under the labor standards provisions of their contracts;

(2) Adequate payroll and on-the-site inspections and employee interviews to determine compliance, and prompt initiation of corrective action when required;

(3) Prompt investigation and disposition of complaints; and

(4) Prompt submission of all reports required by this subpart.

(b) Responsibility. The contracting officer shall ascertain that the contractor is fully informed of the labor standards provisions of the contract and of his and any subcontractor's responsibilities thereunder. Unless it is clear that the contractor is otherwise fully informed, the contractor shall be so informed either by a preconstruction letter or a preconstruction conference promptly after award of the contract. Whenever the clauses under § 1-18.703-1 are applicable. the action prescribed by this § 118.705 shall be taken or required in accordance with procedures prescribed by each agency. Whenever the clauses under §§ 1-18.703-2 and 1-18.703-3 are applicable, the action prescribed by this § 118.705 shall be taken or required, in accordance with procedures prescribed by each respective agency, to the extent pertinent to the applicable clauses.

§ 1-18.705-2 Wages, fringe benefits, and overtime.

(a) In computing wages paid to a laborer or mechanic, including apprentices and trainees, the contractor may include any of the following items:

(1) Amounts paid in cash to the laborer or mechanic, or deducted from such payment in accordance with 29 CFR Part 3;

(2) Contributions, except those required by Federal, State, or local law, which the contractor makes irrevocably to a trustee or a third party pursuant to any fund, plan, or program to provide for medical or hospital care, pensions, compensation for injuries or illness resulting from occupational activity, unemployment benefits, life insurance, disability and sickness insurance, accident insurance, vacation and holiday pay, defraying costs of apprenticeship, or any other fringe benefit but contributions or payments for fringe benefits are allowed only for the specific fringe benefits contained in the applicable wage determination decision involved; and

(3) Other contributions or anticipated costs to the extent such contributions or anticipated costs have been expressly approved by the Secretary of Labor.

(b) Where the wage determination decision specifies fringe benefits payments, the contractor may satisfy his obligation under the clause entitled Davis-Bacon Act by providing wages consisting of any combination of con-tributions or costs as specified in paragraph (a), of this section: Provided, That the total cost of such combination is not less than the total of the basic hourly rate and fringe benefits payments prescribed in the wage determination decision for the classification of laborer or mechanic concerned. Wages provided by the contractor, or fringe benefits payments required by the wage determination decision, may include items which are not stated as exact cash amounts. In such cases, the interested parties shall determine the cash equivalent of the cost of such items when necessary to determine whether the wages provided by the contractor satisfy the requirements of the wage determination. In the event the interested parties are unable to agree on the cash equivalent, the contracting officer, in accordance with paragraph (b) of the clause entitled Davis-Bacon Act, shall submit the question for determination to the Department of Labor, in accordance with agency procedures. The submission shall include a comparison of the payments, contributions, or costs contained in the wage determination decision with those made or proposed by the contractor as equivalent thereto, together with the comments and recommendations of the contracting officer.

(c) For purposes of computing required overtime payments, the basic rate of pay specified in the wage determination, or that actually paid by the contractor if higher, shall be used. The basic rate does not include any amount paid as fringe benefits, and overtime is not required to be paid on the contractor's contributions, costs, or payment of cash equivalent for fringe benefits. In no event may overtime be computed on a rate lower than the basic rate specified in the wage determination.

§ 1-18.705-3 Additional classifications.

(a) Requirements. Whenever any laborer or mechanic is to be employed

in a classification not listed in the wage determination applicable to the contract, the contractor shall submit to the contracting officer a statement of the proposed additional classification and minimum wage rate, including fringe benefits payments, if any. Upon approval, the additional classification and rate shall be posted with the wage determination.

(b) Approval. Upon receipt of the request for authorization, the contracting officer shall review it to determine whether it meets the following criteria:

(1) The classification is an appropriate one which cannot be fitted into a classification contained in the applicable wage determination; and

(2) The proposed wage rate, including any fringe benefits, conforms to the wage determination contained in the contract. If the above criteria are met and no interested party objects to the proposed classification, the contracting officer or his representative shall approve the proposal and submit an information copy to the Department of Labor. If the criteria are not met or the interested parties cannot agree on the proposal, the contracting officer or his representative shall submit the proposal, together with available pertinent information, and his recommendation to the Department of Labor for final determination. Upon approval, the contracting officer shall notify the contractor and instruct him to post the approved rate and classification in accordance with § 1-18.705-7.

§ 1-18.705-4 Apprentices and trainees.

(a) As provided in paragraph (a) of the clause set forth in § 1-18.703-1(c), the contractor or subcontractor is required to furnish written evidence of registration of his program and apprentices as well as of the ratios allowed and the wage rates for the area of construction before using any apprentices on the contract work. Likewise, as provided in paragraph (b) of the clause set forth in § 118.703-1(c), the contractor or subcontractor is required to furnish written evidence of the certification of his program, the registration of the trainees, and the ratios and wage rates prescribed by that program before using any trainees on the contract work.

(b) Contractors planning to use apprentices on a construction project are required to obtain written evidence of

registration of such employees in a program registered under the State apprenticeship agency which is recognized by the Bureau of Apprenticeship and Training, Department of Labor. If no such agency exists within a State, an apprentice must be enrolled under a program registered with the Bureau of Apprenticeship and Training, Department of Labor. The contractor will then submit to the contracting officer this evidence of registration, together with evidence of the established apprenticeship-journeyman ratios and wage rates in the project area, which will be the basis for establishing such ratios and rates for the project. These data will be maintained by the contracting officer with payroll records.

(c) Contractors planning to use trainees on a construction project are required to obtain written evidence of registration of such employees in a program certified by the Bureau of Apprenticeship and Training, Department of Labor. The contractor will then submit to the contracting officer this evidence of certification of his program and the registration of the trainees together with evidence of established trainee-journeyman ratios and wage rates prescribed in the program. This data will be maintained by the contracting officer with payroll records.

(d) Enforcement activities, including the investigation of complaints of violations, to ensure compliance with the requirements of the clause entitled "Apprentices and Trainees" shall be the primary duty of the agency awarding the contract or providing the Federal assistance. The Department of Labor will coordinate its efforts with the various agencies.

[40 FR 48327, Oct. 14, 1975] § 1-18.705-5

Subcontracts.

The contracting officer shall obtain a list of all subcontracts, together with a description of the work to be performed thereunder. This list will be useful in obtaining compliance with the requirements for submission of payrolls by the contractor and subcontractors.

§ 1-18.705-6 Payrolls and statements.

(a) Submission. Within 7 calendar days after the regular payment date of the payroll week covered, the contractor is required to submit, or cause to be submitted for himself and his subcontractors (1) copies of weekly payrolls in

compliance with the clause set forth in § 1-18.703-1(d), and (2) weekly statements of compliance as required by the Copeland Regulations (29 CFR Part 3) incorporated in the contract by the clause set forth in § 1-18.703-1(e) (see 29 CFR 3.3 for form of weekly statement of compliance).

The executive

(b) Examination. agency concerned shall make such examination of the payrolls and statements as may be necessary to insure compliance with contract, statutory, and regulatory requirements. Particular attention should be given to the correctness of classifications and disproportionate employment of laborers, helpers, apprentices, or trainees to journeymen.

(c) Preservation. Unless specifically excepted by the Department of Labor, payrolls and statements shall be preserved by the executive agency concerned for a period of 3 years from the date of completion of the contract and shall be produced at the request of the Secretary of Labor at any time during such period. § 1-18.705-7 Posting wage determinations.

The contracting officer shall ascertain that a copy of the wage determination is kept posted at the site of the work in a prominent place where it can be easily seen by the workers.

(a) Regular investigations. The executive agency concerned shall make such investigations as may be necessary to insure compliance with cor.tract, statutory, and regulatory requirements as follows:

(1) Contracts of 6 months or less duration shall be investigated before final payment is made, if feasible.

(2) Contracts of more than 6 months duration shall be investigated with such frequency as may be necessary to insure compliance. The investigations shall inIclude interviews of employees on a sampling basis.

(b) Special investigations. Special investigations in detail shall be made when required by complaints or other evidence of violations. Complaints of violations shall be given priority.

(c) Confidential nature of statements. When oral or written statements are taken from employees during regular or

special investigations they shall be treated as confidential and shall not be disclosed to the employer without the written consent of the employee.

§ 1-18.705-9 Suspensions and deductions of contract payments.

When wage underpayments are found, the contractor shall be requested to make, or cause to be made, restitution to the employees and/or to plans, funds, or programs for any type of fringe benefits required by the applicable wage determination. If the contractor or subcontractor fails or refuses to pay all or any part of the wages due the employees, the contracting officer shall withhold from payments due the contractor an amount equal to the estimated underpayments, as well as any estimated liquidated damages due under the Contract Work Hours and Safety Standards Act. If wage underpayments continue, or the failure or refusal to make restitution appears continuing or willful, or if the contractor fails or refuses to comply with any other contract, statutory, or regulatory requirements, the contracting officer may suspend all contract payments to the contractor until the violations have ceased. If restitution has not been made prior to final payment under the contract, the contracting officer shall submit with the contractor's payment voucher or vouchers a Standard Form 1093, Schedule of Withholdings Under the Davis-Bacon Act, and a statement of the amounts to be withheld for underpayment of wages and liquidated damages pursuant to the Contract Work Hours and Safety Standards Act. These amounts shall be deducted from payments under the contract and shall be disposed of in accordance with agency procedures. Timely action to withhold for underpayments is encouraged by the General Accounting Office.

§ 1-18.705-10 Reports.

(a) Semiannual reports. Each agency shall furnish to the Department of Labor by July 31 and January 31 of each calendar year semiannual reports on compliance with and enforcement of the labor standards provisions of the Davis-Bacon Act and its related acts and the Contract Work Hours and Safety Standards Act covering the periods of January 1

through June 30 and July 1 through December 31, respectively. Such reports shall be prepared in the manner prescribed in Department of Labor circular memoranda.

(b) Reports of violations. (1) No report need be made when the underpayments (i) total less than $500, (ii) are nonwillful, (iii) restitution has been effected, and (iv) future compliance has been assured, except where the investigation was expressly requested by the Department of Labor. In the latter case, the investigating agency shall submit a factual summary report in accordance with 29 CFR 5.7(a) (1).

(2) For all other such underpayments the agency shall furnish to the Department of Labor, as soon as practicable, a detailed enforcement report. Such reports shall be prepared in accordance with 29 CFR 5.7(a) (2).

(3) Where there is substantial evidence that violations are willful and in breach of the provisions of section 1001 of Title 18, United States Code, or other criminal statute, the matter shall be forwarded to the Attorney General of the United States for prosecution and the Secretary of Labor shall be informed of such action.

§ 1-18.705-11

Contract terminations.

Whenever a contract is terminated for violation of the labor standards provisions, a report shall be submitted by the agency concerned to the Secretary of Labor and the Comptroller General. The report shall include the name and address of the terminated contractor or subcontractor, the name and address of the contractor or subcontractor who is to complete the work, the amount and number of the latter's contract, and a description of the work thereunder. § 1-18.705-12

Cooperation with the De

partment of Labor. The contracting agency concerned shall cooperate with representatives of the Department of Labor in the inspection of records, interviews with workers, and all other aspects of investigations undertaken by the Department of Labor. When requested, the contracting agencies shall furnish to the Secretary of Labor any available information with respect to contractors, subcontractors, their contracts, and the nature of the contract work.

§ 1-18.705-13 Review of recommendations for an appropriate adjustment in liquidated damages under the Contract Work Hours and Safety Standards Act.

Whenever the head of an agency finds that a sum of liquidated damages administratively determined to be due under section 104(a) of the Contract Work Hours and Safety Standards Act is incorrect or that the contractor or subcontractor violated inadvertently the povisions of the Contract Work Hours and Safety Standards Act notwithstanding the exercise of due care upon the part of the contractor or subcontractor involved, he may (a) make an appropriate adjustment in, or release the contractor or subcontractor of liability for, such liquidated damages where the amount of the damages is $100 or less, or (b) make recommendations for adjustment or relief to the Secretary of Labor where the amount of the damages is in excess of $100, as provided in 29 CFR 5.8.

§ 1-18.706 Disposition of disputes arising out of construction contract labor standards enforcement.

The areas of possible differences of opinion between contracting officers and contractors in construction contract labor standards enforcement include misclassification of workers, hours of work, wage rates and payment, withholding practices, and the applicability of the labor standards provisions under varying circumstances. For the most part, these are settled administratively by the agency concerned. If necessary, such differences may be settled with assistance from the Department of Labor, without references to the Disputes clause of the construction contract. Those disagreements which cannot be settled administratively by the agency shall be subject to the Disputes clause, except for disputes involving the meaning of classifications, wage rates contained in the wage determination of the Secretary of Labor, or the applicability of contract labor provisions. These matters shall be referred to the Secretary of Labor for an opinion, in accordance with 29 CFR 5.12, with sufficient supporting data to explain both sides of the dispute. No final decision on these matters shall be made by the contracting officer pursuant to the Disputes clause. The opinion obtained shall be made a part of the contract file and shall be applied (a) in

the investigation of the case, and (b) in the computation of wage underpayments. The contractor will be furnished a copy of the opinion with advice that if aggrieved therewith he may appeal to the Wage Appeals Board of the Department of Labor in accordance with 29 CFR Part 7.

Subpart 1-18.8-Termination of
Construction Contracts

§ 1-18.800 Scope.

This subpart sets forth policies and procedures regarding the termination of contracts for the convenience of the Government or for default which supplement the policies and procedures in Part 1-8.

§ 1-18.801 See

Definitions.

1-8.101. As used in this subpart, the following terms have the meanings set forth below.

(a) "Construction equipment" means automotive vehicles. earth movers, cranes, batching plants, crushers, pavers, mixers, generators, compressors. pumps. drills. welders, forms, and other items of equipment (other than hand tools) used or capable of being used in construction work.

(b) "Terminated portion of the contract" with respect to a contract which has been completely terminated for the convenience of the Government means the entire contract, notwithstanding the completion of, and payment for, individual items of work prior to termination (see § 1-18.802-4).

§ 1-18.802 Termination for convenience of the Government.

See Subpart 1-8.2 for general principles and procedures applicable to all terminations for the convenience of the Government, Subpart 1-8.3 for general principles and procedures applicable to termination of fixed-price contracts for convenience, and Subpart 1-8.4 for general principles and procedures applicable to termination of cost-reimbursement contracts for convenience.

§ 1-18.802-1 Use of clauses.

Use of a clause providing for termination for convenience of the Government is required in every construction contract in excess of $10,000. Contracts which do

not exceed $10,000 may provide for termination for convenience. The specific requirements regarding the use of such clauses are as follows:

(a) Fixed-price construction contracts. See § 1-8.700-2(a) (5) and (6) regarding the use of Termination for Convenience of the Government clauses. (b) Cost-reimbursement type construction contracts. (1) See 1-8.700-2 (a) (3) regarding the use of Termination for Convenience of the Government clauses.

(2) See 1-8.700-2(c) regarding the use of an Excusable Delays clause. § 1-18.802-2 proposals.

Submission of settlement

The settlement proposal formats prescribed in §§ 1-8.802 and 1-8.803 may be used with such modifications as agencies consider necessary.

§ 1-18.802-3 Bases for settlement proposals.

See 1-8.307-2.

(a) Inventory basis. The inventory basis of settlement is appropriate for use under the following circumstances:

(1) The partial termination of a construction contract: and

(2) The partial or complete termination of supply orders under any terminated construction contract.

(b) Total cost basis. The total cost basis of settlement shall be used in all cases where a construction contract is completely terminated. Line 10. section II of the format set forth in § 1-8.802-2, "Deduct-Finished Product Invoiced or To Be Invoiced" is not to be used. All progress and other payments shall be used to reduce the gross amount of the settlement.

§ 1-18.802-4 Completed items.

Work in place accepted by the Government under a fixed-price construction contract is not to be considered a complete item even though that work may have been paid for at prices set forth in the contract.

§ 1-18.802-5 Allowance for profit.

See 1-8.303. In a construction contract, for th epurpose of computing profit, that portion of settlements by the prime contractor with construction subcontractors for actual work in place at