41 U.S.C. § 6703 — Required contract terms

Page 172 TITLE 41—PUBLIC CONTRACTS § 6702 (B) includes an individual without regard to any contractual relationship alleged to exist between the individual and a con- tractor or subcontractor; but (C) does not include an individual em- ployed in a bona fide executive, administra- tive, or professional capacity, as those terms are defined in part 541 of title 29, Code of Federal Regulations. (4) UNITED STATES.—The term ‘‘United States’’— (A) includes any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, the outer Conti- nental Shelf as defined in the Outer Conti- nental Shelf Lands Act (43 U.S.C. § 1331 et seq.), American Samoa, Guam, Wake Island, and Johnston Island; but (B) does not include any other territory under the jurisdiction of the United States or any United States base or possession within a foreign country. (Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3811.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 6701 ............ 41:357. Pub. L. 89–286, § 8, Oct. 22, 1965, 79 Stat. 1036; Pub. L. 93–57, § 1, July 6, 1973, 87 Stat. 140; Pub. L. 94–489, § 3, Oct. 13, 1976, 90 Stat. 2358. In paragraph (3), the word ‘‘individual’’ is substituted for ‘‘person’’ because of the definition of ‘‘person’’ in 1:1. The words ‘‘contract made by the Federal Govern- ment’’ are substituted for ‘‘contract entered into by the United States’’ for consistency in the revised title. The words ‘‘as of July 30, 1976, and any subsequent revi- sion of those regulations’’ are omitted as obsolete. In paragraph (4)(A), the words ‘‘the outer Continental Shelf’’ are substituted for ‘‘Outer Continental Shelf lands’’ for consistency with the definition in 43:1331 and for consistency with the more common usage generally found in subchapter III of chapter 29 of title 43. The words ‘‘Eniwetok Atoll, Kwajalein Atoll’’ are omitted because they are part of the Marshall Islands and therefore no longer part of the United States. The words ‘‘Canton Island’’ are omitted because it is part of Kiribati and therefore no longer part of the United States. Editorial Notes REFERENCES IN TEXT The Outer Continental Shelf Lands Act, referred to in par. (4)(A), is act Aug. 7, 1953, ch. 345, 67 Stat. 462, which is classified generally to subchapter III (§ 1331 et seq.) of chapter 29 of Title 43, Public Lands. For complete clas- sification of this Act to the Code, see Short Title note set out under section 1301 of Title 43 and Tables. § 6702. Contracts to which this chapter applies (a) IN GENERAL.—Except as provided in sub- section (b), this chapter applies to any contract or bid specification for a contract, whether ne- gotiated or advertised, that— (1) is made by the Federal Government or the District of Columbia; (2) involves an amount exceeding $2,500; and (3) has as its principal purpose the fur- nishing of services in the United States through the use of service employees. (b) EXEMPTIONS.—This chapter does not apply to— (1) a contract of the Federal Government or the District of Columbia for the construction, alteration, or repair, including painting and decorating, of public buildings or public works; (2) any work required to be done in accord- ance with chapter 65 of this title; (3) a contract for the carriage of freight or personnel by vessel, airplane, bus, truck, ex- press, railway line or oil or gas pipeline where published tariff rates are in effect; (4) a contract for the furnishing of services by radio, telephone, telegraph, or cable compa- nies, subject to the Communications Act of 1934 (47 U.S.C. 151 et seq.); (5) a contract for public utility services, in- cluding electric light and power, water, steam, and gas; (6) an employment contract providing for di- rect services to a Federal agency by an indi- vidual; and (7) a contract with the United States Postal Service, the principal purpose of which is the operation of postal contract stations. (Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3812.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 6702(a) ........ 41:351(a) (words be- fore par. (1) re- lated to applica- bility). Pub. L. 89–286, § 2(a) (words before par. (1) related to applicability), Oct. 22, 1965, 79 Stat. 1034; Pub. L. 94–489, § 1(a), Oct. 13, 1976, 90 Stat. 2358. 6702(b) ........ 41:356. Pub. L. 89–286, § 7, Oct. 22, 1965, 79 Stat. 1035. In subsection (b)(2), the words ‘‘the Walsh-Healey Public Contracts Act (49 Stat. 2036)’’, which appear in section 7(2) of Public Law 89–286 (79 Stat. 1036), are treated as a reference to the Act of June 30, 1936 (ch. 881, 49 Stat. 2036), which was known as the Walsh- Healey Act and which was subsequently designated as the Walsh-Healey Act by section 12 of the Act of June 30, 1936, which was added by section 10005(f)(5) of Public Law 103–355 (108 Stat. 3409). In subsection (b)(7), the words ‘‘United States Postal Service’’ are substituted for ‘‘Post Office Department’’ because of sections 4(a) and 6(o) of the Postal Reorga- nization Act (Public Law 91–375, 84 Stat. 773, 783, 39 U.S.C. note prec. 101, 201 note). Editorial Notes REFERENCES IN TEXT The Communications Act of 1934, referred to in sub- sec. (b)(4), is act June 19, 1934, ch. 652, 48 Stat. 1064, which is classified principally to chapter 5 (§ 151 et seq.) of Title 47, Telecommunications. For complete classi- fication of this Act to the Code, see section 609 of Title 47 and Tables. § 6703. Required contract terms A contract, and bid specification for a con- tract, to which this chapter applies under sec- tion 6702 of this title shall contain the following terms: (1) MINIMUM WAGE.—The contract and bid specification shall contain a provision speci- fying the minimum wage to be paid to each class of service employee engaged in the per- formance of the contract or any subcontract, Page 173 TITLE 41—PUBLIC CONTRACTS § 6703 as determined by the Secretary or the Sec- retary’s authorized representative, in accord- ance with prevailing rates in the locality, or, where a collective-bargaining agreement cov- ers the service employees, in accordance with the rates provided for in the agreement, in- cluding prospective wage increases provided for in the agreement as a result of arm’s length negotiations. In any case the minimum wage may not be less than the minimum wage specified in section 6704 of this title. (2) FRINGE BENEFITS.—The contract and bid specification shall contain a provision speci- fying the fringe benefits to be provided to each class of service employee engaged in the per- formance of the contract or any subcontract, as determined by the Secretary or the Sec- retary’s authorized representative to be pre- vailing in the locality, or, where a collective- bargaining agreement covers the service em- ployees, to be provided for under the agree- ment, including prospective fringe benefit in- creases provided for in the agreement as a re- sult of arm’s-length negotiations. The fringe benefits shall include medical or hospital care, pensions on retirement or death, compensa- tion for injuries or illness resulting from occu- pational activity, or insurance to provide any of the foregoing, unemployment benefits, life insurance, disability and sickness insurance, accident insurance, vacation and holiday pay, costs of apprenticeship or other similar pro- grams and other bona fide fringe benefits not otherwise required by Federal, State, or local law to be provided by the contractor or sub- contractor. The obligation under this para- graph may be discharged by furnishing any equivalent combinations of fringe benefits or by making equivalent or differential payments in cash under regulations established by the Secretary. (3) WORKING CONDITIONS.—The contract and bid specification shall contain a provision specifying that no part of the services covered by this chapter may be performed in buildings or surroundings or under working conditions, provided by or under the control or super- vision of the contractor or any subcontractor, which are unsanitary or hazardous or dan- gerous to the health or safety of service em- ployees engaged to provide the services. (4) NOTICE.—The contract and bid specifica- tion shall contain a provision specifying that on the date a service employee begins work on a contract to which this chapter applies, the contractor or subcontractor will deliver to the employee a notice of the compensation re- quired under paragraphs (1) and (2), on a form prepared by the Federal agency, or will post a notice of the required compensation in a prominent place at the worksite. (5) GENERAL SCHEDULE PAY RATES AND PRE- VAILING RATE SYSTEMS.—The contract and bid specification shall contain a statement of the rates that would be paid by the Federal agency to each class of service employee if section 5332 or 5341 of title 5 were applicable to them. The Secretary shall give due consideration to these rates in making the wage and fringe ben- efit determinations specified in this section. (Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3812.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 6703 ............ 41:351(a) (words be- fore par. (1) re- lated to required contract terms), (1)–(5). Pub. L. 89–286, § 2(a) (words before par. (1) related to required contract terms), (1)–(5), Oct. 22, 1965, 79 Stat. 1034; Pub. L. 92–473, §§ 1, 2, Oct. 9, 1972, 86 Stat. 789; Pub. L. 94–489, § 2, Oct. 13, 1976, 90 Stat. 2358. Executive Documents EXECUTIVE ORDER NO. 13495 Ex. Ord. No. 13495, Jan. 30, 2009, 74 F.R. 6103, which provided for nondisplacement of qualified workers under a successor service contract upon the expiration of the predecessor contract, was revoked by Ex. Ord. No. 13897, § 1, Oct. 31, 2019, 84 F.R. 59709, formerly set out below. EXECUTIVE ORDER NO. 13897 Ex. Ord. No. 13897, Oct. 31, 2019, 84 F.R. 59709, which related to the revocation of Ex. Ord. No. 13495, formerly set out above, was revoked by Ex. Ord. No. 14055, § 9, Nov. 18, 2021, 86 F.R. 66400, set out below. EX. ORD. NO. 14055. NONDISPLACEMENT OF QUALIFIED WORKERS UNDER SERVICE CONTRACTS Ex. Ord. No. 14055, Nov. 18, 2021, 86 F.R. 66397, pro- vided: By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Federal Property and Adminis- trative Services Act, [see] 40 U.S.C. 101 et seq. [and 41 U.S.C. 101 et seq.], and in order to promote economy and efficiency in procurement, it is hereby ordered as follows: SECTION 1. Policy. When a service contract expires, and a follow-on contract is awarded for the same or similar services, the Federal Government’s procure- ment interests in economy and efficiency are best served when the successor contractor or subcontractor hires the predecessor’s employees, thus avoiding dis- placement of these employees. Using a carryover work force reduces disruption in the delivery of services dur- ing the period of transition between contractors, main- tains physical and information security, and provides the Federal Government with the benefits of an experi- enced and well-trained work force that is familiar with the Federal Government’s personnel, facilities, and re- quirements. These same benefits are also often realized when a successor contractor or subcontractor performs the same or similar contract work at the same location where the predecessor contract was performed. SEC. 2. Definitions. (a) ‘‘Service contract’’ or ‘‘contract’’ means any con- tract, contract-like instrument, or subcontract for services entered into by the Federal Government or its contractors that is covered by the Service Contract Act of 1965, as amended, [see] 41 U.S.C. 6701 et seq., and its implementing regulations. (b) ‘‘Employee’’ means a service employee as defined in the Service Contract Act of 1965, as amended, 41 U.S.C. 6701(3). (c) ‘‘Agency’’ means an executive department or agency, including an independent establishment sub- ject to the Federal Property and Administrative Serv- ices Act, 40 U.S.C. 102(4)(A). SEC. 3. Nondisplacement of Qualified Workers. (a) Each agency shall, to the extent permitted by law, ensure that service contracts and subcontracts that succeed a contract for performance of the same or similar work, and solicitations for such contracts and subcontracts, include the following clause: ‘‘Nondisplacement of Qualified Workers: (a) The con- tractor and its subcontractors shall, except as other- wise provided herein, in good faith offer service em- Page 174 TITLE 41—PUBLIC CONTRACTS § 6703 ployees (as defined in the Service Contract Act of 1965, as amended, 41 U.S.C. 6701(3)) employed under the pred- ecessor contract and its subcontracts whose employ- ment would be terminated as a result of the award of this contract or the expiration of the contract under which the employees were hired, a right of first refusal of employment under this contract in positions for which those employees are qualified. The contractor and its subcontractors shall determine the number of employees necessary for efficient performance of this contract and may elect to employ more or fewer em- ployees than the predecessor contractor employed in connection with performance of the work solely on the basis of that determination. Except as provided in para- graph (b), there shall be no employment opening under this contract or subcontract, and the contractor and any subcontractors shall not offer employment under this contract to any person prior to having complied fully with the obligations described in this clause. The contractor and its subcontractors shall make an ex- press offer of employment to each employee as provided herein and shall state the time within which the em- ployee must accept such offer, but in no case shall the period within which the employee must accept the offer of employment be less than 10 business days. ‘‘(b) Notwithstanding the obligation under paragraph (a) above, the contractor and any subcontractors (1) are not required to offer a right of first refusal to any em- ployee(s) of the predecessor contractor who are not service employees within the meaning of the Service Contract Act of 1965, as amended, 41 U.S.C. 6701(3), and (2) are not required to offer a right of first refusal to any employee(s) of the predecessor contractor for whom the contractor or any of its subcontractors rea- sonably believes, based on reliable evidence of the par- ticular employees’ past performance, that there would be just cause to discharge the employee(s) if employed by the contractor or any subcontractors. ‘‘(c) The contractor shall, not less than 10 business days before the earlier of the completion of this con- tract or of its work on this contract, furnish the Con- tracting Officer a certified list of the names of all serv- ice employees working under this contract and its sub- contracts during the last month of contract perform- ance. The list shall also contain anniversary dates of employment of each service employee under this con- tract and its predecessor contracts either with the cur- rent or predecessor contractors or their subcontractors. The Contracting Officer shall provide the list to the successor contractor, and the list shall be provided on request to employees or their representatives, con- sistent with the Privacy Act, 5 U.S.C. 552a, and other applicable law. ‘‘(d) If it is determined, pursuant to regulations issued by the Secretary of Labor (Secretary), that the contractor or its subcontractors are not in compliance with the requirements of this clause or any regulation or order of the Secretary, the Secretary may impose appropriate sanctions against the contractor or its sub- contractors, as provided in Executive Order (No.) ————, the regulations implementing that order, and relevant orders of the Secretary, or as otherwise pro- vided by law. ‘‘(e) In every subcontract entered into in order to per- form services under this contract, the contractor will include provisions that ensure that each subcontractor will honor the requirements of paragraphs (a) and (b) with respect to the employees of a predecessor subcon- tractor or subcontractors working under this contract, as well as of a predecessor contractor and its sub- contractors. The subcontract shall also include provi- sions to ensure that the subcontractor will provide the contractor with the information about the employees of the subcontractor needed by the contractor to com- ply with paragraph (c) of this clause. The contractor shall take such action with respect to any such sub- contract as may be directed by the Secretary as a means of enforcing such provisions, including the impo- sition of sanctions for noncompliance: provided, how- ever, that if the contractor, as a result of such direc- tion, becomes involved in litigation with a subcon- tractor, or is threatened with such involvement, the contractor may request that the United States enter into such litigation to protect the interests of the United States.’’ (b) Nothing in this order shall be construed to require or recommend that agencies, contractors, or sub- contractors pay the relocation costs of employees who exercise their right to work for a successor contractor or subcontractor pursuant to this order. SEC. 4. Location Continuity. (a) When an agency pre- pares a solicitation for a service contract that succeeds a contract for performance of the same or similar work, the agency shall consider whether performance of the work in the same locality or localities in which the contract is currently being performed is reasonably necessary to ensure economical and efficient provision of services. (b) If an agency determines that performance of the contract in the same locality or localities is reasonably necessary to ensure economical and efficient provision of services, then the agency shall, to the extent con- sistent with law, include a requirement or preference in the solicitation for the successor contract that it be performed in the same locality or localities. SEC. 5. Exclusions. This order shall not apply to: (a) contracts under the simplified acquisition thresh- old as defined in 41 U.S.C. 134; or (b) employees who were hired to work under a Fed- eral service contract and one or more nonfederal serv- ice contracts as part of a single job, provided that the employees were not deployed in a manner that was de- signed to avoid the purposes of this order. SEC. 6. Exceptions Authorized by Agencies. (a) A senior official within an agency may grant an exception from the requirements of section 3 of this order for a par- ticular contract by, no later than the solicitation date, providing a specific written explanation of why at least one of the following circumstances exists with respect to that contract: (i) Adhering to the requirements of section 3 of this order would not advance the Federal Government’s in- terests in achieving economy and efficiency in Federal procurement; (ii) Based on a market analysis, adhering to the re- quirements of section 3 of this order would: (A) substantially reduce the number of potential bidders so as to frustrate full and open competition; and (B) not be reasonably tailored to the agency’s needs for the contract; or (iii) Adhering to the requirements of section 3 of this order would otherwise be inconsistent with statutes, regulations, Executive Orders, or Presidential Memo- randa. (b) To the extent permitted by law and consistent with national security and executive branch confiden- tiality interests, each agency shall publish, on a cen- tralized public website, descriptions of the exceptions it has granted under this section, and ensure that the contractor notifies affected workers and their collec- tive bargaining representatives, if any, in writing of the agency’s determination to grant an exception. (c) On a quarterly basis, each agency shall report to the Office of Management and Budget descriptions of the exceptions granted under this section. SEC. 7. Regulations and Implementation. (a) The Sec- retary of Labor (Secretary) shall, to the extent con- sistent with law, issue final regulations within 180 days of the date of this order [Nov. 18, 2021] to implement the requirements of this order, other than those speci- fied in sections 6(b) and (c) of this order. (b) Within 60 days of the Secretary issuing final regu- lations, the Federal Acquisition Regulatory Council (FAR Council), to the extent consistent with law, shall amend the Federal Acquisition Regulation to provide for inclusion in Federal procurement solicitations and contracts subject to this order the clause described in section 3 of this order. (c) The Director of the Office of Management and Budget shall, to the extent consistent with law, issue guidance to implement section 6(c) of this order. Page 175 TITLE 41—PUBLIC CONTRACTS § 6705 SEC. 8. Enforcement. (a) The Secretary shall have the authority to investigate potential violations of, and ob- tain compliance with, this order. In such proceedings, the Secretary shall have the authority to issue final or- ders prescribing appropriate sanctions and remedies, including, but not limited to, orders requiring employ- ment and payment of wages lost. The Secretary may also provide that, if a contractor or subcontractor has failed to comply with any order of the Secretary or has committed willful violations of this order or the regu- lations issued pursuant thereto, the contractor or sub- contractor, and its responsible officers, and any firm in which the contractor or subcontractor has a substan- tial interest, may be ineligible to be awarded any con- tract of the United States for a period of up to 3 years. Neither an order for debarment of any contractor or subcontractor from further Federal Government con- tracts under this section nor the inclusion of a con- tractor or subcontractor on a published list of noncom- plying contractors shall be carried out without afford- ing the contractor or subcontractor an opportunity to present information and argument in opposition to the proposed debarment or inclusion on the list. (b) This order creates no rights under the Contract Disputes Act, 41 U.S.C. 7101 et seq., and disputes regard- ing the requirements of the contract clause prescribed by section 3 of this order, to the extent permitted by law, shall be disposed of only as provided by the Sec- retary in regulations issued under this order. SEC. 9. Revocation. Executive Order 13897 of October 31, 2019 (Improving Federal Contractor Operations by Revoking Executive Order 13495) [formerly set out above], is revoked. Executive Order 13495 of January 30, 2009 (Nondisplacement of Qualified Workers Under Service Contracts) [formerly set out above], remains revoked. SEC. 10. Severability. If any provision of this order, or the application of any provision of this order to any person or circumstance, is held to be invalid, the re- mainder of this order and its application to any other person or circumstance shall not be affected thereby. SEC. 11. Effective Date. This order shall become effec- tive immediately and shall apply to solicitations issued on or after the effective date of the final regulations issued by the FAR Council under section 7 of this order. For solicitations issued between the date of this order and the date of the action taken by the FAR Council under section 7 of this order, or solicitations that have already been issued and are outstanding as of the date of this order, agencies are strongly encouraged, to the extent permitted by law, to include in the relevant so- licitation the contract clause described in section 3 of this order. SEC. 12. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect: (i) the authority granted by law to an executive de- partment or agency, or the head thereof; or (ii) the functions of the Director of the Office of Man- agement and Budget relating to budgetary, administra- tive, or legislative proposals. (b) This order shall be implemented consistent with applicable law and subject to the availability of appro- priations. (c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforce- able at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. J.R. BIDEN, JR. § 6704. Limitation on minimum wage (a) IN GENERAL.—A contractor that makes a contract with the Federal Government, the prin- cipal purpose of which is to furnish services through the use of service employees, and any subcontractor, may not pay less than the min- imum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) to an employee engaged in performing work on the contract. (b) VIOLATIONS.—Sections 6705 to 6707(d) of this title are applicable to a violation of this section. (Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3813.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 6704 ............ 41:351(b). Pub. L. 89–286, § 2(b), Oct. 22, 1965, 79 Stat. 1034; Pub. L. 94–489, § 1(b), Oct. 13, 1976, 90 Stat. 2358. § 6705. Violations (a) LIABILITY OF RESPONSIBLE PARTY.—A party responsible for a violation of a contract provi- sion required under section 6703(1) or (2) of this title or a violation of section 6704 of this title is liable for an amount equal to the sum of any de- duction, rebate, refund, or underpayment of compensation due any employee engaged in the performance of the contract. (b) RECOVERY OF AMOUNTS UNDERPAID TO EM- PLOYEES.— (1) WITHHOLDING ACCRUED PAYMENTS DUE ON CONTRACTS.—The total amount determined under subsection (a) to be due any employee engaged in the performance of a contract may be withheld from accrued payments due on the contract or on any other contract between the same contractor and the Federal Government. The amount withheld shall be held in a deposit fund. On order of the Secretary, the compensa- tion found by the Secretary or the head of a Federal agency to be due an underpaid em- ployee pursuant to this chapter shall be paid from the deposit fund directly to the under- paid employee. (2) BRINGING ACTIONS AGAINST CONTRAC- TORS.—If the accrued payments withheld under the terms of the contract are insuffi- cient to reimburse a service employee with re- spect to whom there has been a failure to pay the compensation required pursuant to this chapter, the Federal Government may bring action against the contractor, subcontractor, or any sureties in any court of competent ju- risdiction to recover the remaining amount of underpayment. Any amount recovered shall be held in the deposit fund and shall be paid, on order of the Secretary, directly to the under- paid employee. Any amount not paid to an em- ployee because of inability to do so within 3 years shall be covered into the Treasury as miscellaneous receipts. (c) CANCELLATION AND ALTERNATIVE COMPLE- TION.—In addition to other actions in accordance with this section, when a violation of any con- tract stipulation is found, the Federal agency that made the contract may cancel the contract on written notice to the original contractor. The Federal Government may then make other con- tracts or arrangements for the completion of the original contract, charging any additional cost to the original contractor. (d) ENFORCEMENT OF SECTION.—In accordance with regulations prescribed pursuant to section 6707(a)–(d) of this title, the Secretary or the head of a Federal agency may carry out this sec- tion.