Such offices shall report the action taken to the Director, Industrial Relations, OASD (Manpower).

[30 F.R. 6005, Apr. 29, 1965]

§ 12.102 Overtime, extra-pay shift, and multi-shift work.

[25 F.R. 14268, Dec. 31, 1960]

§ 12.102-1 Definitions.

As used throughout this section, the following terms shall have the meaning set forth below:

(a) "Normal work week" and "normal work day" mean, generally, a work week of 40 hours and a work day of 8 hours, respectively: Provided, That, in any area outside the United States, its Territories, its possessions, and Puerto Rico, a work week longer than 40 hours, or a work day longer than 8 hours will be considered normal (1) if such work week or work day does not exceed that which is normal for such area, as determined by local custom, tradition, or law, and (2) if hours worked in excess of 40 in such work week, or 8 in such work day, are not compensated at a premium rate of pay.

(b) "Overtime" means time worked by a contractor's employee in excess of the employee's normal work week or normal work day.

(c) "Shift premium" means the difference between the compensation paid to an employee at the contractor's regular rate of pay for the base shift and that paid at the regular rate of pay for extra-pay-shift work.

(d) "Overtime premium" means the difference between the compensation paid to an employee at the contractor's regular rate of pay for the shift involved and that paid for hours worked overtime. [25 F.R. 14268, Dec. 31, 1960]

§ 12.102-2 Policy.

It is the policy of the Department of Defense that all contracts will be performed, so far as practicable, without the use of overtime, particularly as a regular employment practice. Overtime shall be limited to and be the minimum needed for the accomplishment of specific work. Contractors shall utilize whatever work schedule results in the lowest overall cost to the Government consistent with contract delivery and performance requirements. Extra-pay shifts and multishift work should be scheduled, as required, to achieve these objectives. [27 F.R. 3453, Apr. 11, 1962]

§ 12.102-3 Procedures.

(a) To prevent uneconomic use of overtime, at Government expense, the following clause shall be included in all cost-reimbursement type contracts in excess of $100,000, except cost-plusincentive-fee contracts having a cost incentive which provides for a swing from target fee of at least ±3 percent and a contractor's share of cost of at least 10 percent.

PAYMENT FOR OVERTIME PREMIUMS

(APR. 1964)

(a) Allowable cost shall not include any amount on account of overtime premiums, except to the extent that they either (1) are approved in writing on behalf of the Government or (11) are paid for work

(A) Necessary to cope with emergencies such as those resulting from accidents, natural disasters, breakdowns of production equipment, or occasional production bottlenecks of a sporadic nature;

(B) By indirect labor employees such as those performing duties in connection with administration, protection, transportation, maintenance, standby plant protection, operation of utilities, or accounting;

(C) In the performance of tests, industrial processes, laboratory procedures, loading or unloading of transportation media, and operations in flight or afloat, which are continuous in nature and cannot reasonably be interrupted or otherwise completed; or (D) Which will result in lower overall cost to the Government.

(b) The cost of overtime premiums otherwise allowable under (a) above shall be allowed only to the extent the amount thereof is reasonable and properly allocable to the work under this contract.

(b) Where overtime premiums are being paid in connection with the performance of Government contracts (and approval is required), the continued need therefor shall be subject to periodic review.

(c) Where two or more Military contracting activities have concurrent contracts at a single facility and the approval of payments of overtime premiums by one such activity is likely to affect the performance of, or payments in connection with, contracts of another such activity, the activities concerned will agree as to which will represent them in (1) determining whether such payments shall be approved pursuant to § 12.102-4 and (2) scheduling of periodic reviews. Decisions of such representative shall be binding upon all contracting activities concerned. Ordinarily, in the absence of evidence to the

contrary, a contracting activity may rely on the contractor's statement that such approval will not affect the performance of, or payments in connection with, any contract of another activity. If the contracting activities do not agree within a reasonable time on which one will represent them, the Secretary concerned (or in the case where two or more Military Departments are involved, Assistant Secretary of Defense (Installations and Logistics)) shall be requested to appoint the representative.

[29 F.R. 9763, July 21, 1964, as amended at 29 F.R. 11823, Aug. 19, 1964]

(a) Overtime premiums at Government expense may be approved under the clause set forth in § 12.102-3 by an official designated as provided in paragraph (b) of this section when he determines in writing that such approval:

(1) Is necessary to meet delivery or performance schedules, and such schedules are determined to be consistent with essential military objectives;

(2) Is necessary to make up for delays beyond the control and without the fault or negligence of the contractor; or

(3) Is necessary to eliminate foreseeable production bottlenecks of an extended nature which cannot be eliminated in any other way.

(b) The Director of Procurement, Office of the Assistant Secretary of the Army (Installations and Logistics), for the Army; the Chief of Naval Material for the Navy; the Director of Procurement Management, Headquarters, USAF, for the Air Force; and the Executive Director for Procurement and Production, for the Defense Supply Agency, are authorized, without power of delegation, to designate officers and civilian officials for the purpose of approving overtime premiums at Government expense.

(c) Such approvals shall ordinarily be prospective, but may be retroactive where justified by the circumstances.

(d) Such approvals may be for an individual contract, project, or program, or for a plant, division, or company, as most practicable.

[29 F.R. 9764, July 21, 1964, as amended at 30 F.R. 6005, Apr. 29, 1965]

§ 12.102-5 Exceptions.

The approval requirements under § 12.102-4 do not apply to overtime premiums which are paid for work:

(a) Necessary to cope with emergencies such as those resulting from accidents, natural disasters, or breakdowns of production equipment, or occasional production bottlenecks of a sporadic nature;

(b) By indirect labor employees such as those performing duties in connection with administration, protection, transportation, maintenance, standby plant protection, operation of utilities, or accounting;

(c) In the performance of tests, industrial processes, laboratory procedures, loading or unloading of transportation media, and operations in flight or afloat, which are continuous in nature and cannot reasonably be interrupted or otherwise completed; or

(d) Which will result in lower overall cost to the Government.

However, the cost of such overtime premiums may be allowed, or considered in pricing, only to the extent that the amount thereof is reasonable and properly allocable to the work involved. [29 F.R. 9764, July 21, 1964]

§ 12.102-6 Construction contracts.

See § 18.111 of this chapter regarding expediting actions involving additional costs.

[30 F.R. 6005, Apr. 29, 1965]

§ 12.103 Federal and State labor requirements.

[30 F.R. 6005, Apr. 29, 1965] § 12.103-1 General.

The Department of Defense shall cooperate and encourage contractors to cooperate, to the fullest extent practicable, with Federal and State agencies responsible for enforcing labor requirements with respect to such matters as safety, health and sanitation, maximum hours and minimum wages, equal pay for women, and child and convict labor. [30 F.R. 6005, Apr. 29, 1965]

§ 12.103-2 Applications for relaxation of requirements.

(a) Military Departments shall not initiate applications of any kind for suspension or relaxation of labor requirements. They may, however, support such applications by contractors or suppliers when all of the following circumstances and conditions have been met:

(1) The interested contractor or supplier has filed his application for relaxa

tion of the laws, orders or regulations involved with the appropriate Governmental official charged with the enforcement of such labor requirements applicable to the contract involved;

(2) The required products or services are in short supply and unless the application is granted, production schedules for critically needed military material cannot be met;

(3) There is no alternative source of supply reasonably available to furnish the products or services within the period of time delivery is required;

(4) There is no practicable possibility of taking remedial action (such as recruiting, training, and more effective utilization of manpower) as an alternative to relaxation of applicable Governmental labor requirements;

(5) The apparent supply of labor, and in particular of critical skills, is limited, and it is not practicable to set up new production lines or to use additional facilities as an alternative to the relief requested; and

(6) The granting of the application will not result in an excessive increase in hours or work, an unreasonable curtailment of rest and lunch periods, an undesirable impairment of working conditions, or otherwise adversely affect the productivity of the facility involved.

(b) Requests for authority to support an application on behalf of a contractor or supplier shall be submitted to the Labor Advisor, OASA (I&L) for the Army; Chief of Naval Material for the Navy; HQUSAF (AFSPPDB) for the Air Force; and Directorate, Procurement and Production DSAH-P, for the Defense Supply Agency. Such requests shall contain the following information:

(1) The facilities and services involved and affected;

(2) Provision(s) of law which require relaxation;

(3) Criticality or relative scarcity of the material;

(4) Circumstances necessitating the relaxation (for example, a shortage in the local supply of skilled labor);

(5) Remedial action being taken by the manufacturer (e.g., training, recruiting, more effective utilization of manpower);

(6) The most limited relaxation of the requirement necessary for completion of the specific work; and

(7) The approximate period of time required for completion of the work.

(c) Consistent with the limitations of security and the foregoing requirements, contract information may be furnished to the appropriate governmental official, upon his request, in connection with an application of a contractor or supplier for relaxation of a labor requirement as to the execution of a contract in pursuance of a military procurement program.

[30 F.R. 6005, Apr. 29, 1965]

§ 12.104 Meeting manpower require

ments.

The Department of Defense shall cooperate with and encourage contractors to utilize to the fullest extent practicable the United States Employment Service (USES) and its affiliated Local State Employment Service Offices in meeting contractor's manpower (labor supply) requirements to staff new or expanding plant facilities, including the recruitment of workers in all occupations and skills both from local labor market areas and through the Federal-State manpower clearance system. Local State Employment Offices are operated throughout the United States, Puerto Rico, Guam, and the Virgin Islands. In addition to providing recruitment assistance to contractors who need and desire it, cooperation with the Local State Employment Service Offices will further the national program of maintaining continuous assessment of manpower requirements and resources on a national and local basis.

[30 F.R. 6006, Apr. 29, 1965]

§ 12.105 Location allowances at unfavorable sites.

[26 F.R. 2615, Mar. 28, 1961] § 12.105-1

Description.

"Location allowances" sometimes called "supplemental pay" or "incentive pay," are compensation in addition to normal wages or salaries that is paid by contractors to especially compensate or induce employees to undertake or continue work at locations which may be isolated or in an unfavorable environment. Location allowances include extra wage or salary payments in the form of station allowances, bonuses, extended per diem, or mileage payments for daily commuting; they also include such benefits as contractor-furnished housing.

[26 F.R. 2615, Mar. 28, 1961]

Payments of location allowances shall be allowed as costs under cost-reimbursement type contracts, or recognized in pricing fixed-price type contracts, only where and so long as the isolation or unfavorable environment of the site makes such payments necessary to the accomplishment of the contract work without unacceptable delays. Whether the site is so isolated, or its environment is so unfavorable, as to require location allowances is to be determined in the light of its location and climate; the availability and adequacy of housing within reasonable commuting distance; and the availability and adequacy of educational, recreational, medical, and hospital facilities. The extent to which compensation includes location allowances is to be determined by comparing it with the contractor's normal compensation policy, including pay scales at his principal operating locations; pay scales of other contractors and concerns operating at or near the site; and compensation paid by other concerns within the same industry for similar services elsewhere.

[26 F.R. 2615, Mar. 28, 1961]

(a) Locations at which location allowances are being paid shall be reviewed at least once a year to determine whether such allowances should continue to be allowed or recognized in accordance with § 12.105-2.

(b) Where two or more contracting activities have concurrent contracts at a single facility and the approval of location allowances by one such activity is likely to affect the performance of, or payments in connection with, contracts of another such activity, the activity exercising jurisdiction over the facility shall coordinate with the other interested activities in applying the policy in § 12.105-2 and shall schedule the reviews required by paragraph (a) of this section. Where two or more facilities are so geographically located that determinations as to location allowances at one may affect the other, the activities involved shall coordinate with each other in applying the policy. If the contracting activities do not agree within a reasonable time on application of the policy in § 12.105-2, the matter will be settled by the Secretary concerned or, if more than one Department is involved, by the As

sistant Secretary of Defense (Installations and Logistics).

[26 F.R. 2616, Mar. 28, 1961]

§ 12.106 Supply, services, or maintenance contracts involving construction work.

When any construction work is involved in a contract for supplies, services, or maintenance work, the contracting officer should consider the requirements of § 12.402-2.

[30 F.R. 6006, Apr. 29, 1965]

Subpart B-Convict Labor

SOURCE: The provisions of this Subpart B appear at 25 F.R. 14269, Dec. 31, 1960. § 12.201 Basic requirement.

Pursuant to the policy set forth in the Act of February 23, 1887 (18 U.S. Code 436), and in accordance with the requirements of Executive Order No. 325A of May 18, 1905, all contracts entered into by any Department involving the employment of labor within the United States, shall, unless otherwise provided by law, contain a clause prohibiting the employment of persons, undergoing sentences of imprisonment at hard labor imposed by State or municipal criminal courts.

The requirement set forth in § 12.201 applies, except as stated below, to all contracts involving the employment of labor within the United States. The requirement does not prohibit the employment of persons on parole or probation, or of persons who have been pardoned or who have served their terms. Furthermore, the requirement does not apply to the following kinds of contracts:

(a) Any contracts subject to the provisions of the Walsh-Healey Public Contracts Act (see Subpart F of this part), which contains its own requirement that "no convict labor will be employed by the contractor in the manufacture or production or furnishing of any of the materials, supplies, articles, or equipment included in such contract";

(b) Any contract (1) for the purchase of supplies or services from Federal Prison Industries, Inc., or (2) for the purchase from any State prison of finished supplies which may be secured in the open market or from existing stocks as distinguished from supplies requiring special fabrication.

In connection with the performance of work under this contract, the Contractor agrees not to employ any person undergoing sentence of imprisonment at hard labor.

Subpart C-Work Hours Act of 1962 (Other Than Construction Contracts)1 § 12.300 Scope of subpart.

This subpart deals with the requirements of the Contract Work Hours Standards Act (40 U.S.C. 327-330) applicable to contracts other than construction contracts as defined and covered in Subpart D of this part. [30 F.R. 6006, Apr. 29, 1965]

§ 12.301 Statutory requirement.

In accordance with the requirement of the Contract Work Hours Standards Act (40 U.S. Code 327-330), certain contracts entered into by any Department shall contain a clause to the effect that no laborer or mechanic doing any part of the work contemplated by the contract shall be required or permitted to work more than eight hours in any one calendar day or 40 hours in any work week unless such laborer or mechanic is compensated for all hours worked in excess of eight hours in any one calendar day or 40 hours in any work week at not less than one and one-half times the basic rate of pay.

[30 F.R. 6006, Apr. 29, 1965]

The requirement set forth in § 12.301 applies, except as stated below, to all contracts which may require or involve the employment of laborers or mechanics, including guards and watchmen, either by a contractor or by any subcontractor. The requirement does not apply to the following kinds of contracts:

(a) Contracts (or portions thereof) to be performed in a foreign country or within territory under the jurisdiction of the United States other than the following: a state of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf Lands defined in the Outer Continental

128 F.R. 2582, Mar. 16, 1963.

Shelf Lands Act, American Samoa, Guam, Wake Island, and the Canal Zone, to the extent that such contracts (or portions thereof) may require or involve the employment of laborers or mechanics there:

(b) Contracts with a State or political subdivision thereof (although the requirement does apply, and the contract must so provide, to a subcontract thereunder with a private person or firm);

(c) Contracts (or portions thereof) for supplies in connection with which any required services are merely incidental to the sale and do not require substantial employment of laborers or mechanics;

(d) Contracts (or portions thereof) for materials or articles (other than armor or armor plate) usually bought in the open market (although the requirement does apply, and the contract must so provide, with respect to any contract involving the performance of any class of work which is ordinarily, and not merely occasionally or to a limited extent, performed by the Government);

(e) Contracts (or portions thereof) subject to the provisions of the WalshHealey Public Contracts Act (see Subpart F of this part).

(f) Contracts of $2,500 or less in aggregate amount. In arriving at the aggregate amount involved, there must be included all property and services which would normally be grouped together in a single transaction.

[28 F.R. 12572, Nov. 23, 1963, as amended at 29 F.R. 6938, May 27, 1964; 30 F.R. 6006, Apr. 29, 1965]

§ 12.303 Contract clause.

[25 F.R. 14270, Dec. 31, 1960]

§ 12.303-1 Clause for general use.

Except for those kinds of contracts referred to in § 12.303-2 the contract clause required by this subpart shall be as follows:

CONTRACT WORK HOURS STANDARDS ACT-OVERTIME COMPENSATION (JUNE 1964)

This contract, to the extent that it is of a character specified in the Contract Work Hours Standards Act (40 U.S.C. 327-330), 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