22.1008-2 Successorship with incumbent contractor collective bargaining agreement
Source: FAR 22.1008-2 on acquisition.gov
Successor contractors must honor predecessor collective bargaining agreement wage rates for service employees unless specific exceptions apply, ensuring continuity of labor standards during contract transitions.
Overview
FAR 22.1008-2 outlines the procedures and requirements for successor contractors when the incumbent contractor has a collective bargaining agreement (CBA) covering service employees under the Service Contract Labor Standards statute (formerly the Service Contract Act). The regulation ensures wage and fringe benefit protections for service employees when a new contractor takes over a contract, provided certain conditions are met. It details when the successor must honor the predecessor’s CBA wage rates, exceptions to this rule, and the process for obtaining and incorporating wage determinations into the new contract. The section also addresses how to handle situations where CBAs do not cover all employees or all locations, and what to do if there are concerns about the validity of the CBA wage rates.
Key Rules
- Applicability of 41 U.S.C. 6707(c)
- Successor contractors must pay wages and benefits at least equal to those in the predecessor’s CBA if the services and locality remain the same and the CBA covers the relevant employees.
- Exceptions and Limitations
- The rule does not apply if the CBA is newly effective after contract expiration, or if the agency is not notified in time to inform bidders/awardees. DOL may also exempt contracts if CBA rates are not prevailing or not negotiated at arm’s length.
- Obtaining and Using CBAs
- Contracting officers must obtain the CBA and use it to prepare wage determinations, referencing the CBA in the new contract. If not all employees or locations are covered, separate wage determinations must be obtained for uncovered groups.
Responsibilities
- Contracting Officers: Must determine applicability, obtain and review CBAs, prepare and incorporate wage determinations, notify parties, and consult labor advisors as needed.
- Contractors: Must provide CBAs to the contracting officer and comply with wage and benefit requirements.
- Agencies: Oversee compliance, consult with DOL, and ensure proper wage determinations are used.
Practical Implications
- This section protects service employees’ wages and benefits during contract transitions and ensures continuity of labor standards. Contractors must be diligent in providing CBAs and understanding when CBA wage rates apply. Failure to comply can result in wage violations or contract disputes. Timely communication and documentation are critical to avoid exceptions that could impact wage determinations.
(a) Early in the acquisition cycle, the contracting officer shall determine whether http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section6707(c)&num=0&edition=prelim" target="_blank">41 U.S.C. 6707(c) affects the new acquisition. The contracting officer shall determine whether there is a predecessor contract covered by the Service Contract Labor Standards statute and, if so, whether the incumbent prime contractor or its subcontractors and any of their employees have a collective bargaining agreement.
(b) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section6707(c)&num=0&edition=prelim" target="_blank">41 U.S.C. 6707(c) provides that a successor contractor must pay wages and fringe benefits (including accrued wages and benefits and prospective increases) to service employees at least equal to those agreed upon by a predecessor contractor under the following conditions:
(1) The services to be furnished under the proposed contract will be substantially the same as services being furnished by an incumbent contractor whose contract the proposed contract will succeed.
(2) The services will be performed in the same locality.
(3) The incumbent prime contractor or subcontractor is furnishing such services through the use of service employees whose wages and fringe benefits are the subject of one or more collective bargaining agreements.
(c) The application of http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section6707(c)&num=0&edition=prelim" target="_blank">41 U.S.C. 6707(c) is subject to the following limitations:
(1) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section6707(c)&num=0&edition=prelim" target="_blank">41 U.S.C. 6707(c) will not apply if the incumbent contractor enters into a collective bargaining agreement for the first time and the agreement does not become effective until after the expiration of the incumbent’s contract.
(2) If the incumbent contractor enters into a new or revised collective bargaining agreement during the period of the incumbent’s performance on the current contract, the terms of the new or revised agreement shall not be effective for the purposes of http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section6707(c)&num=0&edition=prelim" target="_blank">41 U.S.C. 6707(c) under the following conditions:
(i)
(A) In sealed bidding, the contracting agency receives notice of the terms of the collective bargaining agreement less than 10 days before bid opening and finds that there is not reasonable time still available to notify bidders (see 22.1012-2(a)); or
(B) For contractual actions other than sealed bidding, the contracting agency receives notice of the terms of the collective bargaining agreement after award, provided that the start of performance is within 30 days of award (see 22.1012-2(b)); and
(ii) The contracting officer has given both the incumbent contractor and its employees’ collective bargaining agent timely written notification of the applicable acquisition dates (see 22.1010).
(d)
(1) If http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section6707(c)&num=0&edition=prelim" target="_blank">41 U.S.C. 6707(c) applies, the contracting officer shall obtain a copy of any collective bargaining agreement between an incumbent contractor or subcontractor and its employees. Obtaining a copy of an incumbent contractor’s collective bargaining agreement may involve coordination with the administrative contracting officer responsible for administering the predecessor contract. (Paragraph (m) of the clause at 52.222-41, Service Contract Labor Standards, requires the incumbent prime contractor to furnish the contracting officer a copy of each collective bargaining agreement.)
(2) If the contracting officer has timely received the collective bargaining agreement, the contracting officer may use the Wage Determinations at SAM.gov website to prepare a wage determination referencing the agreement and incorporate that wage determination, attached to a complete copy of the collective bargaining agreement, into the successor contract action. In using the Wage Determinations at SAM.gov process, it is not necessary to submit a copy of the collective bargaining agreement to the Department of Labor unless requested to do so.
(3) The contracting officer may also use the e98 process on Wage Determinations at SAM.gov to request that the Department of Labor prepare the cover wage determination. The Department of Labor’s response to the e98 may include a request for the contracting officer to submit a complete copy of the collective bargaining agreement. Any questions regarding the applicability of the Service Contract Labor Standards statute to a collective bargaining agreement should be directed to the agency labor advisor.
(e)
(1) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section6707(c)&num=0&edition=prelim" target="_blank">41 U.S.C. 6707(c) will not apply if the Secretary of Labor determines (i) after a hearing, that the wages and fringe benefits in the predecessor contractor’s collective bargaining agreement are substantially at variance with those which prevail for services of a similar character in the locality, or (ii) that the wages and fringe benefits in the predecessor contractor’s collective bargaining agreement are not the result of arm’s length negotiations (see 22.1013 and 22.1021). The Department of Labor (DOL) has concluded that contingent collective bargaining agreement provisions that attempt to limit a contractor’s obligations by means such as requiring issuance of a wage determination by the DOL, requiring inclusion of the wage determination in the contract, or requiring the Government to adequately reimburse the contractor, generally reflect a lack of arm’s length negotiations.
(2) If the contracting officer’s review (see 22.1013) indicates that monetary provisions of the collective bargaining agreement may be substantially at variance or may not have been reached as a result of arm’s length bargaining, the contracting officer shall immediately contact the agency labor advisor to consider if further action is warranted.
(f) If the services are being furnished at more than one location and the collectively bargained wage rates and fringe benefits are different at different locations or do not apply to one or more locations, the contracting officer shall identify the locations to which the agreements apply.
(g) If the collective bargaining agreement does not apply to all service employees under the contract, the contracting officer shall access Wage Determinations at SAM.gov to obtain the prevailing wage determination for those service employee classifications that are not covered by the collective bargaining agreement. The contracting officer shall separately list in the solicitation and contract the service employee classifications-
(1) Subject to the collective bargaining agreement; and
(2) Not subject to any collective bargaining agreement.