Wage determinations based on collective bargaining agreements
Successor contractors on service contracts over $2,500 must pay at least the wages and benefits in the predecessor’s collective bargaining agreement unless specific exceptions apply.
Overview
FAR 22.1002-3 establishes that successor contractors performing service contracts over $2,500 in the same locality must pay wages and fringe benefits at least equal to those in any bona fide collective bargaining agreement (CBA) from the predecessor contract. This requirement is automatic and applies regardless of whether the CBA terms are incorporated into the new contract. However, exceptions exist if the Secretary of Labor determines, after a hearing, that the CBA wages and benefits are substantially at variance with local prevailing rates or were not the result of arm’s length negotiations. The section also references related FAR provisions that address notification requirements, timing of CBA receipt, and procedures for challenging the application of a CBA based on wage variance or negotiation concerns.
Key Rules
- Successor Contractor Wage Requirements
- Successor contractors must pay at least the wages and fringe benefits specified in the predecessor’s CBA for similar services in the same locality.
- Automatic Application
- The requirement is self-executing and does not depend on explicit contract language.
- Exceptions to Application
- The requirement does not apply if the Secretary of Labor finds the CBA wages are substantially at variance with prevailing rates or not the result of arm’s length bargaining.
- Related Provisions
- References to other FAR sections provide further guidance on notification, timing, and challenges to CBA application.
Responsibilities
- Contracting Officers: Ensure successor contractors are aware of wage requirements and monitor for compliance; follow notification and challenge procedures as outlined in related FAR sections.
- Contractors: Pay required wages and benefits per the predecessor’s CBA unless an exception applies; maintain documentation of compliance.
- Agencies: Oversee compliance and facilitate hearings or challenges as necessary.
Practical Implications
- This regulation ensures wage and benefit continuity for service employees when contracts change hands, reducing the risk of wage undercutting. Contractors must be diligent in reviewing predecessor CBAs and understanding when exceptions may apply. Failure to comply can result in labor violations and contract disputes.