Pertinent Provisions of the SCA Regarding Government Contracting

The Service Contract Act (SCA) is a law that mandates government contracting companies to observe minimum wage payment, health and safety standards, and keep a record of transactions open for auditing and inspection.

Under the SCA, government contracting companies must pay workers with service contracts exceeding $2500 the prevailing wage. Workers with service contracts below $2500 may not be paid the prevailing wage or fringe benefits, but are required to be paid not less than the federal minimum wage based on the Fair Labor Standards Act. Every provision in the Service Contract Act (SCA) apart from the safety and health requirements are overseen and administered by the Wage and Hour Division.

What You Must Remember about the SCA If You are a Government Contractor

Although the Service Contract Act (ACA) covers the entire territory of the United States, it does not mean that is can be applied to all government contract work. There are several exceptions to the application of the SCA.

Some of these include contracts for the operation of postal contract stations, contracts covered by the Walsh-Healey Public Contracts Act, and contracts with commercial services, among others. To know all exceptions in government contracting work under the SCA, government contracting companies are advised to read the Service Contract Act (SCA) Administrative: Variances & Exemptions.  

To get a copy of the SCA directory, government contracting companies should visit Wage Determinations Online. Business owners are required to follow the terms laid down by the SCA, including paying the prevailing wage and applying safety and health standards in the workplace. Failure to do so can result to withholding contract funds, contract termination, financial liability, or debarment from future contracts with the government.

Service Contract Act: Method for Wage Determination

Wage determinations for prevailing wage rates under the SCA are developed based on the available data showing the dominant wage rate in a particular locality or area. If similar wage rates are paid to more than 50% of the workers of the same trade within a specific locality, that wage rate is going to become the prevailing wage rate for that area. The statistical measurements of central tendency are used when the wage information used comes from the Bureau of Labor Statistics.

Wage determinations must be reviewed constantly, at least once a year. Even if the contract only requires less than five workers, the contracting agency is still required to request a wage determination for a specific project in excess of $2500.

If you think there are particular trades or occupational titles that have not been covered by the prevailing wage determination in your locality, you may contact the Service Contract Wage Determinations branch of the Wage and Hour Division.

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