Service Contract Act and Davis Bacon Act compliance: Contract management questions and answers

In a recent Deltek webinar, titled “Compliance Check-in: A Guide to SCA & DBA Compliance”, Baker Tilly government contractor advisors discussed multiple facets of the Service Contract and Davis Bacon acts. To clarify contract management concerns, the following questions were addressed:

1. What actions should a contractor take if there is disagreement between a new hire employee and the contractor regarding the appropriate occupation code being used under an SCA contract?

An open door policy is key here. You may not be able to convince every employee that your approach is correct; however, your chances of doing so are increased if:

• You have a reasoned approach to support your occupation code selection.
• Your employee feels as though they have been heard and their position considered.

2. If the hourly wage rate is revised annually, how do you account for out-year pricing, or is any change in the minimum wage automatically increased by the United States government (USG) as a result of a contract modification?

During pricing, SCA contractors do not typically include escalation for SCA covered wages because the adjustment process allows contractors to escalate wages when SCA wages change via the wage determination. Within 30 days of the incorporation of a new wage determination contractors may file a request for equitable adjustment (REA) to recover increased costs.

3. How do SCA wage rates relate to GSA approved pricing for labor categories? GSA approved pricing is usually based on the county where the company resides, but the prevailing wage could be higher in another city where the work may be performed on a federal contract.

Pricing under GSA schedules can be complex and requires contractors to make decisions. Contractors must first decide if they intend to bid and accept work across multiple geographies or in only one location. If work is to be performed in one location, the decision process is simplified – select the wage determination (WD) for the appropriate location. Where work may be performed in multiple locations, we recommend that you select the highest applicable WD and price accordingly. If this is your approach, you should be prepared to provide your price build up to GSA.

4. What options are available to a contractor if a subcontractor fails to comply or takes exception with the prime’s guidance?  Should the prime carry it to the DOL Enforcement Division, or alert the contracting officer (CO)?

The prime contractor is responsible for monitoring subcontractor compliance. Contractors should include a clause stipulating that the prime has audit rights or a clause that requires the subcontractor certify that it is complying with SCA regulations. Additionally, the prime contractor should include an indemnification clause to insulate itself from subcontractor noncompliances. If there is a suspected noncompliance and the subcontractor is non-responsive, we recommend consulting legal counsel.

5. If you are a sub to a contractor, are you still responsible to post the WD?

Yes, all contractors and subcontractors are responsible to post the prevailing wage determination at the job site and to make sure it is made available to their employees.

6. If a WD is updated, but has not been incorporated into the contract, even after an option year is exercised, should we operate under the new WD?

No, contractors should only operate under the most current WD incorporated into the contract. If a contractor operates under a new WD prior to its incorporation in the contract, the contractor will be unable to recover the increase in costs when filing for a request for equitable adjustment. If the contracting officer has not incorporated a WD and you believe that one should be incorporated, you should request, in writing, that the CO incorporate the revised WD.

7. Are labor conformances submitted to the CO for coordination with DOL or does the contractor submit directly to DOL?

The contractor submits a labor conformance (generally SF-1444) to the contracting officer. The contracting officer reviews the form for completeness, and signs the agency's concurrence or disagreement with the contractor's proposal. The contracting officer then submits the request to DOL for approval.

8. Are there any resources that help with the labor mapping process?

Mapping is unfortunately a grey area due to the lack of specificity in the Directory of Occupations and the fact that it has not been updated in many years. When mapping, the most important thing that a contractor must focus on is the actual job duties performed.

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For more information on this topic, or to learn how Baker Tilly government contractor specialists can help, contact our team.