DATE: January 18, 2001

SUBJECT: Department of Labor (DOL); Service Contract Act (SCA) Labor Standards for Federal Service Contracts

SOURCE: Federal Register, January 18, 2001, Vol. 66, No. 12, page 5327

AGENCIES: Wage and Hour Division, Employment Standards Administration, DOL

ACTION: Final Rule

SYNOPSIS: DOL is amending its regulations to exempt certain contracts for commercial services meeting specific criteria from coverage under the McNamara-O'Hara Service Contract Act (SCA).

EDITOR'S NOTE: DOL's regulations on the SCA are in Title 29 of the Code of Federal Regulations (CFR), Part 4, Labor Standards for Federal Service Contracts.

For more on the proposed rule, see the July 26, 2000, FEDERAL CONTRACTS DISPATCH "Department of Labor (DOL); Service Contract Act (SCA) -- Labor Standards for Federal Service Contracts."

For more on Federal Acquisition Circular (FAC) 97-19, which amended the Federal Acquisition Regulation (FAR) to remove the SCA from the list of inapplicable laws, see the July 26, 2000, FEDERAL CONTRACT DISPATCH "Federal Acquisition Circular (FAC) 97-19, Miscellaneous Amendments."

EFFECTIVE DATE: March 19, 2001.

FOR FURTHER INFORMATION CONTACT: William W. Gross, Director, Office of Wage Determinations, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Room S-3028, 200 Constitution Avenue, NW, Washington, DC 20210; 202-693-0062.

SUPPLEMENTAL INFORMATION: The Federal Acquisition Streamlining Act of 1994 (FASA) (Public Law 103-355) required that the FAR include a list of laws that do not apply to subcontracts for commercial items. In 1995, the SCA was included on the list at FAR 12.504, Applicability of Certain Laws to Subcontracts for the Acquisition of Commercial Items. However, DOL maintained that it has sole authority over the applicability of the SCA. The FAR Council eventually agreed, so FAC 97-19 removed the SCA from the list of inapplicable laws at FAR 12.504.

Nevertheless, on May 12, 1999, the Office of Federal Procurement Policy (OFPP) requested that DOL exempt a more limited group of commercial service contracts (both prime contracts and subcontracts) in which "the government is having difficulty acquiring or for which the government is getting limited competition, or where the government is unable to acquire the quality of services needed because commercial sources are reluctant to do business with the government, thereby causing impairment to government business." DOL reviewed the recommended services and concurred, so it proposed on July 26, 2000, to revise paragraph (e) of 29 CFR 4.123, Administrative Limitations, Variances, Tolerances, and Exemptions, to exempt the suggested services.

DOL received 11 comments: three from contractor associations supported the proposed changes; one from a contractor association and seven from unions opposed the proposed changes. As a result, DOL is adopting the proposed rule as final with some significant changes:

In conjunction with the July 26, 2000, DOL proposed rule and FAC 97-19, DOL issued an temporary rule exempting all subcontractors in the proposed exempt service industries until a final rule was published. Since DOL has now issued the final rule, this temporary rule is withdrawn.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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