LABOR

12.1005-9 Withholding of Contract Payments and Contract Termina

tion.

(a) Withholding.

(1) As provided by the Act, any violation of the contract stipulations. required under paragraphs (a) and (c) of the contract clause set forth in 12.1004 (a) or under the contract clause set forth in 12.1004(b) renders the party responsible therefor liable for a sum equal to the amount of any deductions, rebates, refunds, or underpayment of compensation due to any employee engaged in the performance of such contract. Upon the written request of the Department of Labor at a level no lower than a District Director, so much of the accrued payment due on the contract or any other contract between the Government prime contractor and the Federal Government, provided such other contract is not assigned pursuant to 31 U.S.C. 203 or 41 U.S.C. 15, may be withheld as is necessary to pay such employees. Such withheld sums shall be held in a deposit fund. On order of the Adminstrator, Wage and Hour and Public Contracts Division, Department of Labor, any compensation which the head of a Federal agency or the Administrator of the Wage and Hour and Public Contracts Divisions has found to be due pursuant to the Act shall be paid directly from any accrued payments withheld under the Act.

(2) If the accrued payments withheld are insufficient to reimburse all underpaid service employees, the Government may bring an action. against the contractor, subcontractor, or any contract sureties to recover the remaining amount of underpayments. Any sums thus recovered shall be held in the deposit fund and shall be paid, on order of the Secretary of Labor, directly to such underpaid employees. Instances of insufficient funds withheld shall be reported to: the General Accounting Office for possible setoff as may be appropriate; to the Administrator of the Wage and Hour and Public Contracts Divisions of the Department of Labor for any of his purposes; and to the Department of Justice for any other necessary action.

(b) Termination. In addition, as provided by the Act, any failure to comply with the requirements of any of the provisions of the contract clauses set forth under 12.1004 may be grounds for termination, by written notice, of the contractor's right to proceed with the contract work. In such event, the Government may enter into other contracts or arrangements for completion of the work, charging the contractor with any additional cost.

12.1005-10 Cooperation With the Department of Labor. The contracting officer shall cooperate with representatives of the Department of Labor in the examination of records, interviews with service employees, and all other aspects of investigations undertaken by the Department of Labor. When requested, agencies shall furnish to the Administrator, Wage and Hour and Public Contracts Division, Department of Labor, any available information with respect to contractors, subcontractors, their contracts and the nature of the contract services. Violations apparent to the contracting agency and complaints received shall be promptly referred to the Department of Labor. In no event, however, shall complaints by employees be disclosed to the employer.

12.1005-11 Role of the Comptroller General. The Act provides that the Comptroller General shall distribute a list to all Federal agencies giving the names of persons or firms which have been found to be in violation of

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the Act. Unless the Secretary of Labor otherwise recommends, no Government contract shall be awarded to any violator so listed or to any firm, corporation, partnership or association in which such violator has a substantial interest until three years have elapsed from the date of publication of the list containing the name of the violator.

12.1005-50 Register of Wage Determination and Fringe Benefits. The regulations of the Department of Labor provide that the Administrator of the Wage and Hour and Public Contracts Divisions, Department of Labor, shall determine the minimum monetary wages and specify the fringe benefits to be furnished the various classes of service employees for the several localities in which they are to be employed under contracts subject to such determinations under the Act (see 29 CFR 4.3). The regulations further provide that these determinations and specifications will be issued as an orderly series constituting a register of such minimum wages and fringe benefits. The register will be available for public inspection during business hours at the national, regional, and district offices of the Wage and Hour and Public Contracts Divisions, U.S. Department of Labor. In addition, the regulations authorize the Department, when practicable, to maintain such a register at other locations where the needs of procurement agencies for the information contained therein may be better served by such action.

12.1005-51 Absence of Minimum Wage Determination and Fringe Benefit Specifications.

(a) Authority. The Secretary of Labor, pursuant to his authority under the Act to allow reasonable variations, tolerances, and exemptions (see 12.1002-51), has made the finding set forth in (b) below, with respect to service contracts in excess of $2,500 for which minimum monetary wages and fringe benefits have not been determined as provided in 12.1005-3.

(b) Finding. To avoid serious impairment of the conduct of Government business, it is hereby found necessary and proper to provide exemption (1) from the determined wage and fringe benefits section of the Act (section 2(a) (1) and (2)), but not the minimum wage specified under section 6 (a)(1) of the Fair Labor Standards Act of 1938, as amended (section 2(b) of this Act), of all contracts for which no such wage or fringe benefit has been determined for any class of service employees to be employed thereunder, and (2) from the fringe benefits section (section 2(a) (2)) of all contracts and of all classes of service employees employed thereunder if no such benefits have been determined for any such class of service employees. Accordingly, such exemptions are hereby provided.

(c) Application of Finding. The exemptions covered by the finding do not extend to undetermined wages or fringe benefits in contracts for which one or more, but not all, classes of service employees are the subject of an applicable wage and fringe benefit determination (see 12.10054).

12.1006 Labor Standards Enforcement Report. See 12.404-8(d). 12.1050 Extensions of Contract Performance Period.

12.1050-1 General. A number of NASA service contracts are written for a period of one year with an option on the part of the Government to renew the contract for additional one-year periods at the same or other price or rates. Since the exercise of an option results in the performance of services for a new or different period not included in the term for which the contractor is obligated to furnish services or for which the

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LABOR

Government is obligated to pay under the original contract in the absence of such action to extend it, the contract for the option (additional) period is within the contemplation of the Service Contract Act in the same position as a wholly new contract with respect to application of the Act's provisions and the regulations thereunder. (See 29 CFR 4.145.)

12.1050-2 Contract Price Adjustment.

(a) The following requirements shall apply to firm fixed-price contracts, time and material contracts, and labor-hour contracts which contain the clause in 12.1004(a) (i.e., contracts in excess of $2,500), and which provide for Government option renewal.

(1) For firm fixed-price contracts:

(i) When the scope of work called for in the solicitation for the original contract period and any renewal option period is the same, the offeror shall be requiredby such solicitation to submit with his offer, and the Schedule of any resulting contract shall contain, a single listing of the classes of service employees subject to the Service Contract Act, and the number of labor hours to be supplied by each such class applicable both to the original contract period and to any renewal option period.

(ii) When the scope of work called for in the solicitation for the original contract period and any renewal option period differs, the offeror shall be required by such solicitation to submit with his offer, and any resulting contract shall contain in the Schedule thereof, for the original contract period and any renewal option period, respectively, a separate listing of both the Service Contracts Act classes of service employees and the number of labor hours to be supplied by each such class.

(2) For time and material contracts, and labor-hour contracts, the offeror shall be required by the solicitation to submit with his offer, and the Schedule of any resulting contract shall contain, a listing of the classes of Service Contract Act service employees for the initial contract and any renewal period, and the contract unit price labor rates, in the same format as set forth in the Service Contract Act determination for each such class.

(b) The following clause shall be inserted in firm fixed-price contracts, time and material contracts, and labor-hour contracts which contain the clause in 12.1004(a)(i.e., contracts in excess of $2,500), and which contain an option to renew. (The clause prescribed below shall not be used in cost-type contracts.)

FAIR LABOR STANDARDS ACT AND SERVICE CONTRACT ACT-PRICE

ADJUSTMENT (JULY 1970)

(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 and Public Contract Divisions, U.S. Department of Labor, current at the beginning of each renewal option period shall apply to any renewal of this contract. Where 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. 201-219) and amendments thereto current at the beginning of each renewal option period, shall apply to any renewal of this contract.

(c) Where, as a result of the Department of Labor determination of minimum prevailing wages and fringe benefits applicable at the beginning of the renewal option period, or where

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as a result of any amendment to the Fair Labor Standards Act enacted subsequent to award of this contract, affecting minimum wage, and whenever such shall become applicable to this contract under law, the Contractor increases or decreases wages or fringe benefits of employees working on this contract to comply with such legislation, 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. In firm fixed-price contracts, such adjustment will be based on labor hours specified in the Schedule for the particular option period. In time and material contracts and labor-hour contracts, the contract unit price set forth in the Schedule will be so adjusted.

(d) The Contractor shall notify the Contracting Officer of any increases claimed under this clause within sixty (60) days after the exercise of the contract renewal option, 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 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.

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