FAR 52.222-51—Exemption from Application of the Service Contract Labor Standards to Contracts for Maintenance, Calibration, or Repair of Certain Equipment-Requirements.
Plain-English Summary
FAR 52.222-51 creates a narrow exemption from the Service Contract Labor Standards (SCLS) for contracts to maintain, calibrate, or repair certain equipment when the work is tied to commercial equipment and commercial pricing and compensation practices. This clause addresses four core subjects: the type of equipment covered, the pricing basis for the services, the wage and fringe benefit plan that must be used for service employees, and the contractor’s responsibility for subcontractor compliance. It also explains that the contractor must make an affirmative determination that all exemption conditions are met before relying on the exemption, and it warns that the Department of Labor can later decide the exemption does not apply if any condition is not satisfied. In practice, the clause is meant to keep truly commercial service work outside SCLS coverage while preventing contractors from using the exemption unless the equipment, pricing, and labor practices are genuinely commercial. It also requires flowdown of the clause to subcontracts for exempt services, so the exemption is managed consistently throughout the supply chain. For contracting officers and contractors, the practical significance is that this is not a blanket exemption; it is a fact-specific determination that must be supported and monitored throughout performance.
Key Rules
Commercial equipment only
The equipment serviced must be used regularly for non-Government purposes and sold or traded by the contractor in substantial quantities to the general public in the ordinary course of business. This limits the exemption to equipment that is genuinely commercial, not equipment built or maintained primarily for Government use.
Commercial pricing required
The services must be furnished at prices that are, or are based on, established catalog or market prices for maintenance, calibration, or repair. The clause defines both terms to ensure the pricing is real, current, and independently supportable.
Defined catalog price
An established catalog price must come from a regularly maintained catalog, price list, schedule, or similar source that is published or otherwise available for customer inspection. It must show prices at which sales currently are, or were last, made to a significant number of general-public buyers.
Defined market price
An established market price must be a current price formed in the normal course of trade between willing buyers and sellers and must be substantiated by sources independent of the manufacturer or contractor. This prevents self-serving pricing from being treated as market-based.
Commercial wage plan parity
The compensation plan, including wages and fringe benefits, for all service employees on the contract must be the same as the plan used for those employees and equivalent employees servicing the same equipment for commercial customers. The contractor cannot use a different labor compensation structure for the Government work if it wants the exemption.
Contractor must police subcontractors
The contractor is responsible for subcontractor compliance with every condition of the exemption and must decide whether the exemption applies to each subcontract before award. The contractor must make an affirmative, all-factors determination that paragraphs (a) through (c) will be met.
Loss of exemption if conditions fail
If the Department of Labor determines that any exemption condition was not met, the exemption is void and the contract becomes subject to the Service Contract Labor Standards statute. In that event, the procedures in 29 CFR 4.123(e)(1)(iv) and 29 CFR 4.5(c) apply.
Flowdown to subcontracts
The contractor must include the substance of the clause, including the flowdown requirement in paragraph (f), in subcontracts for exempt services. This ensures subcontractors are bound to the same exemption conditions and compliance obligations.
Responsibilities
Contracting Officer
Insert the clause when prescribed by FAR 22.1006(e)(2) and ensure the contract file supports the basis for using the exemption. The contracting officer should understand that the exemption depends on factual commercial-equipment and commercial-pricing conditions, not merely on contract language.
Contractor
Determine whether the exemption applies before relying on it, document an affirmative finding that all conditions in paragraphs (a) through (c) will be met, and maintain compliance throughout performance. The contractor must also ensure the same clause substance is flowed down to applicable subcontracts and must monitor subcontractor performance and pricing/labor practices.
Subcontractor
Comply with the flowed-down exemption conditions when performing exempt services under the subcontract. The subcontractor must use the required commercial pricing and compensation practices and support the contractor’s compliance position.
Department of Labor
Review and determine whether the exemption conditions have been satisfied. If any condition is not met, DOL may deem the exemption inapplicable, causing the contract to become subject to the Service Contract Labor Standards statute and the related regulatory procedures.
Agency
Support proper acquisition planning and contract administration for service work that may qualify for the exemption. The agency should ensure the procurement record and administration practices align with the commercial nature of the equipment and services.
Practical Implications
This clause is a narrow exemption, so contractors should not assume maintenance or repair work is automatically outside SCLS just because the equipment is commercial. The key is proving all three substantive conditions: commercial equipment, commercial pricing, and commercial compensation practices.
Pricing documentation matters. Contractors should be able to show catalog pages, price lists, market data, or other independent evidence that the service prices are established and current, not created ad hoc for the Government requirement.
Labor compensation consistency is critical. If employees servicing commercial customers receive different wages or fringe benefits than those proposed for the Government contract, the exemption may fail.
Subcontract management is a common risk area. Prime contractors remain responsible for subcontractor compliance, so they should evaluate the exemption before award and include clear flowdown language and oversight procedures.
If DOL later rejects the exemption, the contract can become subject to SCLS after award, creating potential wage, fringe, and administrative consequences. Contractors should therefore preserve contemporaneous support for the exemption decision and reassess it if the scope, pricing, or labor model changes.
Official Regulatory Text
As prescribed in 22.1006 (e)(2) , insert the following clause: Exemption from Application of the Service Contract Labor Standards to Contracts for Maintenance, Calibration, or Repair of Certain Equipment-Requirements (May 2014) (a) The items of equipment to be serviced under this contract are used regularly for other than Government purposes, and are sold or traded by the Contractor in substantial quantities to the general public in the course of normal business operations. (b) The services shall be furnished at prices which are, or are based on, established catalog or market prices for the maintenance, calibration, or repair of equipment. (1) An "established catalog price" is a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or the Contractor, is either published or otherwise available for inspection by customers, and states prices at which sales currently, or were last, made to a significant number of buyers constituting the general public. (2) An "established market price" is a current price, established in the usual course of trade between buyers and sellers free to bargain, which can be substantiated from sources independent of the manufacturer or Contractor. (c) The compensation (wage and fringe benefits) plan for all service employees performing work under the contract shall be the same as that used for these employees and for equivalent employees servicing the same equipment of commercial customers. (d) The Contractor is responsible for compliance with all the conditions of this exemption by its subcontractors. The Contractor shall determine the applicability of this exemption to any subcontract on or before subcontract award. In making a judgment that the exemption applies, the Contractor shall consider all factors and make an affirmative determination that all of the conditions in paragraphs (a) through (c) of this clause will be met. (e) If the Department of Labor determines that any conditions for exemption in paragraphs (a) through (c) of this clause have not been met, the exemption shall be deemed inapplicable, and the contract shall become subject to the Service Contract Labor Standards statute. In such case, the procedures at 29 CFR 4.123(e)(1)(iv) and 29 CFR 4.5(c) will be followed. (f) The Contractor shall include the substance of this clause, including this paragraph (f), in subcontracts for exempt services under this contract. (End of clause)