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Both editions of the Manual (at paragraphs 25 and 26, respectively) provide that "Contractors shall make application for Department of Defense security clearances of * *." The term "Contractors" apparently was intended to be used in a broad sense to include prospective as well as incumbent contractors, since paragraph 2-102 of the 1965 Industrial Security Regulation, as well as paragraph 26(d) of the July 1966 Manual, speak of authorizing interim clearances in order to avoid crucial delays in the award of a contract. However, the matter not entirely clear, because paragraph 21 of the July 1966 Manual places upon the Government the responsibility to "advise a prospective contractor of the actions required for the processing * * * of a facility clearance," and the Regulation flatly states at paragraph 2-116 that "Requests to process a contractor for a facility security clearance are originated by a User Agency or by a cleared contractor.” (Emphasis supplied.) The General Terms of the Technical Specifications provide in paragraph 1 that a contractor is solely responsible for initiating security clearance for "all of his personnel prior to assigning them to duty under this contract," but apparently personnel who are to be assigned to duty would not include the corporate executives and officers who must obtain clearances pursuant to a request for a facility clearance.

In our view, the arguments concerning who is responsible for initiating the facility clearance are somewhat beside the point. No one, it would appear, contemplates this costly process being initiated prior to a prospective contractor's being considered responsive to the IFB and at least tentatively eligible for award. We do not know whether the contracting officer or other responsible officials would honor a prospective contractor's request for the clearance processing prior to a determination of responsibility. However, in this case, apparently only five days elapsed between the determinations of your responsiveness and of your lack of responsibility, and only two more days before the award. Even assuming you should have initiated a request for clearance prior to completion of the preaward survey, it cannot be said, in view of the time required to process such a clearance, that you were expected to obtain it within the few days remaining before July 1, 1966.

Furthermore, the record shows that the contracting officer knew on June 23, 1966, when she ordered the preaward survey to help her determine your responsibility, that you did not have a top secret facility clearance. In this connection we note the record also shows that another contracting officer, one apparently charged with the duty of certifying the need to award the contract without delay, indicated in the certification that you were considered nonresponsible, and that the lack of top secret clearance for your firm could prove a further detriment to award a contract to this company." (Emphasis supplied.) Therefore, it appears that at the time the preaward survey was requested, and apparently after it was completed, your lack of top secret facility clearance alone was not considered by the contracting officers as an adequate basis for considering you nonresponsible.

It follows that your alleged "lack of preparation," which was ultimately the basis upon which the determination of nonresponsibility was justified, must refer to your not having hired or having made arrangements to hire, before July 1, 1966, a sufficient number of employees with a top secret clearance, or to your having failed to obtain top secret clearances for uncleared employees within the one week prior to the scheduled contract date. The letter seems patently unreasonable, not only because of the time usually required to obtain such clearances, but also because the applicable Industrial Security Manual & Regulation appear to imply, and the July 1966 Manual expressly provides at paragraph 24, that the contractor shall not initiate personnel security clearance actions on employees until a facility security clearance has been granted to the contractor.

The contracting officer, and you, also, apparently assume that Article 36 of the Bidding Instructions, which is concerned with personnel security clearances and is quoted, supra, requires a successful bidder to have hired by the contract date only people who already have the necessary clearances. However, the article itself does not say this, and does not indicate when hired personnel must obtain the necessary clearances. It merely states that only cleared personnel are to be employed in the performance of the contract, in accordance with the technical specifications. The referenced technical specifications make it abundantly clear that the Government contemplated that some of the contractor's employees would have to be processed for clearance. The fact that the Government was fully aware of the probability of processing clearances for contractor employees is highlighted by advice from the administrative agency that most of the $15,000 estimated administrative cost of awarding annual contracts, referenced in paragraph 26, quoted supra, is attributed to the cost of the processing security clearances.

From the foregoing, it appears that you were determined to be non-responsible primarily for failing to have hired or arranged to hire cleared personnel by the contract date. Whether or not this was a substantial basis for the contracting officer's determination that you were not a responsible bidder for this procurement-a matter as to which we have some doubt-we believe the time which has elapsed since the contract date of July 1, 1966, the fact that you did not submit a protest to this Office for several months thereafter and the fact that your own carelessness is preparing and clarifying your bid may have contributed to the problems which ensued, all militate against the wisdom and propriety of our directing the cancellation of the contract. We are, however, recommending to the Secretary of the Air Force that in any future procurements of such services the obligations of prospective contractors with respect to security clearances and employment arrangements be clarified. Very truly yours,

FRANK H. WEITZEL, Assistant Comptroller General of the United States.


Santa Maria, Calif., April 5, 1971.
House of Representatives,
Washington, D.C.

DEAR SIR: Local 2182 International Brotherhood Electrical Workers has a three year labor contract which provides communications service at Vandenberg Air Force Base, California in direct support of the Air Force Western Missile Test Range.

This service contract is under negotiation for award of the contract.

I feel that it not only may be possible but probable that another company may underbid the current one and be awarded the contract. I also feel that the only possible way that the new company can perform under those conditions would be to cut the wages of the current employees.

I would like very much to obtain your views on the intent of the Public Services Contracts Act which you co-authored. I would also like to obtain a copy of this Act, if possible.

I also urge you to hold hearings at your earliest convenience concerning the Comptroller General and the General Accounting Office interpretation of this law, relative to cases which have occurred at Cape Kennedy and Laredo Air Force Base, Texas. .

I feel that the local unions involved have two alternatives in this matter : (1) To seek possible redress through Congressional action and (2) To go to the courts in an effort to seek an injunction to change the interpretations of the General Accounting Office as well as those of the Comptroller General's office. . In this regard I respectfully request that you furnish me with any cor

respondence or data which may be at your disposal which might be of assistance to the local union. Thanking you in advance for your cooperation in this matter. Sincerely yours,

R. C. RONTAL, Business Manager.


· Washington, D.C., March 30, 1971. Hon. FRANK THOMPSON, Chairman, Special Subcommittee on Labor, House Committee on Education and Labor, Rayburn House Office Building, Washington D.C.

DEAR CHAIRMAN THOMPSON: Enclosed are copies of American Legion Resolutions 21 and 25.

Resolution 21 calls for congressional action to prohibit contracting out personnel services unless such contracts assure veterans preference. Resolution 25 supports legislation which would restrict contracting out of government services relating to guard, elevator operator, messenger and custodian positions.

I would appreciate your including this letter and the resolutions in the transscript of the hearings presently being conducted by your committee on H.R. *6244 and H.R. 6245, to amend Section V of the Services Contract Act. Sincerely yours,

HERALD E. STRINGER, Director, National Legislative Commission.


OCTOBER 21-22, 1970 Resolution No. 25 Commission : Economic Subject: Legislation to Amend Title 5, U.S. Code, Restricting Contracting Out of

Government Services Relating to Guard, Elevator Operator, Messenger and Custodian Positions

Whereas, The American Legion is unalterably opposed to the practice of “contracting out” of jobs for guards, elevator opeartors, and custodial employees by the General Services Administration as well as other Federal agencies, and

Whereas, The American Legion believes that this practice is a deliberate circumvention, if not outright violation of Section 3310 of Title 5, U.S. Code (formerly Section 3 of the Veterans Preference Act of 1944), and

Whereas, The U.S. Civil Service Commission has advised the General Services Administration and other Federal agencies as to the criteria, the legality and guide lines to be observed in the “contracting out” of these services, and

Whereas, The General Services Administration and certain other Federal agencies appear determined to circumvent the law as well as the expressed intent of Congress by continuing the "contracting out” of custodial services, now, therefore, be it

Resolved, by the National Executive Committee of The American Legion in regular meeting assembled in Indianapolis, Indiana on October 21-22, 1970, that, The American Legion sponsor and support legislation to amend Title 5, United States Code, to restrict contracts for services relating to the position of guards, elevator operators, messengers and custodians.


OCTOBER 21-22, 1970 Resolution No.: 21 Commission : Economic Subject: Congressional Actions to Prohibit All Federal Agencies from Contracting

Out Personnel Services Unless Such Contracts Assure Veterans Preference

Whereas, The U.S. Civil Service Commission is responsible for enforcing the Veterans Preference Act of 1944, as amended, and.

Whereas, The Veterans Preference Act has benefitted veterans of all wars who sought career employment, and

Whereas, The ever-increasing return of veterans of the Viet Nam Era has brought great concern to President Nixon and the Congress to the extent that special programs have been established by Federal agencies to aid in providing employment and on-the-job training in government jobs, and

Whereas, It is now evident that some governmental agencies are avoiding their responsibilities to give veterans preference by “contracting out" certain services, and

Whereas, This "contracting out” of services reduces the veterans chances of developing career employment in government, now, therefore, be it

Resolved, by the National Executive Committee of The American Legion in regular meeting assembled in Indianapolis, Indiana on October 21-22, 1970, that, The American Legion urges the Congress to prohibit all Federal Agencies from contracting out personnel services without provisions in such contracts to assure that veterans preference in employment and/or reduction-in-force is maintained.




TABLE OF CONTENTS 200-299 Processing the Notice of Intention 300-399 Determining the Prevailing Wage Rates and Fringe Benefits 400-499 Special Wage-Determination Situations and Administrative Exemp

tions, Tolerances, and Variations 500-599 Review of Wage Determinations 600-699 Administrative Controls : Docket Preparation, Filing, Record-Keeping,

and Index of Wage Determinations



CHAPTER 200-299

TABLE OF CONTENTS 200–209 Introduction

Contemplated contract for services. 201 Notice of intention to make a service contract. 202 Receipt of notice by the Wage and Hour Division. 203 Branch of Wage Determinations. 204 Determining the prevailing wages and fringe benefits. 205 Flow chart. 210-219 Submission of notice or intention by a contracting agency 210 General. 211 Contracts subject to the SCA.

Information furnished by the notice. 213 Standard Form 98. 214 Critical dates. 215

Lack of response to notice. 216

Agency does not submit timely notice. 220–269 Processing of and response to the notice of intention by the wage and

hour division 220

Processing the notice. 221

Reviewing the notice. 222

Evaluating the notice. 223

Responding to the notice. 230 Evaluating the notice. 231

Screening the notice. 232

Locality. 233

Type of service. 234

Occupational class of service employees. 235

Courses of action leading to response. 240 Response : Service Contract Act is inapplicable. 241

Basic exemptions. 242

Multiple coverage. 250 SF 98 response B; no wage determination applicable. 251

Decision to issue wage determination.

Decision not to issue wage determination. 253

Response to notice. 260 SF 98 Response A: wage determination applicable. 261

SF 98 response A: new wage determination applicable. 262

SF 98 response A: revised wage determination applicable. 263

SF 98 response A: current wage determination applicable.


200-209 INTRODUCTION 200 Contemplated contract for services.-A Federal contracting agency, on determining that a contemplated contract for services is subject to the Service Contract Act (SCA), proceeds according to the value of the contract. If the contract amount will not exceed $2,500, the contract will contain the clause specified in section 4.7, 29 CFR 4. A contract subject to the act, the value of which either exceeds $2,500 or is not known in advance to amount to $2,500 or less, will contain the clause specified in section 4.6 of 29 CFR 4.

201 Notice of intention to make a service contract.-Section 4.4. of the regulations requires the contracting agency to submit to the Administrator, Wage and Hour Division, notice of its intention to make a service contract of over $2,500 not less than 30 days prior to its invitation for bids or commencement of negotiations. No notice is required where the agency definitely knows that the contract will not exceed $2,500.

202 Receipt of notice by the Wage and Hour Division.-Receipt of notice by the Wage and Hour Division initiates issuance of an SCA wage and fringe-benefit determination. Under the Division's wage-determination program, it originally issues a wage determination only after a contracting agency has demonstrated the need by submitting a notice.

203 Branch of Wage Determinations.—Within the Division, the Branch of Wage Determinations (hereafter, the Branch) is responsible for processing notices received from contracting agencies and for issuing applicable wage determinations. Processing, which comprises various actions taken by the Branch from receipt of notice to ultimate response, is explained in greater detail in further sections of this chapter.

204 Determining the prerailing wages and fringe benefits. If the Branch determines that the contemplated contract is, in fact, subject to the SCA, it responds to the contracting agency either (a) that no applicable wage determination has been made or (b) hat a copy of the wage determination applicable to the contemplatei contract is returned with its notice. In the first instance, section 2(b) (1) of the SCA provides a minimum wage not less than that specified in section bia) (1) of the Fair Labor Standards Act of 1938, as amended—$1.60 an hour since February 1, 1988. In the second instance, section 4.5 of 29 CFR 4 requires the agency to incorporate in its contract the applicable determination of prevailing wage and fringe benefits.

205 Flor chart.-The filow chart following indicates the broad actions performed by the Wage and Hour Division during standard processing of a contracting agency's notice of intention to make a service contract under the Service Contract Act.

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