Employment:

Congress Should Consider Repeal of the Service Contract Act

HRD-83-4, Jan 31, 1983

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GAO reported on the problems and impacts of the Service Contract Act of 1965, as amended, and the Department of Labor's administration and enforcement of its implementing regulations and procedures.

GAO found that Labor has been unable to administer the Service Contract Act efficiently and effectively because: (1) inherent problems exist in its administration; (2) wage rates and fringe benefits set under the act are generally inflationary; (3) accurate determinations of prevailing wage rates and fringe benefits cannot be made using existing data sources and the data needed to accurately determine prevailing wage rates and fringe benefits would be very costly to develop; and (4) the Fair Labor Standards Act and administrative procedures implemented through the federal procurement process could provide a measure of wage and benefit protection the act now covers. Pending proposed regulations would limit Labor's application of the act while leaving unresolved the major underlying problems in accurately developing prevailing wage rates and fringe benefits. In addition, ambiguities in the act's language have hampered Labor's ability to develop accurate wage rates and fringe benefits for employees. Amendments to the act further complicated Labor's task by requiring Labor to issue collectively bargained wages and benefits in specific successor contractor situations and give due consideration to federal employee wages and benefits in making determinations of the prevailing wages and benefits in a locality.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matters for Congressional Consideration

    Matter: Congress should consider repealing the Service Contract Act of 1965.

    Status: Closed - Not Implemented

    Comments: Several Congresses considered bills to amend or repeal the Service Contract Act. In the 99th Congress, a Senate Committee reported out a bill to raise the threshold to $1 million on defense contracts, but the bill was defeated. Service Contract Act reform bills were considered by the 100th Congress. Labor's legislative proposal was introduced in the 100th Congress in August 1987.

    Matter: Congress should consider amending section 6(e) of the Fair Labor Standards Act to ensure continued federal minimum wage coverage for all employees of employers providing contract services to the United States or the District of Columbia.

    Status: Closed - Not Implemented

    Comments: Action on this recommendation is dependent upon the repeal of the Service Contract Act.

    Recommendations for Executive Action

    Recommendation: The Administrator for Federal Procurement Policy should, if the Service Contract Act is repealed, encourage federal agencies to include provisions in their procurement regulations and service contracts, similar to those already required for professional employees, to discourage wage busting of all service employees on federal service contracts.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Office of Federal Procurement Policy

    Status: Closed - Not Implemented

    Comments: No action has been taken because implementation of this recommendation is dependent on the repeal of the Service Contract Act; however, repeal appears unlikely.

    Recommendation: The Administrator of the Office of Federal Procurement Policy should monitor the impact of repeal on service contract employees. If he determines that repeal has an adverse impact on the employees, the Administrator should develop administrative policies or legislative recommendations to deal with the problem.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Office of Federal Procurement Policy

    Status: Closed - Not Implemented

    Comments: No action has been taken because the Service Contract Act has not been repealed.