FAR 37.115—Uncompensated overtime.

Scope.

FAR 37.115-1 is a short scope provision that explains the legal basis for the policies in this subpart: Section 834 of Public Law 101-510, codified at 10 U.S.C. 4507. In practical terms, it tells readers that the rules in this section are not standalone preferences or agency guidance, but policies grounded in statute. The section itself does not create detailed procedural steps, competition requirements, or contract administration rules; instead, it identifies the source authority that supports the rest of the subpart. For contracting officers and contractors, this matters because it signals that any requirements in the surrounding section should be read as implementing a specific congressional mandate, which can affect how strictly the policies are applied and how much discretion the agency has. It also helps users understand that the section’s purpose is to anchor the subpart in law, not to restate all of the operational details in this single provision.

General policy.

FAR 37.115-2 sets the government’s policy and evaluation rules for uncompensated overtime when acquiring professional or technical services priced by the number of hours to be provided rather than by task or deliverable. It explains that uncompensated overtime is not encouraged, requires solicitations to identify uncompensated overtime hours and rates for direct-charge FLSA-exempt personnel and certain subcontractor proposals, and extends that disclosure to uncompensated overtime embedded in indirect cost pools when those employees are normally charged direct. The section also requires contracting officers to assess whether uncompensated overtime could reduce technical quality, create unrealistic pricing, or concentrate low-cost labor in key positions, and it ties that review to competitive negotiations and cost realism analysis. Finally, it requires use of an adjusted hourly rate that reflects uncompensated overtime for all proposed hours, not just overtime hours, whenever uncompensated overtime is present. In practice, this section is meant to prevent artificially low labor pricing from masking performance risk and to ensure the government evaluates labor-hour proposals on a realistic basis.

Solicitation provision.

FAR 37.115-3 tells contracting officers when they must include the solicitation provision at 52.237-10, Identification of Uncompensated Overtime. This section applies to solicitations valued above the simplified acquisition threshold when the government is buying professional or technical services on the basis of the number of hours to be provided. Its purpose is to ensure offerors disclose any uncompensated overtime practices that could affect labor-hour pricing, staffing assumptions, and the realism of proposed hours and rates. In practice, this helps the government evaluate whether proposed labor mixes and pricing reflect actual work effort or rely on reduced-cost labor hours that may distort competition or performance expectations. The rule is narrow but important: it is a mandatory solicitation requirement tied to a specific type of service acquisition and pricing structure, and it supports fair evaluation of hour-based professional or technical service offers.