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Transcripts for Wage and Hour Division Prevailing Wage Conference Videos

Wednesday, October 5, 2011 Session - Morning

  • Welcome and Logistics
  • Coverage and Exemptions
  • Wage Determinations, Conformances, WDOL.GOV
  • Questions and Answers


>> Good morning.

Welcome to the 2011 McNamara O'hara service contract webinar designed for contracting officials.

We're broadcasting live from the auditorium at the U.S. department of labor auditorium.

My name is William Brooks.

I'm a senior compliance specialist with the U.S. department ofly boar.

I would like to thank everyone for joining us today.

For those of you who joined us yesterday for the Davis-Bacon act webinar, we have addressed your concerns regarding the technical difficulties and the crew have worked very hard to address those concerns.

Additionally, the broadcast that you viewed yesterday or was unable to view yesterday is now available on our website

From there go to DBA webinars.

We have a great presentation lined up for you today.

We're going to be talking exclusively about service contract act.

Designed exclusively from contracting officials.

We design this presentation for contracting officials to help you administer contracts under the service contract.

Let me introduce my team.

I have Sondra hamlet from the branch of service contract wage determinations in the wage and hour division.

We also have Kyle Roberts, labor adviser with the United States air force.

We have a very informative agenda planned today, this morning we're going to talk about coverage and exemptions under the service contract act.

We're going to talk about when the SCA apply, the requirements under the service contract act, who it applies to, who it doesn't apply to. Then we'll talk about the various exemptions under the service contract act.

Then we'll move on later this morning Ms. Hamlet will go over the wage determination process, how to obtain a wage determination.

The types of Wang determination.

When you request a wage determination.

When you receive a new wage determination.

What happens when a class is not on the wage determination, what do you do?

She'll talk collective bargaining agreement, the appeal process.

So she'll go over information concerning the wage determination process.

Then this afternoon Mr. Roberts, Kyle Roberts is going to go over SCA price adjustments.

We know a lot of contracting officers have issues with SCA price adjustments.

What happens when the wage is increased? What do we do, contractors asking for increases.

Kyle Roberts will go over SCA price adjustments.

Then later this afternoon I'm going to go over SCA compliance principles.

I'm going to help you learn about how your customers, contractors come into compliance under the service contract act.

We'll go over how the contractors comply with the minimal wage and fringe benefit requirements under the service contract act.

Then we'll finish with our last presenter who is now present this morning, she'll join us later this afternoon.

Ms. Mahruba Uddowla, with the general service administration who go over the GSA supply schedule.

There's a lot of concerns with the supply schedule when SCA apply, what agency is responsible for incorporating the contract and maintaining that WD.

So she's going to I dress those concerns with you.

We have a great agenda lined up for you as I mentioned.

Before we get into that agenda we have a welcome message from our secretary of labor, Ms. Hilda Solis.

>> Greetings from the department of labor.

Welcome to the government contracting officials prevailing wage conference webcast.

The department of labor's wage and hour division is hosting this free webcast exclusively for federal, state and local contracting agencies.

Our purpose is to highlight the important role that you play in administering the prevailing wage provisions of the Davis-Bacon act and the service contract act.

At the department of labor we know that a well-informed federal contracting community is needed to ensure our work is received the wage is guaranteed to them by law.

We're committed to developing partnerships with our contracting officials to make sure workers receive a lawful livable wage.

Since 2009 the department's wage and hour division under the leadership of deputy administrator Nancy lepping has executed an ambitious program to provide key stakeholders like you with compliance assistance.

We have hosted prevailing wage conferences in cities throughout the United States.

We appreciate those of you who joined us at one of these gatherings and for those of you who haven't we hope to see you at future meetings.

As secretary of labor I believe it's more important than ever to enforce prevailing wage laws.

Davis-Bacon has helped our construction and service workers since the great depression.

Especially during these difficult times, it's crucial that local workers not have livelihoods undercut when carrying out public works projects.

We believe in a proactive two-step strategy.

Step one is to make sure contractors are educated on a prevailing wage obligation.

Step 2, oversee and enhance enforcement process that curtails violations and promotes an efficient and orderly procurement process.

I'm proud that my department of labor has doubled investigations of Davis-Bacon violations.

We have collected millions of dollars in back wages OWED to workers and debarred contractors who break the law.

I appreciate your efforts on behalf of the American worker.

Working together I know we can administer our laws efficiently an effectively and correct problems wherever we find them.

On behalf of all of us here at the department of labor, thank you for your participation in this webcast.

>> I want to thank the secretary for that great welcome message.

Let's get started.

Our first slide we have -- actually before we get started I would like to make you aware of you can submit questions throughout the webinar.

You can submit your questions at WHDPWC at

So the same email address that you registered for the comments submit your questions online.

We have people who will pass that to us and we'll address the questions at the end of the morning session.

Again, the email address where you can send questions is PW -- is

The first site you have is a Internet site.

We have a wealth of resource information availablen our Internet sites.

The first site you see wage determinations online

Ms. Hamlet will over that extensively.

We have the wage and hour website, there's a lot of information on the website.

One website is the

This is a site every contracting officer check to make sure if you're not awarding the contract to someone who is on the list, someone not able to perform on a government contract.

Code of federal regulations.

SCA, the regulations under the service contract act is 29-CFR part 4.

These are some of the other labor statutes that relate to the service contract act.

Let's talk about the service contract act.

The service contract act is the most recent government contract statute.

There are three government contract statutes.

Who knows the three statute?

The Davis-Bacon act we talked about yesterday, there's the Walsh Heeley public contracts act and then there's the service contract act.

It was enacted in 1965, been in effect since 1966.

SCA was create because there was no protection for federal service workers.

Under the Davis-Bacon act for construction projects and we have protection for workers under the Walsh Heeley act, the manufacturing supply contracts.

There was no protection for federal service workers so SCA was created to remove the gap in labor standards and move wages in a bidding factor in competition for service contracts.

What is the service contract act?

The the service contract act applies to most contracts that enter into by the United States or the District of Columbia, the principle purpose of which is to furnish services through the use of service employees in the United States.

Minimal wage contractors ab subcontractors must adhere to certain minimum wage and safety and health requirements.

Under the service contract act the wage and hour division has sole enforcement authority.

There's no dollar threshold under the service contract act.

But if you have a service contract there's greater than $2,500, there's certain requirements.

The contracting agency must incorporate the SCA labor standard clauses in the contract and the applicable wage determination.

The wage determination contains the minimum monetary wages an fringe benefits that all service employees are entitled to receive on a contract.

So again, there's no dollar threshold under the service contract act but if you have a contract greater than $2,500 T contracting agency must incorporate the federal standard clauses and the applicable wage determination into the contract.

Their job -- posting requirements.

The contractor or the subcontractor must post the applicable wage determination at the job site as well as the wage and hour poster 1313 at the job site.

Employees know the compensation they're required to receive.

The contractor has to post a wage determination at the job site and the SCA poster which is wage and hour poster 1313.

There are recordkeeping requirements.

The contract or subcontractor must keep appropriate records for at least three years upon conclusion of the contract.

Now, rare circumstances you may have a contract that's below the the $2,500 threshold for a wage determination being incorporated in the contract.

If that happens, the employees will be subject to the minimum wage under the fair bailor standard act currently $7.25.

If the contract is below the $2,500 threshold employees are subject to the minimum wage under the federal standard age which is $7.25.

Now we're going to talk about coverage.

When did you have coverage under the service contract act?

You have four elements of coverage.

The contract has to be entered into by the United States or the District of Columbia.

Has to be principally for furnishing services, has to be performed through the use of service employees and it has to be performedded in the United States or territories.

We're go fog go over each element separately.

The first one, the contract has to be entered into by the United States or the District of Columbia.

The District of Columbia is named in the statute so all contracts DC government let are subject to the service contract act.

Under the service contract act it has to be a direct federal service contract.

So a federal agency has to award that contract directly.

Unlike under the Davis-Bacon act with some federally assisted contracts will be subject to Davis-Bacon related acts.

So again, there has to be a direct federal service contract let by federal contracting agency.

Under the service contract act there's a principle purpose test.

The the contract has to be principally to perform services.

The example on the screen is you have an example of routine or regular service contracts that you're going to see in a typical federal building, janitorial services, security guard services, janitorial services cafeteria service.

SCA tended to apply to a wide variety of service.

There's contracts for mail hall contracts, beauty and barber services, debt collection, forestry services.

There's a lot of services that pertain to the service contract act.

But again,CA there's a principle purpose test.

So the contract has to be principally for services.

The contract has to be performed in the United States or as territories.

If the contract is in the U.S. -- if the service work is performed in Iraq or Afghanistan, the SCA will now be applicable.

The work has to be performed in the United States or our territories.

The last elm, the work has to be performed through the use of service employees.

There must be service employees performed on the contract.

What is a service employee?

A service employee is any employee who is called for to work on the contract or is necessary to perform work on a contract.

Unless defined under 29-CFR-541 under the fair labor standard act as administrative executive or professionally exempt.

So the employees exempt under the fair labor standard act in 29-CFR-541.

They're going to be exempt under the service contract act.

So again, a service employee is going to be any employee whose called for to work on the contract or is necessary to perform on a contract, unless exempt under 29-CFR-541.

So any employee who performs on the contract is going to be a service employee.

Whether part time, full time or temporary.

Service contract act makes no distinction between employees, if they work on a service contract they're entitled to the SCA prevailing wages and fringe benefits.

As I mentioned they maybe exempt under the fair labor standard act in 29-CFR-541.

If you have a contract principally for say professional services, performed exclusively by professional employees, their contract will not be covered under service contract act because all of those employees are professionally exempt.

You may have a contract that you're going to let principally for professional services but say you do have service employees performing on that contract, to a significant or substantial amount.

Those employees would be counted so if you have a federal service contract say to provide medical services, performanced exclusively by medical doctor, all those employees will be professionally exempt.

But you may have a federal service contract principally for professional services but you may have some administrative support personnel performing on that contract to a significant or substantial amount.

Those employees will be covered.

I want to talk about service employees in a little bit more detail.

Because we have to make sure that you understand when we say any employee performing on a contract or necessary to perform on a contract, say you have a janitorial services contract that you're going to award.

Typically that contract should be performed only by janitors.

But the company may have someone doing payroll, recordkeeping, et cetera, to support the contract.

Their working for that contractor, they're supporting the contract but they're not called for to perform on that contract.

Thaw ear not necessary to perform on that contract.

That contract should only be performed by janitors.

So only the janitors will be service employees and that example the contract I just gave you.

So again, a service employee is going to be any employee called for to work on a contract or is necessary to perform on a contract unless they're exempt under the fair labor standard act in 29-CFR-541.

Let's talk about the exemptions up under 29-CFR-541.

In order for someone to be exempt under the fair labor standard act in 29-CFR-541, there's three tests that had to be met. There's a salary level test, salary base test and a job duties test.

The salary bases test.

Each exempt employee must receive a pre-determined salary for any work that they perform in the work week regardless of the number of days an hours they work.

So it has to be a salary-based test.

So they have to receive a salary.

The salary must be at least $455 in that week.

And again, employees must receive that amount for any work during the work week that person works regardless of the number of days an hours they work.

So you have a salary bases test, a salary level test and you also have a duties test.

For administrative exemptionsch these are the duties the employees should work.

Administrative exemption is going to be a manager, someone making decisions of importance an significance.

They're going to be using independent judgment and spending most of their time doing so.

Professional duties performing the following duties on your screen.

A professional, that's a teacherrer, doctor, lawyer, a chef and accountant.

Executive duties.

They're performing the following duties you see on your screen as well.

An executive, that's a supervisor.

Someone who is supervising two or more employees.

They have the authority to hire and fire employees.

Or make recommendations to hire and fire employees.

When you look at what whether someone is eligible for exemption on 541, there's three tests that have to be med meth.

Salary level test, the salary bases test and job duties test.

Let's talk about contracts that are not covered under the contract act.

We just talked about SCA has a principle purpose test.

So again, if the contract is now principally for services, the service contract act is not going to apply.

The contract has to be principally for services in order for the service contract act to apply.

Contracts for leasing space is not covered under the service contract act.

We talked about professional services.

Contracts principally for professional services performed only by professional exempt employees will not be covered under the service contract act.

We talked about federally assisted contracts.

Under the service contract act, has to be a direct federal service contract let or awarded directly by the federal agency.

Now we're going to talk about exemptions under the service contract act.

We have statutory exemptions, SCA statute itself, as well as we have regulatory exemptions under the service contract act that can be found in the regulations that pertain to the service contract act at 29CFR part 4.

Statutory exemptions.

First will be contacts for construction covered under the Davis-Bacon act.

If you have a contract primarily or principally for construction, that contract is exemption from the service contract act.

Again, if the contract is pli services the service contract act is not going to apply.

So if the contract is primarily construction under the Davis-Bacon act, the service contract act is not going to apply.

Contracts for manufacturing the supply contracts under the Walsh Heeley public contracts act is not going the apply to the service contract act.

It will be statutory exempt.

Contract for the freight or personnel, if these rates are governed you won't see too much of those out there these days but if it is they're statutory exempt from the service contract act.

Contract subject to the communications act of 1934.

These are telecommunication services, that are subject to the telecommunications act in 1934.

They're not going to be covered donor the service contract act.

Contracts for public utility services, gas, steam, water, power, et cetera, these rates are regulated by the State.

They're statutory exempt from the service contract act.

Contracts for providing direct federal services to agency.

This is contracts where agency hires someone direct they're hiring someone directly and that agency is going to pay that employee.

This is not a situation where you award a contract to a contract, and he hires service employees.

This is a situation where you award a -- where you hire someone directly to work for -- to work for your agency to provide direct services so again they're going to be paid by you directly and not a contractor.

Contracts to operate postal contract stations.

United States postal service contracts for the operation of postal contracts on a military basis you have postal contract spaces, right here in the department of labor we have a postal contract stations.

For the operation of the postal contract station only, that's going to be a statutory exempt from the service contract act.

Let's talk about some of the other exemptions.

The administrative wage and hour division through the secretary of labor has the authority to issue a variance, a tolerance on exemption from the service contract act.

If he or she feels necessary and proper in the public interest and to avoid serious impairment of government business.

Administrator of the wage and hour division has authority to issue a variance, a tolerance on exemptions from some of the provisions, from some of the provisions of the service contract act.

Typically what we see is contracting agencies request of variants from the service contract act.

If they want to let a contract greater than five years under the service contract act you cannot award a contract greater than five years.

That's five years base contract.

So what we see on a routine basis is agencies request variants from the service contract act, they submit that request to the administrator, requesting variance to be able to award a contract greater than five years.

There's various reasons they want to do so, they may want to ensure they have a contractor who has special skills and they want to make sure that contract is awarded to someone.

So again, the administrator of the wage and hour division can issue a variance, a tolerance on exemption from some of the provisions of the service contract act.

If it's necessary and proper in the public interest and to avoid serious impairment of government business.

In order for this variance tolerance or exemptions to be approved the labor standard clauses have to be adhered to.

Let's talk about another variation from the service contract act.

There's certain situations where employers can pay a minimal something below the minimal wage stated on the wage determination.

Contractors who obtain a 14C certificate for employee whose are handicapped disabled, or student workers, they can obtain a 14C certificate.

This will be a sub minimal wage where they pay a sub minimal wage, that will necessarily be required on the wage determination incorporated to the contract.

Again, this is going to apply to employees who have a disability handicap or a student workers.

Apprentices an trainees.

Any employee who was enrolled in a bona fide apprenticeship program through the department of labor, employment training or state approved agency can pay something below the SCA prevailing wage as well.

Regulatory es.

We talked statutory exemptions, now we're going to talk briefly about regulatory exemptions donor the service contract act.

There are several regulatory exemptions under the service contract act.

These regulatory exemptions can be found at 29-CFR 4.123.

First one, postal service contracts will come for the carriage of mail or the common carrier.

That's exempt, that's a regulatory exemption under the service contract act.

Postal service contracts with owner operators, this is an owner operator.

Only postal service contracts with opener operator.

So the post office when they award this contract it's anticipated at the time they award this contract they're only the owner operator is going to perform on the contract.

No other service employee is going to perform on a contract.

Of course the if the the owner operator is on vacation, someone is sick, someone will fill in for them but the only way this exemption is going to be applicable is only -- is only the owner operator is going to perform on that contract.

The last exemption that we're going to talk about is certain items for commercial services.

Commercial services, there are es for commercial services.

There are exemptions for commercial item services and there's exemptions for commercial services.

Let's look at commercial items equipment services.

If you have a contract or subcontract for maintenance and calibration of automation data process equipment, word information and processing, that's going to be fall under commercial service exemption.

Scientific and medical apparatus or equipment or application of circuitry or other similar technology is an element.

-- essential element.

Office business machines, the machines that break down in your office every other day, where the services supplied by the manufacturer the supply, they're going to be exempt if certain criteria is met.

We're going to talk about the criteria that has to be met before the commercial service exemption will be applicable.

At a commercial service exemption applies to seven particular services.

It has to be a named commercial services in the exemption.

The first one is vehicle and maintenance automobile and vehicle maintenance services of vehicles that are owned by the Federal Government.

Financial services.

The issuing and servicing of credit cards, debit cards, smart cards and other similar cards.

The third one, space in motels an hotels for conferences.

Typically short duration, one to five days.

Going to be excluding ongoing lodging such as those for military recruits, and training at agency training senters.

Real estate services.

This is the acquiring ab disposal of real property owned by the Federal Government.

The next one is transportations of persons on regularly scheduled routes with common carriers.

Charter services.

The next one will be relocation services.

These are services to assist federal employees and military families that are transferred to new duty stations.

And the last one is the maintenance and servicing of all types of equipment obtained from the manufacturer or the supply under sole source contract.

In order for the commercial items exemptions to be applicable and commercial services exemption to be applicable there's certain criteria that has to be met before this exemption is applicable to your contract.

First is the services have to be offered and sold regularly to non-governmental customers.

The contract has to be awarred on a sole source basis in addition to factor an price.

The service has to be furnished in market or catalog prices to the general public.

The employee must spend a small portion of time available on the government contract.

That's 20% or below.

So the employee has to only -- employee typically is only going to spend a small portion of the time on the government contract.

The re of the time is going to be working on a commercial basis.

The employee receives the same conversation plan as he's receiving performing commercial work.

Now the contracting officer and the prime contractor must certify the criteria met before you are able to claim this exemption under the service contract act.

Couple more to bring to your attention you may not be aware of.

These are contracts principally for the furnishing of food, lodging, automobile fuel, souvenir, newspaper stands, recreational equipment.

But these services are principally furnished to the general public.

And that -- not to the Federal Government.

So the key in this exemption is it's a very limited exemption but these services are very much furnished through the general public and that to the Federal Government.

-- and not to the Federal Government.

(inaudible) contract exemptions.

I'm sure people are familiar with go go contracts is -- GOCO is government owned contractor operated.

This is a situation where contracts to operate or manage a federal facility or program.

Is the contracting agency is awarding a contract to a prime contractor and letting them operate or manage a federal facility or program.

And in essence this prime contract as agent of the Federal Government and acting on their behalf.

In essence, they are the agency.

Any GOCO contract awarded to operate or manage a federal facility or program will be exempt from the service contract act.

At the department of labor we had a job core program to operate that job core program that will now be covered under the service contract act.

Any contracts for services that are subcontracted out would be cover sod the prime contract to operate or manage the federal facility or program will now be covered under the service contract act.

Any contract subcontract any services that work would be covered under the service contract act.

Coverage determinations.

The contracting officer has the initial, the contracting agency has the initial responsibility to determine coverage under the service contract act.

So before when you evaluate your contract, the contracting officer has that initial responsibility, they're going to determine whether the contract is subject to the service contract act or not before they put it out for solicitation.

We have the final authority.

So if there's some disagreements with the contract or employees, SCA applies or not, we have the final authority for coverage under the service contract act.

Final rulings can be appealed to the administrative review board.

We have gone over coverage and exemptions children under the service contract act.

Now segue over to SCA wage determinations under the service contract act.

We're going to turn it over to Ms. Sandra hamletT, the branch chief of service contract wage determinations.

>> Thank you, William.

By now you already know that if the principle purpose of your contract is for services then you must have what is called a wage determination in that contract.

The wage determination is simply a list of wages and fringe benefits that must be paid to any individual performing a service on the contract.

Now you probably say how do I obtain that wage determination?

The contracting officer or agency is required to obtain the wage determination and there are two options for doing that.

The contractor agency can either use the WDOL to download and incorporate a wage determination in that contract or submit an E-98 some agencies such as the postal service their mail hall contracts are required to come in every other year if there money was appropriateed not appropriated through Congress.

If the contracting agencies money is appropriated through Congress they're required to come in every year.

I'll talk a little bit more about the E-98 that is listed on the WDOL website.

If the agency decides to use that particular website to obtain the wage determination they must download -- they may download the wage determination in incorporate it.

If they do that they're required to make any changes that are necessary if an error should occur.

If they decide to use the E-98 process they must fill out the pertinent information such as where the contract is performed, all procurement dates and anything that is needed to issue the appropriate wage determination for that contract.

One time we had other methods for using or obtaining wage determinations such as the blanket program and MOU and the paper E-98 -- the paper SF-98.

But all those are gone and we're primarily using the E-98 system on the D WDOL.

We issue two types of wage determination, one prevailing and locality.

And the other based on for foresee or collective bargaining agreement.

First the locality wage determination.

These wage determinations are primarily based on survey data and they show a consistent wage and salary structure.

What that means is that a GS-3 would make less money or have a lower rate than a GS-4 or 5.

There is two types of locality wage determinations.

One based on survey data, one based on a union agreement, a union dominance wage determination.

What that entails is a union comes in to the department and claims dominance over a particular area, a particular classification paying one rate.

And that union is -- the employees to that union signatory to the collective bargaining agreement which means that at least 50% or more must be signatory to the collective bargaining agreement.

Let me give an example.

In key Kings county New York, hypothetically there have been -- there are janitors and a janitor's union have come in and played dominance for that particular area, paying one rate.

They have told the department that there are thousands janitors in Kings county, New York.

And at least more than 50% of those janitors are signatory to their collective bargaining agreement.

So it's 550 of those janitors are part of their union.

Which makes one rate dominant for that particular area.

So in Kings county, New York, any individual contractor coming in to Kings county must pay that same wage rate to its janitors.

The survey data we look at has the mean and median and we're currently using the median which is the midpoint of distribution.

Not all classifications listed on the SCA direct -- on the wage determination are surveyed by -- in our prevailing locality data.

Regulations give us the authority to use the sliding process.

That's simply obtaining a rate from a class that is survey and giving that rate to a class not surveyed.

For an example, we have a receptionist on our wage determination.

That's not a survey classification.

That class is a GS-5.

We look at the section which is also a GS-5.

We have three levels of secretary.

So we look at the rate for the secretary 5 and apply that rate to the receptionist.

The secretary is surveyed, and the receptionist is not.

We also look at other data sources which shows prevailing and locality such as the GS pay scale, the wage board scale and the non-appropriated funds.

And there are classifications on our wage determinations where we simply use the wage board schedule for blue collar classes and the GS pay scale for white collar classes because there is no other data available.

Now, the department has determined that DLS has the best data source, we currently use the OES which is occupational employment statistics surveys.

Last year we used nal compensation surveys as our primary source, however they no longer develop that data in a format to use wage rates.

We're going forward and using occupational employment statistics surveys for all areas.

OES surveys metropolitan areas.

Is a mail survey conducted by the State employment services under the direction of DLS.

Sample some 400,000 establishment annually which gives three -- for three years a total of 1.2 million establishments.

They do not inform us of who those establishments are and I doubt they will inform you but you can try.

OES samples a lot of data much more than NCS.

But NCS has (inaudible) data whereas OES does not.

The OES data is currently being used by employment and training administration for their foreign labor certification program.

So good data.

Again, OES will be our pray mare data source going forward.

We try to look and make sure the data doesn't show any anomalies when we're using it.

If there is, then we would probably switch over to using something else such as the GS pay scale or the wage board schedules.

What I mean by anomalies is that for some reason the data may show that a GS-6 makes a lot more than a GS-7 or 9.

We can't issue wage rates in that fashion.

We have to keep in mind the wage structure.

In addition to that, if a survey rate comes in a very high based on the previous rate and listed on the wage determination, we will cap that survey rate at 10% rather than giving a large increases.

The survey data is elastic and variable.

Which means a stretch.

And I'll take for example the Washington D.C. wage determination.

It lists of course Washington D.C., some parts of Maryland, some parts of Virginia.

And even some parts of West Virginia.

So you see that stretch.

We also issue wage determinations based on the metropolitan statistical area and non-me poll tan statistical areas.

We issue region wide wage determination and the region that is shown on that wage determination comes from the contracting agency.

We also issue nationwide wage determinations only do so many of those because those have to be looked at very carefully.

There's a court case many years ago that shows that the competition for issuing those wage determinations truly must be for the nationwide competition.

We have to look at those -- to get clarification on whether that contract is truly for nationwide competition.

You probably hear me talk about consolidated standard non-standard but a lot of these terms are history.

In 1994 we combined what is called now the area-wide wage determination.

On wage determination you have 21 broad occupational categories.

In 1994, each one of those broad occupational categories was a separate wage determination.

So we combined then, that's where the word consolidated come from.

The word standard is used because they're used in most frequently in federal contracts.

Non-standard not so frequently.

Let me talk a little bit more about the consolidated.

You can recognize those wage determinations because they start with the series 2005, 2000 series, 2005, 3,000 series.

They have approximately 400 classifications listed on him and as I said before, 21 brought occupational categories.

We do use BLS cross industry survey data.

And the job duties on those wage determinations are listed on the service contract directory of occupations.

All the classes listed on area wide wage determinations the job description is in the directory.

Also in that directory are the federal rate equivalencies.

That's the grade level these classes would be if they were employed on a federal contract.

Not all classes on non-standard wage determinations are listed in the directory.

Those listed on the wage -- would be listed on the wage determinations themselves.

Non-standard wage determinations as I have said are not so frequently used.

And they -- when we're issuing those we use different data sources, there maybe industry-specific data.

They maybe broader in geographical scope or area.

As I said before, the job descriptions maybe listed on the wage determinations themselves or maybe listed in our service contract directory of occupations.

This is a list of some of the frequently used non-standard wage determinations.

I'll go over a few with you.

We talked about union dominance.

Halfway house, if the work is being performed in a halfway house versus being performed in a jail, then you will use the halfway house wage determination.

Nursing homes.

If the work is performed in the nursing home versus a hospital you would use the nursing home wage determination for the nursing home and the area wide wage determination for the hospital.

Moving to storage which is a very interesting one, if you're moving facilities within the department of labor from one room to the next room, then you will use the area-wide.

However, if you remove -- were moving equipment across town or to another state then you may use the moving and storage wage determination.

Mail hall.

That wage determination is used for the postal service, any other type of mail distribution in Federal Government you use the area wide wage determination.

And you see we have a whole list, this is not a total list, this is a sampling of what we issue under service contract act.

Along with the wages as I previously informed you, you have the fringe benefits.

One of the fringe benefits is the health and welfare rate.

And I think it's currently at 3.59.

That rate is updated every June.

And that rate is updated based on employer cost for employee compensation.

We use the all workers and private industry chart to increase that rate.

And you will hear more about that in -- later on in this session.

There are two health and welfare rates and based on whether your contract is fixed cost or average cost.

If your contract started after June 1st, 1997 you have the fixed cost wage determination which means each employee received 3.59 per hour.

Along with that is vacation and holidays.

Many years ago we had survey data to show that depending upon the state and county, the package for one vacation and the package for one holiday maybe different per state.

So if you live and work in New York, the wage determination may show a different package for the vacation pay and holiday versus if you work in Texas.

There's misconceptions as to or about wage determinations.

For less than $2,500 you may have coverage and that may not be true.

Along with that, the department of labor, if you look on the website and you determine that there is no wage determination for a particular classification that you need in your contract that maybe the service contract doesn't apply.

That is not true.

That you must submit an E-98.

By doing that the department of labor will issue you a wage determination if less than five employees on that particular contract.

If it's more than five we are required to issue a wage determination.

If less than five we issue a box B which means those employees would be paid no less than the federal minimum wage.

Now, this process to reviewer reconsideration is a process used to challenge a area-wide consolidated wage determination.

There are timetable which is you must submit your request.

You must submit substantial data and this gives any interested person the opportunity to challenge a rate on the service contract act.

Wage determination.

These are the guidelines, prior to ten days of -- prior to the opening of bid, no later than ten days before the commencement of negotiated contract or exercise of option or extension.

The department has 30 days to get back to you.

We k send a letter back to the person requesting the request and inform you that if you decide to appeal or re you must submit substantial data.

And when we talk about substantial data if you're challenging the rate, say on Washington D.C. wage determination, I have informed you Washington D.C. wage determination you have some parts of Maryland, some parts of Virginia, some parts of West Virginia and the District of Columbia.

The data that you present to me must also cover that geographical area.

In addition in addition to that if you challenge the rate of a guard then you have to give me data for a guard.

Not a detention officer, not a police.

It must be for the classification that you're challenging.

All of the appeals for review reconsiderations are handled through the administrative review board and that will be informed in your letter, in addition to that, we will tell you the timetable that the administrative review board has in 29-CFR part 8 for appeals.

The administrative review board is a independent body, not connected with service contract office and we don't have any -- we can't tell you a timetable because they operate under their own procedures but we will forward them to you if you need assistance.

Now we'll talk about 4C wage determinations.

4C comes because 4C part is part of this SEA act.

And is called successorship because the contract in order to incorporate a collective bargaining agreement you have to suceed something.

This part of the act was enacted in 1972.


It's a statutory requirement.

It does not depend on us issuing a wage determination.

It's a short form where this this is the geographical scope, the parties to the collective bargaining agreement and the type of work being performed.

It does not list wages.

You have to have a copy of collective bargaining agreement to see the wages and the fringe benefits.

But in essence it tells you that the CBA data has been negotiated by a particular contracting unions, that is prevailing for that particular contract.

A contract may suceed himself.

The CBA must be applicable for work being performed on the predecessors contract in order to have application.

The successor contract must be for substantially the same service and located in the same locality.

So if you move the work from one building to another the CBA may not be covered.

Successor contractors must pay the CBA rate the employees who were hired or whether or not the employees are signatory to their CBA.

Let's take for instance the janitors have a collective bargaining agreement in the department of labor.

And they have some janitor whose are signatory to it.

They hire new janitorsch those employees are still covered under their check active bargaining agreement.

Foresee yourself executing and interpretation of CBAs is based on intent of the parties who assign a signatory the the CBA.

There's some things that 4C does extend to when a contract comes on board.

Work rules an overtime.

I would like to explain 4C in this format.

The very first year of the contract, an area-wide or non-standard or locality base wage determination must be in that contract.

Now, the second year which will be the first option period, the contractor and the union negotiated a CBA.

That CBA can be incorporate ated in the contract so long as that CBA has been ratified prior to that option period.

What I mean by that is that if the CBA is not in effect prior to then the CBA may not be incorporated.

If the option period is October 1 and CBA is ratified October 1, that's not prior to.

So it may not be incorporated in that contract.

Now you come to the second year of the contract and there is a new contractor on board.

The new contractor must pay the same rates and fringe benefits that have been negotiated in the previous contract.

In the previous contract CBA.

Then on the fourth year of the contract which will be the third option period if that contractor has a CBA, at that point the contractor incorporated into that contract.

So those must be careful with that.

There are limitations on self-executing of application of 4C.

In the regulations I believe is 4.1B.

It tells us that the contractor has an obligation in the union and as well as the contractor agency.

The contractor agency must inform in writing the contractor and the union of all upcoming procurement dates.

So if this is not done, then perhaps the CBA may not be applicable for that contract.

At the same time the contractor and the union has obligation to see that the agency receives the CBA in a timely manner.

If that is not done perhaps the collective bargaining agreement may in the be incorporated.

I can give you an example, agency X, Y, Z inform the contractor, the union that the upcoming procurement dates were October the 1st for the new option period.

The contractor and union negotiated a collective bargaining agreement.

The rates in that collective bar gang agreement were substantially higher than the area wide.

However, the contracting union also gave that collective bargaining agreement to the agency ten days after the option period.

The agency said we're not going to accept that collective bargaining agreement and the department found out that the agency failed to give written notification to the contractor and union.

There by they had to take that collective par gaining agreement and incorporate it into that contract.

So there are requirements for the contractor, requirements for the contracting agency.

And there are requirements for the union.

All must be met.

Now there are two ways in which to challenge a 4C wage determination.

One is through substantial variants and the other through arm's length.

Substantial variants is a process used in the -- any interested party can can come in and say the rates on that -- in that CBA are substantially higher than what prevails in that particular area.

You must give us substantial data as to your claim.

And you must be timely.

You can find the timetables in 4.10 of the regulations.

For arm's length any interested party can come in and say the collective bargaining agreement was not reached to arm's length.

There's something that shouldn't have -- hadn't occur and you must have substantial evidence of that as well.

There are also timetables in which to submit that request and you can find that in 4.11.

I'm going the talk now about the wage determination online.

Mr. Brooks has given you some information.

This on line -- this online presentation was created into governmental agreement between the department of labor and department defense OMB, GSA and department of energy.

This is housed by the national technical information system.

The reason for creating this system was twofold, to meet the president's initiative for E government and enhance or help the public obtain wage determination and wage determination information.

This system is houses the SCA wage determinations as well as Davis-Bacon decisions.

It also has archived wage determinations for SEA and -- SCA and Davis-Bacon.

The occupation on this system, the E-98 system.

Also have the list of labor advisers that help with any contract information that you need for the particular agencies.

It heads the department of labor regulations and the far regulations.

There's a user guide.

And there's AAM.

And AAM is simply all agency memorandum the department sends out when there's a change in business.

There's also menu driven.

It reduces time of obtaining wage determination.

In most cases you may get a wage determination the same day.

It ensure consistent application with labor standards and also has an alert system.

And with the alert system, I'll go over that in a few minutes.

It also has a drop down box to select wage determination for your contract.

There are a list of questions that you may have to answer in order to obtain the applicable wage determination.

And like there are two wage determinations I previously informed you.

There's even number of wage determinations an odd number.

The odd number are for contracts where the contract started after June 1st of 1997.

And the even number is only for those that previously had an even number wage determination.

There's a non-standard list, we when over the nonstandard list to help you determine if you have or need the right wage determination.

Like I said, there's a drop-down menu to help you with that.

If you find no wage determination on that system that you need for your contract, then you must come into the department of labor and submit an E-98 in order to obtain that wage determination.

There are two dates on wage determine s you pull offline, one is the date the department of labor issue, one date is the date that the wage determination is published on the WDOL.

That is the wage determination that you must use to determine whether it's appropriate for your contract or not based on your option period or solicitation.

The alert system.

This system simply informs you if you previously pulled off a wage determination that if this wage determination is going to be increased or updated then the system will alert you that something is occurring through the wage determination you previously pulled off.

So it's a good tool and I suggest that if you need it to use it.

Now with archive wage determinationious may pull those down and simply review them but they cannot be incorporated into any contract.

If for some reason you passed your deadline for your option period or your solicitation or whatever it maybe, then you must come into the department of labor for a back dated wage determination.

You cannot incorporate an archive wage determination into your contract.

Now we'll talk about the conformance procedure.

This is after you obtain your wage determination and the contractor determines that there is a class of work needed on his contract but is not listed on the wage determination.

That contractor must proceed with a conformance process.

The conformance process is listed on the last three pages of the area-wide wage determination.

It is a directory guide on the DWOL and is also a form on the DWDL to help with the conformance.

Like I said, in order to obtain the conformance, the classification or work that the class is performing must not be listed with any other class that is listed on the wage determination.

The proposed rate that the for the class that is not listed must be a reasonable relationship to the classes already listed ton wage determination.

There's no single formula, look at comparable classes and you look at how the classes were developed.

I'll give an example.

If you have a which jit maker and -- maker and you determined the skills an responsibilities of that which jit maker is probably at the level of a GS-5, and you have a secretary that's listed on the wage determination, and there is a GS-5 secretary, to show a reasonable relationship you can use the rate for that GS-5 secretary and give it to your WIJIT maker.

And that shows a reasonable relationship.

You cannot artificially subdivide classes that are already on the wage determination to create a new wage determination.

You can't combine two or more classifications to create a new wage determination.

If you have administrative assistance and a person is doing administrative duties an secretary duties and you come up with a classification, a WIGIT maker, then we will not approve that because administrative assistant is on the wage determination and the secretary is on the wage determination.

4.169 tells you if a is doing more than one task you must participate in the higher rate at all times or segregate hours and keep a record of how you are segregating it.

The wage determinations are the lowest rates that must be paid.

There by you cannot create something lower than what is already there.

Some classify cases we have have five levels.

If you have a 6th level, that job description shows that that level should be higher than the last level that we have on our wage determination, you can conform that.

We do not conform helpers or trainee positions.

William talked a little bit about that.

If you have a bona fide training program and officer active Kate through ETA, of course you can use the -- lower the rate that way but we do not conform training positions or helper positions.

When doing conformance we asked for rationale, that's to help the department understand how that class was developed.

We take 30 days in which to review your request, after we review your request we send it back -- I may have failed to give you the process.

The contractor is required to propose the wage rate, create a job description and the job rate.

He must bear that rate on a reasonable relationship to other classes listed on that wage determination.

Then he must obtain signatures of employees who are affected by that wage determination or classification.

He must combine all that information and give to it the contracting agency.

The contracting agencies responsibility is to submit the request to the department of labor.

The department of labor has the authority to approve it or disapprove the conformance.

Once we have made our decision we'll send it back to the contracting agency and the contracting agency sends it to the contractor.

And the rates we approve must be paid by the contractor the employee for that occupation.

We ask that the contracting agency gives us recommendations on the conformance and submitted to us.

We also take 30 days two weeks so we cut downen our time.

However regulations say we have 30 days to review it.

Now you come to the next year after the conformance is approved we still do not see that class on the wage determination.

There's an indexing procedure.

In fact the contractor has two options, he can do conformance over again and submit to the agency and agency submits it to the department of labor, or may perform indexing procedure.

Whereby he takes all classifications that were used on that contract, look at the wage determination and old wage determination and new Wang determination and give a percentage difference between the two if there were increases and give that percentage to the conform class that was conformed previously.

That process is between the contracting agency and the contractor and does not have to be to the department of labor.

Now this is an example of indexing.

On this particular contract they had a secretary and an accounting clerk.

Revision 8 the secretary's rate was $10 and accounting clerk's rate was $10.50.

Division 9 got an increase.

And the secretary rate was 10: 80 and 10:71.

Accounting clerk received 2%.

Based on that average percentage, that came out to be 5%.

We previously approved an accounting clerk at clnt 50.

So you apply that 5% to the 12.50 and come up with a rate of 13: 13.

This procedure will be between the contracting agency and the contractor.

This ends my presentation and now it's time for questions and answers.

and I thank you for your attention.

>> We're going to move over to questions and answers.

Remember, you can submit your questions to

We're ahead of schedule.

Please submit your questions, we have plenty of time to address your questions and concerns.

We have a few questions already so we'll go over those questions.

The first question we received, this is for you Sandra.

Why is the statement of rates paid to federal employees included in wage determination request?

The question was why is a statement of race paid to federal employees included in SCA wage determination request?

>> So the contractor knows exactly what he's required to pay the employees.

We don't want them to second guess.

We want them to know.

Those rates will be listed.

Next question is, this comes from Patrick the question is if an employee pass it is duty test and salary test but is paid hourly, and is considered non-exempt under the fair labor standard act can that employee be conformed?

>> We do not conform the class.

Only classes that we conform are those that are not exempt.

>> The next question comes from Terry I believe in Knoxville.

Kyle, you take us out of this question.

Does the service contract act apply to non-federal agencies?

For instance, does it apply to public housing authorities or airports using federal money?

>> Answer to that is no.

There's a big difference between service contract act and the Davis-Bacon and its related act so different answer than we gave you yesterday.

There is no comparable separate related acts under the service contract act.

>> This next question comes from Ramone.

In New Mexico.

This maybe a question for you, Kyle.

And a request for proposal, RFP.

How does the government ensure all offerers propose the correct wage determination, labor categories without dictating to them which apply.

>> That's a bit of a contracting strategy question there.

First and foremost you're ensuring they're meeting minimum obligations to employees by incorporateing a service contract act, 52222/41 clause and applicable wage determination whether based on collective bargaining agreement or area prevailing wage determination.

Ensuring that the contractor is actually paying that is another matter.

Enforcement overall compliance authority for service contract at rest with the department of labor.

I think your question is more looking at how do we determine in the proposal stage that the offerer is at least meeting the minimum obligation.

I'll give you two answers to that.

Under fixed price contract under our current contracting rules an regulations, your ability to gain insight into contractor's pricing structure in a competitive environment is limited.

So you don't necessarily have the means to gain that reassurance without obtaining some sort of cost and pricing data and if you look for part 15, 15406, there's certain hurdles that must be let in order to obtain that data.

Certainly if the requirement is large enough you'll obtain the data anyway and that provides you a means of ensuring the contractor is meeting minimum obligation in that respect.

So I can't really give you a straight answer to that question because you're getting into your approach to contracting for the requirement itself and what you're actually requiring to be submitted by the offerer.

Hope that answers or at least addresses the question.

>> Okay.

Next question.

Kyle, does the service contract act apply to security grant program awards?

As fiduciary agent for Federal Government funds are passed to us, programs are approved by FEMA.

And then we are directed to release funds to agency requesting them and monitoring the fund and other regulatory compliance issues.

SCA apply to sub award since we're acting on behalf of the Federal Government?

>> Going back to the service contract act and applicability of it the short answer would be no.

I would caveat that with when there's exception for goCO type contracts.

So if you would fall into that GOCO exception and acting as a agent for the government my answer would be yes but the short and I believe the book answer is no.

We just have one more question left.

Again, you can submit your questions again to

The next question, we're go tag talk about this more this afternoon.

If the fringe benefits package exceeded the allotted amount of the hourly health and welfare can an employee deduct a difference from the employees base pay?

The health and welfare amount is separate from the minimum monetary wages so employee is entitled to the minimum monetary wage and health and welfare fringe benefit requirement.

There's a minimum requirement, the current fringe benefit rate is $3.59.

Because someone can pay above and beyond that.

The minimum monetary requirement, there's a minimum monetary requirement and a health and welfare fringe benefit requirement.

They're separate and addition to.

So an employee can take away from the employees minimum monetary wages.

Entitled to minimum monetary wages, and health and welfare fringe benefit.

That ends the questions we received so far this morning.

Since we have a few minutes before we break, Sondra, can can we talk about some of the concerns that or issues that come up that you see that contracting officers have with the wage determination process conformance issues, anything you want to elaborate on that you see on a consistent basis that contracting officers have?

>> Yes.

One of the problems that we see is that the -- in the conformance process with the wage determination that is listed on 1444 is not the wage determination that should have been used to establish the rate.

When looking at the procurement dates the wage determination the date object wage determination must be prior to the option period or invitation for bid and not afterwards.

So we've seen a lot of those that we have to send back because they fail to use the right wage determination.

If you use the wrong wage determination the more likely the rate has -- is also wrong.

Because you must use or must be a reasonable relationship, the wage determination is incorrect.

So we ask the agencies to look very carefully at those wage determinations.

In addition to that we get a lot of calls where the contractor has informed us that the agency told them to go and pull down the wage determination.

Incorporated in their contract.

That shouldn't be, it is the agency's responsibility to obtain that wage determination and forward it to the contractor so it's not the other way around.

We caution the agencies to be careful with that.

As I have said with the collective bargaining agreement, a lot of agencies, it's totally up to the agency if they like to do that, if the CBA is not in effect prior to then there's -- it's not a good collective bargaining agreement.

When we are reviewing those collective bargain ago s, if the CBA is not in effect prior to we will not issue a wage determination.

The agencies do now have the option of o issuing their own collective bargaining agreements.

So we can't tell the agencies what to do but it is appropriate that the CBA be in effect prior to the option period.

>> I know we receive a lot of calls in our office about appealing collective bargain ago, substantive variance process.

Can you talk about time frames appealing substantial variance we quest?

>> Ten days before the option period, I think we'll take negotiated contract before the work starts.

with substantial variance one time we only looked at cases where the collective bargaining agreement was higher than area wide.

I think back in 2005 we had a case where the rates were actually lower and a union came in and asked for substantial variance and won that case and rates were lower than prevailed.

We look at those whether higher or lower now.

That's something kind of new to us.

>> Any final points you would like the speak about what concerns with contracting officer?

>> No, I think that my real concern is they give directions to the contractor as far as the wage determination and be assured that they are the ones that pool the wage determinations.

I can't tell you how many times we have received calls where they come to the department and say the contractors are asking what wage determination is applicable to my contract and I always say you know, you need to be talking to the agency.

They say the agency informed me to talk to you.

That's not the way it should be.

So I just say that the agencies need to make sure that they pool the wage determination or submit an E-98 and obtain wage determination and give that wage determination to the contractor.

>> We still have a few more minutes.

Kyle, can you talk about -- Kyle Roberts, also a former contracting officer.

Can you talk about some coverage issues that you see contracting agencies have in determining whether their contract is applicable to the service contract act?

>> I think some of the biggest issues I have seen have been determining hey, the principle purpose of the requirement, is it for services or not for services and secondarily, this is probably the hardest part that contracting officers have to wrestle with, is a significant or substantial number of service employees.

And their involve in the the requirement.

That is something we really look at on a case-by-case basis.

Fortunately most of the time whether or not something is subject to the service contract act is patently obvious.

It applies 98% of the situations so that remaining 5% cause it is most grief and the most heartache and leads to the most detailed analysis.

Determining principle purpose is fairly simple but times needs to be taken hand in hand and looked as well as with the significant number of service employees.

Up until a couple of years ago we used an old rule of thumb, the 50% rule.

If 50% or more of the contract was for services it met the principle purpose.

Likewise, the 50% or more of the contract work hours or contract costs associated with those directly engaged service employees, we would say the same thing.

However, there is a court case I often cite to my contracting officers called the C-21 case that involve a contract here at Andrews air force base in the local area here that lowered that 50% threshold.

So it's no longer so black and white, if you will.

It's more of a really requires some thoughtful and careful analysis of the requirement itself.

So I would say to the contracting officer go back and look at your requirement, more importantly look at that government estimate that came with that requirement and see if you can define how many work hours and how much cost is associated with those service employees.

>> We have couple more questions here.

>> We received a couple more questions.


This comes from BABETT in Sacramento, California.

When there is an existing SCA contract, when even number averaging wage determination has been in place for many years, has there ever been occasion to conform that contract to the person, persons fixed wage determination?

Well, each contract period is sort of a new contract peer -- new contract -- I haven't seen it but I mean, that doesn't mean it doesn't exist.

I guess it can be done.

More likely if the contract previously had a even number wage determination in it then it probably always have one.

That doesn't answer the question, I don't know if it's a yes or no answer.


>> Once an even always an even, once an odd, always an odd.

>> I know if it's a brand new contract and it started after June 1st, 1997, then you should have the odd number and you should not have the even number.

>> We have a few questions, few more questions that have just come in.

The next one is I think this is for you again Sandra.

Can you provide the current status of the arching wage determination, is there an intent to no longer invoke them or alleviate them entirely?

I haven't heard anything make me -- it was on regulatory mandate to look at.

I don't know right now where they are if they plan ongoing away or, there's nothing that has been occurred lately on that, I should say that.

>> We have another conformance question.

What happens if the DOL does not approve the rate during the conformance process?

Would a DOL determine rate based on description?

>> We have.

Sometimes we get conformance where the rate that was proposed is not a fair rate.

The department of labor will change that rate and inform the contracting officer that -- of the change.

If it's lowered or decreased then the contractor must make that adjustment.

>> I think we have another question, I'll get it to you, Kyle, it goes back I think you just addressed it, the principle purpose test.

The question is, does the SCA applies to contract principally for services, can anyone define what principally mean?

Should it be considered that if the price of the products provided in the contract are 51% of the total and the services for example assembly and installation are 49% of the total, does the service contract act does not apply?

>> It does build on the previous answer.

I would be hesitant to apply a plain black and white kind of test to that, given recent decisions.

I would look at the requirement itself to determine whether or not that principle purpose test is being met.

A threshold is lowered but above all whatever you do contracting officers document your decision an rationale for what you did, make sure you document a lot easier to go back and defend yourself when you laid out your rationale than to try to make it up later when challenged upon it so document, document, document.

The threshold is significantly lower than 50% now I would say.

>> If next question -- the next question, also comes from sherry in Fort Worth, Texas.

When a service contractor applies to an order that has a short period of performance and workers work on the federal project for a few hours a week, but also work on other non-federal jobs the rest of the week how is the SCA apply?

Are they paid for the fringe benefits for the time they work on the federal job?

What about vacation environment requirements.

I'll take that one.

Employees are entitled to the minimum mop tear Wang and fringe benefit, one or two hours they're entitled to the minimum monetary wages an fringe benefits.

Vacation an holiday fringe benefits are concerned is based on a prorated basis on the hours they work if they're not a full time employee.

Our next question comes from Barbara in Virginia.

Her question is San currently there's no collections specialist classification for the State of Kentucky.

This is a classification that needs to be provided to contractor performing services on,CA contract to provide debt collection services.

Should we submit a standard form 1444?

>> If your contractor is already going on, and the contract has a wage determination in it, then you must do a conformance.

However, this is the brand new contract.

Then the agency is required to submit an E-98 and obtain a wage determination for that particular classification.

We do have some debt collector wage determinations out there so if that's the case, then the contracting agency would need to submit an E-98.

If the contract is not ongoing, if it's an old contract, the work is currently being performed, yes, the conformance would be available.

>> Okay.

Next question comes from Robin in green belt, mare.

The prime contractor or subcontractor responsible for posting SCA and other compliance forms on government site?

Even if the employees are not located in one location?

I'll take that one.

The contract or the subcontractor is going to be required to post the applicable wage determination in the contract and SCA post at an accessible location.

Employee consist see the compensation they're entitled to receive.

If they're not working at that time job site it should be posted wherever they're performing at work.

So it should be at an accessible location so employees are entitled to know the compensation they're entitled to receive.

So yes, the contract and the subcontract is responsible for posting the applicable wage determination in the contract and the SCA poster which is wage and hour poster 1313.

Sandra, we had one question, think it was clarification on collective bargaining agreement, when a successor takes over collective bargaining agreement he's required to pay the wage fringe benefits in that agreement for how long?

>> One year or the contract period.

If the new contractor has the collective bar gang agreement that collective bargaining agreement cannot be paid until that next year.

It's one year, I think the regulations say a contract period.

And that's because all contracts are not year-to-year, some contracts are six months or whatever it has been designated so the contract period for one contract period.

>> Okay.

What happens when a successor takes over a contract, the substantive bargaining agreement but fail to negotiate their own collective bargaining agreement?

What happens in that process?

>> If they fail to negotiate a collective bargaining agreement after the one year period the area wide wage determination goes into that contract.

>> Next question, Kyle.

Does the service contract act apply to intergovernmental agreements between Federal Government, state, local and travel governments?

>> There's bit of a hard one there.

I would go back to the authority for the service contract act and applies to any contracts entered into on by the federal government or wholly-owned corporation thereof.

An agreement is not necessarily a contract within meaning of the service contract act.

But I would be very careful and I would encourage you to both A, look at the specifics of what you're doing and B, definitely consult with your jag or your legal adviser there.

I can't give you a straight answer on that.

>> Bare with me a few minutes as I sort through some of the questions.

Some of the questions we receive pertain to some of the topics that we're going to discuss this afternoon.

So I'm going to hold some of those questions containing to fringe benefits in particular.

We have a question should gate attendants working at Army core engineers be paid applicable wage rates for that area?

Does the SCA apply to these service?

They meet an greet people visiting the parks an collect money.

>> Yes.

>> Here is a good question.

Contract act be used for projects such as painting an carpentering.

Is there a time Davis-Bacon should be used for these types of project?

I think this is talking hybrid contracts where SCA and Davis-Bacon can apply to the same contract?

>> Yes.

If you saw yesterday's presentation, the answer is there for you.

I forgetting the precise site but if you get into the defense, the DOD for implement, if you look in DFARS off the top of my head.

237 and also sited in 236.

There are criteria laid out, but basic laymen's term terms if you're painting more than 200 square feet you're looking at Davis-Bacon.

Less than 200 square feet you're looking at service contract act.

These answers are in generalities but there's some additional wrinkle to the situation I find.

Carpet laying is a bit more nebulous.

Tend to look at the overall job, doing carpet laying, is it regular recurring type of requirement or is it a one off replacement?

Those are things I would look at.

It's a regular recurring requirement to go in at regular intervals and replace a carpet in a hallway, for instance, that's more a service contract act requirement.

On the other hand if I'm going to replace the carpet in a building I look at that as a Davis-Bacon act requirement.

>> Remember, if you're in the familiar with Davis-Bacon act painting is include in the the statute.

It's covered under Davis-Bacon act.

Under service contract act it's if it's less than 200 square feet minor touch up painting that's covered under service contract act.

Most painting is under Davis-Bacon act.

Next question from Patricia in Virginia.

Sandra, is the contracting agency responsible for incorporating a revised WD into the contract at option or extension?

If so, what action should be taken by the contractor if this does not happen?

>> If that doesn't happen then you need to talk to the agency's contracting officer to determine why the wage determination was not incorporated.

Of course if you contacted the department of labor we can talk to some of our labor advisers and get your case or your issue corrected.

>> Okay.

This next question from Patricia in Miami, Florida. Given small business and disadvantaged business participation, given that we have many who are individual contractors submit 1099 to support their status, it's more documentation required or needed to answer their status as independent contractor?

I'll address that.

Under the service contract act, any employee performs work on that contract is going to be a service employee.

Whether they may say they're independent contractor, they work on an SCA covered contract they're going to be service employees under the service contract act.

Next question comes from hope in, Maryland.

Is it possible have employee exempt from job duty test and some employee not exempt and all be on the same contract?


An example I gave, you may have a contract that's principally -- for professional services.

So all professional exempt employees working would not be covered but if you have some employees perform to a significant or substantial amount, those employees will be employees an covered under the service contract act.

This question is for you, Sandra.

Please explain when the odd and even WD applies.

>> When the odd and even.

If your contract started prior to June 1st, 1997 and you had an even number wage determination in that contract the more likely you will still have one.

If your contract started after June 1st, 1997, then you must have the odd wage determination in your contract.

Some years ago those two wage determinations had different rates on them and we looked at the even and odd as way of indicating which health and welfare rate is applicable.

Now the rate is the same and now it depends on how the contractor calculates it.

If you have the even number wage determination for fixed cost -- for average cost of the contract for the odd number etch employee will receive 359.

>> Okay.

We have another Wang determination question.

-- wage determination.

Please ex two dates of the WD how they impact the contract.

Imthey're -- Sandra, they're talking about the date that the WD is issued and the date it's published so on

>> Right.

The agency use the publication date, the date that was incorporated on to the WDOL website.

And they use that date as indication of whether -- for their procurement.

The date that it was issued is the date that it actually was developed out of the department of labor.

That's not the date to be used.

You must use the publication date.

>> Okay.

Sandra, you're very popular today.

We have another question for you.

Someone would like you to explain the contingency language as it relates to foreseeable collective bargaining agreements.

>> Wow.

Thank you.

Contingency language.

When we look at the CBA we look through the CBA for specific things such as signatures, such as the dates that it was ratified and the wages and fringe benefits.

When we see language that depends on someone else doing something other than the parties of that CBA we pretty much think that is contingency language.

The CBA must be between the contractor and the union, not the agency, not the department of labor.

And anyone else.

That's pretty much in that CBA contains language other than the parties we look at that as contingency language.

besay that CBA may not have been reached at arm's length because it includes other parties than the people who it was intended for.

>> Okay.

One other question we have under the 541 exemptions would a nurse qualify as professional under the job duties test?

Very well may have.

We have some nursing categories on wage determination that are not exempt.

>> We have registered nurses, we have licensed practical nurses and we have nurse assistants.

The nurse -- I think all of them on the wage determination are not exempt.

I don't know -- I'm sure there could be some that are exempt but you have to look at the -- at 541 to determine whether that particular nurse is exempt or not.

>> This is probably going to be the last question before we break.

Please describe the compliance issues for contract vendors as relates to the service contract act cover form employees for holiday as relates to payment and when it's paid out.

I'll address that.

All employees working on SCA covered contracts are entitled to paid holidays, a number of paid holidays listed on that WD.

If they work within the work week the holiday occurs they're entitled to that paid holiday fringe benefit.

And has to be a name holiday on that particular WD.

Next question.

Is it appropriate for an employer to pay the 359 to an employee 401(k) plan if employee option out to participate in the company health and dental plans?

We'll address this this afternoon.

Employees are entitled to the health and welfare fringe benefit.

Stated on the wage determination.

The employer can -- since the employer/blygation to meet the requirement they choose which benefits to provide to employees.

It can be cash in lieu of fringe benefits or to a bona fide fringe benefit.

The employer has the option of deciding what type of benefits he's going to provide to the employees.

If they give the employee a list of benefits that they would like to receive and they decline some of those benefits, then the employer has to still provide some type of bona fide fringe benefit.

We're going go a little more in detail with this this afternoon.

The last one when converting employees from previous contractor, how is the vacation from the previous employer be handled must the new employer carry over left overbalances from a previous employer?

We'll talk about this this afternoon.

With SCA compliance principles employees are entitled to paid vacation based on length of service on SCA covered contract.

There's no accruing so vacation cannot be carried over from one year to another.

We'll go a little bit more in detail in that.

Once the employee reaches anniversary day on the contract he's entitled to pay vacation and will be entitlinged to pay vacation once he reaches anniversary date on the contract and that has to be paid before the next anniversary date of the contract, includes another contract of the contract when employee quits.

So vacation cannot carry over year-to-year but the employee anniversary date remain it is same.

Once we start working with one contractor, that contractor loses the contract, taken over by a new contractor, his anniversary date stay it is same so length of service continues to increase.

We'll go over this a little bit more NCI detail this afternoon -- more in detail with SCA compliance principles.

I would like the thank everyone for joining us this morning.

We have a few more questions just came in.

Pause with me a few minutes.

We have ten more minutes and we have a few more questions that have come in.

Ten more minutes.

>> Kyle, we have a question addressed correct directly to you.

Can Kyle give the citation for the court case on the principle purpose significant amount of service employees?

How does that relate to the field operations hand back at 20%?

>> Number in the field operations handbook of 20% is actually if I recall correctly, directly a result of this case.

The case -- I'm sorry, I can't give you a precise citation but the case I know by is the so called C-21 case, if you were to go and Google that, C-21 case plus service contract you probably hit on it.

It's been fairly recent case within the past five years but that's the one that we have looked at, 20% is now generally the threshold for determining if there's substantial or significant number of service contracts, employees directly engaged in the work.

What that does, the wording of this case, effectively said that since that is a substantial number of service employees that effectively converts the principle purpose of the contract or the requirement into a service requirement rather than being for instance a supply requirement.

The C-21 case, it's an air force case.

Which ultimately we lost the air force took a different view of that.

But upon review, our view is incorrect.

>> Next question comes from Jane.

If your company provides health and welfare equal to dollar amount stated on WD, and that employee waves their company health benefits because they are covered on another plan does the company provide the dollar amount equal to $3.59?


If you offer a frick benefit plan and they decline you have to offer something else.

As employer, as contractor who takes on SCA covered contract you're responsible for paying an employee, the stated amount of the health welfare fringe benefit amount.

The employee is entitled to that.

If you offer a bona fide fringe benefit plan and they decline that, you have to offer them something.

Tough incur expense of providing a bona fide fringe benefit plan or cash in lieu of fringe benefits of the stated health and welfare fringe benefit amount.

If someone declines a plan you have to provide them with something else.

This is another question that you addressed earlier, Kyle, I guess they want some clarification.

As a federal entity, when preparing intergovernmental agreements does the SCA apply to the IGAs between state, local and tribal governments specifically to a correctional institution?

Example correction officers medical staff, et cetera.

>> Again, I believe the authority or the service contract act only applies to contracts entered by federal entities.

What the act actually says it says that the Federal Government or the District of Columbia or wholly owned corporation thereof must be a party to that contract.

The reason I can't give a fully straight black and white answer is because the term agreement is nebulous.

An agreement isn't always a contract.

In terms of the far, agreements aren't necessarily contracts.

So therefore I tend towards the no answer on that but in the larger sense an agreement is to exchange something of value for something else of value and could be viewed as a contract.

That's why I can't give you a straight 100% answer to that. I would rather look at the specifics of what we're doing in order to analyze that and again, I would also lean heavily upon the advice of my legal advicer on that case too.

>> The last two again Sandra, you're popular this morning.

Wage determination questions.

Is there a reason that the nationally recognized SOC codes, not familiar, are not published on projects and provide a true skill level class?

>> I'm not sure but codes we use are OES codes.

And that shows a direct link to the wage rate.

They say the examples we use are far less than what we have seen in other parts of the country.

For determination and fringes.

>> Okay.

Thank you.

>> Okay.

Looks like we address all the questions from this morning.

Again, there are a couple of questions that we did not address this morning, we will address those this afternoon.

Because they are pertaining to the topics we're going to discuss this afternoon.

Again, I would like to thank Ms. Sandra hamletT and Mr. Kyle ies for joining me.

We'll be back this afternoon, Kyle Roberts will go over SCA price adjustments.

He's going to help you in the wage determination and wage is increased it will help you with price adjustment scenarios and questions.

Then I'm going to go over SCA compliance principles.

How does the contractor come into compliance with the wage determination.

How does he pay the wages an fringe benefits paid vacation, holiday, talk about part time employees.

And then we're going to be joined by Ms. Mahruba Uddowla from the General Services Administration who will go over the GSA supply schedule.

There's issues and concerns with the supply schedule, what agency is responsible for the wage determination, updating that, putting that into the contracts, so she's going to go over that.

Again, all questions can be addressed to

I would like the thank everyone for joining us this morning, we will be back at 2 o'clock.

Thank you.

(Please standBY)

>> Do you hear me and see me okay?

I'm calling you on your phone.

Is my picture on?

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