15i Exclusions and Exemptions Under CWHSSA

15i EXCLUSIONS AND EXEMPTIONS UNDER CWHSSA

15i00 Exemptions.

Certain types of contracts and contract work are exempted from coverage of the act, either by the terms of the act (see section 103(a) and (b)) or by administrative order issued by authority of the Secretary under section 105 of the act. These include (the first five are statutory):

• Work under a contract described in FOH 15g00(3) where the assistance from the U.S. or any agency or instrumentality is only in that nature of a loan guarantee, or insurance (see FOH 15i01(b))
• Contracts for transportation by land, air, or water (this includes, for example, mail haul contracts)
• Contracts for transmission of intelligence
• Contracts for the purchase of supplies or materials or articles ordinarily available in the open market
• Work required to be done in accordance with the provisions of the PCA
• Construction contracts of $100,000 or less
• Purchases and contracts, other than construction , in the aggregate amount of $100,000 or less. In arriving at the aggregate amount involved, there must be included all property and services which would properly be grouped together in a single transaction and which would be included in a single advertisement for bids if the procurement were being effected by formal advertising
• Agreements entered into by or on behalf of the Commodity Credit Corporation for storage in, or handling by, commercial warehouses of certain items, including grains, beans, seeds, cotton, wool, and naval stores
• Certain sales of surplus power by Tennessee Valley Authority
• Contract work performed in a work place within a foreign country or certain other areas. This exemption follows section 13(f)of the FLSA and its effect is to make the geographical scope of CWHSSA the same as the FLSA

15i01 Application of exclusions and exemptions under CWHSSA.

• The CWHSSA provides in part that the act applies if the contract is “for work financed in whole or in part by loans or grants from, or loans insured or guaranteed by,” the U.S. or any agency or instrumentality thereof under any federal law providingwage standards for the work. See 40 USC 3701(b)1(B)(iii). Thus, coverage on federally assisted contracts does not exist unless the particular statute under which the loans or grants are authorized contains wage standards, directly or by reference. For example, contracts awarded as a result of a grant from the U.S. Department of Agriculture, Soil Conservation Service, under the Watershed Protection and Flood Prevention Act (16 USCA 1001, et seq.) are not covered by CWHSSA since the basic statute contains no reference to wage standards.
• 40 USC 3701 also provides that 40 USC 3702 (labor standards and wage and liquidated damages liabilities) shall not apply “to work where the assistance described in 40 USC § 3701(b)1(B)(iii) from the Government or an agency or instrumentality is only in a loan guarantee, or insurance” (emphasis added). This is a limited partial exemption from the application of CWHSSA confined to work assisted only in the quoted manner. It applies even though CWHSSA stipulations are written into the contract, but it does not affect DBRA application under the wage standards provided in the enabling statute. Particular attention should be paid to HUD projects since the assistance for many of these projects is only in the nature of a loan guarantee, or insurance.
• With respect to contracts involving transportation, it is necessary to distinguish carefully as to whether the contract is primarily for transportation purposes or whether the transportation is merely incidental to some other purpose of the contract. For example, mail haul contracts are for the primary purpose of transportation; hauling of materials by a contractor in connection with its construction contract is an incident to the primary purpose of the contract, which is construction, not transportation.
• The open market exemption in CWHSSA is much broader than the exemption in PCA. While in PCA the open market exemption is directed at the mode of purchase, in the CWHSSA the determination of whether a purchase is an open market one depends on the character of the products or article purchased. If the contract is for the purchase of materials in the form in which they are ordinarily made available to the general purchasing public, the CWHSSA open market exemption applies.
• Laborers or mechanics (including watchmen and guards) engaged in performance of government contracts for supplies that are not ordinarily available in the open market (see FOH 15i01(d)) are covered by CWHSSA if and to the extent that the work which they perform is not required to be done in accordance with the provisions of PCA. If a contract in excess of $100,000 is in part for services and in part for materials, a laborer or mechanic performing the services may be subject to CWHSSA, and another employee, engaged in producing the materials, may be subject only to PCA.

15i02 Limited exemptions, variations, and tolerances.

• Under the act, the Secretary or authorized representative may provide reasonable limitations and allow variations, tolerances, and exemptions to and from any or all of the provisions of the CWHSSA whenever such action is found to be necessary and proper in the public interest to prevent injustice, or undue hardship, or to avoid serious impairment of government business. 29 CFR 5.15 provides for consideration of any written request by any federal agency for such action, and sets forth certain variations, tolerances, and exemptions which have been granted.
• In limited instances, individual exemptions, variations, and tolerances under the CWHSSA have been granted to certain categories of workers on qualified contracts. However, such workers are to be paid overtime compensation as may be required by any other applicable law.