1-12. 1202

Regulations and rulings on applicability or interpretation. AUTHORITY: The provisions of this Part 1-12 issued under sec, 205 (c), 63 Stat. 390; 40 U.S.C. 486 (c).

SOURCE: The provisions of this Part 1-12 appear at 29 F.R. 10264, July 24, 1964, unless otherwise noted.

§ 1-12.000 Scope of part.

This part deals with general policies regarding labor, so far as they relate to procurement; sets forth certain pertinent labor laws and requirements, indicating in connection with each its applicability and any procedures thereunder; and prescribes the contract clauses with respect to each labor law or requirement. Subpart 1-12.1-Basic Labor Policies § 1-12.100 General.

The policies and procedures stated in this Subpart 1-12.1 are recommendatory and are for the guidance of executive agencies.

(a) With respect to Government contract activities, procurement agencies should maintain and encourage the best possible relations with industry and labor in order that the Government may procure needed supplies and services without delay. All problems arising out of the Government contract labor relations of private contractors, and all communications with labor organizations or Federal agencies relative thereto, shall be handled in accordance with agency procedures.

(b) Procurement agencies should remain impartial in, and should refrain from taking a position on, the merits of a dispute between labor and private management. No procuring activity should undertake the conciliation, mediation, or arbitration of a labor dispute. § 1-12.101-2 Contract pricing and ad

ministration.

(a) Nothing in § 1-12.101-1 should be construed to relieve a contracting officer from his responsibility to achieve efficient contract pricing and administration.

(b) Contractor labor policies and compensation practices, whether no not they are provided for in labor-management agreements, are not an acceptable basis for allowance of cost in cost-reimbursement type contracts or for recognition of costs in pricing fixed-price type contracts if and insofar as they result in unreasonable costs to the Government. Part 1-15, particularly § 1-15.205-6(a), explains that the term "unreasonable costs" includes costs resulting from practices that are discriminatory against the Government or unwarranted in the context of the particular contract work.

(c) In some cases, labor disputes may give rise to work stoppages which cause delays in the timely performance of important contracts. The contracting officer should impress on the contractor that he will be held accountable for delays that are reasonably avoidable. It should be emphasized that the standard contract clauses dealing with default, excusable delays, etc., do not relieve the contractor of delays that are not beyond his control or, with respect to delays of subcontractors, that are not beyond the control of both the contractor and the subcontractor. A delay caused by a strike which is an unfair labor practice, as identified in the National Labor Relations Act, as amended (29 U.S.C. 158), and which the contractor could not reasonably prevent can be excused only to the extent that it does not go beyond the point at which a reasonably diligent contractor could resume the delayed performance by taking action toward ending the strike by such means as:

(1) Filing a charge with the National Labor Relations Board so as to permit the NLRB to seek injunctive relief in court;

(2) Recourse to other available Government procedures: or

(3) Use of private boards or organizations for the settlement of disputes. § 1-12.102 Overtime, extra-pay shifts, and multi-shift work.

respectively. In any area outside the United States, its possessions, and Puerto Rico, a workweek longer than 40 hours, or a workday longer than 8 hours, will be considered normal if (1) such workweek or workday does not exceed that which is normal for such area, as determined by local custom, tradition, or law, and (2) hours worked in excess of 40 in such workweek, or 8 in such workday, 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 workweek or normal workday.

(c) "Shift premium" means the difference between the compensation paid to an employee at the contractor's regular rate of pay for the base or regular work 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 work period or shift involved and that paid for hours worked overtime.

(a) To the extent practicable, invitations for bids and requests for proposals shall not specify delivery or performance schedules which may be reasonably anticipated to necessitate overtime, at Government expense.

(b) In the negotiation of contracts in excess of $10,000, the contracting officer, consistent with the nature and size of the procurement should use his best efforts (1) to ascertain the extent to which proposals and quotations are based on the payment of overtime premiums and shift premiums, and (2) to negotiate contract prices or estimated costs which are not based on the payment of overtime premiums or shift premiums, taking into consideration the

practicability of procurement from other sources of all or part of the requirement.

(c) All contracts, other than firm fixed-price contracts or fixed-price contracts with escalation (which do not provide for any labor escalation), should provide that payment of overtime premiums and shift premiums shall be allowed, or considered in pricing, only to the extent approved in accordance with § 1-12.102-4, or as provided in § 1-12.102-5.

(d) Overtime for which overtime premiums would be at Government expense should not be approved under a contract where the contractor is already obligated, without the right to additional compensation, to meet the required delivery date.

(e) Where overtime premiums or shift premiums are being paid at Government expense in connection with the performance of Government contracts, the continued need therefor should be subject to periodic review in accordance with agency procedures.

(a) In the three following situations, overtime premiums and shift premiums at Government expense may be considered proper for approval when determined in writing by the agency head, or his designee or designees, that approval:

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

(2) Is necessary to make up for delays which are beyond the control and without the fault or negligence of the contractor and, in construction contracts which result from unforeseeable causes.

or

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

(b) Approvals should ordinarily be prospective, but may be retroactive where justified by the circumstances.

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

§ 1-12.102-5 Other authorized overtime.

(a) Approved overtime premiums or shift premiums may be paid for work,

without the approval required by § 112.102-4:

(1) When 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:

(2) When by indirect labor employees such as those performing duties in connection with administration, protection, transportation, maintenance, standby

plant protection, operation of utilities, or accounting;

(3) 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

(4) When lower overall cost to the Government will result.

(b) The cost of such overtime premiums or shift premiums may be allowed, or considered in pricing, only to the extent the amount thereof is reasonable and properly allocable to the work involved.

§ 1-12.105-2 Policy.

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 (1) its location and climate; (2) the availability and adequacy of housing within reasonable commuting distance; and (3) 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 (a) the contractor's normal compensation policy, including pay scales at his principal operating locations; (b) pay scales of other contractors and concerns operating at or near the site; and (c) compensation paid by other concerns within the same industry for similar services elsewhere.

§ 1-12.105-3 Procedures.

(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 $1-12.105-2.

(b) Where two or more contracting activities of an agency 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 § 1-12.105-2 and shall schedule the reviews required by (a) of this § 1-12.105-3. 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. The foregoing procedure in this § 1-12.105-3(b) should also be applied where different agencies are known to have concurrent contracts at a single facility or where the action of one agency may affect the interests of another agency.

(a) Executive Order 11755, December 29, 1973, states as follows: "The development of the occupational and educational skills of prison inmates is essential to their rehabilitation and to their ability to make an effective return to free society. Meaningful employment serves to develop those skills. It is also true, however, that care must be exercised to avoid either the exploitation of convict labor or any unfair competition between convict labor and free labor in the production of goods and services."

(b) The Act of February 23, 1887 (18 U.S.C. 436), provided that all officers or agents of the United States were as a matter of public policy forbidden, under appropriate penalties, to hire or contract out the labor of any criminals who might thereafter be confined in any prison, jail, or other place of incarceration for the violation of any laws of the Government of the United States.

(c) Public Law 89-176 (18 U.S.C. 4082 (c) (2)) empowers the Attorney General to authorize Federal prisoners to work at paid employment in the community during their terms of imprisonment under conditions that protect against both the exploitation of convict labor and unfair competition with free labor. § 1-12.202 Basic requirement.

Pursuant to the policy originally set forth in the Act of February 23, 1887, and in accordance with the requirements of Executive Order 11755, all contracts involving the use of appropriated funds which shall hereafter be entered into by any department or agency of the Executive branch for performance in any State, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, or the Trust Territory of the Pacific Islands shall, unless otherwise provided by law, contain a clause forbidding, in the performance of such contracts, the employment of persons undergoing sentences of impris

onment which have been imposed by any Federal Court or court of a State, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, or the Trust Territory of the Pacific Islands.

§ 1-12.203 Applicability.

(a) The requirement in § 1-12.202 applies, except as stated in this § 1-12.203, to all contracts where performance involves the employment of labor within any State, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, or the Trust Territory of the Pacific Islands.

(b) The requirement does to apply to contracts:

(1) Subject to the provisions of the Walsh-Healey Public Contracts Act (see Subpart 1-12.6) 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" (As interpreted by the Secretary of Labor, the term convict labor does not prohibit the employment of Federal or State prisoners on (i) parole, (ii) probation, or (iii) employed under work release programs, meeting the same conditions applicable to the Federal program.);

(2) For the purchase of supplies or services from Federal Prison Industries, Inc.; or

(3) 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.

(c) The requirement does not prohibit the employment by a contractor in the performance of such contracts of:

(1) Persons on parole or probation to work at paid employment during the term of their sentence;

(2) Persons who have been pardoned or who have served their terms; or

(3) Federal prisoners authorized by the Attorney General under 18 U.S.C. 4082(c) (2) to work at paid employment in the community during the term of their imprisonment if:

(i) The worker is paid or is in an approved work training program on a voluntary basis;

(ii) Representatives of local union central bodies or similar labor union organizations have been consulted;

(iii) Such paid employment will not result in the displacement of employed workers, or be applied in skills, crafts, or trades in which there is a surplus of available gainful labor in the locality, or impair existing contracts for services; and

(iv) The rates of pay and other conditions of employment will not be less than those paid or provided for work 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:

This subpart deals with the requirements of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327333) 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

138 FR 6673, Mar. 12, 1973.

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 § 1-12.301 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 or subcontractor. The requirement does not apply to the following:

(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.

(f) Any other contracts exempt under regulations of the Secretary of Labor 29 CFR 5.14).

t

(29 F.R. 10264, July 24, 1964, as amended at 34 F.R. 5655, Mar. 26, 1969]

§ 1-12.303 Contract clause.

The contract clause set forth in § 112.303 shall be included in contracts in accordance with the provisions of §§ 112.301 and 1-12.302. The clause may be