FAR 37.3—Subpart 37.3

Scope of subpart.

FAR 37.300 defines the scope of Subpart 37.3, which governs how agencies contract for dismantling, demolition, and removal of improvements. It covers buildings, ground improvements, and other real property structures, including the removal of those structures or portions of them, and it uses the umbrella term “dismantling, demolition, or removal of improvements” for all of these activities. The purpose of the subpart is to ensure these contracts are handled under a specific set of procedures because they often involve safety hazards, property disposition issues, site restoration concerns, environmental and waste-handling issues, and the need to clearly define what is being removed and what remains government property. In practice, this section tells contracting personnel and contractors that demolition-type work is not just ordinary construction or service work; it requires attention to the unique risks and contract terms associated with taking down or removing existing real property improvements. It also signals that the rest of Subpart 37.3 contains the detailed procedures that apply when the Government is procuring this kind of work.

Labor standards.

FAR 37.301 explains which federal labor standards statute applies to contracts for dismantling, demolition, or removal of improvements. It addresses the key coverage question between the Service Contract Labor Standards (41 U.S.C. chapter 67) and the Construction Wage Rate Requirements statute, formerly Davis-Bacon, under 40 U.S.C. chapter 31, subchapter IV. The section draws a bright line: if the contract is only for dismantling, demolition, or removal, the Service Contract Labor Standards generally apply; but if the work is tied to contemplated construction, alteration, or repair of a public building or public work at that location, then the construction wage statute applies instead. It also makes clear that the later construction work can be covered even if it will be awarded under a separate contract, so agencies cannot avoid construction wage coverage by splitting the work into multiple procurements. In practice, this section is about proper labor-statement classification at the planning and solicitation stage, because the wrong statute means the wrong wage determinations, clauses, and contractor compliance obligations. It is especially important for agencies planning site clearance, teardown, or removal work where redevelopment, renovation, or replacement is expected.

Bonds or other security.

FAR 37.302 addresses when bonds are not automatically required and when a contracting officer may still require security for a demolition-type contract. It applies only to contracts that are solely for dismantling, demolition, or removal of improvements, and it states that the statutory bond requirements in 40 U.S.C. chapter 31, subchapter III do not apply in that narrow situation. Even though the statute does not apply, the contracting officer retains discretion to require a performance bond or other security under FAR 28.103. The section also explains the purposes for which that security may be set: to ensure completion of the work, to protect Government-retained property, to protect property given to the contractor as compensation, and to protect the Government from damage to adjoining property. In practice, this provision gives the Government flexibility to tailor risk protection to demolition and removal contracts, where the usual construction-bond framework may not fit the transaction. It is important because these contracts can involve significant site, property, and third-party damage risks even when the work is not traditional construction.

Payments.

FAR 37.303 addresses how payment works in demolition and dismantling contracts when salvageable materials are involved. It covers two possible payment structures: the Government may pay the contractor to dismantle or demolish structures, or the contractor may pay the Government for the right to salvage and remove materials recovered from the work. The section also requires the contracting officer to evaluate the usefulness of all salvageable property to the Government, not just its scrap value, and to expressly reserve for Government retention any items that are more valuable to the Government than to the contractor as salvage. For property not reserved, the contracting officer must determine fair market value because title will pass to the contractor, and that value affects the amount the Government pays, whether the contractor pays the Government, and any additional compensation due if the contract is terminated. In practice, this section is about making sure the contract clearly allocates salvage rights and reflects the real economic value of materials so the Government does not lose useful property or misprice the work.

Contract clauses.

FAR 37.304 tells contracting officers which payment clause to use in solicitations and contracts for dismantling, demolition, or removal of improvements. It covers three related situations: when the Government pays the contractor and the contractor may also receive title to property; when the contractor pays the Government because the contractor will receive title to dismantled or demolished property and owes a net amount; and when the Government allows incremental payments with title transferred in stages. The section also addresses the special case where all material from the work is retained by the Government, requiring use of the basic payment clause with Alternate I. In practice, this provision is about matching the contract clause to the ownership and payment structure of the demolition or removal work so that title, compensation, and risk are handled correctly. It matters because the wrong clause can create disputes over ownership of salvaged materials, timing of payments, and when title passes. It also gives the contracting officer discretion to use incremental payment arrangements when that approach would benefit the Government, such as improving competition or increasing small business participation.