The Service Contract Labor Standards (SCLS) and the GSA Multiple Award Schedule (MAS)

At a Glance:

• The main takeaway: The Service Contract Labor Standards (SCLS), formerly the Service Contract Act (SCA), applies to all Multiple Award Schedule (MAS) contracts.
• The impact on your business: Misclassifying SCLS/SCA categories and ceiling prices can lead to noncompliance.
• Next steps: Review the SCLS/SCA categories on your GSA contract to ensure the negotiated terms set you up for success.

The Full Story:

The Service Contract Labor Standards (SCLS), better known as the Service Contract Act (SCA), sets the minimum wages and fringe benefits that contractors and subcontractors must pay service employees working on covered contracts. The SCLS applies to federal contracts over $2,500, principally for services performed in the U.S. using service employees. Contractors must pay covered employees the minimum wages, health & welfare, vacation, and holidays outlined in the applicable wage determinations (WDs).

Unlike other Government -Wide Contract Acquisition Vehicles (GWACS) with defined labor categories and descriptions, Multiple Award Schedule (MAS) contractors have flexibility in proposing and defining distinct labor categories. Because of this flexibility, the SCLS applies to all MAS contracts. If a MAS contract includes SCLS-eligible labor categories, they must be mapped to the Department of Labor SCLS-equivalent labor category titles and wage determination (WD) rates. Suppose no specific labor categories are identified as subject to SCLS. In that case, the contract will still maintain the provisions and protections for SCLS-eligible labor categories – unless determined to be exempt from the application of  the Service Contract Labor Standards per FAR Clause 52.222-52.

Pricing and Escalations

When proposing new labor categories, contractors must identify any SCLS-eligible categories and select an appropriate wage determination and mapping based on WD revisions currently incorporated in the MAS solicitation.  GSA negotiates fully burdened ceiling rates, so contractors must ensure their pricing complies with the minimum wages and fringe benefits outlined in the wage determination. To be competitive, it’s essential to negotiate an appropriate mapping to the WD and ceiling price since the task order pricing cannot exceed the established GSA ceiling prices.

Escalations for SCLS-covered services are in accordance with FAR 52.222-43 and either clause I-FSS-969 or 552.216-70. Contractors may be entitled to a price adjustment when GSA incorporates a new wage determination to the MAS solicitation via a modification. Under FAR 52.222-43, price adjustments are limited to the actual increased wages, health and welfare costs, applicable FICA, unemployment taxes, and workers’ compensation. Price adjustments do not allow for G&A, overhead, and profit. Since price adjustments are based on actuals, following a WD that is not incorporated into the contract is not advantageous. Any price adjustments must be requested within 30 days of the incorporation of a new wage determination.  

Contract Wage Determinations vs. Task Order Wage Determinations

GSA incorporates WD revisions for all localities in the solicitation. Typically, GSA incorporates new revisions annually via a solicitation refresh and mass modification for existing contractors.  The WDs applicable to MAS contracts can be found here because the DOL issues revisions to WDs more frequently than the GSA updates the solicitation; often, the WDs applicable to MAS contracts differ from the latest revision posted on SAM.gov. Frequently, Ordering Contracting Officers incorporate different WDs at the task order level, creating a conflict with the MAS contract terms and conditions. Task Orders should NOT incorporate WDs that are different from those incorporated into the MAS contract.

Although a WD is selected at the contract level, contractors must comply with the WDs applicable to the locality where the work will be performed, regardless of the pricing awarded on the MAS contract. Negotiating an appropriate ceiling price allows contractors to cover all costs associated with compliance. If the price required to comply with the task order WD is higher than the GSA ceiling price, the contractor cannot bill higher than the GSA ceiling price and must absorb the additional costs.  

Complying with the SCLS is complicated, especially for MAS contract holders. Establishing appropriate pricing and mappings at the contract level can set your company up for success at the task order level. Contact Aprio to discuss best practices for compliance with the Service Contract Labor Standards under GSA MAS contracts.

Related Resources

The Department of Labor’s (DOL)’s Nondisplacement Rule is Back        

Service Contract Labor Standards (SCLS) Minimum Health & Welfare Amounts Increased

Avoid Overbillings: Understand The Role of GSA Schedule Ceiling Rates