52.222-53
Exemption from Application of the Service Contract Labor Standards to Contracts for Certain Services-Requirements
To maintain exemption from Service Contract Labor Standards, contractors must strictly meet all specified conditions regarding commercial availability, pricing, employee time, compensation, and subcontractor compliance.
Overview
FAR 52.222-53 establishes the requirements for contractors claiming exemption from the Service Contract Labor Standards (SCLS, formerly the Service Contract Act) for certain service contracts. This clause applies when services are regularly sold to the general public in substantial quantities at established catalog or market prices, and when service employees spend only a small portion of their time on the government contract. It also sets out requirements for compensation parity, subcontractor selection, and compliance responsibilities, as well as procedures if the exemption is found invalid.
Key Rules
- Commercial Availability and Pricing
- Services must be regularly offered to non-governmental customers in substantial quantities and provided at established catalog or market prices.
- Employee Time Limitation
- Service employees must spend less than 20% of their available hours on the government contract.
- Compensation Parity
- Contractors must use the same wage and benefits plan for employees on the government contract as for those serving commercial customers.
- Subcontractor Selection
- Subcontractors for exempt services must be selected based on factors other than price alone, or awarded on a sole source basis (with limited exceptions).
- Subcontractor Compliance
- Contractors must ensure subcontractors meet exemption conditions and include this clause in all subcontracts for exempt services.
- Loss of Exemption
- If the Department of Labor finds exemption conditions unmet, the contract becomes subject to SCLS requirements.
Responsibilities
- Contracting Officers: Ensure the clause is included when applicable and monitor compliance.
- Contractors: Certify and maintain all exemption conditions, ensure subcontractor compliance, and flow down the clause to subcontracts.
- Agencies: Oversee contractor compliance and respond to DOL findings.
Practical Implications
- This clause allows certain commercial service contracts to be exempt from SCLS, reducing administrative burden, but only if strict conditions are met. Contractors must carefully document compliance, especially regarding employee time allocation and compensation parity. Failure to meet any condition can trigger retroactive SCLS application, leading to significant liability.