Title 41-Public Contracts, Property Management

#1-18.303 Price negotiation policies and procedures.

The policies and procedures in Sub-
part 1-3.8 shall be followed regardless
of the type of contract used. Where a
cost-plus-a-fixed-fee contract is used,
the fee shall be determined in accord-
ance with agency procedures. The
statutory limit for such fees is 10 per-
cent of the estimated cost of the con-
tract (see § 1-3.405-5(c)).

#1-18.304 Subcontracting with small busi-
ness concerns.
See 1-1.710.

$1-18.305 Subcontracting policies and
www.procedures.

(a) Review and approval of contrac-
tor's purchasing system and subcon-
tracts. See § 1-3.903.

(b) Subcontracting by cost-reim-
bursement type construction contrac-
tors. (1) Construction work under a
cost-reimbursement type prime con-
struction contract that is to be subcon-
tracted shall be performed to the full-
est extent practicable under unit-price
or 1 mp-sum subcontracts obtained by
competitive bids. Each project or
phase thereof under a general contrac-
tor shall be analyzed by the contrac-
tor, in conjunction with the contract-
ing agency, to determine those ele-
ments which can be performed under
a fixed-price subcontract.

(2) The apportionment of work be-
tween the prime and subcontractors
shall be based on the best interests of
the Government, taking into consider-
ation all factors including the follow-
ing:

(i) The general practice of the con-
struction industry of utilizing subcon-
tractors for certain specialty phases of
the work;

(ii) The additional management,
technical, and craft skills which a spe-
cialty subcontractor may contribute to
the efficient prosecution of the work,
particularly on complex industrial-
type facilities which require maximum
concentration of such skills;

(iii) The qualifications of the prime
contractor to perform such specialty
work, based on the extent to which he
has customarily performed the work

320

with his own organisation and the
competency of his available organiza-
tion to perform the work; and

(iv) The amount of work that should
be performed by the prime contractor
in order to ensure adequate supervi-
sion of the project (see 1-18.104).

81-18.306 Preparation for negotiation.
01-18.306-1 Fixed-price type contracts.

(a) Proposals and, where required,
cost or pricing data submitted by po-
tential contractors shall be evaluated
and compared with the Government
estimate required by § 1-18.108. Pro-
posals shall be required in all cases,
and cost or pricing data shall be re-
quired as provided in § 1-3.807-3. Sub-
Ject to the provisions of 1-3.807-3,
such data shall be required, to the
extent necessary, in any case where
there are significant differences be-
tween the Government estimate and
the proposals submitted on any item.
All data shall be evaluated and ana-
lyzed, as shall cost or pricing data on
subcontracts ( 1-3.807-10) when such
data is requested by the contracting
officer.

(b) Where appropriate, additional
pricing tools may be used, such as
comparision of current prices for simi-
lar features of work, adjusted for dif-
ferences in site and specifications. In
addition, rough yardsticks such as cost
per cubic foot for structures, cost per
linear foot for utilities, cost per cubic
yard for excavation, concrete, etc.,
may be developed and compared with
proposed prices which are questioned.
$1-18.306-2 Cost-reimbursement

contracts.

type

(a) Use of cost-reimbursement type
contract. This type of contract may be
used only when it is consistent with
§ 1-3.405.

(b) Information to be prepared for
negotiating-(1) Description of the fa-
cility. A sufficiently detailed descrip-
tion of the facility to be constructed
shall be provided to permit an evalua-
tion of the magnitude, physical char-
acteristics, and complexity of its major
components. For example:

(1) Major buildings and other structures, including the number of each

Chapter 1-Federal Procurement Regulations

type and an explanation of the functional requirements for each:

(11) Major utilities; and

(111) Major equipment to be installed
by the contractor.

(2) Services required of the contrac-
tor. A statement should be prepared
which gives the extent to which the
contractor shall:

(1) Perform work with his own
forces;

(ii) Procure services of subcontractors;

(ill) Procure materials and equip. ment;

(iv) Supervise the project; and
(v) Provide other services.

(3) Estimated cost and time for com-
pletion. (1) Prepare an estimate of the
total cost of construction, exclusive of
the contractor's fee broken down by
the major components listed in the de-
scription required by paragraph (bX1),
above. To the extent available, identi-
fy labor, material, and indirect costs,
and any amount included for contin-
gencies. List separately materials and
equipment that will be furnished by
the Government and the total related
cost.

(11) Prepare an estimated time for
completion with an explanation of the
basis therefor.

(4) Maximum fixed fee. Determine,
in accordance with agency procedures,
the maximum fixed fee that may be
paid for the required services.

(c) Conclusion of negotiations. Nego-
tiations relative to the contract and
fee shall be concluded at as early a
date as practicable. When mutually ac-
ceptable terms of contract, estimate of
cost, and estimate of time of perform-
ance have been agreed to, the fixed fee
should be negotiated. Generally, nego-
tiations relative to the fee shall be suc-
cessfully concluded prior to making
commitment on final selection. In the
event it is necessary to use a letter
contract, it should include the basis
for determining the fee, which estab-
lishes the possible range of fees for
the work. Should it be evident in the
course of negotiations that no hope
exists for a meeting of the minds
within the previously determined max-
imum allowable (ceiling) fee, then con-
sideration should be given to terminat-
ing negotiations and entering into a

§ 1-18.308
similar action with the next best quali
fied contractor (1-18.307-2).

#1-18.306-3 Selection of a cost-reimburse-
ment type contractor.
(a) Construction
cost-reimbursement

contractors for
type contracts
shall be selected on the basis of quali-
fications and the ability to provide the
particular services required (see § 1-
3.805-2). The evaluation for purposes
of determining relative qualifications
of firms underconsideration should be
performed in accordance with agency
procedures.

(b) Fee proposals for construction
services should be secured as a part of
the selection procedure if evaluation
shows that there are several available
contractors equally well qualified to
undertake construction of a project on
a CPFF basis, and if the scope is suffi-
ciently defined to permit a reasonably
accurate estimate of the cost of the
work. Where these conditions prevail
and amounts of the fee proposals are
the only significant differences in the
overall proposals of several equally
qualified construction contractors, the
contract should be awarded on the
basis of the lowest reasonable fee pro-
posal.

(c) A completely documented record
shall be made of all steps and deci-
sions in the selection of a contractor.
#1-18.307 Negotiations.

1-18.307-1 Fixed-price construction con.
tracts.

Negotiations will be conducted with
the responsive offerors within a com-
petitive price range except where an
award is made on initial proposals
without negotiations, all as provided
in § 1-3.805.

@1-18.307-2 Cost-reimbursement contracts.

type

(a) Negotiations shall be conducted
in accordance with agency procedures.
(b) The factors set forth in § 1-3.808
should be considered in negotiating
the fee for a cost-reimbursement type
contract.

321

#1-18.308 Audit as a pricing aid. See1-3.809.

Title 41-Public Contracts, Property Management

The record of negotiations shall
demonstrate conformity with the re-
quirements of § 1-3.101 and, to the
extent applicable, include the general
type of information indicated in the
paragraphs below. The scope and
detail of information to be included
generally should be determined on the
basis of the nature, dollar value, and
complexity of the transactions in-
volved:

(a) Name and address of contractor;
(b) Location of construction site;
(c) Contract number;

(d) Nature of contract action (letter
contract, conversion of letter contract,
etc., as well as type of contract);

(e) Program basis for the contract:

(f) Description of the project;

(g) Total price or estimated cost;
(h) Term of contract and construc-
tion schedules:

(i) Justification for use of negotia-
tion in lieu of formal advertising:

(j) The request for proposals;

(k) Number of firms invited to
submit proposals and a list of the
firms quoting along with their respec-
tive quotations;

(1) Reasons for selection of the pro-
posed contractor. (If a fixed-price
award is made to other than the low
offeror, explain.);

(m) A summary of principal points
involved in negotiation and the final
results thereof. (The record should be
in sufficient detail to reflect the most
significant considerations controlling
the establishment of the initial or re-
vised price or fee.);

(n) For fixed-price contracts, an ex-
planation of why cost or pricing data
were, or were not, required (see § 1-
3,807) and, if not required in the case
of any price negotiation in excess of
$100.000, give the basis for determin-
ing that the price resulted from ade-
quate price competition (If cost or
pricing data were submitted and a cer-
tificate of cost and pricing data was re-
quired (1-3.807-4), show the reliance
placed upon the factual cost or pricing
data submitted and the use of these
data by the contracting officer in de-
termining his total price objective.);

(0) For cost-reimbursement type
Contracts, the fee determination in
detail including the cost breakdown

322

used to arrive at the estimated cost for fee computation purposes;

(p) Names and locations, when avail-
able, of prospective subcontractors
and estimated amounts of respective
subcontracts which will exceed
$100,000;

(q) If the contract contains any form
of price redetermination or escalation,
the reasons for such inclusion;

(r) General types and values of Gov-
ernment property to be furnished;
(s) Funding data; and

(t) The names and affiliations of all
persons taking part in or present at
the negotiations.

Subparts 1-18.4-1-18.5-[Reserved]

Subpart 1-18.6-Buy American Act
81-18.600 Scope.

This subpart implements the Buy
American Act (41 U.S.C. 10a-10d) and
the policies set forth in Executive
Order 10582, December 17, 1954 (3
CFR. 1954-1958 Comp., p. 230), as
amended by Executive Order 11051,
September 27, 1962 (3 CFR, 1959-1963
Comp., p. 635), with respect to con-
struction contracts.

81-18.601 Definitions.

As used in this subpart, the follow-
ing definitions apply:

(a) "Construction" means construc-
tion, alteration, or repair of any public
building or public work.

(b) "Construction material" means
any article, material, or supply
brought to the construction site for in-
corporation in the building or work.

(c) "Component" means any article,
material, or supply directly incorpo-
rated in construction material.

(d) "Domestic construction materi-
al" means an unmanufactured con-
struction material which has been
mined or produced in the United
States, or a manufactured construc-
tion material which has been manu-
factured in the United States if the
cost of its components which are
mined, produced, or manufactured in
the United States exceeds 50 percent
of the cost of all its components. The
cost of components shall include
transportation costs to the place of in-

91-18.602-1 General.

Only domestic construction material
shall be used in the performance of
contracts for construction in the
United States made by executive agen-
cles, except for particular material as
to which it is determined:

(a) By the agency head, that to
make such requirement is impractica
ble;

(b) In accordance with agency proce-
dures, that domestic construction ma-
terial is unavailable in sufficient and
reasonably available commercial quan.
tities and of a satisfactory quality; or
(c) In accordance with 1-18.603,
that to make such requirement would
unreasonably increase the cost.

1-18.602-2 Determining domestic con.
struction material.

In determining whether a construc-
tion material is a domestic construc-
tion material:

(a) Only the construction material
and its components shall be consid-
ered; and

(b) A component shall be considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the construction material in which it is incorporated is manufactured in the United States and the component is of a class or kind determined by the agency concerned to be not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality.

§ 1-18.603-2

#1-18.602-3 Panamanian material used in Canal Zone.

Construction material mined, pro-
duced, or manufactured in the Repub-
lic of Panama, when purchased for use
in the Canal Zone, is exempted from
the provisions of the Buy American
Act (under item 3 of the Memorandum
of Understandings Reached Ancillary
to the Treaty of Mutual Understand-
ing and Cooperation between the
United States of America and the Re-
public of Panama, signed January 25.
1955).

$1-18.602-4 Noting exceptions and find-
ings.

Exceptions for nondomestic con
struction material because use of par-
ticular domestic construction material
would be impracticable or would un
reasonably increase the cost or be
cause domestic construction material
is unavailable shall be noted in the
contract. Findings justifying such ex
ceptions shall be made a matter of
public record.

1-18.603 Unreasonable cost determina
tion.

$1-18.603-1 General.

A determination shall be made that
the use of domestic construction mate
rial would unreasonably increase the
cost where, with respect to each par
ticular construction material:

(a) A bid or proposal offers nondo
mestic construction material (no
listed as excepted in the invitation fo
bids or request for proposals), the cos
of which, plus 6 percent thereof, is les
than the cost of comparable domesti
construction material; and

(b) That bid or proposal offers th
lowest price of any received, afte
adding to each bid or proposal, fo
evaluation purposes. 6 percent of th
cost of all nondomestic constructio
material, which qualifies under par:
graph (a), of this section, offered i
each bld or proposal.

323

#1-18.603-2 Cost computation.

The cost of construction materi: shall be computed as including all co of delivery to the construction sit The cost of nondomestic constructio

$1-18.603-3

Title 41-Public Contracts, Property Management

material shall also include any appli.
cable duty. Computations shall be
based on costs on the date of opening
of bids or proposals.

§ 1-18.603-3 Deviations by agency head.

Deviations from the requirements of
$1-18.603-1 may be authorized by the
agency head in accordance with 1-
1.009 of this chapter, the Buy Ameri-
can Act, and Executive Orders 10582
and 11051.

$ 1-18.603-4 Small business.

Nothing in 1-18.603-1 shall affect
the authority or responsibility of an
executive agency to place a fair pro-
portion of its total contracts with
small business concerns.

1-18.604 Invitation provision.

Except for contracts executed on
Standard Form 19, invitations for bids
and requests for proposals for affected
construction work shall include the
following provision:

INFORMATION REGARDING BUY AMERICAN ACT

(a) The Buy American Act (41 U.S.C. 10a-
10d) generally requires that only domestic
construction material be used in the per-
formance of this contract. (See the clause
entitled "Buy American" in Standard Form
23A. General Provisions, Construction Con-
tract.) This requirement does not apply to
the following construction material or com-
ponents:

(List the excepted construction material
or components.)

(bx1) Furthermore, bids or proposals of-
fering use of additional nondomestic con-
struction material may be acceptable for
award if the Government determines that
use of comparable domestic construction
material is impracticable or would unreason-
ably increase the cost or that domestic con-
struction material (in sufficient and reason-
ably available commercial quantities and of
a satisfactory quality) is unavailable. Rell-
able evidence shall be furnished justifying
such use of additional nondomestic con-
struction material.

(2) Where it is alleged that use of domes-
Tic construction material would unreason-
ably increase the cost:

(i) Data shall be included, based on a rea-
sonable canvass of suppliers, demonstrating
that the cost of each such domestic con-
struction material would exceed by more
than 6 percent the cost of comparable non-
domestic construction material. (All costs of
livery to the construction site shall be in-
uded, as well as any applicable duty.)

(i) For evaluation purposes, 6 percent of
the cost of all additional nondomestic con-
struction material, which qualifies under
paragraph (1), above, will be added to this
bid or proposal.

(3) When offering additional nondomestic
construction material, bids or proposals may
also offer, at stated prices, any available
comparable domestic construction material,
so as to avoid the possibility that failure of
a nondomestic construction material to be
acceptable, under (1), above, will cause re-
jection of the entire bid.

(a) Agreement. In accordance with the
Buy American Act (41 U.S.C. 10a-10d), and
Executive Order 10582, December 17, 1954
(3 CFR, 1954-58 Comp., p. 230), as amended
by Executive Order 11051, September 27,
1962 (3 CFR, 1959-63 Comp., p. 635), the
Contractor agrees that only domestic con-
struction material will be used (by the Con-
tractor, subcontractors, materialmen, and
suppliers) in the performance of this con-
tract, except for nondomestic material listed
in the contract.

(b) Domestic construction material. "Con-
struction material" means any article, mate-
rial, or supply brought to the construction
site for incorporation in the building or
work. An unmanufactured construction ma-
terial is a "domestic construction material"
if it has been mined or produced in the
United States. A manufactured construction
material is a "domestic construction materi-
al" if it has been manufactured in the
United States and if the cost of its compo-
nents which have been mined, produced, or
manufactured in the United States exceeds
50 percent of the cost of all its components.
"Component" means any article, material,
or supply directly incorporated in a con-
struction material.

(c) Domestic component. A component
shall be considered to have been "mined,
produced, or manufactured in the United
States" (regardless of its source in fact) if
the article, material, or supply in which it is
incorporated was manufactured in
the
United States and the component is of a
class or kind determined by the Govern-
ment to be not mined, produced, or manu-
factured in the United States in sufficient
and reasonably available commercial quanti-
ties and of a satisfactory quality.

324

Chapter 1-Federal Procurement Regulations

#1-18.606 Violations.

If the head of the agency concerned
finds there has been a failure to
comply with the Buy American provi-
sions of the contract, he shall make
public his findings and no other con-
tract for the construction, alteration,
or repair of any public building or
public work in the United States or
elsewhere shall be awarded, as provid-
ed in the Buy American Act, to the
contractor, subcontractors, material-
men, or suppliers with which the con-
tractor is associated or affiliated, for a
period of 3 years after such finding is
made public. (For debarment proce-
dures, see Subpart 1-1.6.)

§ 1-18.701-1

#1-18.701-1 Construction contracts.

(a) A contract is for construction if it
is solely or predominantly for con
struction as defined in § 1-18.101-1.

(1) These requirements are applica
ble only if the construction work is, or
reasonably can be foreseen to be, per-
formed at a particular site so that
wage rates can be determined for the
locality.

(2) These requirements do not apply
to contracts solely for dismantling.
demolition, or removal of improve
ments, though certain of the statutes
mentioned herein may apply to such
contracts.

(3) These requirements do not apply
to contracts requiring construction
work which is so closely related to re
search, experiment, and development
that it cannot be performed separately
or which is itself the subject of re
search, experiment, or development.

(4) These requirements apply to
manufacture or fabrication of materi
als and components on the site by a
construction contractor or subcontrac
tor under a contract otherwise subjec
to these requirements but do no:
apply to other manufacturing or fur
nishing of equipment, components, or
other materials.

(5) These requirements do not apply
to employees of railroads operating
under collective bargaining agree
ments that are subject to the provi
sions of the Railway Labor Act.

(b) Under contracts for constructio
as described in § 1-18.701-1(a), the re
quirements of this subpart apply onl
to work performed by mechanics and
laborers at the site of the work.

(1) "Mechanics and laborers" ar
construed to include at least thos
workers whose duties are manual o
physical in nature as distinguishe
from mental or managerial whethe
employed by a prime contractor or b
a subcontractor of any tier. The terr
includes any workers who work wit!
tools or equipment or perform th
work of a trade, apprentices and train
ees, and, in the case of contracts sub
ject to the Contract Work Hours an
Safety Standards Act, watchmen an
guards. The term does not apply t
employees whose duties are nonma
ual in nature, such as office worker

325

$1-18.701-2

Title 41-Public Contracts, Property Management

superintendents. technical engineers,
or scientific workers, but it does apply
to cooks, storekeepers, and working
foremen who devote more than 20 per-
cent of their time during a workweek
to mechanic or laborer duties.

(2) The "site of the work" is limited
to the physical place or places where
the construction called for in the con-
tract will remain when work on it has
been completed and to other adjacent
or nearby property used by the con-
tractor or subcontractor in such con-
struction which can reasonably be said
to be included in the "site" because of
proximity. For example, if a small
office building is being erected, the
"site of the work" will normally in-
clude no more than the building itself
and its grounds and other land or
structures "down the block" or "across
the street" which the contractor or
subcontractor uses in the course of his
performance on the particular con-
tract. In the case of larger contracts
such as for a large building, an airport,
or a dam, the "site of the work" is nec-
essarily more extensive and includes
the whole area in which the contract
construction activity will take place.
Fabrication plants "mobile factories,"
batch plants, borrow pits, job head-
quarters, and tool yards are part of
the "site of the work" provided they
are dedicated exclusively or nearly so
to performance on the contract and
are so located in proximity to the
actual construction location that it
would be reasonable to include them.
Once the limits of "site of the work"
have been determined, the Secretary's
wage rate decision is applicable only to
those mechanics and laborers em:
ployed by a contract, contractor, or
subcontractor within such limits (that
Is. upon the "site of the work"), in-
eluding drivers who temporarily leave
the "site" to transport materials and
equipment used in the course of con-
tract operations..

1-18.701-2 Supply, service, maintenance.
or other contracts involving construc-
tion.

(a) The requirements of this Sub-
part 1-18.7 do not ordinarily apply to
supply, service, maintenance, research
and development. or other noncon-
struction contracts. However,

con

326

tracts predominantly for nonconstruc-
tion work may also involve construc-
tion work. Construction items under
such contracts are not exempted from
the requirements of this subpart
simply because the work is to be per-
formed under a contract which also re-
quires, for example, the furnishing of
supplies. On the other hand, where
construction work is to be performed
in support of other work such as man-
ufacturing and furnishing of supplies,
the circumstances may be such that
the construction work may be so
merged with nonconstruction activity
or may be so fragmented in terms of
the locations or time spans in which it
is to be performed that it cannot be
segregated as a separate contractual
requirement for construction, alter-
ation, or repair of a public building or
public work. Generally, the require-
ments apply to, and the appropriate
clauses in § 1-18.703-1 must be includ-
ed in, a prime contract if:

(1) The contract contains specific re-
quirements for substantial amounts of
construction work, or it is ascertain-
able at the contract date that a sub-
stantial amount of construction work
will be necessary for the performance
of the contract. The word "substan-
tial" relates to the type and quantity
of construction work to be performed
and not merely to the total value of
construction work as compared to the
total value of the contract; and

(2) Such construction work is phys-
ically or functionally separate from
and, as a practical matter, is capable
of being performed on a segregated
basis from the other work required by
the contract.

(b) The standard clauses provide
that they will be applicable to the con-
tract work only to the extent that
such work is subject to the labor
standards statutes involved. Under
contracts requiring substantial
amounts of segregable construction
work, only such segregable construc-
tion will be covered.

(1) For example, the requirements
do not apply to installation, mainte-
nance, and alteration work incidental
to furnishing supplies under a supply
contract; however, if a substantial and
segregable amount of construction, al-
teration, or repair work at the site is

Chapter 1-Federal Procurement Regulations

required, such as for installation of
heavy generators and large refrigera-
tor systems or for plant modification
or rearrangement, the labor standards
for construction contracts apply to the
construction work at the site.

(2) Contracts for maintenance or
service are not ordinarily subject to
the requirements of this subpart.
Maintenance includes the routine, re-
curring type of work necessary to keep
a facility in such condition that it may
be continuously used at an established
capacity and efficiency for its intend-
ed purpose. However, if such mainte-
nance or service contracts call for sub-
stantial and segregable items of con-
struction, alteration, or repair, the
labor standards provisions for con-
struction contracts will be applicable
to those items. All contracts in excess
of $2,000 for painting of any public
building or public work, whether per-
formed in connection with the original
construction or as regular mainte-
nance, are subject to the labor stand-
ards provisions for construction con-
tracts.

@1-18.702 Statutory and regulatory requirements.

#1-18.702-1 Davis-Bacon Act.

The Davis-Bacon Act (Act of March
3, 1931, as amended (40 U.S.C. 276a-
276a-7)), provides that certain con-
tracts over $2,000 entered into by any
executive agency for construction, al-
teration, or repair (including painting
and decorating) of public buildings or
public works within the United States
shall contain a provision (see 1-
18.703-1(a)) to the effect that no la-
borer or mechanic employed directly
upon the site of the work contemplat-
ed by the contract shall receive less
than the prevailing rates of wages as
determined by the Secretary of Labor.
The term "wages" as used in the
Davis-Bacon Act Includes the basic
hourly rate of pay, the rate of contri-
bution irrevocably made by an employ-
er pursuant to a fund, plan, or pro-
gram, and the rate of costs to the em-
ployer which may be reasonably an-.
ticipated in providing certain bona
fide fringe benefits.

#1-18.702-2 Copeland Act.

§ 1-18.702-4

The Copeland ("Anti-kickback") Act
(18 U.S.C. 874 and 40 U.S.C. 276c)
makes it unlawful to induce, by force
or otherwise, any person employed in
the construction, prosecution, comple-
tion, or repair of public buildings.
public works, or buildings, or works in-
cluding those financed in whole or in
part by loans or grants from the
United States, to give up any part of
the compensation to which he is enti-
tled under his contract of employ.
ment. In accordance with regulations
of the Secretary of Labor issued pur
suant to the Copeland Act, certain
contracts entered into by any execu
tive agency shall contain a provision
(see 1-18.703-1(e)) to the effect that
the contractors and any subcontractor
shall comply with the regulations of
the Secretary of Labor under the Act.

§ 1-18.702-3 Contract Work Hours and
Safety Standards Act.

In accordance with the requirements
of the Contract Work Hours and
Safety Standards Act (40 U.S.C. 327-
333), certain contracts entered into by
any executive agency must contain a
clause (see 1-18.703-1(b)) to the
effect that no laborer or mechanic
doing any part of the work contem-
plated by the contract shall be re-
quired or permitted to work more than
8 hours in any one calendar day or 40
hours in any workweek unless such la
borer or mechanic is compensated at
not less than one and one-half times
his basic rate of pay for all hours
worked in excess of 8 hours in any one
calendar day or 40 hours in any work.
week. The workmen will be paid ac
cording to the calculation which repre
sents the greater number of overtime
hours.

#1-18.702-4 Department of Labor regula.
Lions.

Pursuant to the statutes referred to in this 1-18.702 and Reorganization Plan No. 14 of 1950 (3 CFR, 1949-53 Comp., p. 1007), the Secretary of Labor has issued regulations in Parts 1, 3, 5, 5a, and 7 of Title 29. Subtitle A Code of Federal Regulations. provid Ing for the administration and en forcement of those statutes in con

327

$ 1-18.703

Title 41-Public Contracts, Property Management

struction contracts. The Secretary's
regulations cover the following wage
determination procedures: Duties of
contractors on Government-financed
public buildings: labor standards for
construction contracts; standards for
ratios of apprentices and trainees to
journeymen; and wage determination
review procedures.

$1-18.703 Contract clauses.

$1-18.703-1 Clauses for general use.'

Except as provided in § 1-18.703-2,
every construction contract in excess
of $2.000 (or of such other amount as
may be specifically indicated) for work
within the United States shall include
the following clauses:

(a) Davis-Bacon Act (40 U.S.C. 276a-
276a-7).

DAVIS-BACON ACT (40 U.S.C. 278a-276a-7)

(a) All mechanics and laborers employed
or working directly upon the site of the
work shall be paid unconditionally and not
less often than once a week, and without
subsequent deduction or rebate on any ac-
count (except such payroll deductions as are
permitted by the Copeland Regulations, 29
CFR Part 3), the full amounts due at time
of payment computed at wage rates not less
than the aggregate of the basic hourly rates
and the rates of payments, contributions, or
costs for any fringe benefits contained in
the wage determination decision of the Sec-
retary of Labor which is attached hereto
and made a part hereof, regardless of any
contractual relationship which may be al-
leged to exist between the Contractor or
subcontractor and such laborers and me-
chanics. A copy of such wage determination
decision shall be kept posted by the Con-
tractor at the site of the work in a promi-
nent place where it can be easily seen by the
workers. The term "mechanics and labor-
ers" shall be deemed to included apprentices
and trainees not covered by an approved
program as provided by the Apprentices and
Trainees clause of this contract.

(b) The Contractor may discharge his ob-
ligation under this clause to workers in any
classification for which the wage determina-
tion decision contains:

(1) Only a basic hourly rate of pay. by
making payment at not less than such basic
hourly rate, except as otherwise provided in
the Copeland Regulations (29 CFR Part 3);

or

See Temporary Regulation 70 in the ap
pendix to Chapter 1 for temporary changes
to 1 18.703 1.

(2) Both a basic hourly rate of pay and
fringe benefits payments, by making pay-
ment in cash, by irrevocably making contri-
butions pursuant to a fund, plan, or pro-
gram for, and/or by assuming an enforcea-
ble commitment to bear the cost of, bona
fide fringe benefits contemplated by the
Davis-Bacon Act, or by any combination
thereof. Contributions made, or cost as-
sumed, on other than a weekly basis shall
be considered as having been constructively
made or assumed during a weekly period to
the extent that they apply to such period..
Where a fringe benefit is expressed in a
wage determination in any manner other
than as an hourly rate and the Contractor
pays a cash equivalent or provides an alter-
native fringe benefit, he shall furnish infor-
mation with his payrolls showing how he
determined that the cost incurred to make
the cash payment or to provide the alterna-
tive fringe benefit is equal to the cost of the
wage determination fringe benefit. In any
case where the Contractor provides a fringe
benefit different from any contained in the
wage determination he shall similarly show
how he arrived at the hourly rate shown
therefor. In the event of disagreement be-
tween or among the interested parties as to
an equivalent of any fringe benefit, the
Contracting Officer shall submit the ques-
tion, together with his recommendation, to
the Secretary of Labor for final determina-
tion.

(c) The assumption of an enforceable com-
mitment to bear the cost of fringe benefits,
or the provision of any fringe benefits not
expressly listed in section 1(bx2) of the
Davis-Bacon Act or in the wage determina-
tion decision forming a part of the contract,
may be considered as payment of wages
only with the approval of the Secretary of
Labor pursuant to a written request by the
Contractor. The Secretary of Labor may re-
quire the Contractor to set aside assets, in a
separate account, to meet his obligations
under any unfunded plan or program.

(d) The Contracting Officer shall require
that any class of laborers or mechanics, in-
cluding apprentices and trainees, which is
not listed in the wage determination decl-
sion and which is to be employed under the
contract shall be classified or reclassified
conformably to the wage determination de-
cision, and shall report the action taken to
the Secretary of Labor. If the interested
parties cannot agree on the propoer classifi-
cation or reclassification of a particular
class of laborers or mechanics, including ap-
prentices and trainees to be used, the Con-
tracting Officer shall submit the question,
together with his recommendation, to the
Secretary of Labor for final determination.
Apprentices and trainees may be added
under this clause only where they are em-
ployed pursuant to an apprenticeship or

F

Chapter 1-Federal Procurement Regulations

trainee program meeting the requirements
of the Apprentices and Trainees clause
below.

(e) In the event It is found by the Con-
tracting Officer that any laborer or me-
chanic, including apprentices and trainees,
employed by the Contractor or any subcon-
tractor directly on the site of the work cov.
ered by this contract has been or is being
paid at a rate of wages less than the rate of
wages required by paragraph (a) of this
clause, or by the Apprentices and Trainees
clause of this contract, the Contrating Offi-
cer may (1) by written notice to the Govern-
ment Prime Contractor terminate his right
to proceed with the work, or such part of
the work as to which there has been a fail-
ure to pay said required wages, and (2) pros-
ecute the work to completion by contract or
otherwise, whereupon such Contractor and
his sureties shall be liable to the Govern-
ment for any excess costs occasioned the
Government thereby.

(f) Paragraphs (a) through (e) of the
clause shall apply to this contract to the
extent that it is (1) a prime contract with
the Government subject to the Davis-Bacon
Act, or (2) a subcontract also subject to the
Davis-Bacon Act under such prime contract.

(b) Contract Work Hours and Safety
Standards Act-Overtime Compensa-
tion (40 U.S.C. 327-333).

CONTRACT WORK HOURS AND SAFETY STAND-
ARDS ACT-OVERTIME COMPENSATION (40
U.S.C. 327-333)

This contract is subject to the Contract
Work Hours and Safety Standards Act and
to the applicable rules, regulations, and in-
terpretations of the Secretary of Labor.
(a) The Contractor shall not require or
permit any laborer or mechanic, including
apprentices, trainees. watchmen, and
guards, in any workweek in which he is em-
ployed on any work under this contract to
work in excess of 8 hours in any calendar
day or in excess of 40 hours in such work-
week on work subject to the provisions of
the Contract Work Hours and Safety Stand-
ards Act unless such laborer or mechanic,
including apprentices, trainees, watchmen,
and guards, receives compensation at a rate
not less than one and one-half times his
basic rate of pay for all such hours worked
in excess of 8 hours in any calendar day or
in excess of 40 hours in such workweek,
whichever is the greater number of over-
time hours. The "basic rate of pay," as used
in this clause, shall be the amount paid per
hour, exclusive of the Contractor's contribu-
tion or cost for fringe benefits, and any cash
payment made in lieu of providing fringe
benefits, or the basic hourly rate contained
in the wage determination, whichever is
greater.

§ 1-18.703-1

(b) In the event of any violation of the
provisions of paragraph (a), the Contractor
shall be liable to any affected employee for
any amounts due. and to the United States
for liquidated damages. Such liquidated
damages shall be computed with respect to
each individual laborer or mechanic, includ
ing an apprentice. trainee, watchman, or
guard, employed in violation of the provi
sions of paragraph (a) in the sum of $10 for
each calendar day on which such employer
was required or permitted to be employed
on such work in excess of 8 hours or in
excess of the standard workweek of 40
hours without payment of the overtime
wages required by paragraph (a).

(c) Apprentices and Trainees.

APPRENTICES AND TRAINEES

(a) Apprentices shall be permitted to work
at less than the predetermined rate for the
work they performed (1) when they are em-
ployed and individually registered in a bona
fide apprenticeship program registered with
the U.S. Department of Labor, Employment
and Training Administration, Bureau of Ap
prenticeship and Training, or with a State
Apprenticeship Agency recognized by the
Bureau, or (2) if a person is employed in his
first 90 days of probationary employment as
an apprentice in such an apprenticeship
program, who is not individually registered
in the program, but who has been certified
by the Bureau of apprenticeship and Train-
ing or State Apprenticeship Agency (where
appropriate) to be eligible for probationary
employment as an apprentice. The allow
able ratio of apprentices to journeymen in
any craft classification shall not be greater
than the ratio permitted to the Contrator as
to his entire work force under the registered
program. Any employee listed on a payroll
at an apprentice wage rate, who is not a
trainee as defined in paragraph (b) of this
clause or who is not registered or otherwise
employed as stated above, shall be paid the
wage rate determined by the Secretary of
Labor for the classification of work he actu
ally performed. The Contractor or subcon-
tractor shall furnish to the Contracting Of
ficer written evidence of the registration of
his program and apprentices as well as the
appropriate ratios and wage rates (ex-
pressed in percentages of the journeymen
hourly rates) for the area of construction.
prior to using any apprentices on the con
tract work. The wage rate paid apprentices
shall be not less than the appropriate per
centage of the journeymen's rate contained
in the applicable wage determination.

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