What is the Service Contract Act?

The McNamara-O'Hara Service Contract Act (SCA) of 1965 requires contractors and subcontractors performing services on prime federal contracts to pay service employees in various classes (typically hourly) no less than the wage rates and fringe (employee) benefits found prevailing in the locality, or the rates contained in a predecessor contractor's collective bargaining agreement. The Department of Labor issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies. These determinations are incorporated into the contract.

The SCA sets forth a series of compliance requirements for contractors to ensure that the Act's standards are being met. Compliance is crucial to government contractors; failing to meet these provisions could result in penalties and loss of awarded work.

By setting standardized wage and employee benefit requirements, the SCA ensures fair competition among contractors bidding for federal service contracts. This not only creates a level playing field but also opens up opportunities for employers of all sizes and levels of contract experience. Having fair wages and employee benefits in place not only attracts skilled workers to government contracts but also contributes to the delivery of high-quality service, paving the way for successful contract bids.

While all contractors have the same minimum requirements, there are strategic choices that can be made to enhance competitiveness. The AssuredPartners GovCon Team is here to provide tailored solutions that maximize a contractor's competitive, compliant, and profitable position to win. With our guidance, you can navigate the SCA requirements with confidence.