Service Contract Act

The McNamara-O'Hara Service Contract Act (SCA) applies to every contract entered into by the United States or the District of Columbia, the principal purpose of which is to furnish services to the United States through the use of service employees. The SCA requires contractors and subcontractors performing services on covered federal or District of Columbia contracts in excess of $2,500 to pay service employees in various classes no less than the monetary wage rates and to furnish fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement. Safety and health standards also apply to such contracts.

The compensation requirements of the SCA are enforced by the Employment Standards Administration's Wage and Hour Division (WHD) within the U.S. Department of Labor (DOL). The SCA safety and health requirements are enforced by the Occupational Safety and Health Administration (OSHA) within DOL.

See more here: Synopsis of Law - McNamara-O'Hara Service Contract Act (SCA)

Wage Determinations

Federal contracting officials will set forth the wage determinations for the project in the contract documentation. There is also a publically available website,, that provides a single location for federal contracting officers and the public to use in obtaining appropriate Service Contract Act (SCA) and Davis-Bacon Act (DBA) wage determinations (WDs) for each official contract action. On this site, you can review previously issued wage determinations specific to your county for various types of services.

Allowable Costs for Meeting Fringe Benefit Obligations

In addition to the wage requirements, a fringe benefit or “health and welfare” component will be required. Typically, the contractor cost for the following items are allowable costs in meeting the fringe benefit obligation:

  • Health insurance
  • Dental care insurance
  • Sick leave (as used)
  • Life insurance
  • Accidental death and dismemberment insurance
  • Short-term disability insurance
  • Long-term disability insurance
  • Vision care insurance
  • Prescription drug plan
  • Travel accident insurance
  • 401(k) deferred savings plan
  • Pension plan
  • Profit sharing plan
  • Educational reimbursement
  • Paid vacation or holiday absences in excess of the amount required by the AWD
  • Jury duty leave
  • Military leave
  • Bereavement leave
  • Administrative leave

If you would like to discuss compliance with a VetUSA business consultant, please contact us today at 855-4VETUSA (option 2) or complete our online form.

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