FAR 22.101—Labor relations.

General.

FAR 22.101-1 sets the Government-wide baseline for handling labor relations issues that can affect contract performance. It covers agency duties to maintain sound relations with industry and labor, remain neutral in labor-management disputes, avoid conciliation/mediation/arbitration of disputes, encourage use of outside dispute-resolution resources, exchange labor-related information with other affected agencies, take appropriate actions to protect acquisition programs, and designate programs or requirements where contractors must notify the Government of actual or potential labor disputes. It also points readers to the project labor agreement rules in FAR subpart 22.5 and to the contractor-notification procedures in FAR 22.103-5(a). In practice, this section is about protecting continuity of supply and service while preserving agency neutrality and respecting the separate roles of labor-relations authorities. It matters because labor disputes can delay performance, disrupt critical programs, and create schedule and cost risk, but agencies must respond carefully so they do not interfere with the merits of the dispute or exceed their acquisition responsibilities.

Contract pricing and administration.

FAR 22.101-2 addresses how labor policies, labor disputes, and strikes affect contract pricing, cost allowability, and contract administration. It covers four main subjects: contractor labor policies and compensation practices; the effect of labor disputes on schedule performance and excusable delay; how strike-related costs are treated in cost-reimbursement and fixed-price pricing; and the continuation of Government inspection activities during a labor dispute when safety permits. In practice, this section prevents contractors from passing unreasonable labor-driven costs to the Government, reminds contractors that they remain responsible for avoidable delays, and instructs contracting officers to evaluate strike impacts carefully rather than automatically excusing performance problems or accepting all strike-related costs. It also protects the Government’s inspection rights by requiring normal inspection functions to continue if inspectors are not endangered. The section works together with the cost principles in FAR 31.205-6(b) and the standard default/excusable delay clauses to ensure labor unrest is handled consistently in both pricing and administration.

Reporting labor disputes.

FAR 22.101-3 requires prompt reporting of labor disputes that could affect contract performance. It covers two related duties: first, the office administering the contract must report any potential or actual labor dispute that may interfere with performance of contracts under its cognizance, following agency procedures; second, if the contract includes FAR 52.222-1, Notice to the Government of Labor Disputes, the contractor must also report any actual or potential dispute that may delay performance. The section exists so the Government can identify labor unrest early, assess schedule and mission impacts, and take appropriate management or contingency actions before performance is disrupted. In practice, this means labor issues are not treated as purely internal contractor matters when they could affect delivery, services, or continuity of operations. The rule is about notification and awareness, not about resolving the dispute itself, but timely reporting can be critical to avoiding missed deadlines, service interruptions, and downstream contract administration problems.

Removal of items from contractors’ facilities affected by work stoppages.

FAR 22.101-4 addresses what happens when a labor dispute or work stoppage affects a contractor’s facility and the Government needs to remove items from that plant. The section covers agency procedures for deciding whether removal is in the Government’s interest, the usual basis for that decision (the critical needs of an agency program), efforts to obtain the contractor’s and union representative’s approval for shipment of urgently required items, internal agency approval steps, and identifying who will physically remove the items. It also requires agencies to avoid force or the appearance of force and to prevent incidents that could harm labor-management relations. Finally, it addresses coordination when more than one agency’s requirements are involved. In practice, this section exists to balance mission continuity with restraint and labor-relations sensitivity, so agencies can recover urgently needed items without escalating a dispute or creating inconsistent actions across agencies.