22.1023
Termination for default
Failure to comply with Service Contract Labor Standards clauses can result in termination for default, putting contractors at significant risk.
Overview
FAR 22.1023 establishes that a contractor’s failure to comply with the Service Contract Labor Standards (SCLS) requirements, as set forth in the relevant contract clauses (notably FAR 52.222-41), can be grounds for termination for default. This means that if a contractor does not adhere to wage, benefit, or other labor standards mandated by the SCLS, the government may terminate the contract for default, which can have serious legal and financial consequences for the contractor. The section references the specific authority for this action and ties it directly to the enforcement of labor standards on service contracts.
Key Rules
- Service Contract Labor Standards Compliance
- Contractors must comply with all SCLS-related contract clauses, including wage and benefit requirements.
- Grounds for Termination
- Noncompliance with SCLS clauses may result in termination for default, as specified in FAR 52.222-41(k).
Responsibilities
- Contracting Officers: Must monitor contractor compliance with SCLS and may initiate termination for default if violations occur.
- Contractors: Must strictly adhere to all SCLS requirements in the contract clauses to avoid default.
- Agencies: Ensure oversight and enforcement of SCLS compliance on service contracts.
Practical Implications
- This section exists to enforce labor standards on service contracts and protect worker rights.
- Contractors risk severe penalties, including contract termination, for failing to comply with SCLS requirements.
- Common pitfalls include misclassification of employees, underpayment of wages, or failure to provide required benefits.