Federal Acquisition Regulation; FAR Case 2001-004, Exemption of Certain Service Contracts from the Service Contract Act (SCA), 2724-2731 [E9-532]

Agencies

• General Services Administration
• National Aeronautics and Space Administration
• DEPARTMENT OF DEFENSE

[Federal Register Volume 74, Number 10 (Thursday, January 15, 2009)]
[Rules and Regulations]
[Pages 2724-2731]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-532]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 4, 15, 17, 22, and 52

[FAC 2005-30; FAR Case 2001-004; Item III; Docket 2007-0001, Sequence 
6]
RIN 9000-AK82


Federal Acquisition Regulation; FAR Case 2001-004, Exemption of 
Certain Service Contracts from the Service Contract Act (SCA)

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have adopted as final, with 
changes, the interim rule which amended the Federal Acquisition 
Regulation (FAR) to revise the current SCA exemption and to add an SCA 
exemption for contracts for certain

[[Page 2725]]

additional services that meet specific criteria.

DATES: Effective Date: February 17, 2009.

FOR FURTHER INFORMATION CONTACT: Mr. Ernest Woodson, Procurement 
Analyst, at (202) 501-3775 for clarification of content. For 
information pertaining to status or publication schedules, contact the 
FAR Secretariat at (202) 501-4755. Please cite FAC 2005-30, FAR case 
2001-004.

SUPPLEMENTARY INFORMATION:

A. Background

    The Wage and Hour Division of the U.S. Department of Labor's (DoL) 
Employment Standards Administration, issued a final rule, published in 
the Federal Register at 66 FR 5327, January 18, 2001, amending the 
regulations at 29 CFR part 4 to exempt certain contracts for services 
meeting specific criteria from coverage under the SCA. The Councils 
opened FAR Case 2001-004 to implement the DoL rule.
    The Councils published an interim rule in the Federal Register at 
72 FR 63076 on November 7, 2007. The public comment period closed on 
January 7, 2008. The Councils received comments from 4 commenters (one 
commenter submitted 4 separate responses).
    1. Non-statutory certifications.
    The respondent is concerned about additional non-statutory 
certifications.
    Response: These certifications are imposed by the Secretary of 
Labor as a condition for the Secretary granting the exemptions. The 
certifications are found in DoL regulations at 29 CFR 
4.123(e)(1)(ii)(D) and (e)(2)(ii)(G). The FAR rule implements the DoL 
requirements for certification by the prime contractor with respect to 
compliance with the DoL conditions for exemption from the SCA. The 
certification at FAR 52.222-48 was already required. In accordance with 
FAR 1.107, the Administrator of the Office of Federal Procurement 
Policy approved this non-statutory certification and the new non-
statutory certification at FAR 52.222-52 because these certifications 
provide the basis for determining applicability of the SCA to the 
acquisition. When certain conditions are met, the certifications are 
necessary in order to exempt contracts for maintenance, calibration, or 
repair of certain equipment (FAR 52.222-48) and contracts for certain 
services (FAR 52.222-52) from the application of the SCA. The 
certifications are necessary to encourage broader participation in 
Government procurement by companies doing business in the commercial 
sector, and reinforce the Government's commitment to reduce 
Government--unique terms and conditions, without compromising the 
purpose of the SCA to protect prevailing labor standards. Without the 
certifications from the contractor, the DoL conditions for exemption 
would not be met, and all contractors would be required to comply with 
the SCA and, if the contract exceeds $2,500, the appropriate DoL wage 
determination.
    2. Existing conditions for exemption for contracts for maintenance, 
calibration or repair of certain equipment (22.1003-4(c)(2)). Paragraph 
22.1003-4(c)(2)(i) sets forth the condition that ``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.''
    One respondent questions if this means that the condition can be 
met only if the contractor that sold or traded the equipment is also 
the contractor performing the ``maintenance, calibration, or repair 
services?''
    Response: The respondent's interpretation is correct. This is 
existing FAR text that comes from the DoL rule at 29 CFR 
4.123(e)(1)(ii)(A).
    3. DoL determination after award (22.1003-4(c)(4)(ii)).
    One respondent suggests that the wording at FAR 22.1003-4(c)(4)(ii) 
should be the same as the wording at FAR 22.1003-4(d)(4)(ii).
    Response: Since the FAR at 22.1003-4(c)(4)(ii) and 22.1003-
4(d)(4)(ii) is based on the DoL rule at 29 CFR 4.123(e)(1)(iv) and 29 
CFR 4.123(e)(2)(iii), and there is no discrepancy between these two 
paragraphs in the DoL rule, then they should read the same in the FAR 
rule. The suggested changes have been made to make the FAR paragraphs 
read the same, except that the run-on sentence has been corrected in 
22.1003-4(d)(4)(ii), rather than repeating it in 22.1003-4(c)(4)(ii).
    4. New exemptions for contracts for certain services (22.1003-
4(d)(1)). Paragraph 22.1003-4(d)(1)(i) provides exemption for 
``Automobile or other vehicle (e.g., aircraft) maintenance services 
(other than contracts or subcontracts to operate a Government motor 
pool or similar facility).''
     One respondent wants it indicated with more certainty, 
that aircraft maintenance services are covered.
     One respondent requests a definition of ``maintenance 
services.''
     One respondent wants to know what does ``similar 
facility'' mean? Is a contractor owned and operated facility, such as a 
depot or hangar outfitted for commercial aircraft maintenance and 
repair work a similar facility? The respondent suggests using the 
phrase ``Government facility performing automobile maintenance or 
repair services'' instead of ``Government motor pool or similar 
facility.''
    Response:
     Specifically listing aircraft maintenance services as an 
example provides complete certainty. This specifically reflects the DoL 
regulations at 29 CFR 4.123(e)(2)(i).
     ``Maintenance services'' is a widely used commercial term 
that should not require further definition. Since the FAR is 
implementing the DoL rule, the Councils decided not provide a 
definition that might inadvertently change the intent of the DoL rule.
     The FAR is implementing the DoL rule. The suggested 
rewrite would change the meaning of the DoL rule.
    5. Inconsistencies between wording of new exemptions and existing 
exemptions (22.1003-4(c)(1) and (d)(1)). For example, 22.1003-
4(d)(1)(i) refers only to ``Automobile or other vehicle (e.g., 
aircraft) maintenance services'' as qualifying for the exemption, 
whereas 22.1003-4(d)(1)(iv) refers to ``maintenance, calibration, 
repair, and/or installation ... services for all types of equipment 
where the services are obtained.''
    One respondent recommends making the language consistent by using 
the terms ``maintenance, calibration, repair, and/or installation 
services.''
    Response: The Councils cannot change in the FAR the exemptions 
provided by DoL in its rule (29 CFR 4.123(e)(2)(i)(A) and (D)).
    6. Conditions for new exemptions (22.1003-4(d)(2)).
     One respondent notes the condition in paragraph 22.1003-
4(d)(2)(i) that--
    ``(A) The contract will be awarded on a sole-source basis; or
    (B) 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 in selecting 
the contractor.''
     The respondent requests transparency in this area by 
announcing the relative weighting of all of the source selection 
factors in the Federal Business Opportunities announcement.
    Response: FAR 15.101-1 states that when using a tradeoff process, 
the following apply:
    (1) All evaluation factors and significant subfactors that will 
affect contract award and their relative importance shall be clearly 
stated in the solicitation; and
    (2) The solicitation shall state whether all evaluation factors 
other than cost or price,

[[Page 2726]]

when combined, are significantly more important than, approximately 
equal to, or significantly less important than cost or price.
    It is outside the scope of this case to revise this policy. The 
information provided is sufficient to know whether the combination of 
other factors at least as important as price or cost in selecting the 
contractor.
     One respondent notes the condition in paragraph 22.1003-
4(d)(2)(iv) that ``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.'' This requirement to have the capability of 
tracking the percentage of time each employee spends on Government work 
is a problem for contractors that meet the other criteria.
    Response: This condition is imposed by the DoL rule (29 CFR 
4.123(e)(2)(ii)(D)). The Councils do not have the authority to change 
the conditions imposed by the DoL.
     One respondent notes the additional conditions that apply 
to the new exemptions and recommends their deletion to avoid 
unnecessary confusion and complexity for contractors and contracting 
officers.
    Response: See prior response.
     One respondent considers paragraph 22.1003-4(d)(2)(vi) 
confusing, since it is unclear when an ``advance'' contracting officer 
determination of offeror compliance would be made and whether the 
determination will be a formal determination and finding per FAR 1.701 
or something less. This respondent suggests the following replacement 
language:
    ``The Contracting Officer determines prior to award, but after 
receipt of offers based on the contract requirements, that the 
conditions for a certified exemption in paragraph (d)(2)(ii) through 
(v) can be met by an offeror.''
    Response: This condition is from the DoL rule (29 CFR 
4.123(e)(2)(ii)(F)). In the DoL rule this clearly means before the 
solicitation is issued, because the DoL rule continues on ``If upon 
receipt of offers, the contracting officer finds that he or she did not 
correctly determine ....'' This is implemented through the positive 
statement at 22.1003-4(d)(3)(ii)(B) in combination with the results at 
(d)(3)(iii) if the conditions are not met. The Councils have added 
``before issuing the solicitation'' at (vi) to clarify the FAR rule.
     Paragraph (vii) requires the following:
    ``(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)).''
     One respondent requests clarification of the term 
``substantially all.'' One respondent is concerned about the meaning of 
``substantially all'' other offerors. She runs through several 
scenarios, considering if there are only 2 or 3 offerors, what would 
``substantially all'' mean. She recommends that only the apparently 
successful offeror should have to certify.
    Response: This term was left undefined to provide maximum 
flexibility to contracting officers. The Councils acknowledge the 
respondent's concerns, but the FAR rule must follow the conditions set 
by DoL for use of these new exemptions.
     One respondent questions how far down the supply chain the 
SCA compliance test and certifications must go.
    Response: The flowdown requirement in the clauses at 52.222-52 and 
52.222-54 each require that the contractor must flow down the clause to 
any subcontract for services for which the exemption is being claimed.
     The same respondent also objects to use of the term 
``responsive'' at subparagraph (vii)(B)(2) (also appears at 
subparagraph (d)(3)(ii)(B)(2)). The respondent states that this term is 
a legacy term of art used in the Sealed Bidding process to describe an 
offeror's statement of affirmative compliance with (or lack of 
exception to) all the terms and conditions of a formally advertised 
procurement. The respondent suggest the following:
    ``(2) Considered compliant with the Government's requirements 
(see FAR 15.306(a)).''
    Response: The term ``responsive'' is not just a legacy term from 
Part 14, but is used in many other FAR parts (1, 7, 8, 9, 19, 22, 37, 
and 50) to describe an offer that meets the Government requirements. 
Although the term ``compliant'' is used in many places in the FAR, the 
Councils did not find any example in the FAR of an offer being 
described as ``compliant.''
    7. Contract award or resolicitations (new exemptions) (22.1003-
4(d)(3)). Paragraph (ii)(C) states a condition for award without the 
otherwise applicable SCA clauses is that ``The contracting officer has 
no reason to doubt the certification.''
     One respondent is concerned that there is a lack of 
definition or standard for ``no reason to doubt'' and that it does not 
appear to be in the best interests of the acquisition community to 
allow a decision to cancel a solicitation to hinge on the concept of 
doubt.
    Response: The FAR rule implements the DoL rule. The DoL rule 
requires that ``If the contracting officer or prime contractor has 
reason to doubt the validity of the certification, SCA stipulations 
shall be included in the prime contract or subcontract.'' (29 CFR 
4.123(e)(2)(ii)(G))
     One respondent is concerned that this resolicitation 
process could, in some cases, unduly increase the workload of the 
contracting officer.
    Response: The FAR rule implements the DoL rule and follows the 
conditions set by DoL for use of these new exemptions.
    8. DoL determination (new exemptions) (22.1003-4(d)(4)). One 
respondent states that this paragraph provides for a post-award 
determination of some type by the DoL, not the contracting agency, at 
any time during contract performance. The respondent suggests that 
exemption compliance over time will be challenging, and that the 
interim rule should provide a ``grace period'' in which the prime or 
the subcontractor could remedy any compliance shortfalls.
    Response: The DoL regulations require that when the DoL discovers 
and determines, whether before or subsequent to a contract award, that 
a contracting agency made an erroneous determination that the SCA did 
not apply to a particular procurement and/or failed to include an 
appropriate wage determination in a covered contract, the contracting 
agency, within 30 days of notification by DoL, shall include in the 
contract the stipulations contained in 29 CFR 4.6 and any applicable 
wage determination issued by the DoL Administrator or his authorized 
representative through the exercise of any and all authority that may 
be needed including, where necessary, its authority to negotiate or 
amend, its authority to pay any necessary additional costs, and its 
authority under any contract provision authorizing changes, 
cancellation, and termination. With respect to any contract subject to 
section 10 of the Act, the DoL Administrator may require retroactive 
application of such wage determination (29 CFR 4.5(c)(2)).
    The FAR rule implements the DoL requirements. It is up to DoL 
whether it

[[Page 2727]]

would allow time for correction of a compliance shortfall. The DoL 
regulations do not contemplate such a process.
    9. Exceptions (new exemptions) (FAR 22.1003-4(d)(5)).
    Paragraph (5)(iii) provides that the new exemptions do not apply to 
solicitations and contracts that are subject to section 4(c) of the 
SCA.
    One respondent interprets this to mean that any contract that has 
now or ever contained SCA clauses can never be exempt in future 
contracts from the SCA.
    Response: Section 4(c) of the SCA reads as follows:
    (c) Predecessor contracts; employees' wages and fringe benefits 
No contractor or subcontractor under a contract, which succeeds a 
contract subject to this chapter and under which substantially the 
same services are furnished, shall pay any service employee under 
such contract less than the wages and fringe benefits, including 
accrued wages and fringe benefits, and any prospective increases in 
wages and fringe benefits provided for in a collective-bargaining 
agreement as a result of arm's-length negotiations, to which such 
service employees would have been entitled if they were employed 
under the predecessor contract: Provided, That in any of the 
foregoing circumstances such obligations shall not apply if the 
Secretary finds after a hearing in accordance with regulations 
adopted by the Secretary that such wages and fringe benefits are 
substantially at variance with those which prevail for services of a 
character similar in the locality.
    Section 4(c) is different from the regular wage determination and 
this provision applies to a situation where collective bargaining 
agreement union agreements are involved. Many SCA covered contracts 
involve annual, recurring procurements of the same services. When a 
collective bargaining agreement governs the wage rates and fringe 
benefits of service workers employed to perform work called for by an 
incumbent SCA covered contract, the wage determination to be issued for 
the successor contract must reflect the wage and fringe benefit 
provisions of the predecessor, contractor's collective bargaining 
agreement, including any accrued or prospective increases contained 
therein.
    The successor contractor obligation to comply with the provisions 
of the collective bargaining agreement under Section 4(c) of the SCA 
extend only for the immediate successor contract period of performance. 
Thus, if the predecessor contractor was signatory to a collective 
bargaining agreement, the successor contractor would be required to 
comply with those provisions but would not be required to enter into a 
collective bargaining agreement. At the end of that first period of 
performance, the successor contractor would be subject to a general 
wage determination and Section 4(c) would no longer be in effect.
    10. Incorrect references (22.1003-5 and 22.1003-6).
    Several respondents pointed out that the references at 22.1003-5 
and 22.1003-6 to ``22.1003(c)(1) and (d)(1)(iv)'' should both read 
``22.1003-4(c)(1) and (d)(1)(iv).''
    Response: The Councils concur. The draft final rule has been 
amended.
    11. Prescriptions for use of provisions and clauses (22.1006).
    One respondent had several suggestions to clarify the prescriptions 
for the use of provisions and clauses.
    1. Certification provision 52.222-48 will not be in solicitation if 
ORCA is used, so use of SCA clause in contract can not be tied to 
presence of certification provision in solicitation. The same concern 
applies to 52.222-52, if it is incorporated into ORCA.
    The respondent suggests several solutions for drafting the 
prescriptions.
    Response: The Councils recognize the problem, and have adopted a 
different solution. The FAR drafting conventions prohibit prescribing a 
clause in more than one place, and normally there is a separate 
prescription for each provision or clause.
    There is a widespread problem, extending beyond this single case, 
that there is no indication in FAR 52.204-8 as to which representations 
or certifications are applicable to the particular solicitation. This 
is unlike FAR 52.212-3, which either gives the criteria for 
applicability, or requires that the contracting officer indicate the 
applicability of some of the representations and certifications (e.g., 
FAR 52.212-3(k)). Because it is essential that the contracting officer 
have the ability to indicate the applicability of FAR 52.222-48 or 
52.222-52 to a solicitation, the Councils have agreed to an overall fix 
to the FAR clause at 52.204-8, indicating for each representation or 
certification either its general applicability, if that is sufficient, 
or in more complex cases, requiring the contracting officer to 
specifically indicate if the representation or certification is 
applicable.
    Once this is accomplished, the inclusion of the clauses at FAR 
52.222-51 and 52.222-53 can be tied to either the inclusion of 52.222-
48 or 52.222-52 in the solicitation, or the indication of the 
applicability of the comparable certification in 52.204-8(c)(2) or 
52.212-3(k).
    2. Paragraph 22.1006(a)(2) does not directly contradict FAR 
22.1003-4(c)(3) or (d)(3), but it is not totally consonant. One states 
that the contracting officer includes the SCA clause if the contracting 
officer determines it is appropriate to do so. The other states that 
the SCA clause is excluded, if the contracting officer determines that 
is it appropriate to do so.
    Response: The Councils have revised FAR 22.1006(a)(2) to put it in 
terms of excluding the SCA clause when the contracting officer 
determines that the SCA does not apply, consistent with DoL regulations 
and other parts of the rule.
    3. Reference at FAR 22.1003-4(d)(3)(iii) should be 22.1006(e)(3) 
not (e)(4).
    Response: The Councils have made the correction.
    4. Language at FAR 22.1006(e)(1) prescribing the use of 52.222-48 
is unclear and at (e)(3), prescribing the use of 52.222-52 is unclear. 
One respondent interprets it as potentially applying to all contracts 
that contain the SCA clause, not just the targeted services.
    Response: The phrase ``but the contract may be exempt from the 
Service Contract Act in accordance with 22.1003-4(c) `or (d)''' was 
intended to target the specific services. If this is not sufficiently 
clear, the Councils have made the following revision. The use of 
``and'' instead of ``but'' makes it clear that both conditions must be 
met.''
    ``(e)(1) The contracting officer shall insert the provision at 
52.222-48, Exemption from Application of the Service Contract Act to 
Contracts for Maintenance, Calibration, or Repair of Certain 
Equipment--Certification, in solicitations that include the clause 
at 52.222-41, Service Contract Act of 1965 and the contract may be 
exempt from the Service Contract Act in accordance with 22.1003-
4(c).''
* * * * *
    (3) The contracting officer shall insert the provision at 
52.222-52, Exemption from Application of the Service Contract Act to 
Contracts for Certain Services--Certification, in solicitations that 
include the clause at 52.222-41, Service Contract Act of 1965 and 
the contract may be exempt from the Service Contract Act in 
accordance with 22.1003-4(d).''
    12. Provisions and clauses:
    a. FAR 52.212-3, 52.222-48, 52.222-51, and 52.222-53. ``Or 
subcontractor in the case of an exempt subcontract.''
    One respondent requests that the language that is included 
parenthetically in paragraph (a)(1) of the provisions at FAR 52.222-52, 
also be included in the provisions at 52.212-3(k)(1)(i) and 52.222-
48(a)(1) as well as the clauses at 52.222-51(a) and 52.222-53(a).
    Response: The Councils concur with inclusion of the phrase in the

[[Page 2728]]

provisions, because it is possible that a subcontractor may be exempt, 
and the term ``offeror'' does not include ``subcontractor.''
    However, the Councils do not agree with inclusion of the 
parenthetical phrase in the clauses, because FAR 22.1001 defines 
``contractor'' to include a subcontractor at any tier whose subcontract 
is subject to the provisions of the Act.
    b. FAR 52.212-5, correction of paragraph reference.
    One respondent points out the oversight to revise the paragraph 
reference in paragraph (e)(1) of the FAR clause 52.212-5.
    Response: The Councils have made the correction.
    c. FAR 52.222-53, order of paragraphs.
    One respondent recommends reversal of paragraphs FAR 52.222-
53(e)(1) and (e)(2) in order to put the more likely situation first--
i.e., award on the basis of other factors in addition to cost or price 
and that cost or price is of equal or lesser importance than the other 
factors. Further, the same respondent states that there is one 
particular type of service that allows award only on a sole source 
basis (FAR 22.1003-4(d)(1)(iv)- Maintenance, calibration, repair, and/
or installation (where the installation is not subject to the Davis-
Bacon Act, 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. Therefore, the respondent recommends that FAR paragraph 52.222-
53(e)(2) address only this type of services.
    Response: The Councils concur with the reversal of the paragraphs. 
However, the Councils do not agree that the new paragraph (e)(2) should 
address only the service at FAR 22.1003-4(d)(1)(iv). The DoL criteria 
allow any of the subcontract services to be purchased on a sole source 
basis (29 CFR 4.123((e)(2)(ii)(B)), not just the maintenance, etc. 
services that must be purchased sole source. Therefore the Councils 
have revised the subject paragraphs as follows:
    ``(e)(1) Except for services identified in FAR 22.1003-
4(d)(1)(iv), the subcontractor for exempt services shall 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
    (2) A subcontract for exempt services shall be awarded on a sole 
source basis.''
    13. FAR Matrix.
    One respondent identified that the FAR matrix incorrectly referred 
to FAR 52.222-48 as a clause and states that it will go in section I. 
Although the matrix correctly identifies 52.222-52 as a provision, it 
incorrectly states that it will go in Section I. The same commenter 
also objects that these provisions should not be incorporated by 
reference because it requires a fill-in.
    Response: Partially Concur. FAR 52.222-48 and 52.222-52 are 
provisions and belong in Section K. The FAR Matrix will be revised. The 
Councils disagree that a provision requiring a fill-in should not be 
incorporated by reference. See FAR 52.104(d).
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to 
this final rule. The Councils prepared a Final Regulatory Flexibility 
Analysis (FRFA) that is summarized as follows:
    This rule finalizes an interim rule with changes, to amend the 
Federal Acquisition Regulation to implement Department of Labor 
(DoL) regulation 29 CFR 4.123, Administrative limitations, variance, 
tolerances, and exemptions. Paragraph (e) of that regulations 
provides exemption for contracts for certain services that meet 
specific criteria.
    The objective of the DoL final rule was to be more commercial-
like, encourage broader participation in Government procurement by 
companies doing business in the commercial sector, and reinforce our 
commitment to reduce Government-unique terms and conditions, without 
compromising the purpose of the SCA to protect prevailing labor 
standards.
    This final rule will have a positive economic impact on the 
small contractors and subcontractors that meet the exemption 
criteria to be exempt from the SCA for certain services, because it 
may provide additional opportunities for work on Federal projects; 
enable these contractors to compete in a more commercial-like 
environment, and alleviate the burden of complying with Government-
unique terms and conditions for these types of contracts.
    Pursuant to Section (4)(b) of the SCA, the Secretary of Labor 
may grant reasonable exemptions to the provisions of the SCA, but 
only in special circumstances where the exemption is necessary and 
proper in the public interest, and is in accord with the remedial 
purposes of the Act to protect prevailing labor standards.
    There were no comments in response to the initial regulatory 
flexibility analysis.
    This final rule will apply to all large and small entities that 
seek award of Federal service contracts in the service categories 
identified. The Councils relied on the DoL regulatory flexibility 
analysis (66 FR 5339), which determined that a majority of contracts 
affected by the proposed exemption would likely be performed by 
small businesses. FPDS does not provide an accurate estimate of the 
contracts potentially covered by the exemption, but DoL estimates 
that the total value of the exempt contracts could be relatively 
small, and that the SCA would no longer apply to only a relatively 
small number of contracts that currently contain SCA wage 
determination provisions.
    The rule imposes no reporting, recordkeeping, or other 
information collection requirements that require the approval of the 
Office of Management and Budget under 44 U.S.C. 3501, et seq. This 
rule implements the Department of Labor Rule (66 FR 5327), which 
stated in the preamble that the DoL rule contained no reporting or 
recordkeeping requirements subject to the Paperwork Reduction Act of 
1980 (Pub. L. 96-511). The DoL preamble stated further, that 
although offerors are required to certify that the criteria for 
exemption are met, the certifications can be submitted as part of 
the bid process and offerors are not required to maintain records to 
support the certification.
    There are no practical alternatives that will accomplish the 
objectives of this rule. However, the exemption is expected to have 
a positive impact on small entities, because it does not contain any 
new reporting or recordkeeping or other compliance requirements 
applicable to small business. Rather, the exemption would relieve 
small businesses and other contractors from the requirements of the 
SCA on certain contracts.
    Interested parties may obtain a copy of the FRFA from the FAR 
Secretariat. The FAR Secretariat has submitted a copy of the FRFA to 
the Chief Counsel for Advocacy of the Small Business Administration.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 104-13) does not apply because 
the final rule does not impose or remove information collection 
requirements that require the approval of the Office of Management and 
Budget under 44 U.S.C. 3501, et seq. This final rule implements the DoL 
rule published in the Federal Register at 66 FR 5327, January 18, 2001, 
which stated in the preamble that the DoL rule contained no reporting 
or recordkeeping requirements subject to the Paperwork Reduction Act of 
1980 (Pub. L. 96-511). The DoL preamble stated further, that although 
offerors are required to certify that the criteria for exemption are 
met, the certifications can be submitted as part of the bid process and 
offerors are not required to maintain records to support the 
certification.

List of Subjects in 48 CFR Parts 4, 15, 17, 22, and 52

    Government procurement.


[[Page 2729]]


    Dated: December 24, 2008.
Edward Loeb,
Acting Director, Office of Acquisition Policy.

Interim Rule Adopted as Final With Changes

0
Accordingly, the interim rule amending 48 CFR parts 4, 15, 17, 22, and 
52 which was published in the Federal Register at 72 FR 63076 on 
November 7, 2007, is adopted as a final rule with the following 
changes:
0
1. The authority citation for 48 CFR parts 4, 15, 22, and 52 continues 
to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 4--ADMINISTRATIVE MATTERS


4.1201  [Amended]

0
2. Amend section 4.1201 in paragraph (c) by removing ``52.204-8(c)'' 
and adding ``52.204-8(d)'' in its place.

0
3. Amend section 4.1202 by--
0
a. Revising the introductory text;
0
b. Redesignating paragraphs (r) through (bb) as (s) through (cc) 
respectively; and
0
c. Adding new paragraph (r).
    The revised and added text reads as follows:


4.1202  Solicitation provision and contract clause.

    Except for commercial item solicitations issued under FAR Part 12, 
insert in solicitations the provision at 52.204-8, Annual 
Representations and Certifications. The contracting officer shall check 
the applicable provisions at 52.204-8(c)(2). When the clause at 52.204-
7, Central Contractor Registration, is included in the solicitation, do 
not include the following representations and certifications:
* * * * *
    (r) 52.222-52, Exemption from Application of the Service Contract 
Act to Contracts for Certain Services--Certification.
* * * * *

PART 15--CONTRACTING BY NEGOTIATION


15.102  [Amended]

0
4. Amend section 15.102 in paragraph (b) by removing ``52.204-8(c)'' 
and adding ``52.204-8(d)'' in its place.

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITION

0
5. Amend section 22.1003-4 by--
0
a. Removing from paragraph (c)(3)(iii) ``22.1006(a)(2)'' and adding 
``22.1006(a)'' in its place;
0
b. Revising paragraph (c)(4)(ii);
0
c. Revising paragraph (d)(2)(i) and revising the first sentence in 
paragraph (d)(2)(vi);
0
d. Removing from paragraph (d)(3)(i) ``22.1006(a)(2)'' and adding 
``22.1006'' in its place, and revising paragraph (d)(3)(iii); and
0
e. Revising paragraph (d)(4)(ii).
0
The revised text reads as follows:


22.1003-4  Administrative limitations, variations, tolerances, and 
exemptions.

* * * * *
    (c) * * *
    (4) * * *
    (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 Act, effective as of the date of the subcontract award.
    (d) * * *
    (2) * * *
    (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.
* * * * *
    (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. 
* * *
* * * * *
    (3) * * *
    (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 Act 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) * * *
    (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 Act, effective as of the date of the subcontract award.
* * * * *


22.1003-5  [Amended]

0
6. Amend section 22.1003-5 in paragraph (k) by removing 
``22.1003(c)(1)'' and adding ``22.1003-4(c)(1)'' in its place.


22.1003-6  [Amended]

0
7. Amend section 22.1003-6 in paragraph (b)(2) by removing 
``22.1003(c)(1)'' and adding ``22.1003-4(c)(1)'' in its place.

0
8. Amend section 22.1006 by revising paragraphs (a) and (e) to read as 
follows:


22.1006  Solicitation provisions and contract clauses.

    (a)(1) The contracting officer shall insert the clause at 52.222-
41, Service Contract Act of 1965, in solicitations and contracts 
(except as provided in paragraph (a)(2) of this section) if the 
contract is subject to the Act and is--
    (i) Over $2,500; or
    (ii) For an indefinite dollar amount and the contracting officer 
does not know in advance that the contract amount will be $2,500 or 
less.
    (2) The contracting officer shall not insert the clause at 52.222-
41 (or any of the associated Service Contract Act clauses as prescribed 
in this section for possible use when 52.222-41 applies) in the 
resultant contract if--
    (i) The solicitation includes the provision at--
    (A) 52.222-48, Exemption from Application of the Service Contract 
Act to Contracts for Maintenance, Calibration, or Repair of Certain 
Equipment--Certification;
    (B) 52.222-52, Exemption from Application of the Service Contract 
Act to Contracts for Certain Services--Certification; or
    (C) Either of the comparable certifications is checked as 
applicable in the provision at 52.204-8(c)(2)(v) or (vi) or 52.212-
3(k); and
    (ii) The contracting officer has made the determination, in 
accordance with paragraphs (c)(3) or (d)(3) of subsection 22.1003-4, 
that the Service Contract Act does not apply to the contract. (In such 
case, insert the clause at 52.222-51, Exemption from Application of the 
Service Contract Act to Contracts for Maintenance, Calibration, or 
Repair of Certain Equipment--Requirements, or 52.222-53, Exemption from 
Application of the Service Contract Act to Contracts for Certain 
Services--Requirements, in

[[Page 2730]]

the contract, in accordance with the prescription at paragraph 
(e)(2)(ii) or (e)(4)(ii) of this subsection).
* * * * *
    (e)(1) The contracting officer shall insert the provision at 
52.222-48, Exemption from Application of the Service Contract Act to 
Contracts for Maintenance, Calibration, or Repair of Certain 
Equipment--Certification, in solicitations that--
    (i) Include the clause at 52.222-41, Service Contract Act of 1965; 
and
    (ii) The contract may be exempt from the Service Contract Act in 
accordance with 22.1003-4(c).
    (2) The contracting officer shall insert the clause at 52.222-51, 
Exemption from Application of the Service Contract Act to Contracts for 
Maintenance, Calibration, or Repair of Certain Equipment--
Requirements--
    (i) In solicitations that include the provision at 52.222-48, or 
the comparable provision is checked as applicable in the clause at 
52.204-8(c)(2)(v) or 52.212-3(k)(1); and
    (ii) In resulting contracts in which the contracting officer has 
determined, in accordance with 22.1003-4(c)(3), that the Service 
Contract Act does not apply.
    (3)(i) Except as provided in paragraph (e)(3)(ii) of this section, 
the contracting officer shall insert the provision at 52.222-52, 
Exemption from Application of the Service Contract Act to Contracts for 
Certain Services--Certification, in solicitations that--
    (A) Include the clause at 52.222-41, Service Contract Act of 1965; 
and
    (B) The contract may be exempt from the Service Contract Act in 
accordance with 22.1003-4(d).
    (ii) When resoliciting in accordance with 22.1003-4(d)(3)(iii), 
amend the solicitation by removing the provision at 52.222-52 from the 
solicitation.
    (4) The contracting officer shall insert the clause at 52.222-53, 
Exemption from Application of the Service Contract Act to Contracts for 
Certain Services--Requirements--
    (i) In solicitations that include the provision at 52.222-52, or 
the comparable provision is checked as applicable in 52.204-8(c)(2)(vi) 
or 52.212-3(k)(2); and
    (ii) In resulting contracts in which the contracting officer has 
determined, in accordance with 22.1003-4(d)(3), that the Service 
Contract Act does not apply.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
9. Amend section 52.204-8 by--
0
a. Revising the date of the provision;
0
b. Removing from paragraphs (b)(1) and (b)(2) ``paragraph (c)'' 
wherever it occurs, and adding ``paragraph (d)'' (four times) in its 
place; and
0
c. Redesignating paragraph (c) as paragraph (d), adding new paragraph 
(c), and revising the second sentence in newly designated paragraph 
(d).
0
The revised and added text reads as follows:


52.204-8  Annual Representations and Certifications.

* * * * *
    ANNUAL REPRESENTATIONS AND CERTIFICATIONS (FEB 2009)

* * * * *
    (c)(1) The following representations or certifications in ORCA 
are applicable to this solicitation as indicated:
    (i) 52.203-2, Certificate of Independent Price Determination. 
This provision applies to solicitations when a firm-fixed-price 
contract or fixed-price contract with economic price adjustment is 
contemplated, unless--
    (A) The acquisition is to be made under the simplified 
acquisition procedures in Part 13;
    (B) The solicitation is a request for technical proposals under 
two-step sealed bidding procedures; or
    (C) The solicitation is for utility services for which rates are 
set by law or regulation.
    (ii) 52.203-11, Certification and Disclosure Regarding Payments 
to Influence Certain Federal Transactions. This provision applies to 
solicitations expected to exceed $100,000.
    (iii) 52.204-3, Taxpayer Identification. This provision applies 
to solicitations that do not include the clause at 52.204-7, Central 
Contractor Registration.
    (iv) 52.204-5, Women-Owned Business (Other Than Small Business). 
This provision applies to solicitations that--
    (A) Are not set aside for small business concerns;
    (B) Exceed the simplified acquisition threshold; and
    (C) Are for contracts that will be performed in the United 
States or its outlying areas.
    (v) 52.209-5, Certification Regarding Responsibility Matters. 
This provision applies to solicitations where the contract value is 
expected to exceed the simplified acquisition threshold.
    (vi) 52.214-14, Place of Performance--Sealed Bidding. This 
provision applies to invitations for bids except those in which the 
place of performance is specified by the Government.
    (vii) 52.215-6, Place of Performance. This provision applies to 
solicitations unless the place of performance is specified by the 
Government.
    (viii) 52.219-1, Small Business Program Representations (Basic & 
Alternate I). This provision applies to solicitations when the 
contract will be performed in the United States or its outlying 
areas.
    (A) The basic provision applies when the solicitations are 
issued by other than DoD, NASA, and the Coast Guard.
    (B) The provision with its Alternate I applies to solicitations 
issued by DoD, NASA, or the Coast Guard.
    (ix) 52.219-2, Equal Low Bids. This provision applies to 
solicitations when contracting by sealed bidding and the contract 
will be performed in the United States or its outlying areas.
    (x) 52.222-22, Previous Contracts and Compliance Reports. This 
provision applies to solicitations that include the clause at 
52.222-26, Equal Opportunity.
    (xi) 52.222-25, Affirmative Action Compliance. This provision 
applies to solicitations, other than those for construction, when 
the solicitation includes the clause at 52.222-26, Equal 
Opportunity.
    (xii) 52.222-38, Compliance with Veterans' Employment Reporting 
Requirements. This provision applies to solicitations when it is 
anticipated the contract award will exceed the simplified 
acquisition threshold and the contract is not for acquisition of 
commercial items.
    (xiii) 52.223-1, Biobased Product Certification. This provision 
applies to solicitations that require the delivery or specify the 
use of USDA-designated items; or include the clause at 52.223-2, 
Affirmative Procurement of Biobased Products Under Service and 
Construction Contracts.
    (xiv) 52.223-4, Recovered Material Certification. This provision 
applies to solicitations that are for, or specify the use of, EPA-
designated items.
    (xv) 52.225-2, Buy American Act Certificate. This provision 
applies to solicitations containing the clause at 52.225-1.
    (xvi) 52.225-4, Buy American Act--Free Trade Agreements--Israeli 
Trade Act Certificate. (Basic, Alternate I, and Alternate II) This 
provision applies to solicitations containing the clause at 52.225-
3.
    (A) If the acquisition value is less than $25,000, the basic 
provision applies.
    (B) If the acquisition value is $25,000 or more but is less than 
$50,000, the provision with its Alternate I applies.
    (C) If the acquisition value is $50,000 or more but is less than 
$67,826, the provision with its Alternate II applies.
    (xvii) 52.225-6, Trade Agreements Certificate. This provision 
applies to solicitations containing the clause at 52.225-5.
    (xviii) 52.225-20, Prohibition on Conducting Restricted Business 
Operations in Sudan--Certification.
    (xix) 52.226-2, Historically Black College or University and 
Minority Institution Representation. This provision applies to--
    (A) Solicitations for research, studies, supplies, or services 
of the type normally acquired from higher educational institutions; 
and
    (B) For DoD, NASA, and Coast Guard acquisitions, solicitations 
that contain the clause at 52.219-23, Notice of Price Evaluation 
Adjustment for Small Disadvantaged Business Concerns.
    (2) The following certifications are applicable as indicated by 
the Contracting Officer:
    [Contracting Officer check as appropriate.]
    ----(i) 52.219-19, Small Business Concern Representation for the 
Small Business Competitiveness Demonstration Program.
    ------(ii) 52.219-21, Small Business Size Representation for 
Targeted Industry Categories Under the Small Business 
Competitiveness Demonstration Program.

[[Page 2731]]

    ------(iii) 52.219-22, Small Disadvantaged Business Status.
    ------(A) Basic.
    ------(B) Alternate I.
    ------(iv) 52.222-18, Certification Regarding Knowledge of Child 
Labor for Listed End Products.
    ------(v) 52.222-48, Exemption from Application of the Service 
Contract Act to Contracts for Maintenance, Calibration, or Repair of 
Certain Equipment Certification.
    ------(vi) 52.222-52 Exemption from Application of the Service 
Contract Act to Contracts for Certain Services--Certification.
    ------(vii) 52.223-9, with its Alternate I, Estimate of 
Percentage of Recovered Material Content for EPA-Designated Products 
(Alternate I only).
    ------(viii) 52.223-13, Certification of Toxic Chemical Release 
Reporting.
    ------(ix) 52.227-6, Royalty Information.
    ------ (A) Basic.
    ------ (B) Alternate I.
    ------(x) 52.227-15, Representation of Limited Rights Data and 
Restricted Computer Software.
    (d) * * * After reviewing the ORCA database information, the 
offeror verifies by submission of the offer that the representations 
and certifications currently posted electronically that apply to 
this solicitation as indicated in paragraph (c) of this provision 
have been entered or updated within the last 12 months, are current, 
accurate, complete, and applicable to this solicitation (including 
the business size standard applicable to the NAICS code referenced 
for this solicitation), as of the date of this offer and are 
incorporated in this offer by reference (see FAR 4.1201); except for 
the changes identified below [offeror to insert changes, identifying 
change by clause number, title, date]. * * *
* * * * *

    [End of provision]

0
10. Amend section 52.212-3 by revising the date of the provision and 
paragraph (k)(1)(i) to read as follows:


52.212-3  Offeror Representations and Certifications--Commercial Items.

* * * * *
    OFFEROR REPRESENTATIONS AND CERTIFICATIONS--COMMERCIAL ITEMS (FEB 
2009)

* * * * *
    (k) * * *
    [ ](1) * * *
    (i) The items of equipment to be serviced under this contract 
are used regularly for other than Governmental purposes and are sold 
or traded by the offeror (or subcontractor in the case of an exempt 
subcontract) in substantial quantities to the general public in the 
course of normal business operations;
* * * * *

    [End of provision]

0
11. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Revising paragraph (c)(6);
0
c. Removing from paragraph (e)(1) ``in paragraphs (e)(1)(i) through 
(xi) of this paragraph'' and adding ``in this paragraph (e)(1)'' in its 
place; and
0
d. Revising paragraph (e)(1)(x).
0
The revised text reads as follows:


52.212-5  Contract Terms and Conditions Required to Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *
    CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR 
EXECUTIVE ORDERS--COMMERCIAL ITEMS (FEB 2009)

* * * * *
    (C) * * *
    (6) 52.222-53, Exemption from Application of the Service 
Contract Act to Contracts for Certain Services--Requirements (FEB 
2009) (41 U.S.C. 351, et seq.).
* * * * *
    (e)(1) * * *
    (x) 52.222-53, Exemption from Application of the Service 
Contract Act to Contracts for Certain Services-Requirements (FEB 
2009)(41 U.S.C. 351, et seq.).
* * * * *

    [End of clause]

0
12. Amend section 52.222-48 by revising the date of the provision and 
paragraph (a)(1) to read as follows:


52.222-48  Exemption from Application of the Service Contract Act to 
Contracts for Maintenance, Calibration, or Repair of Certain Equipment 
Certification.

* * * * *
    EXEMPTION FROM APPLICATION OF THE SERVICE CONTRACT ACT TO CONTRACTS 
FOR MAINTENANCE, CALIBRATION, OR REPAIR OF CERTAIN EQUIPMENT 
CERTIFICATION (FEB 2009)

* * * * *
    (a) * * *
    (1) The items of equipment to be serviced under this contract 
are used regularly for other than Government purposes, and are sold 
or traded by the offeror (or subcontractor in the case of an exempt 
subcontractor) in substantial quantities to the general public in 
the course of normal business operations;
* * * * *

    [End of provision]

0
13. Amend section 52.222-53 by revising the date of the clause and 
paragraph (e) to read as follows:


52.222-53  Exemption from Application of the Service Contract Act to 
Contracts for Certain Services--Requirements.

* * * * *
    EXEMPTION FROM APPLICATION OF THE SERVICE CONTRACT ACT TO CONTRACTS 
FOR CERTAIN SERVICES-- REQUIREMENTS (FEB 2009)

* * * * *
    (e)(1) Except for services identified in FAR 22.1003-
4(d)(1)(iv), the subcontractor for exempt services shall 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
    (2) A subcontract for exempt services shall be awarded on a sole 
source basis.
* * * * *

    [End of clause]
[FR Doc. E9-532 Filed 1-14-09; 8:45 am]
BILLING CODE 6820-EP-S