FAR 22.103-5—Contract clauses.
Plain-English Summary
FAR 22.103-5 tells contracting officers when to include two labor-related contract clauses: the notice of labor disputes clause at 52.222-1 and the payment for overtime premiums clause at 52.222-2. It ties the first clause to solicitations and contracts involving programs or requirements designated under FAR 22.101-1(e), which are the kinds of acquisitions where labor disputes could affect timely performance and government operations. It ties the second clause to cost-reimbursement contracts expected to exceed the simplified acquisition threshold, but it also creates two important exceptions: cost-reimbursement contracts for vessel operation and certain cost-plus-incentive-fee contracts with specified fee swing and contractor share thresholds. In practice, this section is about making sure the government gets advance notice of labor disputes that could disrupt performance and about controlling when overtime premium costs may be paid under cost-reimbursement arrangements. For contracting officers, it is a clause-selection rule that must be applied at solicitation and contract award; for contractors, it signals when they must notify the government of labor issues and when overtime premium costs may or may not be reimbursable.
Key Rules
Insert labor dispute notice clause
The contracting officer must include FAR 52.222-1, Notice to the Government of Labor Disputes, in solicitations and contracts for programs or requirements designated under FAR 22.101-1(e). This clause is mandatory whenever the acquisition falls within that designated category.
Apply overtime premium clause to covered cost-reimbursement contracts
The contracting officer must include FAR 52.222-2, Payment for Overtime Premiums, when a cost-reimbursement contract is contemplated and the expected contract amount exceeds the simplified acquisition threshold. The rule is aimed at controlling reimbursement of overtime premium costs in larger cost-reimbursement acquisitions.
Exception for vessel operations
The overtime premium clause is not required for a cost-reimbursement contract for operation of vessels. This is a specific carve-out from the general rule, so the contracting officer should not insert 52.222-2 in that situation.
Exception for qualifying CPIF contracts
The overtime premium clause is also not required for a cost-plus-incentive-fee contract if the contract provides a swing from target fee of at least plus or minus 3 percent and the contractor’s share is at least 10 percent. Both conditions must be met for the exception to apply.
Clause selection is mandatory at solicitation and award
The section directs the contracting officer to insert these clauses in both solicitations and contracts when the stated conditions are met. This means the decision must be made early, before award, and carried through consistently into the final contract document.
Responsibilities
Contracting Officer
Determine whether the acquisition involves a program or requirement designated under FAR 22.101-1(e) and, if so, insert FAR 52.222-1 in the solicitation and contract. Also determine whether a cost-reimbursement contract is contemplated, whether the expected amount exceeds the simplified acquisition threshold, and whether either exception applies before deciding whether to include FAR 52.222-2.
Contractor
If the labor dispute notice clause is included, provide the required notice to the government of labor disputes as required by the clause and manage performance planning accordingly. If the overtime premium clause is included, ensure overtime premium charges are handled in accordance with the contract terms and understand that reimbursement may be limited or conditioned by the clause.
Agency/Program Office
Identify requirements that may be designated under FAR 22.101-1(e) so the contracting officer can apply the labor dispute notice clause correctly. For cost-reimbursement acquisitions, support the contracting officer with accurate acquisition planning, including contract type, estimated value, and whether any exception to the overtime premium clause applies.
Practical Implications
This section is mainly a clause-coverage check: if the acquisition fits the trigger, the clause must be included, and missing it can create compliance problems later.
The labor dispute clause matters most where performance interruptions could affect critical government needs, so contractors should be ready to notify the government quickly if labor issues arise.
For cost-reimbursement contracts, overtime premium costs are a common audit and billing issue; parties should confirm whether 52.222-2 applies before work starts.
The two exceptions to the overtime premium clause are easy to overlook, especially the CPIF exception, which requires both the fee swing and contractor share thresholds to be met.
Contracting officers should verify the acquisition type and dollar threshold early, because the clause decision depends on the contemplated contract structure, not just final negotiations.
Official Regulatory Text
(a) The contracting officer shall insert the clause at 52.222-1 , Notice to the Government of Labor Disputes, in solicitations and contracts that involve programs or requirements that have been designated under 22.101-1 (e). (b) The contracting officer shall include the clause at 52.222-2 , Payment for Overtime Premiums, in solicitations and contracts when a cost-reimbursement contract is contemplated and the contract amount is expected to exceed the simplified acquisition threshold; unless- (1) A cost-reimbursement contract for operation of vessels is contemplated; or (2) A cost-plus- incentive-fee contract that will provide a swing from the target fee of at least plus or minus 3 percent and a contractor’s share of at least 10 percent is contemplated.