FAR 22.1801—Definitions.
Plain-English Summary
FAR 22.1801 is the definitions section for the subpart implementing the contractor minimum wage requirements for federal service and construction contracts. It tells readers exactly how to interpret the key terms that control coverage and compliance, including "commercially available off-the-shelf (COTS) item," "employee assigned to the contract," "subcontract," "subcontractor," and "United States." These definitions matter because they determine whether a contract or subcontract is covered, which workers must be paid the required minimum wage, and what kinds of items or labor arrangements fall inside or outside the rule. The section also clarifies that certain bulk cargo is excluded from the COTS definition and explains when an employee is considered directly performing work under a covered contract. In practice, contracting officers use these definitions to decide when to include the clause prescribed at FAR 22.1803, and contractors use them to identify covered employees, subcontract flowdowns, and geographic scope. Because the definitions are precise and sometimes narrower than ordinary business usage, careful reading is essential to avoid underapplying or overapplying the wage requirements.
Key Rules
COTS has a narrow meaning
A COTS item must be a commercial product, sold in substantial quantities in the commercial marketplace, and offered to the Government without modification in the same form in which it is sold commercially. The definition excludes bulk cargo such as agricultural and petroleum products, even if those items are otherwise commercially traded.
Bulk cargo is excluded
Bulk cargo is not treated as a COTS item under this subpart. The text ties the exclusion to the maritime definition of bulk cargo, meaning loose, unpackaged cargo carried without mark or count; cargo loaded into intermodal equipment generally stops being bulk cargo if it becomes subject to mark and count.
Covered employee definition is limited
An employee assigned to the contract is one hired after the applicable statutory date and directly performing work in the United States under a contract that must include the clause at FAR 22.1803. Employees who mainly do indirect, overhead, or support work are not covered unless they perform substantial duties applicable to the contract.
Subcontract is broadly defined
A subcontract includes any contract entered into by a subcontractor to furnish supplies or services for performance of a prime contract or another subcontract. The definition expressly includes purchase orders and changes or modifications to purchase orders.
Subcontractor includes multiple tiers
A subcontractor is any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor. This broad wording reaches lower-tier subcontracting relationships, not just direct privity with the prime contractor.
United States is geographically defined
For this subpart, the United States includes the 50 States, the District of Columbia, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands. Work performed outside these locations is not within the defined United States for purposes of this subpart.
Responsibilities
Contracting Officer
Determine whether the contract is covered by the subpart and whether the clause at FAR 22.1803 must be included. Apply the definitions correctly when evaluating COTS status, employee coverage, subcontract flowdown expectations, and the geographic scope of work.
Contractor
Identify which workers are directly performing covered work in the United States, distinguish covered employees from indirect or overhead staff, and ensure subcontract arrangements are understood and managed consistently with the subpart. Verify whether items claimed as COTS truly meet the definition and whether any exclusions, such as bulk cargo, apply.
Subcontractor
Comply with the same coverage concepts when furnishing supplies or services for a covered prime contract or lower-tier subcontract. Recognize that purchase orders and modifications may be treated as subcontracts for purposes of the subpart and ensure downstream arrangements are handled accordingly.
Agency
Support consistent application of the subpart by using the defined terms when drafting solicitations, administering contracts, and monitoring compliance. Ensure acquisition personnel understand the scope of the United States definition and the limits of the COTS and employee-assignment definitions.
Practical Implications
Coverage turns on definitions, so a small misread can change whether the wage clause applies at all or which workers must be paid the required rate.
Contractors should not assume that all commercial items are COTS; the item must be sold in substantial quantities and offered without modification in the same form.
Payroll and labor tracking need to separate direct performers from indirect or overhead personnel, especially when employees split time between covered and noncovered work.
Subcontract flowdown analysis should be broad, because the definition reaches purchase orders and lower-tier suppliers, vendors, and distributors.
Geography matters: work performed outside the defined United States is outside this definition, while work in Puerto Rico, Guam, CNMI, and the U.S. Virgin Islands is included.
Official Regulatory Text
As used in this subpart- Commercially available off-the-shelf (COTS) item - (1) Means any item of supply that is- (i) A commercial product (as defined in paragraph (1) of the definition of “commercial product” at 2.101 ); (ii) Sold in substantial quantities in the commercial marketplace; and (iii) Offered to the Government, without modification, in the same form in which it is sold in the commercial marketplace; and (2) Does not include bulk cargo, as defined in 46 U.S.C. 40102(4) , such as agricultural products and petroleum products. Per 46 CFR 525.1 (c)(2), "bulk cargo" means cargo that is loaded and carried in bulk onboard ship without mark or count, in a loose unpackaged form, having homogenous characteristics. Bulk cargo loaded into intermodal equipment, except LASH or Seabee barges, is subject to mark and count and, therefore, ceases to be bulk cargo. Employee assigned to the contract means an employee who was hired after November 6, 1986 (after November 27, 2009, in the Commonwealth of the Northern Mariana Islands), who is directly performing work, in the United States, under a contract that is required to include the clause prescribed at 22.1803 . An employee is not considered to be directly performing work under a contract if the employee- (1) Normally performs support work, such as indirect or overhead functions; and (2) Does not perform any substantial duties applicable to the contract. Subcontract means any contract, as defined in 2.101 , entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract. It includes but is not limited to purchase orders, and changes and modifications to purchase orders. Subcontractor means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor. United States , as defined in 8 U.S.C. 1101(a)(38) , means the 50 States, the District of Columbia, Puerto Rico, Guam, the Commonwealth of Northern Mariana Islands, and the U.S. Virgin Islands.