Service Contract Act Basics

The McNamara-O’Hara Service Contract Act of 1965, now codified at 41 U.S.C. chapter 67 as the Service Contract Labor Standards, is the service-contract counterpart of the Davis-Bacon Act. Where Davis-Bacon covers construction, the Service Contract Act (SCA) covers contracts under which the federal government buys services performed by service employees: janitorial and food service, security guards, call centers, maintenance, moving, laundry, many information technology support jobs, and so on. The Department of Labor’s regulations are in 29 CFR part 4.

Which contracts are covered

The Act applies to contracts entered into by the United States or the District of Columbia, in excess of $2,500, whose principal purpose is to furnish services in the United States through the use of service employees. A service employee is anyone engaged in performing the contract other than a bona fide executive, administrative or professional employee as those terms are defined in the Fair Labor Standards Act regulations at 29 CFR part 541. Several kinds of contracts are excluded by statute or by 29 CFR 4.115 to 4.134, including construction (which falls under Davis-Bacon), contracts for the manufacture of goods (the Walsh-Healey Act), public utility services, transportation under published tariffs, and some direct services to the government by individuals. Whether a given contract is covered is decided by the contracting agency and the Department of Labor.

Wage determinations and fringe benefits

For a covered contract over $2,500, the contracting officer obtains a wage determination from the Department of Labor and includes it in the contract. The determination lists an hourly wage rate for each occupation in the locality where the work will be performed, using the occupational titles and descriptions in the SCA Directory of Occupations, and a separate health and welfare fringe benefit rate, plus holiday and vacation requirements. The wage rates are derived from Bureau of Labor Statistics survey data, in most localities from the same Occupational Employment and Wage Statistics program that supplies the occupation pages on this site, or, where a predecessor contractor’s employees were covered by a collective bargaining agreement, from that agreement under section 4(c) of the Act.

Under 29 CFR 4.6 the contractor must pay at least the listed wage for the work performed, and must furnish the fringe benefits or pay their cash equivalent. The health and welfare rate is set nationally and revised periodically by the Wage and Hour Division; the current figure is printed on every determination rather than on a single page, which is why this site links to the determination instead of quoting a rate.

A contract under $2,500, or a worker on a covered contract whose occupation is not listed, is still protected by the Act’s requirement that no service employee be paid less than the federal minimum wage under the Fair Labor Standards Act, and the contractor may request a conformance for an unlisted class.

Successor contracts and contractor minimum wage orders

Two further rules matter in practice. First, when a contract is re-awarded and the previous contractor’s employees were covered by a collective bargaining agreement, the successor contractor must pay at least the wages and fringe benefits of that agreement for the first contract year (41 U.S.C. 6707(c)). Second, a separate contractor minimum wage has at times sat beneath the SCA determination. Executive Order 14026 of 2021, implemented at 29 CFR part 23, set such a floor, adjusted each January; Executive Order 14236 of March 14, 2025 revoked it, and the Department of Labor states that it no longer enforces it and will rescind part 23. The earlier Executive Order 13658 floor still applies to the contracts it covered, and the Department publishes its current rate on its government-contracts pages. Where any such floor applies, the higher of it and the determination governs.

Records, notices and enforcement

Covered contractors must keep records of hours, wages and fringe benefits for each service employee for three years, post the Department of Labor’s SCA notice and the applicable wage determination where employees can see them, and pay overtime under the Contract Work Hours and Safety Standards Act and the Fair Labor Standards Act. The Wage and Hour Division investigates complaints and may require back pay, withhold contract funds, and recommend debarment for three years; under the SCA debarment follows a violation unless the Secretary of Labor finds unusual circumstances, a stricter standard than Davis-Bacon’s.

What this site does and does not show

The SCA sets a contract-by-contract floor derived from survey data for a locality. This site publishes the survey data itself, by occupation and state, but the figure on an SCA determination is a legal rate for a specific contract and is the only number that governs it. Which law covers a particular job, and what to do about an underpayment, are questions for the contracting agency, the Wage and Hour Division or a lawyer.