CONTRACT CLAUSES AND SOLICITATION PROVISIONS

with the following variations, tolerances, and exemptions, which the Secretary of Labor hereby finds pursuant to section 4(b) of the Act to be necessary and proper in the public interest or to avoid serious impairment of the conduct of Government business:

(1)(i) 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 of 1965, without diminishing any fringe benefits or cash payments in lieu thereof required under section 2(a)(2) of that Act, in accordance with the 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 of the Wage and Hour and Public Contracts Divisions of the Department of Labor (Parts 520, 521, 524, and 525 of 29 CFR).

(ii) The Administrator will issue certificates under the Service Contract Act of 1965 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 (Parts 520, 521, 524, and 525 of 29 CFR).

(iii) 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.

(2) An employee engaged in an occupation in which he customarily and regularly receives more than $20 a month in tips may have the amount of his tips credited by his employer against the minimum wage required by section 2(a)(1) or section 2(b)(1) of the Act, in accordance with the regulations in Part 531 of 29 CFR: Provided, however, That the amount of such credit may not exceed 80 cents per hour.

(End of clause)

(b) Service Contracts Not in Excess of $2,500. Insert the following clause in every contract not in excess of $2,500 which has as its principal purpose the furnishing of services through the use of service employees, except:

(i) those transactions identified in paragraph (1) of the clause in (a) above;

(ii) a contract for services to be furnished outside the United States (see 12-1002.2); or

(iii) a contract exempted by the Secretary of Labor under Section 4(b) of the Act (see paragraph (m) of the clause in (a) above).

SERVICE CONTRACT ACT OF 1965 (1968 SEP)

Except to the extent that an exemption, variation, or tolerance would apply pursuant to 29 CFR 4.6 if this were a contract in excess of $2,500, the Contractor and any subcontractor hereunder shall pay all of his employees engaged in performing work on the contract not less than the minimum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended ($1.60 per hour). However, in cases where section 6(e)(2) of the Fair Labor Standards Act of 1938 is applicable, the rates specified therein will apply. All regulations and interpretations of the Service Contract Act of 1965 expressed in 29 CFR Part 4 are hereby incorporated by reference in this contract.

(End of clause)

7-1903.41

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

(c) Basic Ordering Agreements and Blanket Purchase Agreements. In the case of the basic ordering agreement or blanket purchase agreement, the amount thereof for purposes of (a) and (b) shall be the aggregate amount of all orders estimated to be placed thereunder for one year after the effective date of the agreement. If a basic ordering agreement or blanket purchase agreement continues or is extended, such estimate shall be made annually for each year after the first and the agreement modified accordingly. See Section XII, Part 10.

(d) Linen Supply Services.

(1) In contracts for linen supply services containing the clause in (a) above (i.e., contracts in excess of $2,500), insert the following clause.

LINEN SUPPLY SERVICE CONTRACTS (1968 SEP).

In the absence of a wage determination issued under the McNamara-O'Hara Service Contract Act specifying a higher rate, the special minimum wage provisions of section 6(e)(2) of the Fair Labor Standards Act for linen supply service contracts entered into with the United States Government on or after February 1, 1967, shall apply to all employees (except those qualifying for the minimum wage and overtime exemption under section 13(a)(1) of the Fair Labor Standards Act) in an establishment providing such linen supply services. Such employees must be paid not less than $1.15 per hour as of February 1, 1968, with annual increments of 15 cents per hour, as of February 1 each year, increasing to a minimum rate of $1.60 per hour as of February 1, 1971. However, if more than 50 per centum of the gross annual dollar volume of sales made or business done by an establishment is derived from providing linen supply services under contracts or subcontracts with the United States, all employees in the establishment (other than employees qualifying for the minimum wage and overtime exemption under section 13(a)(1) of the Fair Labor Standards Act) must be paid at least $1.60 per hour as of February 1, 1968.

(End of clause)

(2) In contracts for linen supply services containing the clause in (b) above (i.e., contracts for $2,500 or less), insert the following:

LINEN SUPPLY SERVICE CONTRACTS (1968 SEP)

The special minimum wage provisions of section 6(e)(2) of the Fair Labor Standards Act for linen supply service contracts entered into with the United States Government on or after February 1, 1967, shall apply to all employees (except those qualifying for the minimum wage and overtime exemption under section 13(a)(1) of the Fair Labor Standards Act) in an establishment providing such linen supply services. Such employees must be paid not less than $1.15 per hour as of February 1, 1968, with annual increments of 15 cents per hour, as of February 1 each year, increasing to a minimum rate of $1.60 per hour as of February 1, 1971. However, if more than 50 per centum of the gross annual dollar volume of sales made or business done by an establishment is derived from providing linen supply services under contracts or subcontracts with the United States, all employees in the establishment (other than employees qualifying for the minimum wage and overtime exemption under section 13(a)(1) of the Fair Labor Standards Act) must be paid at least $1.60 per hour as of February 1, 1968.

(End of clause)

(e) Price Adjustment Clause. In a fixed price type service contract with an option to renew or in a fixed price type multi-year service contract which contains the clause in (a) above, insert the Fair Labor Standards Act and Service Contract Act-Price Adjustment clause in 7-1905(b).

7-1903.42 Patent Rights. When experimental, developmental or research work may be performed under the contract, insert the appropriate clause in 7-302.23.

7-1903.42

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

7-1903.43 Government Delay of Work. The clause in 7-104.77 may be in

serted.

7-1903.44 Safety Precautions for Ammunition and Explosives. In accordance with 7-104.79, insert the clause therein.

7-1903.45 Accident Reporting and Investigation Involving Aircraft, Missiles, and Space Launch Vehicles. In accordance with 7-104.81, insert the clause therein.

7-1903.46 Management Systems Requirements. In accordance with 16-827.1, insert the clause in 7-104.50.

7-1903.47 Payment of Interest on Contractor's Claims. In accordance with 1-333, insert the clause in 7-104.82.

7-1903.48 Cost Accounting Standards. In accordance with 3-1204, insert the clauses in 7-104.83.

7-1903.49 Availability of Funds. In accordance with 1-318, insert one of the clauses in 7-104.91.

7-1903.50 Capture and Detention. In accordance with 10-406, insert the clause in 7-104.94.

7-1903.51 Value Engineering.

(a) In accordance with 1-1702, insert the appropriate clauses in 7-104.44 modified, as required, to suit the particular procurement involved.

(b) Insert additional paragraph as follows:

( ) Contractor proposals which eliminate, modify or substitute new procedures for contractually required work procedures shall qualify for instant contract savings sharing. If this is a time and material or labor-hour contract, the "effect of the proposal on the Contractor's cost of performance," for purposes of the instant contract sharing paragraph (e)(1) of the clause, shall be determined by (i) multiplying the time per item saved by the elimination, modification, or substitution by the labor-hour rate agreed upon for the workers involved, and then (ii) multiplying the result by the number of items over which the task has been deleted, and (iii) taking into account in the usual manner the Contractor's cost of developing the proposal and of implementing the change, and increased Government costs related to implementing the proposal. (The result under (i) would be the unit cost reduction for purposes of determining future acquisition savings.) (End of clause paragraph)

7-1903.52 Buy American Act. In accordance with 7-104.3, insert the clause

therein.

7-1903.53 Preference for United States Flag Air Carriers. In accordance with 1-336.1(b), insert the clause in 7-104.95.

7-1903.54 Privacy Act. In accordance with 1-327.1, insert the clause in

7-104.96.

7-1903.55 Preference for Domestic Specialty Metals. In accordance with 7-104.93, insert the applicable clause therein.

7-1903.56 Exclusionary Policies and Practices of Foreign Governments. In accordance with 6-1312, insert the clause in 7-104.97.

7-1903.57 Hazardous Material Identification and Material Safety Data. In accordance with 1-323.2(b), insert the clause in 7-104.98.

7-1904 Additional Clauses for Use in Fixed-Price Service Contracts. The following clauses may be inserted in fixed price service contracts in accordance with Departmental procedures when it is appropriate to do so.

7-1904.1 Alterations in Contract. The clause in 7-105.1(a) may be inserted. 7-1904.2 Approval of Contract. The clause in 7-105.2 may be inserted. 7-1904.3 Stop Work Orders. In accordance with 7-105.3, the clause therein may be inserted.

7-1904.3

ARMED SERVICES PROCUREMENT REGULATION

538

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

7-1904.4 Liquidated Damages. In accordance with 1-310, where a liquidated damages provision is to be used in a service contract, the provision in 7-105.5 shall be inserted as paragraph (f) of the Default clause (see 7-1902.8) and the present paragraph (f) of that clause shall be redesignated (g).

7-1904.5 Warranties.

(a) Use of Clauses. A decision on whether to include a warranty clause shall be made after careful consideration of the policy and guidelines in 1–324.

(b) In addition to the clauses in 7-105.7, the following is an example for use in fixed-price type services contracts:

WARRANTY OF SERVICES

Notwithstanding inspection and acceptance by the Government or any provision concerning the conclusiveness thereof, the Contractor warrants that all services performed under this contract will, at the time of acceptance, be free from defects in workmanship and conform to the requirements of this contract. The Contracting Officer shall give written notice of any such defect or nonconformance to the Contractor *. Such notice shall state either (i) that the Contractor shall correct or re-perform any defective or nonconforming services, or (ii) that the Government does not require correction or re-performance. If the Contractor is required to correct or re-perform, it shall be at no cost to the Government, and any services corrected or re-performed by the Contractor pursuant to this clause shall be subject to all provisions of this clause to the same extent as work initially performed. If the Contractor fails or refuses to correct or re-perform, the Contracting Officer may, by contract or otherwise, correct or replace with similar services and charge to the Contractor the cost occasioned to the Government thereby or obtain an equitable adjustment in the contract price. If the Government does not require correction or reperformance, the Contracting Officer shall make an equitable adjustment in the contract price. (End of clause)

* Insert the specific period of time in which notice shall be given to the Contractor, e.g., "within ........(insert period of time) from the date of acceptance by the Government," "within.......(insert number of hours) of use by the Government," or other specified event whose occurrence will terminate the period of notice, or combination of any applicable events or periods of time.

7-1905 Price Adjustment Clauses.

(a) When fluctuations in costs not provided for in (b) and (c) below are likely to be included as contingencies in the contract price, the contracting officer may include a provision for economic price adjustment authorized by 3-404.3(c). The clauses set forth in (b) and (c) below provide coverage for situations in which revised minimum wage rates are applied to contracts by operation of law, or by revision of a wage determination prior either to exercise of a contract option, or to extension of a multi-year contract into a new program year. Care should be taken to insure that an economic price adjustment clause authorized by this paragraph (a) does not conflict with, or overlap, the clauses set forth in (b) or (c).

(b) The following clause shall be inserted in fixed price type multi-year service contracts (see 1-322) and fixed price type service contracts with options to renew which contain the clause in 7-1903.41(a). It is to be noted that the adjustments under (c)(ii) and (iii) of the clause may be applicable to the base period as well as to subsequent periods.

7-1905

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

FAIR LABOR STANDARDS ACT AND SERVICE CONTRACT ACT PRICE ADJUSTMENT (MULTI-YEAR AND OPTION CONTRACTS) (1975 MAY)

(a) The Contractor warrants that the prices set forth in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause.

(b) The minimum prevailing wage determination, including fringe benefits, issued pursuant to the Service Contract Act of 1965 (Public Law 89-286, 79 Stat. 1034), by the Administrator, Wage and Hour Division, U. S. Department of Labor, current at the beginning of each renewal option period shall apply to any renewal of this contract. When no such determination has been made as applied to this contract, then the Federal minimum wage as established by Section 6(a)(1) of the Fair Labor Standards Act (29 U.S.C. Sec. 201-219) and amendments thereto current at the beginning of each renewal option period, shall apply to any renewal of this contract. (c) When, as a result of (i) the Department of Labor determination of minimum prevailing wages and fringe benefits applicable at the beginning of the renewal option period, or (ii) an increased or decreased wage determination otherwise applied to the contract by operation of law, or (iii) an amendment to the Fair Labor Standards Act enacted subsequent to award of this contract, affecting the minimum wage, which becomes applicable to this contract under law, the Contractor increases or decreases wages or fringe benefits of employees working on this contract to comply therewith, the contract price or contract unit price labor rates will be adjusted to reflect such increases or decreases. Any such adjustment will be limited to increases or decreases in wages or fringe benefits as described above, and the concomitant increases or decreases in social security and unemployment taxes and workmen's compensation insurance, but shall not otherwise include any amount for general and administrative costs, overhead, or profits.

(d) The Contractor shall notify the Contracting Officer of any increases claimed under this clause within thirty (30) days after the effective date of the wage change, unless this period is extended by the Contracting Officer in writing. In the case of any decrease under this clause, the Contractor shall promptly notify the Contracting Officer of such decrease but nothing herein shall preclude the Government from asserting a claim within the period permitted by law. The notice shall contain a statement of the amount claimed and any other relevant data in support thereof, which may reasonably be required by the Contracting Officer. Upon agreement of the parties, the contract price or contract unit price labor rates shall be modified in writing. Pending agreement on or determination of, any such adjustment and its effective date, the Contractor shall continue performance.

(e) The Contracting Officer or his authorized representative shall, until the expiration of three (3) years after final payment under the contract, have access to and the right to examine any directly pertinent books, documents, papers and records of the Contractor.

(End of clause)

(c) The following clause shall be inserted in Fixed Price Service Contracts, other than those covered by (b) above, which contain the clause in 7-1903.41(a).

FAIR LABOR STANDARDS ACT AND SERVICE CONTRACT ACT - PRICE ADJUSTMENT (1975 MAY)

(a) The Contractor warrants that the prices set forth in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause.

(b) When, as a result of an increased or decreased wage determination applied to this contract by operation of law or an amendment to the Fair Labor Standards Act enacted subsequent to award of this contract, affecting the minimum wage, which becomes applicable to this contract under law, the Contractor increases or decreases wages or fringe benefits of employees working on this contract to comply therewith the contract price or contract unit price labor rates will be adjusted to reflect such increases or decreases. Any such adjustment will be limited to increases or decreases in wages or fringe benefits as described above, and the concomitant increases or decreases in social security and unemployment taxes and workmen's compensation insurance, but shall not otherwise include any amount for general and administrative costs, overhead, or profits.

7-1905

ARMED SERVICES PROCUREMENT REGULATION