Overview
This section prescribes the specific clauses and provisions that contracting officers must include in solicitations and contracts governed by the Service Contract Labor Standards (SCLS) statute. It defines the thresholds and conditions for implementing labor standards, price adjustment mechanisms, and exemptions for specific categories of services.
Key Rules
- Mandatory SCLS Clause: The contracting officer (CO) must insert FAR 52.222-41 in contracts over $2,500 (or indefinite amounts likely to exceed $2,500) unless a specific exemption applies.
- Price Adjustment Mechanisms:
- FAR 52.222-43: Required for fixed-price, time-and-materials, or labor-hour contracts that are multi-year or have options and exceed the Simplified Acquisition Threshold (SAT). It allows for price adjustments based on new wage determinations.
- FAR 52.222-44: Required for similar contracts that are not multi-year and do not have options, provided they exceed the SAT.
- Adjustment Limits: Price adjustments are strictly limited to the actual increase or decrease in wages and fringe benefits required to comply with new wage determinations; they do not cover discretionary contractor raises above the minimum required.
- Exemption Procedures: If a contract may be exempt (e.g., maintenance of certain equipment or specific commercial services), the CO must include certification provisions (52.222-48 or 52.222-52). If the exemption is validated, the CO replaces the standard SCLS clause with the corresponding "Requirements" clause (52.222-51 or 52.222-53).
- Federal Equivalent Rates: FAR 52.222-42 must be included in contracts over $2,500 to notify contractors of the wages the government would pay if the work were performed by federal employees.
Practical Implications
- Compliance Monitoring: Contractors must monitor "Anniversary Date" or option exercise wage determination updates, as the SCLS clause triggers mandatory minimum wage and benefit obligations that can fluctuate over the life of the contract.
- Strict Pricing Calculations: During price adjustment requests, contractors can only claim the delta between the old wage determination and the new one; they cannot include additional overhead, G&A, or profit on top of the wage increase.
- Certification Risk: If a contractor certifies an exemption (e.g., for certain commercial services) but the CO determines the SCLS statute applies, the contractor must comply with the full labor standards and wage determinations of 52.222-41.