Anyone who wishes to bid for a federal service contract must prepare to meet the tenets of the McNamara-O’Hara Service Contract Act (SCA) of 1965, and develop stringent internal processes necessary to support compliance.
The SCA was enacted to prevent wage busting and displacement of qualified workers. The act specifies wages, benefits, vacation and holiday policies and a variety of other working conditions for employees who fall into specific SCA classifications.
You must fully understand the financial and operational implications of SCA prior to deciding whether to bid on a project or when negotiating the contract price.
The SCA enforces compensation requirements on the general contractors and their subcontractors providing services to the federal government. It is important to note that the SCA applies to service contracts performed within America when the contract value exceeds $2500. It will not apply to any portion of a contract where the work is performed outside the US. It is also not uniformly applicable to all federal contracts as some of them are exempt.
Contractors and subcontractors who are required to compensate service employees under the Service Contract Act would do well to follow a checklist to make sure that they are compliant with the act and its tenets:
Consequences of Non-Compliance: The SCA provides the Department of Labor (DOL) with the authority to withhold the violators’ contract funds in order to reimburse underpaid employees. The DOL may also terminate the contract, hold the contractor liable for associated costs to the government, and prohibit the contractor from participating in future government contracts for a period of three years.
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