FAR 22.1603—Exceptions.
Plain-English Summary
FAR 22.1603 explains when the requirements of this subpart do not apply and how formal exemptions can be granted. It covers three automatic exclusions: contracts below the simplified acquisition threshold, subcontracts of $10,000 or less, and contracts or subcontracts for work performed exclusively outside the United States. It also addresses discretionary exemptions issued by the Secretary when applying the Executive Order would impair economical and efficient procurement or when special circumstances make an exemption necessary to serve the national interest. In practice, this section tells contracting personnel and contractors when the subpart’s requirements can be skipped entirely, when a higher-level exemption must be sought, and that exemption requests must follow Department of Labor procedures at 29 CFR 471.3. It is important because it prevents unnecessary application of the subpart to low-dollar or overseas work while preserving a formal process for exceptional cases.
Key Rules
Small-dollar contracts excluded
The subpart does not apply to contracts under the simplified acquisition threshold. If the procurement is below that threshold, the requirements in this subpart are not triggered.
Low-value subcontracts excluded
Subcontracts of $10,000 or less are outside the scope of this subpart. Prime contractors do not need to flow these requirements down to such small subcontracts.
Work performed overseas excluded
Contracts or subcontracts for work performed exclusively outside the United States are exempt from this subpart. The exclusion applies only when the work is entirely outside the United States.
Secretary may grant exemptions
The Secretary may exempt a department, agency, contract, subcontract, or class of contracts or subcontracts if the Executive Order would impair economical and efficient procurement or if special circumstances require an exemption in the national interest.
Clause coverage may be waived
An exemption may cover the requirement to include clause 52.222-40, or even only parts of that clause, in contracts. This gives the Secretary flexibility to tailor relief to the specific need.
Requests must follow DOL procedures
Requests for exemptions must be submitted under Department of Labor regulations at 29 CFR 471.3. Agencies cannot invent their own exemption process or bypass the required submission procedures.
Responsibilities
Contracting Officer
Determine whether the acquisition falls within an automatic exclusion and, if not, whether an exemption is needed. If an exemption is sought, ensure the request follows the Department of Labor process and that the contract file documents the basis for any exclusion or exemption.
Agency/Contracting Department
Identify procurements or classes of procurements that may warrant a Secretary-granted exemption and coordinate requests through the proper channels. Ensure compliance with any exemption conditions and maintain consistent application across the agency.
Secretary
Evaluate whether the Executive Order requirements would hinder economical and efficient procurement or whether special circumstances justify relief. Grant exemptions to departments, agencies, contracts, subcontracts, or classes of contracts/subcontracts as appropriate.
Prime Contractor
Apply the subpart only when it is required and flow down requirements only to covered subcontracts. Confirm whether a subcontract is above the $10,000 threshold and whether any exemption or exclusion applies before imposing clause requirements.
Subcontractor
Determine whether the subcontract is covered by the subpart or excluded because it is $10,000 or less or performed exclusively outside the United States. If a flowdown is received, verify whether it is required or whether an exemption applies.
Department of Labor
Provide the regulatory framework for submitting exemption requests under 29 CFR 471.3 and process requests in accordance with those procedures.
Practical Implications
This section is a threshold-and-exemption rule: first check whether the contract or subcontract is automatically outside the subpart, then consider whether a formal exemption is needed.
A common pitfall is assuming any overseas work is excluded; the exclusion applies only when the work is performed exclusively outside the United States.
Another frequent mistake is overlooking the $10,000 subcontract threshold or applying flowdown clauses to subcontracts that are too small to be covered.
Contracting officers should document the basis for exclusion or exemption in the file, especially when the decision is close to a threshold or involves mixed-location performance.
If an agency believes an exemption is justified, it must use the Department of Labor’s prescribed process rather than treating the exemption as a routine contracting discretion.
Official Regulatory Text
(a) The requirements of this subpart do not apply to- (1) Contracts under the simplified acquisition threshold; (2) Subcontracts of $10,000 or less; and (3) Contracts or subcontracts for work performed exclusively outside the United States. (b) Exemptions granted by the Secretary. (1) If the Secretary finds that the requirements of the Executive Order impair the ability of the Government to procure goods and services on an economical and efficient basis or if special circumstances require an exemption in order to serve the national interest, the Secretary may exempt a contracting department or agency, or groups of departments or agencies, from the requirements of any or all of the provisions of this Executive Order with respect to a particular contract or subcontract, or any class of contracts or subcontracts, including the requirement to include the clause at 52.222-40 , or parts of that clause, in contracts. (2) Requests for exemptions may be submitted in accordance with Department of Labor regulations at 29 CFR 471.3 .