Under the SCA, the government contractors – whether prime or sub – are expected to meet the following provisions: Pay minimum wages as per prevailing rates; Pay fringe benefits including medical care, pensions, compensation for injuries, unemployment benefits, life insurance, vacation and holiday pay ; Ensure that the services are performed in a safe and healthy environment; Furnish the employee at the outset with a notice of compensation payable; and provide a statement of the rates that would be paid by federal agency.
In the course of executing a contract subject to the SCA, the contractor agrees to observe the Act’s labor standards in furnishing the required services. The obligation is not transferable, which means when subcontracting any work governed by the SCA, a violation by a subcontractor renders the prime jointly liable. This places a major responsibility on the prime contractor not only to stay compliant but must also supervise the subcontractors work, ensuring that the subcontractor does not violate the tenets of the Service Contract Act.
Every contractor and subcontractor performing work subject to the Act is also required to maintain the following records for a period of three years from the date any work is complete on a contract:
The prime contractor needs to adopt certain safeguards to ensure the compliance of sub-contractors and maintain an audit trail to prove the compliance of self and sub-contractors:
Sanctions under the Act include: withholding of contract funds to reimburse underpaid employees, terminating the contract, holding the contractor and/or the subcontractor liable for all costs incurred by the government associated with the violation, and debarring the contractor and/or subcontractor from future government contracts for a period of three years. These deterrents make it imperative for all federal contractors to stay compliant.
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