting officer that the concern is ineligible, SBA will forward the matter to the Secretary of Labor for a final determination of eligibility or ineligibility (see 15 U.S.C. 637(b)(7)).

(c) When the eligibility of a bidder or offeror is challenged before award, it should be treated in a manner similar to a protest before award (see § 12.407-8). The contracting officer should make an initial determination and should process the protest in accordance with agency procedures for submission to the Department of Labor for a final determination. However, if the challenged concern is a small business, the matter shall be forwarded to SBA.

The following clause shall be used as required by this Subpart 1-12.6:

WALSH-HEALEY PUBLIC CONTRACTS ACT

If this contract is for the manufacture or furnishing of materials, supplies, articles, or equipment in an amount which exceeds or may exceed $10,000 and is otherwise subject to the Walsh-Healey Public Contracts Act, as amended (41 U.S. Code 35-45), there are hereby incorporated by reference all representations and stipulations required by said Act and regulations issued thereunder by the Secretary of Labor, such representations and stipulations being subject to all applicable rulings and interpretations of the Secretary of Labor which are now or may hereafter be in effect.

Subpart 1-12.7—Fair Labor Standards Act of 1938

§ 1-12.701 Basic statute.

The Fair Labor Standards Act of 1938, as amended (29 U.S.C. 201-219), provides for the establishment of minimum wage and maximum hour standards, creates a Wage and Hour Division in the Department of Labor for purposes of interpretation and enforcement (including investigation and inspection of Government contractors), prohibits oppressive child labor and, under an amendment contained in the Equal Pay Act of 1963 (77 Stat. 56, 29 U.S.C. 206), prohibits discrimination on the basis of sex. The Fair Labor Standards Act applies to all employees, unless otherwise exempted,