EP 1180-1-1
1 Aug 01
a. If the successor contract is not to be performed in the same locality as the predecessor contract,
or
b. The DOL determines after a hearing that the wage rates and fringe benefits in the collective
bargaining agreement are "substantially at variance" with those prevailing in the locality for similar services;
or
c. The DOL determines that the predecessor's wage rates were not agreed to in an "arm's length"
transaction.
d. "Contingency Clause". The DOL has determined that CBAs which contain increased wage and
fringe benefit provisions which are contingent on a number of factors (but principally, upon approval by
the DOL's Wage and Hour Division) do not satisfy the criteria for the establishment of successor
contractor obligations under section 4 (c). FAR subparts 22.1002-3, 22.1008-3, and 22.1021 have
been revised to implement the guidance previously furnished by DOL on these issues within All Agency
Memoranda 159 and 166. All Agency Memorandum No. 159, for example, provides that regardless of
any contingency clauses contained within a predecessor contractor's CBA, a copy of the CBA must be
submitted with the SF 98 wage determination request to the DOL. The determination as to whether the
CBA has application for section 4{c} purposes is to be made by the DOL, and not the contracting
agency.
COs and their representatives need to be aware of the above successor contractor obligation as well as
the conditions which alter its applicability insofar as it may affect certain solicitations. The contracting
agency or any other person affected or interested, including contractors, and employee representatives,
may request a determination by the DOL on these issues. COs are reminded that FAR subparts
22.1012-3 and 22.1012-5 authorize the incorporation of the wage and fringe benefit terms of the CBA,
or the CBA itself, in order to facilitate price adjustments for options in fixed-price type contracts.
4-9. Substantial Variance. Requests for a DOL "substantial variance" hearing or "arm's length"
determination involve the use of Administrative Law Judges (ALJ) in accordance with the DOL's
regulations. For either type of request, information must be submitted (in accordance with 29 CFR 4.10
and 4.11) as follows:
4-7
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