52.222-51 Exemption from Application of the Service Contract Labor Standards to Contracts for Maintenance, Calibration, or Repair of Certain Equipment-Requirements
Source: FAR 52.222-51 on acquisition.gov
This clause exempts certain equipment service contracts from SCLS only if strict eligibility, pricing, and compensation requirements are met and documented.
Overview
This clause outlines the requirements for contracts exempt from the Service Contract Labor Standards (SCLS) when providing maintenance, calibration, or repair services for certain equipment. The exemption applies only if the equipment is regularly used for non-government purposes, sold or traded in substantial quantities to the public, and services are provided at established catalog or market prices. Contractors must ensure that compensation plans for service employees match those for commercial customers and are responsible for ensuring subcontractors also comply. If the Department of Labor finds that exemption conditions are not met, the contract becomes subject to SCLS requirements.
Key Rules
- Equipment Eligibility
- Equipment must be used for non-government purposes and sold/traded in substantial quantities to the public.
- Pricing Requirements
- Services must be offered at established catalog or market prices, as defined in the clause.
- Employee Compensation
- Service employees must receive the same compensation as those servicing commercial customers.
- Subcontractor Compliance
- Contractors must ensure subcontractors meet exemption conditions and flow down the clause.
- Loss of Exemption
- If exemption conditions are not met, SCLS applies and DOL procedures are triggered.
Responsibilities
- Contracting Officers: Ensure the clause is included in applicable contracts and monitor compliance.
- Contractors: Verify all exemption conditions are met, ensure proper compensation, and flow down requirements to subcontractors.
- Agencies: Oversee compliance and respond to DOL findings regarding exemption status.
Practical Implications
- This clause allows certain service contracts to avoid SCLS requirements if strict conditions are met, reducing administrative burden.
- Contractors must carefully document eligibility and pricing to maintain exemption.
- Failure to comply can result in retroactive application of SCLS and potential penalties.
As prescribed in 22.1006(e)(2), insert the following clause:
Exemption from Application of the Service Contract Labor Standards to Contracts for Maintenance, Calibration, or Repair of Certain Equipment-Requirements (May 2014)
(a) The items of equipment to be serviced under this contract are used regularly for other than Government purposes, and are sold or traded by the Contractor in substantial quantities to the general public in the course of normal business operations.
(b) The services shall be furnished at prices which are, or are based on, established catalog or market prices for the maintenance, calibration, or repair of equipment.
(1) An "established catalog price" is a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or the Contractor, is either published or otherwise available for inspection by customers, and states prices at which sales currently, or were last, made to a significant number of buyers constituting the general public.
(2) An "established market price" is a current price, established in the usual course of trade between buyers and sellers free to bargain, which can be substantiated from sources independent of the manufacturer or Contractor.
(c) The compensation (wage and fringe benefits) plan for all service employees performing work under the contract shall be the same as that used for these employees and for equivalent employees servicing the same equipment of commercial customers.
(d) The Contractor is responsible for compliance with all the conditions of this exemption by its subcontractors. The Contractor shall determine the applicability of this exemption to any subcontract on or before subcontract award. In making a judgment that the exemption applies, the Contractor shall consider all factors and make an affirmative determination that all of the conditions in paragraphs (a) through (c) of this clause will be met.
(e) If the Department of Labor determines that any conditions for exemption in paragraphs (a) through (c) of this clause have not been met, the exemption shall be deemed inapplicable, and the contract shall become subject to the Service Contract Labor Standards statute. In such case, the procedures at 29 CFR 4.123(e)(1)(iv) and 29 CFR 4.5(c) will be followed.
(f) The Contractor shall include the substance of this clause, including this paragraph (f), in subcontracts for exempt services under this contract.
(End of clause)