EXOP - Office of Management and Budget

Service Contract Act Wage Determination

This SAVE idea is not agency specific and deals with Service Contract Act. Currently, government service contracts of $2,500 or more require federal agencies to include Wage Determination(s) issued by the Department of Labor (DOL) to set the minimum wage and fringe benefits for classes of contractor staff. On the anniversary of the contract under the Fair Labor Standards Act and Service Contract Act—Price Adjustment (Multiple Year and Option Contracts) requires the contracting officer to obtain a new wage determination from DOL.


The Act requires the following:


“The contract price, contract unit price labor rates, or fixed hourly labor rates will be adjusted to reflect the Contractor’s actual increase or decrease in applicable wages and fringe benefits to the extent that the increase is made to comply with or the decrease is voluntarily made by the Contractor as a result of:


The wage determination applicable on the anniversary date of the multiple year contracts, or at the beginning of the renewal option period. For example, the prior year wage determination required a minimum wage rate of $4.00 per hour. The Contractor chose to pay $4.10. The new wage determination increases the minimum rate to $4.50 per hour. Even if the Contractor voluntarily increases the rate to $4.75 per hour, the allowable price adjustment is $.40 per hour.”


My suggestion would be to freeze all current federal service contracts employees at the current Wage Determination in the contract they are working on, and suspend the requirement for federal agencies to obtain new determinations for multiple year contracts for the same period of time of the federal employee freeze.


In reviewing the Act and governing regulations it appears the Sec. of Labor would have the authority to enact a freeze on increases of service contract employees. The potential saving across the board annual saving would be in the billions.


This should be only temporary and only if federal wages are frozen.



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Idea No. 2303