FAR 52.222-2—Payment for Overtime Premiums.
Plain-English Summary
FAR 52.222-2, Payment for Overtime Premiums, controls when a contractor may charge overtime premium costs to the Government and when prior approval is required. The clause addresses the basic authorization for overtime, the dollar threshold the parties negotiate for allowable overtime premiums, and four express exceptions where overtime premiums may be paid regardless of that threshold: emergencies, indirect-labor work, continuous operations that cannot reasonably be interrupted, and overtime that will reduce overall Government cost. It also sets out what a contractor must submit when requesting approval for overtime premiums above the negotiated amount, including workload and staffing data, schedule impact, effects on other Government contracts, and why multishift operations or additional staffing are not feasible. In practice, this clause is a cost-control and scheduling tool: it helps the contracting officer decide whether overtime is justified, prevents unnecessary premium labor charges, and forces the contractor to show that overtime is truly needed or economically beneficial. It matters both for contract pricing and for day-to-day performance management because unapproved or unsupported overtime premiums may be unallowable or disallowed, while properly justified overtime can protect schedule performance and reduce total program cost.
Key Rules
Overtime is conditionally authorized
The clause authorizes overtime only if the overtime premium does not exceed the negotiated dollar amount inserted in the clause, or if one of the listed exceptions applies. The inserted amount is negotiated at award and serves as the general ceiling for overtime premium reimbursement.
Four express exceptions apply
The negotiated dollar limit does not apply to overtime premiums for emergencies, indirect-labor employees, continuous operations that cannot reasonably be interrupted, or work that will result in lower overall Government costs. These categories allow overtime when business necessity or cost savings justify it.
Emergency overtime is allowed
Overtime premiums may be paid for work needed to cope with emergencies such as accidents, natural disasters, equipment breakdowns, or sporadic production bottlenecks. This exception is intended for unexpected events that require immediate labor response.
Indirect labor may use overtime
Overtime premiums are permitted for indirect-labor employees performing support functions such as administration, protection, transportation, maintenance, standby plant protection, utilities, or accounting. The clause recognizes that these functions may require extended hours to support contract performance.
Continuous operations are covered
Overtime premiums may be paid for tests, industrial processes, laboratory procedures, loading or unloading transportation conveyances, and in-flight or afloat operations that are continuous in nature and cannot reasonably be interrupted or completed otherwise. This exception addresses work that is operationally impractical to stop and restart.
Lower-cost overtime is permitted
If overtime will reduce overall costs to the Government, the premium may be paid even if it exceeds the negotiated threshold. The contractor must be able to show that the total cost impact is favorable, not merely that overtime is convenient.
Requests above the threshold need detailed support
Any request for estimated overtime premiums above the negotiated amount must include all estimated overtime for contract completion and provide specific supporting data. The contractor must identify the work unit, show the effect of denial on schedule, explain impacts on other Government contracts, and justify why multishift operations or additional personnel are not practical.
Responsibilities
Contracting Officer
Negotiate the overtime premium amount to be inserted in the clause, evaluate contractor requests that exceed that amount, and determine whether the supporting facts justify approval. The contracting officer must assess workload, staffing, schedule impact, cross-contract effects, and the feasibility of alternatives such as multishift operations or hiring additional personnel.
Contractor
Use overtime only within the clause’s authorization, track whether the overtime premium stays within the negotiated limit or fits an exception, and submit a complete justification when requesting approval above the threshold. The contractor must provide accurate workload, staffing, schedule, and cost-impact information and include all estimated overtime for contract completion in the request.
Agency/Program Personnel
Provide operational input needed to evaluate whether overtime is necessary and whether it affects delivery, performance, or other contracts. Program and technical staff often supply the facts about urgency, production constraints, and whether the work can be rescheduled or shifted.
Practical Implications
This clause is not a blanket approval for overtime; it is a controlled mechanism tied to a negotiated dollar amount and specific exceptions. Contractors should not assume premium pay is reimbursable just because overtime was worked.
The biggest pitfall is failing to document the justification before overtime is incurred or requested. If the contractor cannot show why overtime was necessary, the contracting officer may deny the premium cost.
Requests above the threshold must be complete and specific. Vague statements like "needed to meet schedule" are usually not enough; the contractor should provide unit-level workload, staffing, and schedule data.
The clause requires consideration of alternatives. If the work could be handled by a second shift or additional hires, the contractor must explain why those options are not feasible before overtime is approved.
Contractors with multiple Government contracts should watch for cross-contract impacts. Overtime approved for one contract may affect performance or payments on others, and that can influence the contracting officer’s decision.
Official Regulatory Text
As prescribed in 22.103-5 (b) , insert the following clause: Payment for Overtime Premiums (July 1990) (a) The use of overtime is authorized under this contract if the overtime premium does not exceed * ______________ or the overtime premium is paid for work- (1) Necessary to cope with emergencies such as those resulting from accidents, natural disasters, breakdowns of production equipment, or occasional production bottlenecks of a sporadic nature; (2) By indirect-labor employees such as those performing duties in connection with administration, protection, transportation, maintenance, standby plant protection, operation of utilities, or accounting; (3) To perform tests, industrial processes, laboratory procedures, loading or unloading of transportation conveyances, and operations in flight or afloat that are continuous in nature and cannot reasonably be interrupted or completed otherwise; or (4) That will result in lower overall costs to the Government. (b) Any request for estimated overtime premiums that exceeds the amount specified above shall include all estimated overtime for contract completion and shall- (1) Identify the work unit; e.g., department or section in which the requested overtime will be used, together with present workload, staffing, and other data of the affected unit sufficient to permit the Contracting Officer to evaluate the necessity for the overtime; (2) Demonstrate the effect that denial of the request will have on the contract delivery or performance schedule; (3) Identify the extent to which approval of overtime would affect the performance or payments in connection with other Government contracts, together with identification of each affected contract; and (4) Provide reasons why the required work cannot be performed by using multishift operations or by employing additional personnel. * Insert either "zero" or the dollar amount agreed to during negotiations. The inserted figure does not apply to the exceptions in paragraph (a)(1) through (a)(4) of the clause. (End of clause)