September 25, 2023
Page Summary
Contractors must ensure compliance with the Service Contract Act (SCA) when bidding on federal contracts by understanding its applicability, reviewing contract requirements, determining wage rates, providing fringe benefits, maintaining records, and staying informed about regulations.
Contractors bidding on federal contracts subject to the Service Contract Act (SCA) must take specific steps to ensure compliance with its provisions. The SCA is designed to ensure that employees working on covered federal contracts receive certain labor protections and benefits. This makes SCA bidding compliance vital to success.
Contractors can ensure compliance when bidding on federal contracts
1. Understand SCA Regulations
Contractors should determine whether the SCA applies to the specific federal contract they are bidding on. The SCA generally covers service contracts and subcontracts exceeding $2,500, except those excluded by statute.
2. Review Contract Requirements
Carefully review the solicitation documents and contract requirements to identify any SCA clauses, wage determinations, and compliance obligations specific to the contract. The U.S. Department of Labor (DOL) Wage and Hour Division provides guidance and resources, including wage determinations, that can help contractors understand their obligations.
Learn more about managing SCA contracts
3. Determine Wage Rates
Contractors must ensure that they pay their employees the appropriate prevailing wage rates as specified in the wage determination for the contract's geographic area. Wage determinations are issued by the DOL and can change over time, so contractors should regularly check for updates.
4. Fringe Benefits
In addition to wages, contractors must also provide the required fringe benefits specified in the SCA wage determination. These may include health insurance, retirement benefits, and paid leave.
5. Recordkeeping
Contractors should establish and maintain accurate records of their employees' hours worked, wages paid, and fringe benefits provided. These records should be kept for at least three years.
6. Compliance with SCA Clauses
Ensure that your contract includes the standard SCA clauses and be prepared to comply with them throughout the contract's performance.
7. Notify Employees
Inform employees working on SCA-covered contracts of their rights, including wage rates, fringe benefits, and working conditions. This should be done in a clear and understandable manner.
8. Monitor Subcontractors
If you subcontract any portion of the work, ensure that your subcontractors are also aware of and compliant with SCA requirements.
9. Implement Compliance Policies
Develop and implement internal policies and procedures to ensure SCA compliance. Assign responsibility for compliance oversight within your organization. OneLynk™ specializes in SCA compliance and controls.
10. Seek Legal and Professional Guidance
If you are unsure about any aspect of SCA compliance, consider consulting legal counsel or labor experts with experience in federal contracting. They can provide guidance on specific contract requirements and compliance issues.
11. Stay Informed
Keep up to date with changes in SCA regulations and wage determinations. The DOL periodically updates wage rates, so contractors should regularly check for updates that may affect their contracts.
12. Reporting and Remediation
If non-compliance issues arise, promptly address, and correct them. Contractors should report any potential violations to the contracting agency and work to resolve the issues in accordance with SCA requirements.
Compliance with the SCA is essential for contractors bidding on federal contracts to avoid legal penalties, contract disputes, and damage to their reputation. A proactive approach to understanding and meeting SCA obligations is crucial.
Learn more about the Service Contract Act
Learn more about Managing Contracts & Grants