McNamara-O-Hare Service Contract Act

By Rebecca Barbour, SBTDC PTAC Counselor at North Carolina State University

You have seen it in nearly every service contract, and it is referenced in your SAM Reports and Certifications, but do you really know what the Service Contract Act (SCA) entails?

Initially enacted in 1965, the SCA requires federal contractors and subcontractors performing on contracts over $2,500 to pay their service employees no less than the “prevailing wage” for their locality. The prevailing wage is a rate determined by the Department of Labor’s Wage and Hour Division, and specifies a minimum hourly rate and fringe benefits for contract employees.  The Wage and Hour Division determines these rates based on data from the Bureau of Labor Statistics and other data bases, including the Federal Wage System Schedule. All wage determinations are reviewed regularly, and most are updated once per year.  Wage determinations are not the only component of the SCA. For contracts over $100,000 contractors and subcontractors are also required to pay their service employees time and half for any overtime, or hours worked beyond 40 hours per week. Failure to comply with the SCA can lead to the withholding of payments, contract termination, and possible debarment.

Fortunately, there are numerous resources available to help contractors comply with the Service Contract Act.

The Department of Labor has published a contractor compliance guide on their website.  In addition to the compliance guide, the website also includes an FAQ section, fact sheets, and online training modules and videos. Assistance with the SCA is also available through your local PTAC office.

As a federal contractor or subcontract, don’t take the Service Contract Act for granted. When pursuing any contract opportunity, remember to carefully read the regulations included in full text and incorporated by reference in all solicitations. When the SCA applies, take your time in reviewing the wage determinations and your own labor policies to ensure you can be compliant. Above all, remember don’t be afraid to reach out for help as you need it.

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