Understanding the Service Contract Act: An Easy Guide

Service Contract Act

The Service Contract Act (SCA), crucial for GSA contractors, mandates specific requirements. What exactly is the SCA and how can contractors ensure compliance? This article demystifies the Service Contract Act, offering a straightforward overview.

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Essentials of the Service Contract Act

The McNamara O’Hara Service Contract Act is pivotal for government contractors and subcontractors, enforcing minimum wage, health and safety standards, and specific record-keeping for service employees. It ensures GSA Schedule contractors maintain optimal working conditions for their staff involved in government projects.

Eligibility Criteria for SCA Application

Not all GSA contracts fall under the SCA, but it significantly influences many. A contract is subject to the Act if:

  1. It’s a service contract.
  2. Its value exceeds $2500 (contracts at or below $2500 adhere to the federal minimum wage per the Fair Labor Standards Act).
  3. The service is performed within the United States.
  4. It involves ‘service employees,’ excluding executive, administrative, or professional staff (refer to 29 CFR part 541).

Exceptions exist, like contracts for public building construction, public utility services, and freight or personnel transportation.

Determining SCA Wages

SCA wages hinge on prevailing local rates for similar roles, typically the median, though sometimes the mean is used. The Department of Labor assesses labor market trends to set these minimum wages for various occupations under government contracts.

Geographic Variance in Wage Determinations

Wage determinations under the SCA vary by location. Nationwide services require multiple wage determinations in GSA contracts. These determinations are updated regularly; usually annually, to reflect current market conditions.

This guide clarifies the Service Contract Act, highlighting its impact and compliance strategies for GSA contractors.

Maintaining Compliance with the Service Contract Act: Essential Steps for GSA Contractors

Adhering to the Service Contract Act (SCA) involves several critical practices for GSA contractors:

  • Ensure minimum wage and fringe benefits compliance: Pay service employees as per the wage determinations outlined by the Department of Labor (DoL).
  • Uphold health and safety standards: Maintain workplace conditions that align with specified health and safety criteria.
  • Inform employees about compensation: Communicate to service employees their rights and entitlements regarding minimum wage and fringe benefits under the contract.

The Importance of SCA Compliance for GSA Contractors

Non-compliance with the SCA can lead to severe repercussions for GSA vendors, including penalties, the need to compensate underpaid service employees, potential termination of the Multiple Award Schedule contract, and a possible three-year debarment from other government contracts. Therefore, it’s crucial to prioritize full compliance with the SCA.

Specific Actions for Ensuring SCA Compliance

GSA contractors should adhere to the following steps under the Service Contract Act:

  1. Develop a Service Contract Act Matrix for each labor category, utilizing codes from the SCA Directory of Occupations.
  2. Incorporate the Service Contract Act Matrix into your GSA Advantage price list.
  3. Update the SCA Matrix in response to wage determination changes, following Mass Modification notices from GSA via the eMod system.

Given the continuous demand on your business, considering professional assistance for managing SCA-related requirements can be a practical choice. If you’re seeking expert help in this area, feel free to schedule a consultation with the Price Reporter GSA expert team and we will provide you with the necessary support and guidance.

The Importance of SCA Compliance

Failing to comply with the SCA can result in severe consequences, including penalties, required compensation for underpaid employees, termination of contracts, and a potential three-year debarment from other government contracts. It’s not just a legal obligation but a critical aspect of maintaining your business’s reputation and eligibility to participate in future contracts.

Steps to Ensure Compliance

Ensuring compliance with the Service Contract Act (SCA) involves several crucial steps:

  1. Create a Service Contract Act Matrix: For each labor category, use codes from the SCA Directory of Occupations.
  2. Update Your GSA Advantage Price List: Include the SCA Matrix in your pricing strategy.
  3. Stay Informed on Wage Determinations: Update your SCA Matrix in response to changes, following Mass Modification notices via the eMod system.
  4. Given the complexities involved, seeking professional assistance can be a wise decision. Knowledgeable consultants, such as Price Reporter can help streamline this process.

FAQs on the Service Contract Act

What is the Service Contract Act?

The Service Contract Act is a federal law requiring government contractors to pay specific wages and provide benefits and safe working conditions.

How do I know if the SCA applies to my contract?

Review the criteria outlined above, focusing on the type of contract, its value, location, and employee roles.

What happens if I don’t comply with the SCA?

Non-compliance can lead to financial penalties, contract termination, and possible debarment from future contracts.


Remaining compliant with the Service Contract Act is not just a legal requirement but a commitment to fair and safe working conditions. By understanding and adhering to its guidelines, you safeguard your business against potential penalties and foster a more ethical working environment. Remember, staying informed and seeking professional guidance is key to navigating the complexities of SCA compliance effectively.

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