Staffing Dilemma for Service Contract Act and Davis-Bacon Act Contractors

12/07/2022 Written by: Jim Stevenson

Recruiting and retaining quality employees is an increasing problem for most companies. Historically high inflation and low unemployment rates create a labor shortage for many industries. This environment favors employees allowing them to demand more from their total compensation package before accepting a job.

The Service Contract Act and Davis-Bacon Act require compliance with area wage determinations that set minimum wages, employee (fringe) benefits, vacations, sick leave, etc., but contract proposals are often awarded on a Low Price Technically Acceptable (LPTA) basis. The lowest priced contractor that meets minimum technical requirements wins the contract! Providing higher wages, more expensive employee benefits or additional paid time off is not possible, if the contractor wishes to win the contract…a dilemma that is difficult but not impossible to resolve.

Contractors need a Total Compensation Management Plan that maximizes every payroll dollar spent, including providing employee benefits value while maintaining proper worker compensation coverage at minimum expense. Each contract is unique but proper planning allows for a nibble total compensation philosophy easily adaptable to any situation in the current LPTA environment.

There are techniques which can be applied to give federal government contractors the competitive advantage and our AssuredPartners Government Contractor Solutions team is there to help you craft a solution. Contact the team today to see what strategies you can implement to assist your organization. It is recommended that when working with a federal government contractor, you ask about their approach to total compensation philosophy on their contracts.

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