FAR 22.605—Rulings and interpretations of the statute.
Plain-English Summary
FAR 22.605 explains how the Department of Labor’s rulings and interpretations apply the underlying labor statute to real contracting situations. It covers five specific topics: what happens when a contract at or below $20,000 is later modified above that threshold, what happens when a contract above $20,000 is later reduced to $20,000 or less, how the statute applies when a prime contractor acts as the Government’s agent, how it applies to contractors operating Government-owned facilities, and how to treat indefinite-delivery arrangements such as basic ordering agreements and blanket purchase agreements. The section exists to make clear when the statute’s labor stipulations must be included and when they stop applying, especially as contract value or structure changes over time. In practice, this section is important because coverage can turn on timing, modification, and the estimated aggregate value of orders, not just the original award amount. Contracting officers and contractors must therefore monitor contract changes and ordering patterns closely to avoid missing required labor clauses or applying them when they no longer fit. The reserved paragraph (b) indicates there is no additional regulatory text in that subsection.
Key Rules
Modifications can trigger coverage
A contract initially valued at $20,000 or less becomes subject to the statute if it is later modified to exceed $20,000. The statute applies only to work performed after the date of the modification, not retroactively to earlier performance.
Downward modifications can end coverage
If a contract originally above $20,000 is later modified by mutual agreement to $20,000 or less, the statute no longer applies to work performed after the modification date. The change must be by mutual agreement, and the coverage change is prospective only.
Agency-prime contracts require flowdown
When a prime contractor is made an agent of the Government, it must include the statute’s stipulations in contracts over $20,000 it awards for and on behalf of the Government for supplies used in constructing and equipping Government facilities. The key issue is whether the prime is acting as the Government’s agent in placing those supply contracts.
Government-owned facilities do not change coverage
A contractor operating Government-owned facilities is treated the same as a contractor operating privately owned facilities for purposes of the statute. Coverage depends on the contract and the statute, not on who owns the facility where the work is performed.
Indefinite-delivery contracts need annual estimates
Indefinite-delivery contracts, including basic ordering agreements and blanket purchase agreements, are subject to the statute unless it can be determined in advance that the total estimated orders for the first year after the agreement’s effective date will not exceed $20,000. If the agreement is extended, the agency must make the determination again each year and modify the contract or agreement if needed.
Labor rules follow the contract status
The section ties coverage to the contract’s current status and estimated use, so agencies must reassess coverage when the contract is modified, extended, or structured as an ordering vehicle. This prevents under- or over-application of the statute based on outdated assumptions.
Responsibilities
Contracting Officer
Determine whether a contract or agreement is covered by the statute based on the original award amount, later modifications, and estimated annual order volume. Ensure required stipulations are included when coverage applies, remove or stop applying them prospectively when coverage ends, and reassess indefinite-delivery arrangements annually if extended.
Prime Contractor acting as Government agent
Include the statute’s stipulations in covered supply contracts over $20,000 awarded for and on behalf of the Government for supplies used in constructing and equipping Government facilities. Monitor the value and purpose of those subcontracts to ensure the required labor terms are flowed down.
Contractor operating Government-owned facilities
Apply the statute’s labor requirements to employees in the same manner as if the facilities were privately owned. Do not assume Government ownership of the facility exempts the contract from coverage.
Agency
Support proper administration of the statute by making accurate coverage determinations for indefinite-delivery vehicles, tracking modifications that change contract value, and ensuring contracts are modified when annual estimates show the agreement should or should not remain covered.
Department of Labor
Issue rulings and interpretations that explain how the statute is administered, which agencies and contractors use to apply the law consistently in specific contracting situations.
Practical Implications
Coverage can change after award, so contractors and contracting officers must watch modifications closely; a small contract that grows above $20,000 can suddenly become covered for future work.
The $20,000 threshold is not just a pricing check at award. For indefinite-delivery vehicles, the key question is the estimated aggregate value of orders over the relevant year, which must be revisited annually if the agreement continues.
Do not assume Government-owned facilities or special operating arrangements remove labor-statutory obligations; the statute can still apply to the contractor’s employees.
When a prime contractor is acting as the Government’s agent, subcontracting/supply purchases may need the statute’s stipulations even if the prime is not buying for its own account.
A common pitfall is failing to update the contract file and clauses after a modification or extension changes coverage status; the regulation expects prospective adjustment, not informal reliance on the original award terms.
Official Regulatory Text
(a) As authorized by the Act, the Secretary of Labor has issued rulings and interpretations concerning the administration of the statute (see 41 CFR50-206). The substance of certain rulings and interpretations is as follows: (1) If a contract for $20,000 or less is subsequently modified to exceed $20,000, the contract becomes subject to the statute for work performed after the date of the modification. (2) If a contract for more than $20,000 is subsequently modified by mutual agreement to $20,000 or less, the contract is not subject to the statute for work performed after the date of the modification. (3) If a contract awarded to a prime contractor contains a provision whereby the prime contractor is made an agent of the Government, the prime contractor is required to include the stipulations of the statute in contracts in excess of $20,000 awarded for and on behalf of the Government for supplies that are to be used in the construction and equipment of Government facilities. (4) If a contract subject to the statute is awarded to a contractor operating Government-owned facilities, the stipulations of the statute affect the employees of that contractor the same as employees of contractors operating privately owned facilities. (5) Indefinite-delivery contracts, including basic ordering agreements and blanket purchase agreements, are subject to the statute unless it can be determined in advance that the aggregate amount of all orders estimated to be placed thereunder for 1 year after the effective date of the agreement will not exceed $20,000. A determination shall be made annually thereafter if the contract or agreement is extended, and the contract or agreement modified if necessary. (b) [Reserved]