Successorship with incumbent contractor collective bargaining agreement
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.