2554 Supplementary Conditions of the Contract for Constructio

Supplementary Conditions of
the Contract for Construction

U.S. Department of Housing
and Urban Development
Office of Housing
Federal Housing Commissioner

OMB Approval No. 2502-xxxx
(exp. mm/dd/yyyy)

Public reporting burden for this collection of information is estimated to average 30 minutes per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. HUD may not
collect this information, and you are not required to complete this form, unless it displays a currently valid OMB control number.
This information collection is necessary to ensure that viable projects are developed. It is important to obtain information from applicants to assist
HUD in determining if nonprofit organizations initially funded continue to have the financial and administrative capacity needed to develop a project and
that the project design meets the needs of the residents. The Department will use this information to sets forth the obligations of the contractor or
subcontractor performing under the covered contract. This information is required in order to obtain benefits. This information is considered nonsensitive and no assurance of confidentiality is provided.

Article 1 – Labor Standards
Instructions
Whenever only FHA mortgage insurance is involved, use paragraph
(A) and (C) of Article 1 – Labor Standards. Whenever any direct form
of assistance (Section 8, Section 202/811 Capital Advance, grants
etc.) is involved, use paragraphs (A) and (B) and (C) of Article 1 –
Labor Standards.
Applicability
The Project or Program to which the construction work covered by
this contract pertains is being assisted or insured by the United
States of America and the following Federal Labor Standards Provisions are included in this Contract or related instrument pursuant to the
provisions applicable to such Federal assistance or insurance.
A. 1. (i) Minimum Wages. All laborers and mechanics employed
or working upon the site of the work (or under the United States
Housing Act of 1937 or under the Housing Act of 1949 in the
construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent
deduction or rebate on any account (except such payroll deductions
as are permitted by regulations issued by the Secretary of Labor
under the Copeland Act (29 CFR Part 3), the full amount of wages
and bona fide fringe benefits (or cash equivalents thereof) due at
time of payment computed at rates not less than those contained in
the wage determination of the Secretary of Labor which is attached
hereto and made a part hereof, regardless of any contractual
relationship which may be alleged to exist between the contractor
and such laborers and mechanics. Contributions made or costs
reasonably anticipated for bona fide fringe benefits under Section
1(b)(2) of the Davis-Bacon Act on behalf of laborers or mechanics
are considered wages paid to such laborers or mechanics, subject
to the provisions of 29 CFR 5.5(a)(1)(iv); also, regular contributions
made or costs incurred for more than a weekly period (but not less
often than quarterly) under plans, funds, or programs, which cover
the particular weekly period, are deemed to be constructively made
or incurred during such weekly period.
Such laborers and mechanics shall be paid the appropriate wage
rate and fringe benefits on the wage determination for the classification of work actually performed, without regard to skill, except as
provided in 29 CFR Part 5.5(a)(4). Laborers or mechanics performing work in more than one classification may be compensated at the
rate specified for each classification for the time actually worked
therein: Provided, That the employer's payroll records accurately set
forth the time spent in each classification in which work is performed.
The wage determination (including any additional classification and
wage rates conformed under 29 CFR Part 5.5(a)(1)(ii) and the DavisBacon poster (WH-1321) shall be posted at all times by the contractor
and its subcontractors at the site of the work in a prominent and
accessible place where it can be easily seen by the workers.
(ii) (a) Any class of laborers or mechanics which is not
listed in the wage determination and which is to be employed under
the contract shall be classified in conformance with the wage
determination. HUD shall approve an additional classification and
wage rate and fringe benefits therefore only when the following
criteria have been met:
(1) The work to be performed by the classification
Replaces FHA-2554 which is obsolete.

requested is not performed by a classification in the
wage determination; and
(2) The classification is utilized in the area by the
construction industry; and
(3) The proposed wage rate, including any bona fide
fringe benefits, bears a reasonable relationship to the
wage rates contained in the wage determination.
(b) If the contractor and the laborers and mechanics to
be employed in the classification (if known), or their representatives,
and HUD or its designee agree on the classification and wage rate
(including the amount designated for fringe benefits where appropriate), a report of the action taken shall be sent by HUD or its designee
to the Administrator of the Wage and Hour Division, Employment
Standards Administration, U.S. Department of Labor, Washington,
D.C. 20210. The Administrator, or an authorized representative, will
approve, modify, or disapprove every additional classification action
within 30 days of receipt and so advise HUD or its designee or will
notify HUD or its designee within the 30-day period that additional
time is necessary. (Approved by the Office of Management and
Budget under OMB control number 1215-0140.)
(c) In the event the contractor, the laborers or mechanics to be employed in the classification or their representatives, and
HUD or its designee do not agree on the proposed classification and
wage rate (including the amount designated for fringe benefits,
where appropriate), HUD or its designee shall refer the questions,
including the views of all interested parties and the recommendation
of HUD or its designee, to the Administrator for determination. The
Administrator, or an authorized representative, will issue a determination within 30 days of receipt and so advise HUD or its designee
or will notify HUD or its designee within the 30-day period that
additional time is necessary. (Approved by the Office of Management and Budget under OMB Control Number 1215-0140.)
(d) The wage rate (including fringe benefits where
appropriate) determined pursuant to subparagraphs A.1.(ii)(b) or (c)
of this paragraph, shall be paid to all workers performing work in the
classification under this contract from the first day on which work is
performed in the classification.
(iii) Whenever the minimum wage rate prescribed in the
contract for a class of laborers or mechanics includes a fringe benefit
which is not expressed as an hourly rate, the contractor shall either
pay the benefit as stated in the wage determination or shall pay
another bona fide fringe benefit or an hourly cash equivalent thereof.
(iv) If the contractor does not make payments to a trustee or
other third person, the contractor may consider as part of the wages
of any laborer or mechanic the amount of any costs reasonably
anticipated in providing bona fide fringe benefits under a plan or
program, Provided, That the Secretary of Labor has found, upon the
written request of the contractor, that the applicable standards of the
Davis-Bacon Act have been met. The Secretary of Labor may require
the contractor to set aside in a separate account assets for the meeting
of obligations under the plan or program. (Approved by the Office of
Management and Budget under OMB Control Number 1215-0140.)
2. Withholding. HUD or its designee shall upon its own action
or upon written request of an authorized representative of the
Department of Labor withhold or cause to be withheld from the
contractor under this contract or any other Federal contract with the

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form HUD-2554 (11/22/2006)
ref. Handbook 4571.1

same prime contractor, or any other Federally-assisted contract
subject to Davis-Bacon prevailing wage requirements, which is held
by the same prime contractor so much of the accrued payments or
advances as may be considered necessary to pay laborers and
mechanics, including apprentices, trainees and helpers, employed
by the contractor or any subcontractor the full amount of wages
required by the contract. In the event of failure to pay any laborer or
mechanic, including any apprentice, trainee or helper, employed or
working on the site of the work (or under the United States Housing
Act of 1937 or under the Housing Act of 1949 in the construction or
development of the project), all or part of the wages required by the
contract, HUD or its designee may, after written notice to the
contractor, sponsor, applicant, or owner, take such action as may be
necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased. HUD
or its designee may, after written notice to the contractor, disburse
such amounts withheld for and on account of the contractor or
subcontractor to the respective employees to whom they are due. The
Comptroller General shall make such disbursements in the case of
direct Davis-Bacon Act contracts.
3. (i) Payrolls and basic records. Payrolls and basic records
relating thereto shall be maintained by the contractor during the course
of the work and preserved for a period of three years thereafter for all
laborers and mechanics working at the site of the work (or under the
United States Housing Act of 1937, or under the Housing Act of 1949,
in the construction or development of the project). Such records shall
contain the name, address, and social security number of each such
worker, his or her correct classification, hourly rates of wages paid
(including rates of contributions or costs anticipated for bona fide fringe
benefits or cash equivalents thereof of the types described in Section
1(b)(2)(B) of the Davis-Bacon Act), daily and weekly number of hours
worked, deductions made and actual wages paid. Whenever the
Secretary of Labor has found under 29 CFR 5.5(a)(1)(iv) that the wages
of any laborer or mechanic include the amount of any costs reasonably
anticipated in providing benefits under a plan or program described in
Section 1(b)(2)(B) of the Davis-Bacon Act, the contractor shall maintain
records which show that the commitment to provide such benefits is
enforceable, that the plan or program is financially responsible, and that
the plan or program has been communicated in writing to the laborers
or mechanics affected, and records which show the costs anticipated or
the actual cost incurred in providing such benefits. Contractors employing apprentices or trainees under approved programs shall maintain
written evidence of the registration of apprenticeship programs and
certification of trainee programs, the registration of the apprentices and
trainees, and the ratios and wage rates prescribed in the applicable
programs. (Approved by the Office of Management and budget under
OMB Control Numbers 1215-0140 and 1215-0017.)
(ii) (a) The contractor shall submit weekly for each week in
which any contract work is performed a copy of all payrolls to HUD
or its designee if the agency is a party to the contract, but if the
agency is not such a party, the contractor will submit the payrolls to
the applicant, sponsor, or owner, as the case may be, for transmission to HUD or its designee. The payrolls submitted shall set out
accurately and completely all of the information required to be
maintained under 29 CFR Part 5.5(a)(3)(i). This information may be
submitted in any form desired. Optional Form WH-347 is available for
this purpose and may be purchased from the Superintendent of
Documents (Federal Stock Number 029-005-00014-1), U.S. Government Printing Office, Washington, D.C. 20402. The prime contractor is responsible for the submission of copies of payrolls by all
subcontractors. (Approved by the Office of Management and Budget
under OMB Control Number 1215-0149.)
(b) Each payroll submitted shall be accompanied by a
“Statement of Compliance,” signed by the contractor or subcontractor or his or her agent who pays or supervises the payment of the
persons employed under the contract and shall certify the following:
(1) That the payroll for the payroll period contains the
information required to be maintained under 29 CFR
Part 5.5(a)(3)(i) and that such information is correct and
complete;
(2) That each laborer or mechanic (including each
Replaces FHA-2554 which is obsolete.

helper, apprentice, and trainee) employed on the contract during the payroll period has been paid the full
weekly wages earned, without rebate, either directly or
indirectly, and that no deductions have been made either
directly or indirectly from the full wages earned, other
than permissable deductions as set forth in 29 CFR Part
3;
(3) That each laborer or mechanic has been paid not
less than the applicable wage rates and fringe benefits
or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the contract.
(c) The weekly submission of a properly executed
certification set forth on the reverse side of Optional Form WH-347
shall satisfy the requirement for submission of the “Statement of
Compliance” required by paragraph A.3.(ii)(b) of this section.
(d) The falsification of any of the above certifications
may subject the contractor or subcontractor to civil or criminal
prosecution under Section 1001 of Title 18 and Section 231 of Title
31 of the United States Code.
(iii) The contractor or subcontractor shall make the records
required under paragraph A.3.(i) of this section available for inspection, copying, or transcription by authorized representatives of HUD
or its designee or the Department of Labor, and shall permit such
representatives to interview employees during working hours on the
job. If the contractor or subcontractor fails to submit the required
records or to make them available, HUD or its designee may, after
written notice to the contractor, sponsor, applicant, or owner, take
such action as may be necessary to cause the suspension of any
further payment, advance, or guarantee of funds. Furthermore,
failure to submit the required records upon request or to make such
records available may be grounds for debarment action pursuant to
29 CFR Part 5.12.
4. (i) Apprentices and Trainees. Apprentices. Apprentices
will be permitted to work at less than the predetermined rate for the
work they performed when they are employed pursuant to and
individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training
Administration, Bureau of Apprenticeship and Training, or with a
State Apprenticeship Agency recognized by the Bureau, or if a
person is employed in his or her first 90 days of probationary
employment as an apprentice in such an apprenticeship program,
who is not individually registered in the program, but who has been
certified by the Bureau of Apprenticeship and Training or a State
Apprenticeship Agency (where appropriate) to be eligible for probationary employment as an apprentice. The allowable ratio of apprentices to journeymen on the job site in any craft classification shall not
be greater than the ratio permitted to the contractor as to the entire
work force under the registered program. Any worker listed on a
payroll at an apprentice wage rate, who is not registered or otherwise
employed as stated above, shall be paid not less than the applicable
wage rate on the wage determination for the classification of work
actually performed. In addition, any apprentice performing work on
the job site in excess of the ratio permitted under the registered
program shall be paid not less than the applicable wage rate on the
wage determination for the work actually performed. Where a contractor is performing construction on a project in a locality other than
that in which its program is registered, the ratios and wage rates
(expressed in percentages of the journeyman's hourly rate) specified in the contractor's or subcontractor's registered program shall be
observed. Every apprentice must be paid at not less than the rate
specified in the registered program for the apprentice's level of
progress, expressed as a percentage of the journeymen hourly rate
specified in the applicable wage determination. Apprentices shall be
paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify
fringe benefits, apprentices must be paid the full amount of fringe
benefits listed on the wage determination for the applicable classification. If the Administrator determines that a different practice
prevails for the applicable apprentice classification, fringes shall be
paid in accordance with that determination. In the event the Bureau

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form HUD-2554 (11/22/2006)
ref. Handbook 4571.1

of Apprenticeship and Training, or a State Apprenticeship Agency
recognized by the Bureau, withdraws approval of an apprenticeship
program, the contractor will no longer be permitted to utilize apprentices at less than the applicable predetermined rate for the work
performed until an acceptable program is approved.
(ii) Trainees. Except as provided in 29 CFR 5.16, trainees
will not be permitted to work at less than the predetermined rate for
the work performed unless they are employed pursuant to and
individually registered in a program which has received prior approval, evidenced by formal certification by the U.S. Department of
Labor, Employment and Training Administration. The ratio of trainees to journeymen on the job site shall not be greater than permitted
under the plan approved by the Employment and Training Administration. Every trainee must be paid at not less than the rate specified
in the approved program for the trainee's level of progress, expressed as a percentage of the journeyman's hourly rate specified in
the applicable wage determination. Trainees shall be paid fringe
benefits in accordance with the provisions of the trainee program. If
the trainee program does not mention fringe benefits, trainees shall
be paid the full amount of fringe benefits listed on the wage determination unless the Administrator of the Wage and Hour Division
determines that there is an apprenticeship program associated with
the corresponding journeyman wage rate on the wage determination
which provides for less than full fringe benefits for apprentices. Any
employee listed on the payroll at a trainee rate who is not registered
and participating in a training plan approved by the Employment and
Training Administration shall be paid not less than the applicable
wage rate on the wage determination for the classification of work
actually performed. In addition, any trainee performing work on the
job site in excess of the ratio permitted under the registered program
shall be paid not less than the applicable wage rate on the wage
determination for the work actually performed. In the event the
Employment and Training Administration withdraws approval of a
training program, the contractor will no longer be permitted to utilize
trainees at less than the applicable predetermined rate for the work
performed until an acceptable program is approved.
(iii) Equal employment opportunity. The utilization of
apprentices, trainees and journeymen under this part shall be in
conformity with the equal employment opportunity requirements of
Executive Order 11246, as amended, and 29 CFR Part 30.
5. Compliance with Copeland Act Requirements. The contractor shall comply with the requirements of 29 CFR Part 3 which are
incorporated by reference in this contract.
6. Subcontracts. The contractor or subcontractor will insert in
any subcontracts the clauses contained in 29 CFR 5.5(a)(1) through
(10) and such other clauses as HUD or its designee may be
appropriate instructions require, and also a clause requiring the
subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for the compliance
by any subcontractor or lower tier subcontractor with all the contract
clauses in 29 CFR Part 5.5.
7. Contract termination; debarment. A breach of the contract
clauses in 29 CFR 5.5 may be grounds for termination of the contract,
and for debarment as a contractor and a subcontractor as provided
in 29 CFR 5.12.
8. Compliance with Davis-Bacon and Related Act Requirements. All rulings and interpretations of the Davis-Bacon and
Related Acts contained in 29 CFR Parts 1, 3, and 5 are herein
incorporated by reference in this contract.
9. Disputes concerning labor standards. Disputes arising
out of the labor standards provisions of this contract shall not be
subject to the general disputes clause of this contract. Such disputes
shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR Parts 5, 6, and 7. Disputes within
the meaning of this clause include disputes between the contractor
(or any of its subcontractors) and HUD or its designee, the U.S.
Department of Labor, or the employees or their representatives.
10. (i) Certification of Eligibility. By entering into this contract
the contractor certifies neither it (nor he or she) nor any person or firm
who has an interest in the contractor's firm is a person or firm
Replaces FHA-2554 which is obsolete.

ineligible to be awarded Government contracts by virtue of Section
3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1) or to be awarded
HUD contracts or participate in HUD programs pursuant to 24 CFR
Part 24.
(ii) No part of this contract shall be subcontracted to any
person or firm ineligible for award of a Government contract by virtue
of Section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1) or to be
awarded HUD contracts or participate in HUD programs pursuant to
24 CFR Part 24.
(iii) The penalty for making false statements is prescribed in
the U.S. Criminal Code, 18 U.S.C. 1001. Additionally, U.S. Criminal
Code, Section 1010, Title 18, U.S.C., “Federal Housing Administration transactions”, provides in part: “Whoever, for the purpose of . .
. influencing in any way the action of such Administration . . . makes,
utters or publishes any statement, knowing the same to be false . .
. shall be fined not more than $5,000 or imprisoned not more than two
years, or both.”
B. Contract Work Hours and Safety Standards Act. As used in
this paragraph, the terms “laborers” and “mechanics” include watchmen and guards.
1. Overtime requirements. No contractor or subcontractor
contracting for any part of the contract work which may require or
involve the employment of laborers or mechanics shall require or
permit any such laborer or mechanic in any workweek in which he or
she is employed on such work to work in excess of forty hours in such
workweek unless such laborer or mechanic receives compensation
at a rate not less than one and one-half times the basic rate of pay
for all hours worked in excess of forty hours in such workweek.
2. Violation; liability for unpaid wages, liquidated damages. In
the event of any violation of the clause set forth in subparagraph (1)
of this paragraph, the contractor and any subcontractor responsible
therefore shall be liable for the unpaid wages. In addition, such
contractor and subcontractor shall be liable to the United States (in
the case of work done under contract for the District of Columbia or
a territory, to such District or to such territory), for liquidated damages. Such liquidated damages shall be computed with respect to
each individual laborer or mechanic, including watchmen and guards,
employed in violation of the clause set forth in subparagraph (1) of
this paragraph, in the sum of $10 for each calendar day on which
such individual was required or permitted to work in excess of the
standard workweek of forty hours without payment of the overtime
wages required by the clause set forth in subparagraph (1) of this
paragraph.
3. Withholding for unpaid wages and liquidated damages.
HUD or its designee shall upon its own action or upon written request
of an authorized representative of the Department of Labor withhold
or cause to be withheld, from any moneys payable on account of
work performed by the contractor or subcontractor under any such
contract or any other Federal contract with the same prime contractor, or any other Federally-assisted contract subject to the Contract
Work Hours and Safety Standards Act, which is held by the same
prime contractor such sums as may be determined to be necessary
to satisfy any liabilities of such contractor or subcontractor for unpaid
wages and liquidated damages as provided in the clause set forth in
subparagraph (2) of this paragraph.
4. Subcontracts. The contractor or subcontractor shall insert in
any subcontracts the clauses set forth in subparagraph (1) through
(4) of this paragraph and also a clause requiring the subcontractors
to include these clauses in any lower tier subcontracts. The prime
contractor shall be responsible for compliance by any subcontractor
or lower tier subcontractor with the clauses set forth in subparagraphs (1) through (4) of this paragraph.
C. The Contractor will be required to execute FHA Form No. 2403A, Contractor's Prevailing Wage Certificate, as a condition precedent to insurance by the Federal Housing Administration of that
certain mortgage loan, or an advance thereof, made or to be made
by the mortgagee in connection with the construction of the project.

Article 2 – Equal Employment Opportunity
The applicant hereby agrees that it will incorporate or cause to be

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form HUD-2554 (11/22/2006)
ref. Handbook 4571.1

incorporated into any contract for construction work, or modification
thereof, as defined in the regulations of the Secretary of Labor at 41
CFR Chapter 60, which is paid for in whole or in part with funds
obtained from the Federal Government or borrowed on the credit of
the Federal Government pursuant to a grant, contract, loan insurance, or guarantee, or undertaken pursuant to any Federal program
involving such grant, contract, loan, insurance, or guarantee, the
following equal opportunity clause:
During the performance of this contract, the Contractor agrees as
follows:
A. The Contractor will not discriminate against any employee or
applicant for employment because of race, color, religion, sex, or
national origin. The Contractor will take affirmative action to ensure
that applicants are employed, and that employees are treated during
employment without regard to their race, color, religion, sex or
national origin. Such action shall include, but not be limited to the
following: Employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or
other forms of compensation; and selection for training including
apprenticeship. The Contractor agrees to post in conspicuous places
available to employees and applicants for employment notices to be
provided setting forth the provisions of this nondiscrimination clause.
B. The Contractor will, in all solicitations or advertisements for
employees placed by or on behalf of the Contractor state that all
qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin.
C. The Contractor will send to each labor union or representative of
workers with which it has a collective bargaining agreement or other
contract or understanding a notice to be provided advising the said
labor union or workers representatives of the Contractor's commitments hereunder, and shall post copies of the notice in conspicuous
places available to employees and applicants for employment.
D. The Contractor will comply with all provisions of Executive Order
11246 of September 24, 1965 and of the rules, regulations, and
relevant orders of the Secretary of Labor.
E. The Contractor will furnish all information and reports required by
Executive Order 11246 of September 24, 1965, and by rules,
regulations, and orders of the Secretary of Labor, or pursuant
thereto, and will permit access to its books, records, and accounts by
the Secretary of Labor for purposes of investigation to ascertain
compliance with such rules, regulations, and orders.
F. In the event of the Contractor's noncompliance with the nondiscrimination clauses of this contract or with any of the said rules,
regulations, or orders, this contract may be canceled, terminated, or
suspended in whole or in part and the Contractor may be declared
ineligible for further government contracts or federally assisted
construction contracts in accordance with procedures authorized in
Executive Order 11246 of September 24, 1965, and such other
sanctions may be imposed and remedies invoked as provided in
Executive Order 11246 of September 24, 1965, or by rule, regulations
or order of the Secretary of Labor, or as otherwise provided by law.
G. The Contractor will include the portion of the sentence immediately preceding paragraph A and the provisions of paragraphs A
through G in every subcontract or purchase order unless exempted
by rules, regulations, or orders of the Secretary of Labor issued
pursuant to Section 204 of Executive Order 11246 of September 24,
1965, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any
subcontract or purchase order as the Secretary of Housing and
Urban Development or the Secretary of Labor may direct as a means
of enforcing such provisions, including sanctions for noncompliance. Provided, however, that in the event the Contractor becomes
involved in, or is threatened with, litigation with a subcontractor or
vendor as a result of such direction by the Secretary of Housing and
Urban Development or the Secretary of Labor, the Contractor may
request the United States to ener into such litigation to protect the
interests of the United States.
H. The applicant further agrees that it will be bound by the above
equal opportunity clause with respect to its own employment practices when it participates in federally assisted construction work:
Replaces FHA-2554 which is obsolete.

Provided, That if the applicant so participating is a State or local
government, the above equal opportunity clause is not applicable to
any agency, instrumentality or subdivision of such government
which does not participate in work on or under the contract.
I. The applicant agrees that it will assist and cooperate actively with
the administering agency and the Secretary of Labor in obtaining the
compliance of contractors and subcontractors with the equal opportunity clause and the rules, regulations, and relevant orders of the
Secretary of Labor, that it will furnish the administering agency and
the Secretary of Labor such information as they may require for the
supervision of such compliance, and that it will otherwise assist the
administering agency in the discharge of the agency's primary
responsibility for securing compliance.
J. The applicant further agrees that it will refrain from entering into
any contract or contract modification subject to Executive Order
11246 of September 24, 1965, with a contractor debarred from, or
who has not demonstrated eligibility for, Government contracts and
federally assisted construction contracts pursuant to the Executive
order and will carry out such sanctions and penalties for violation of
the equal opportunity clause as may be imposed upon contractors
and subcontractors by the administering agency or the Secretary of
Labor pursuant to Part II, Subpart D of the Executive order. In
addition, the applicant agrees that if it fails or refuses to comply with
these undertakings, the administering agency may take any or all of
the following actions: Cancel, terminate, or suspend in whole or in
part this grant (contract, loan, insurance, guarantee); refrain from
extending any further assistance to the applicant under the program
with respect to which the failure or refund occurred until satisfactory
assurance of future compliance has been received from such applicant; and refer the case to the Department of Justice for appropriate
legal proceedings.

Article 3 – Equal Opportunity for Businesses and Lower
Income Persons Located Within the Project Area
(Applicable to Section 236 projects, where the estimated replacement cost of the project as determined by the Secretary of Housing
and Urban Development exceeds $500,000, and to all projects,
including Section 236 regardless of estimated replacement cost,
receiving rent supplement assistance under Title I, Section 101 of the
Housing and Urban Development Act of 1965.)
A. The work to be performed under this contract is on a project
assisted under a program providing direct Federal financial assistance from the Department of Housing and Urban Development and
is subject to the requirements of Section 3 of the Housing and Urban
Development Act of 1968, as amended, 12 U.S.C. 1701u. Section 3
requires that to the greatest extent feasible opportunities for training
and employment be given lower income residents of the unit of local
government or the metropolitan area (or nonmetropolitan county) as
determined by the Secretary of Housing and Urban Development in
which the projects located and contracts for work in connection with
the project be awarded to business concerns which are located in, or
owned in substantial part by persons residing in the same metropolitan area (or nonmetropolitan county) as the project.

Article 4 – Health and Safety
A. No laborer or mechanic shall be required to work in surroundingss
or under working conditions which are unsanitary, hazardous, or
dangerous to his health and safety as determined under construction
safety and health standards promulgated by the Secretary of Labor
by regulation.
B. The Contractor shall comply with all regulations issued by the
Secretary of Labor pursuant to Title 29 Part 1926 (formerly part 1518)
and failure to comply may result in imposition of sanctions pursuant
to the Contract Work Hours and Safety Standards Act (Public Law 9154, 83 Stat. 96).
C. The Contractor shall include the provisions of this Article in every
subcontract so that such provisions will be binding on each subcontractor. The Contractor shall take such action with respect to any
subcontract as the Secretary of Housing and Urban Development of
the Secretary of Labor shall direct as a means of enforcing such
provisions.

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form HUD-2554 (11/22/2006)
ref. Handbook 4571.1