22.1003-4 Administrative limitations,

variations, tolerances, and exemptions.

(a) The Secretary of Labor may provide reasonable limitations and may make rules and regulations

allowing reasonable variations, tolerances, and exemptions to and from any or all provisions of the

Service Contract Labor Standards statute other than 41 U.S.C.6707(f). These will be made only in

special circumstances where it has been determined that the limitation, variation, tolerance, or

exemption is necessary and proper in the public interest or to avoid the serious impairment of

Government business, and is in accord with the remedial purpose of the Service Contract Labor

Standards statute to protect prevailing labor standards (41 U.S.C.6707(b)). See 29 CFR 4.123 for a

listing of administrative exemptions, tolerances, and variations. Requests for limitations, variances,

tolerances, and exemptions from the Service Contract Labor Standards statute shall be submitted in

writing through contracting channels and the agency labor advisor to the Wage and Hour

Administrator.

(b) In addition to the statutory exemptions cited in 22.1003-3 of this subsection, the Secretary of

Labor has exempted the following types of contracts from all provisions of the Service Contract

Labor Standards statute:

(1) Contracts entered into by the United States with common carriers for the carriage of mail by rail,

air (except air star routes), bus, and ocean vessel, where such carriage is performed on regularly

scheduled runs of the trains, airplanes, buses, and vessels over regularly established routes and

accounts for an insubstantial portion of the revenue therefrom.

(2) Any contract entered into by the U.S. Postal Service with an individual owner-operator for mail

service if it is not contemplated at the time the contract is made that the owner-operator will hire

any service employee to perform the services under the contract except for short periods of vacation

time or for unexpected contingencies or emergency situations such as illness, or accident.

(3) Contracts for the carriage of freight or personnel if such carriage is subject to rates covered by

section 10721 of the Interstate Commerce Act.

(c) Contracts for maintenance, calibration or repair of certain equipment.-

(1) Exemption. The Secretary of Labor has exempted from the Service Contract Labor Standards

statute contracts and subcontracts in which the primary purpose is to furnish maintenance,

calibration, or repair of the following types of equipment, if the conditions at paragraph (c)(2) of this

subsection are met:

(i) Automated data processing equipment and office information/word processing systems.

(ii) Scientific equipment and medical apparatus or equipment if the application of micro-electronic

circuitry or other technology of at least similar sophistication is an essential element (for example,

Product or Service Code (PSC) 6515, "Medical and Surgical Instruments, Equipment, and Supplies;"

PSC 6525, "Imaging Equipment and Supplies: Medical, Dental, Veterinary;" PSC 6630, "Chemical

Analysis Instruments;" and PSC 6655, "Geophysical Instruments," are largely composed of the types

of equipment exempted in this paragraph).

(iii) Office/business machines not otherwise exempt pursuant to paragraph (c)(1)(i) of this
subsection, if such services are performed by the manufacturer or supplier of the equipment.

(2) Conditions. The exemption at paragraph (c)(1) of this subsection applies if all the following

conditions are met for a contract (or a subcontract):

(i) The items of equipment to be serviced under the contract are used regularly for other than

Government purposes and are sold or traded by the contractor in substantial quantities to the

general public in the course of normal business operations.

(ii) The services will be furnished at prices which are, or are based on, established catalog or market

prices for the maintenance, calibration, or repair of such equipment. As defined at 29 CFR

4.123(e)(1)(ii)(B)-

(A) An established catalog price is a price included in a catalog price list, schedule, or other form

that is regularly maintained by the manufacturer or the contractor, is either published or otherwise

available for inspection by customers, and states prices at which sales currently, or were last, made

to a significant number of buyers constituting the general public.

(B) An established market price is a current price, established in the usual course of trade between

buyers and sellers free to bargain, which can be substantiated from sources independent of the

manufacturer or contractor.

(iii) The contractor will use the same compensation (wage and fringe benefits) plan for all service

employees performing work under the contract as the contractor uses for these employees and

equivalent employees servicing the same equipment of commercial customers.

(iv) The apparent successful offeror certifies to the conditions in paragraph (c)(2)(i) through (iii) of

this subsection. (See 22.1006(e).)

(3) Affirmative determination and contract award.

(i) For source selections where the contracting officer has established a competitive range, if the

contracting officer determines that one or more of the conditions in paragraphs 22.1003-4(c)(2)(i)

through (iii) of an offeror’s certification will not be met, the contracting officer shall identify the

deficiency to the offeror before receipt of the final proposal revisions. Unless the offeror provides a

revised offer acknowledging applicability of the Service Contract Labor Standards statute or

demonstrating to the satisfaction of the contracting officer an ability to meet all required conditions

for exemption, the offer will not be further considered for award.

(ii) The contracting officer shall determine in writing the applicability of this exemption to the

contract before contract award. If the apparent successful offeror will meet all conditions in

paragraph (c)(2) of this subsection, the contracting officer shall make an affirmative determination

and award the contract without the otherwise applicable Service Contract Labor Standards

clause(s).

(iii) If the apparent successful offeror does not certify to the conditions in paragraph (c)(2)(i)

through (iii) of this subsection, the contracting officer shall incorporate in the contract the Service

Contract Act clause (see 22.1006(a)) and, if the contract will exceed $2,500, the appropriate

Department of Labor wage determination (see 22.1007).

(4) Department of Labor determination.
(i) If the Department of Labor determines after award of the contract that any condition for

exemption in paragraph (c)(2) of this subsection has not been met, the exemption shall be deemed

inapplicable, and the contract shall become subject to the Service Contract Labor Standards statute,

effective as of the date of the Department of Labor determination. In such case, the procedures at 29

CFR 4.123(e)(1)(iv) and 29 CFR 4.5(c) shall be followed.

(ii) If the Department of Labor determines that any conditions in paragraph (c)(2) of this subsection

have not been met with respect to a subcontract, the exemption shall be deemed inapplicable. The

contractor may be responsible for ensuring that the subcontractor complies with the Service

Contract Labor Standards statute, effective as of the date of the subcontract award.

(d) Contracts for certain services.-

(1) Exemption. Except as provided in paragraph (d)(5) of this subsection, the Secretary of Labor has

exempted from the Service Contract Labor Standards statute contracts and subcontracts in which

the primary purpose is to provide the following services, if the conditions in paragraph (d)(2) of this

subsection are met:

(i) Automobile or other vehicle (e.g., aircraft) maintenance services (other than contracts or

subcontracts to operate a Government motor pool or similar facility).

(ii) Financial services involving the issuance and servicing of cards (including credit cards, debit

cards, purchase cards, smart cards, and similar card services).

(iii) Hotel/motel services for conferences, including lodging and/or meals, that are part of the

contract or subcontract for the conference (which must not include ongoing contracts for lodging on

an as needed or continuing basis).

(iv) Maintenance, calibration, repair, and/or installation (where the installation is not subject to the

Construction Wage Rate Requirements statute, as provided in 29 CFR 4.116(c)(2)) services for all

types of equipment where the services are obtained from the manufacturer or supplier of the

equipment under a contract awarded on a sole source basis.

(v) Transportation by common carrier of persons by air, motor vehicle, rail, or marine vessel on

regularly scheduled routes or via standard commercial services (not including charter services).

(vi) Real estate services, including real property appraisal services, related to housing Federal

agencies or disposing of real property owned by the Government.

(vii) Relocation services, including services of real estate brokers and appraisers to assist Federal

employees or military personnel in buying and selling homes (which shall not include actual moving

or storage of household goods and related services).

(2) Conditions. The exemption for the services in paragraph (d)(1) of this subsection applies if all the

following conditions are met for a contract (or for a subcontract):

(i)

(A) Except for services identified in paragraph (d)(1)(iv) of this subsection, the contractor will be

selected for award based on other factors in addition to price or cost, with the combination of other

factors at least as important as price or cost; or
(B) The contract will be awarded on a sole source basis.

(ii) The services under the contract are offered and sold regularly to non-Governmental customers,

and are provided by the contractor (or subcontractor in the case of an exempt subcontract) to the

general public in substantial quantities in the course of normal business operations.

(iii) The contract services are furnished at prices that are, or are based on, established catalog or

market prices. As defined at 29 CFR 4.123(e)(2)(ii)(C)-

(A) An established catalog price is a price included in a catalog, price list, schedule, or other form

that is regularly maintained by the contractor, is either published or otherwise available for

inspection by customers, and states prices at which sales are currently, or were last, made to a

significant number of buyers constituting the general public; and

(B) An established market price is a current price, established in the usual course of trade between

buyers and sellers free to bargain, which can be substantiated from sources independent of the

manufacturer or contractor.

(iv) Each service employee who will perform the services under the contract will spend only a small

portion of his or her time (a monthly average of less than 20 percent of the available hours on an

annualized basis, or less than 20 percent of available hours during the contract period if the contract

period is less than a month) servicing the Government contract.

(v) The contractor will use the same compensation (wage and fringe benefits) plan for all service

employees performing work under the contract as the contractor uses for these employees and

equivalent employees servicing commercial customers.

(vi) The contracting officer (or contractor with respect to a subcontract) determines in advance

before issuing the solicitation, based on the nature of the contract requirements and knowledge of

the practices of likely offerors, that all or nearly all offerors will meet the conditions in paragraph

(d)(2)(ii) through (v) of this subsection. If the services are currently being performed under contract,

the contracting officer (or contractor with respect to a subcontract) shall consider the practices of

the existing contractor in making a determination regarding the conditions in paragraphs (d)(2)(ii)

through (v) of this subsection.

(vii)

(A) The apparent successful offeror certifies that the conditions in paragraphs (d)(2)(ii) through (v)

will be met; and

(B) For other than sole source awards, the contracting officer determines that the same certification

is obtained from substantially all other offerors that are-

(1) In the competitive range, if discussions are to be conducted (see FAR 15.306(c)); or

(2) Considered responsive, if award is to be made without discussions (see FAR 15.306(a)).

(3) Contract award or resolicitation.

(i) If the apparent successful offeror does not certify to the conditions, the contracting officer shall

insert in the contract the applicable Service Contract Labor Standards clause(s) (see 22.1006) and, if
the contract will exceed $2,500, the appropriate Department of Labor wage determination (see

22.1007).

(ii) The contracting officer shall award the contract without the otherwise applicable Service

Contract Labor Standards clause(s) if-

(A) The apparent successful offeror certifies to the conditions in paragraphs (d)(2)(ii) through (v) of

this subsection;

(B) The contracting officer determines that the same certification is obtained from substantially all

other offerors that are-

(1) In the competitive range, if discussions are to be conducted (see FAR 15.306); or

(2) Considered responsive, if award is to be made without discussions (see FAR 15.306(a)); and

(C) The contracting officer has no reason to doubt the certification.

(iii) If the conditions in paragraph (d)(3)(ii) of this subsection are not met, then the contracting

officer shall resolicit, amending the solicitation by removing the exemption provision from the

solicitation as prescribed at 22.1006(e)(3). The contract will include the applicable Service Contract

Labor Standards clause(s) as prescribed at 22.1006 and, if the contract will exceed $2,500, the

appropriate Department of Labor wage determination (see 22.1007).

(4) Department of Labor determination.

(i) If the Department of Labor determines after award of the contract that any conditions for

exemption at paragraph (d)(2) of this subsection have not been met, the exemption shall be deemed

inapplicable, and the contract shall become subject to the Service Contract Labor Standards statute.

In such case, the procedures at 29 CFR 4.123(e)(2)(iii) and 29 CFR 4.5(c) shall be followed.

(ii) If the Department of Labor determines that any conditions in paragraph (d)(2) of this subsection

have not been met with respect to a subcontract, the exemption shall be deemed inapplicable. The

contractor may be responsible for ensuring that the subcontractor complies with the Service

Contract Labor Standards statute, effective as of the date of the subcontract award.

(5) Exceptions. The exemption at paragraph (d)(1) of this subsection does not apply to solicitations

and contracts (subcontracts)-

(i) Awarded under , 41 U.S.C. chapter 85, Committee for Purchase from People Who Are Blind or

Severely Disabled (see subpart 8.7).

(ii) For the operation of a Government facility, or part of a Government facility (but may be

applicable to subcontracts for services); or

(iii) Subject to 41 U.S.C. 6707(c) (see 22.1002-3).

Parent topic: 22.1003 Applicability.