When you win a contract with the federal government, it’s important to understand that you are subject to numerous rules, regulations, and laws as a government contractor. Compliance with the Service Contract Act and the Davis-Bacon Act are just two of the major domestic requirements that are a must for any contractor.
The McNamara-O’Hara Service Contract Act (SCA) of 1965 is one of the most important laws that contractors must comply with domestically for federal contracts over $2,500. The SCA requires that hourly service employees charging work hours directly to a domestic federal contract must be paid wages and provided with bona fide fringe benefits or the fringe rate equivalent paid out in cash.
Construction contracts with the federal government are governed by the Davis-Bacon Act (DBA.) Workers employed on federal contracts are required under the DBA to be paid a local prevailing wage and fringe benefits on any contract valued more than $2000. The DBA stipulates how hourly employees must be paid and what records the contractor must retain on all workers. Employees must be paid once a week with full wages and the employers’ option of fringe benefits or paying the fringe rate in cash.
For contractors working under the SCA and Davis-Bacon Acts, fringe benefit compliance, proper reporting and administration, and subcontractor compliance are vital to avoiding penalties that could cost contractors more than profits.
When working with the federal government, it’s essential that you understand these requirements and have a proper plan in place. The AssuredPartners Government Contractor Solutions team is there to help you craft that solution.
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