Overview
This section outlines the policies and procedures for maintaining neutral and effective relations between the Government, industry, and labor to ensure the timely acquisition of supplies and services. It emphasizes agency impartiality during labor disputes while providing a framework for managing contract delays, cost allowability, and the protection of Government property during work stoppages.
Key Rules
- Government Impartiality: Agencies must remain neutral in labor-management disputes and are prohibited from mediating or arbitrating such conflicts; parties should be directed to the NLRB or Federal Mediation and Conciliation Service.
- Contractor Accountability: While strikes may be considered excusable delays, contractors are held accountable for "reasonably avoidable" delays and must demonstrate diligence in attempting to resolve the strike (e.g., filing NLRB charges or using private mediation).
- Cost Allowability: Labor costs resulting from labor-management agreements are not allowable if they are deemed unreasonable. During strikes, specific costs (like security or legal fees) must be carefully examined to ensure they are necessary and in the Government's essential interest.
- Mandatory Reporting: Contract administration offices must report labor disputes that may interfere with performance. If the clause at 52.222-1 is present, the contractor is contractually required to notify the Government of actual or potential disputes.
- Removal of Items: If critical for agency programs, the Government may remove items from a facility affected by a work stoppage, provided they coordinate with both management and union representatives to avoid the appearance of force or interference in the dispute.
- Continued Inspection: Government inspectors must continue their functions at a contractor’s plant during a strike as long as their safety is not endangered.
Practical Implications
- Performance Management: Contractors cannot use a strike as an automatic "get out of jail free" card for delays; they must document proactive steps taken to settle the dispute to qualify for an excusable delay.
- Financial Scrutiny: Contracting Officers will subject cost-reimbursement contracts to heightened scrutiny during labor unrest, as the Government will not subsidize unreasonable labor settlements or inefficient production costs caused by work stoppages.
- Risk Mitigation: For critical programs, the Government maintains the right to seize essential components or equipment from a striking plant, requiring contractors to maintain clear inventory and access procedures.