of the oil, it is required to notify the manufacturer.

The fraudulent use of this certificate for the purpose of purchasing oil tax free, rather than subject to tax at the rate of 6 cents a gallon, will subject the guilty party to a fine of not more than $10,000, or imprisonment for not more than five (5) years, or both, together with the costs of prosecution.

(Signature)

(Title)

(Address)

[31 F.R. 6373, Apr. 27, 1966. Redesignated, 31 F.R. 6373, Apr. 27, 1966]

§ 1-11.502 State and local tax exemption forms.

§ 1-11.502-1 Types of evidence of exemption.

Evidence appropriate to establish exemption or immunity from State or local taxes will vary depending upon the grounds of exemption or immunity claimed, the parties to the transaction, and the requirements of the taxing jurisdiction. Such evidence includes but is not limited to the following:

(a) U.S. Government Tax Exemption Certificate (Standard Form 1094);

(b) A copy of the contract or a portion thereof;

(c) Shipping documents indicating that shipments are in interstate or foreign commerce;

(d) A State or local form indicating that supplies or services are for the exclusive use of the United States; or

(e) Any other State or locally required form, certificate, or document to establish general or specific exemption.

§ 1-11.502-2 When evidence of exemption is to be furnished.

(a) Unless there does not exist any reasonable basis to sustain a claimed exemption, a contractor or vendor will be furnished evidence of exemption under a:

(1) Contract which contains the clause prescribed in either §§ 1-11.401-1 or 1-11.401-2 in accordance with the terms of those clauses;

(2) Cost-reimbursement type contract at the request of the contractor or at the discretion of the contracting officer; or (3) Contract or purchase order which contains no provision regarding taxes, at the request of the contractor or at the discretion of the contracting officer, if

(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 administration.

(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:

As used in this § 1-12.102, the following terms shall have the meanings set forth:

(a) "Normal workweek" and "normal workday" mean, generally, a workweek of 40 hours and a workday of 8 hours, 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.

§ 1-12.102-4 Approvals.

(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;

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.

§ 1-12.103 Federal and State labor requirements.

Executive agencies should cooperate, and require contractors to cooperate, to the fullest extent possible, 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.

Subpart 1-12.2-Convict Labor SOURCE: 39 FR 24009, June 28, 1974, unless otherwise noted.

(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 imprisonment 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