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McNamara-O’Hara Service Contract Act (SCA)
SCA Legislative History and Purpose
- The SCA took effect in January 1966. The law was amended in 1972 and 1976. It is the most recent of the government contract labor standards laws administered by the WHD.
- The SCA was enacted to "close the gap" in labor standards protection between supply contracts subject to the PCA and construction contracts subject to DBA. (Services were the remaining category of federal procurement not covered by labor standards law.) Thus, enactment of the SCA was intended to ensure all the major categories of government procurement included labor standards protections for affected employees.
- The SCA was intended to remove wages as a factor in the competition for federal service contracts by requiring the payment of locally prevailing wage rates (not just the FLSA minimum wage) and fringe benefits, or in certain cases, the wage rates and fringe benefits contained in a predecessor contractor's collective bargaining agreement (section 4(c) of the Act). (Labor costs are often the predominant factor affecting bids on federal service contracts being awarded to the lowest bidder.)
- The SCA applies to most contracts entered into by the United States or the District of Columbia whose principal purpose is the furnishing of services through the use of service employees.
- The major SCA labor standards provisions are:
- Prevailing minimum wage and fringe benefit compensation standards for service employees working on contracts over $2,500, and FLSA minimum wages for contracts of $2,500 or less.
- Recordkeeping and posting requirements.
- Safety and health protection.
SCA Coverage 29 C.F.R. §§ 4.107 - 4.113.
- What federal government contracts are subject to SCA?
- Contracts entered into by any agency or instrumentality of the federal government, whether by the executive, judicial, or legislative branches, or by the District of Columbia. Examples: the Department of Defense, the Department of the Interior, the General Services Administration, etc.
- Contracts issued by wholly owned corporations of the government. Examples: Tennessee Valley Authority, Postal Service.
- Contracts with non-appropriated fund activities, i.e., concession contracts. Examples: military post exchanges (PX's), cafeteria boards in federal buildings.
- Contracts between a federal agency and a state or local government are covered. Contracts between federal agencies are not covered (examples: DOL and the General Services Administration).
- SCA applies only to federal contracts, not to federally "assisted" contracts.
- The contract is principally (i.e., primarily) for services (as distinguished from construction or manufacturing or some other purpose).
- The contract involves work to be performed in any of the 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf lands, American Samoa, Guam, Wake Island, Johnston Island, and the Northern Marianas. (Canton Island, Eniwetok Atoll, and Kwajalein Atoll are now independent and no longer a part of the U.S.)
- Contract work performed in any other territory under U.S. jurisdiction or U.S. base or possession within a foreign country is not covered. For example, the SCA does not apply to a contract to provide cafeteria services on a military base in a foreign country.
- The contract is performed through the use of service employees as defined in the SCA regardless of any contractual relationship that may be alleged to exist between a contractor and an employee. 41 U.S.C. § 6701(3).
- The Act defines "service employee" as any person engaged in the performance of a covered contract except those persons who individually qualify for exemption as bona fide executive, administrative or professional employees as defined in 29 C.F.R. Part 541. 29 C.F.R. § 4.113(b); 29 C.F.R. § 4.156.
- Coverage of service employees depends on whether they perform the work called for by an SCA-covered contract, regardless of any alleged contractual relationship between the service employee and the contractor. 29 C.F.R. § 4.155.
- Examples of contracts covered by SCA. 29 C.F.R. § 4.130.
- Guard and watchman security services - Janitorial services
- Cafeteria and food service - Grounds maintenance
- Laundry and dry cleaning - Data processing
- Electronic equipment maintenance and operation - Chemical testing and analysis
- Support services at government installations - Drafting and illustrating and mapping services
- Operating, maintenance and logistical support of a Federal facility
- Warehousing or storage
- Examples of contracts not covered by SCA. 29 C.F.R. § 4.134.
- Any contract whose principal purpose is something other than the procuring of services through the use of service employees - for example, a construction, supply or manufacturing contract.
- Contracts for the leasing of space.
- Contracts for professional medical services (where the employment of "service employees" is not involved or is a minor factor).
- Contracts to operate or manage an entire federal facility or program (i.e., government-owned contractor/privately-operated "GOCO" or "GOPO").
- Sometimes contracts are entered into with a prime contractor to operate a federal facility or program for and on behalf of the government. Because the contractor is in effect operating in the place of the government as an "agent for the government," such a contract is not considered subject to the SCA. However, contracts entered into by the operating contractor with secondary contractors, for and on behalf of the government, that have services as their principal purpose are subject to the SCA. 29 C.F.R. § 4.107(b).
SCA Statutory Exemptions SCA § 7; 29 C.F.R. §§ 4.115 - 4.122.
- The SCA does not apply to the following:
- Any contracts of the United States for construction, alteration, and/or repair, including painting and decorating, of public buildings or public works (contracts subject to DBA). 29 C.F.R. § 4.116.
- Any work (work not contract) required to be done in accordance with the provisions of the PCA. 29 C.F.R. § 4.117.
- Any contract for the carriage of freight or personnel by vessel, airplane, bus, truck, express, railway line, or oil or gas pipeline where published tariff rates are in effect (29 C.F.R. § 4.118). The effect of this exemption has become limited in scope due to changes in transportation laws. (See All Agency Memorandum No. 185 for further information.)
- This exemption applies only to contracts for carriage by a common carrier. A transportation service contract is exempt only if the service is actually governed by published tariff rates in effect pursuant to state or federal law. A contract between the government and the carrier would be evidenced by a government bill of lading citing the published tariff rates.
- Contracts for ambulance or taxicab services typically are not exempt because they are usually not deemed common carriers and/or the transportation is not governed by published tariff rates.
- Mail haul contractors are not within the scope of this exemption because "mail" is not considered to be "freight" under federal law. (However, see the discussion of relevant regulatory exemptions, below.)
- Contracts principally for packing, crating and warehousing of household goods are also not exempt, even though performed by an otherwise common carrier, because the local hauling is a minor, incidental purpose of the contract.
- Any contract for the furnishing of services by radio, telephone, telegraph, or cable companies, subject to the Communications Act of 1934. 29 C.F.R. sect; 4.119.
- Any contract for public utility services, including electric light and power, water, steam, and gas. 29 C.F.R. § 4.120.
- Any employment contract providing for direct service to a federal agency by an individual or individuals. 29 C.F.R. § 4.121.
- Any contract with the U.S. Postal Service, the principal purpose of which is the operation of postal contract stations. 29 C.F.R. § 4.122.
SCA Regulatory Exemptions 41 U.S.C. § 6707 and 29 C.F.R. § 4.123.
- The SCA authorizes DOL to provide reasonable limitations, and make rules and regulations allowing reasonable variations, tolerances and exemptions from SCA provisions in special circumstances where such action is necessary and proper in the public interest or to avoid serious impairment to the conduct of government business, and is in accord with the remedial purpose to protect prevailing labor standards.
Consulting Services We Provide
- Review public works preconstruction contracts
- Monitor DIR contractor/subcontractor certified payrolls
- Audit labor classification for each worker employed
- Review DIR pre-DAS 140/142 submissions
- Review CAC training fund contributions form CAC-2
- Review DIR Fringe Benefits Statement PW-26
- Monitor DIR wage determinations
- Audit fringe benefits allowances
- Review DIR holiday payment requirements
- Audit DIR travel & subsistence requirements
- Caltrans Labor Compliance
- County of Sacramento Labor Compliance
- City of Los Angeles Labor Compliance
- Los Angeles Unified School District Labor Compliance
- Federal Davis-Bacon Project Monitoring
- Federal DBE Implementation & Review
- Federal FAA AIP Goal Setting
- DIR & Davis-Bacon Training
- DIR Civil Wage Penalty Review
- Local-Hire Review (e.g., San Francisco)
- Skilled and Trained Workforce
Give us a call to discuss your labor compliance requirements.
This email is intended for general information purposes only and should not be construed as legal advice
or legal opinions on any specific facts or circumstances.