52.237-8 Restriction on Severance Payments to Foreign Nationals
Source: FAR 52.237-8 on acquisition.gov
Severance payments to foreign nationals under overseas service contracts are generally unallowable unless a waiver is granted based on strict criteria before contract award.
Overview
FAR 52.237-8 restricts the allowability of severance payments to foreign nationals working under service contracts performed outside the United States. Severance payments to these employees are generally unallowable unless the agency grants a waiver before contract award, as outlined in FAR 37.113-1. The waiver may only be granted if denying it would adversely affect critical support services for U.S. armed forces or executive agency employees overseas, if the contractor has taken steps to minimize such payments, and if the payments are required by local law or collective bargaining agreements. This provision ensures that severance payments to foreign nationals are carefully controlled and only permitted under specific, justified circumstances.
Key Rules
- Severance Payment Restrictions
- Severance payments to foreign nationals under overseas service contracts are generally unallowable unless a waiver is granted.
- Waiver Criteria
- Waivers are only considered if denying them would harm essential support services, the contractor has minimized such payments, and the payments are legally or contractually required.
Responsibilities
- Contracting Officers: Must ensure compliance with severance payment restrictions and process waiver requests according to FAR 37.113-1.
- Contractors: Must minimize severance payments to foreign nationals and provide justification if seeking a waiver.
- Agencies: Must evaluate waiver requests and determine if criteria are met before contract award.
Practical Implications
- This provision exists to control government costs and prevent unnecessary severance payments to foreign nationals overseas.
- Contractors must be proactive in minimizing severance payments and documenting compliance with local laws or agreements.
- Failure to comply can result in unallowable costs and potential contract disputes.
As prescribed in 37.113-2(a), use the following provision:
Restriction on Severance Payments to Foreign Nationals (Aug 2003)
(a) The Federal Acquisition Regulation (FAR), at 31.205-6(g)(6), limits the cost allowability of severance payments to foreign nationals employed under a service contract performed outside the United States unless the agency grants a waiver pursuant to FAR 37.113-1 before contract award.
(b) In making the determination concerning the granting of a waiver, the agency will determine that-
(1) The application of the severance pay limitations to the contract would adversely affect the continuation of a program, project, or activity that provides significant support services for-
(i) Members of the armed forces stationed or deployed outside the United States; or
(ii) Employees of an executive agency posted outside the United States;
(2) The Contractor has taken (or has established plans to take) appropriate actions within its control to minimize the amount and number of incidents of the payment of severance pay to employees under the contract who are foreign nationals; and
(3) The payment of severance pay is necessary in order to comply with a law that is generally applicable to a significant number of businesses in the country in which the foreign national receiving the payment performed services under the contract, or is necessary to comply with a collective bargaining agreement.
(End of provision)