FAR 22.1023—Termination for default.
Plain-English Summary
FAR 22.1023 is a short but important enforcement provision under the Service Contract Labor Standards (SCLS) framework. It explains that a contractor’s failure to comply with the requirements of the SCLS-related contract clauses may be grounds for termination for default, and it points readers to paragraph (k) of the clause at 52.222-41, Service Contract Labor Standards, for the operative contract language. In practice, this means SCLS compliance is not just a wage-and-fringe-benefit issue; it can become a contract performance issue with the most serious remedy available to the Government. The section matters because it ties labor standards compliance directly to contract administration, giving contracting officers a basis to treat certain violations as material breaches rather than mere administrative errors. It also signals to contractors that failures involving wage determinations, fringe benefits, recordkeeping, or other clause requirements can jeopardize continued performance. For agencies, it reinforces the need to monitor compliance and document violations carefully before pursuing default remedies.
Key Rules
SCLS clause violations can trigger default
If a contractor fails to comply with the requirements of the SCLS-related contract clauses, that failure may be grounds for termination for default. The rule does not make default automatic, but it authorizes the Government to treat serious noncompliance as a contractual default issue.
Look to 52.222-41(k)
This section directs users to paragraph (k) of the Service Contract Labor Standards clause at 52.222-41 for the specific default language. The practical effect is that the clause itself supplies the detailed contractual basis for enforcement.
Applies to clause requirements, not just wages
The trigger is failure to comply with the requirements of the contract clauses related to SCLS, which can include more than paying the correct wage rates. Depending on the clause and facts, noncompliance may involve fringe benefits, notices, records, or other required labor-standard obligations.
Default is discretionary, not mandatory
The regulation says violations may be grounds for termination for default, which means the contracting officer must exercise judgment. The Government should consider the seriousness of the violation, the contract terms, and the overall circumstances before deciding to terminate.
Responsibilities
Contractor
Comply with all applicable SCLS contract clause requirements, including wage, fringe benefit, and other clause-based obligations. Correct violations promptly and understand that noncompliance may expose the contract to default termination.
Contracting Officer
Monitor contractor performance and determine whether SCLS clause violations are serious enough to justify default action. Use the authority in the contract clause and document the basis for any termination decision.
Agency
Administer SCLS-covered contracts in a way that supports compliance oversight, including ensuring the proper clauses are included and violations are addressed through appropriate enforcement channels.
Department of Labor / Labor Standards Enforcement Officials
Provide the labor standards framework and enforcement support associated with SCLS compliance. Their findings or guidance may inform whether a contractor’s conduct constitutes a clause violation that could support default action.
Practical Implications
Contractors should treat SCLS compliance as a performance requirement, not just a payroll issue, because violations can threaten the contract itself.
Contracting officers should build a clear record of noncompliance before considering default, since the regulation authorizes but does not require termination.
Common pitfalls include underpaying required wages or fringe benefits, failing to follow clause procedures, and assuming that correcting back pay alone eliminates default risk.
Because the section points to 52.222-41(k), users should read this provision together with the clause text to understand the full enforcement mechanism.
Agencies should coordinate labor standards issues carefully so that compliance problems are addressed consistently and supported by documentation.
Official Regulatory Text
As provided by the Service Contract Labor Standards statute, any contractor failure to comply with the requirements of the contract clauses related to the Service Contract Labor Standards statute may be grounds for termination for default (see paragraph (k) of the clause at 52.222-41 , Service Contract Labor Standards).