FAR 22.1002—Statutory and Executive order requirements.

General.

FAR 22.1002-1 states the basic coverage for service contracts subject to the Service Contract Labor Standards (SCLS), formerly the Service Contract Act. It explains that service contracts over $2,500 must include mandatory provisions addressing minimum wages, fringe benefits, safe and sanitary working conditions, notice to employees of the minimum allowable compensation, and the use of equivalent Federal employee classifications and wage rates. The section also ties service contract duration to 41 U.S.C. 6707(d), which limits service contracts to no more than 5 years. In practice, this section tells contracting officers when SCLS requirements must be built into the solicitation and contract, and it alerts contractors that labor pricing, wage determinations, and workplace compliance are not optional add-ons but core contract requirements. It matters because failure to include or follow these provisions can lead to wage underpayments, contract administration problems, and legal or enforcement issues.

Wage determinations based on prevailing rates.

FAR 22.1002-2 explains how wage determinations work for service contracts when there is no predecessor contractor collective bargaining agreement to carry forward. It covers service contracts over $2,500, the requirement to pay at least the wages and fringe benefits the Department of Labor (DOL) finds to prevail in the locality, and the fallback rule that applies when no wage determination is available: the Fair Labor Standards Act (FLSA) minimum wage. In practice, this section is the basic wage-setting rule under the Service Contract Labor Standards framework for new or non-successor service contracts, ensuring service employees receive locally prevailing compensation rather than only the federal minimum wage. It matters because the wage determination becomes a contract pricing and administration requirement, affects labor costs, and can trigger compliance issues if the contractor underpays covered employees. The section also signals that the contracting officer must obtain and incorporate the correct DOL wage determination, and that contractors must build their pay practices around that determination from contract start.

Wage determinations based on collective bargaining agreements.

FAR 22.1002-3 explains how wage determinations are set when a service contract is reprocured and the incumbent workforce is covered by a bona fide collective bargaining agreement (CBA). It addresses successor contractor obligations on contracts over $2,500 for substantially the same services in the same locality, including the duty to pay wages and fringe benefits that are at least equal to the CBA terms, as well as accrued benefits and prospective increases. The section also makes clear that this obligation is self-executing, meaning it applies by operation of law even if the contract does not expressly include the wage determination or the predecessor’s CBA terms. In addition, it identifies the limited circumstances in which the requirement does not apply: when the Secretary of Labor determines, after a hearing, that the CBA rates are substantially at variance with local prevailing rates, or that the agreement was not the result of arm’s-length negotiations. Finally, paragraph (b) points readers to related FAR provisions on notice to contractors and bargaining representatives, late receipt of a CBA, and challenges based on variance or lack of arm’s-length bargaining, showing how this rule fits into the broader Service Contract Labor Standards framework.

Application of the Fair Labor Standards Act minimum wage.

FAR 22.1002-4 establishes the baseline wage floor for employees working on federal service contracts: no contractor or subcontractor may pay any employee working on the contract less than the minimum wage required by section 6(a)(1) of the Fair Labor Standards Act (FLSA), 29 U.S.C. 206. This section applies to service contracts of any dollar amount, so it is not limited by contract size, funding level, or whether the contract is otherwise subject to a separate wage determination. In practice, it means contractors must monitor the current federal minimum wage and ensure that all covered workers on the contract receive at least that amount for hours worked on the contract. The rule is a floor, not a ceiling, and it operates alongside other labor requirements that may require higher wages, such as the Service Contract Labor Standards wage determinations, state or local minimum wage laws, or collective bargaining obligations. Its purpose is to prevent underpayment of service contract workers and to give contracting officers and contractors a clear, universal minimum wage compliance standard.

Executive Orders 13658 and 14026.

FAR 22.1002-5 explains how the federal contractor minimum wage rules under Executive Order (E.O.) 13658 and Executive Order (E.O.) 14026 interact, including the historical E.O. 13658 rate, its annual increases through January 1, 2022, and the superseding effect of E.O. 14026 as of January 30, 2022 to the extent the two orders conflict. It identifies the current E.O. 14026 minimum wage rate of $15.00 per hour and notes that this rate is adjusted annually by the Secretary of Labor. The section also points readers to subpart 22.19 for the implementing requirements and to clause 52.222-55, Minimum Wages for Contractor Workers under Executive Order 14026, which requires payment of the E.O. 14026 minimum wage when it is higher than other applicable minimum wage rates, including statutory wage determination amounts under subpart 22.10. In practice, this section tells contracting officers and contractors which wage floor controls when multiple wage requirements may apply, and it helps prevent underpayment by establishing a hierarchy that favors the higher applicable minimum wage. It is important because contractor payroll compliance depends on applying the correct wage rate for covered workers and updating rates when annual adjustments occur.

Executive Order 13706.

FAR 22.1002-6 is a cross-reference provision that points readers to Executive Order 13706, which requires paid sick leave for employees of certain Federal contractors. In practical terms, this section does not itself set out the full sick leave rules; instead, it identifies the governing authority and directs users to subpart 22.21 and the contract clause at 52.222-62, Paid Sick Leave Under Executive Order 13706. The topic covers which contractor employees are covered, the obligation to provide paid sick leave, and the implementation requirements that flow into solicitations and contracts when the Executive Order applies. Its purpose is to ensure agencies and contractors know that paid sick leave is a mandatory labor requirement for covered Federal service and construction contracts, not an optional benefit. For contracting officers, this means they must recognize when the Executive Order applies and include the proper clause and administration requirements. For contractors, it means they must understand that compliance is driven by the clause and the implementing subpart, including accrual, use, recordkeeping, and flowdown obligations where applicable.