Fast Facts

The Service Contract Act provides pay and benefit standards for service workers—such as security guards and janitors—on covered federal contracts.

The Department of Labor conducted more than 5,000 compliance investigations over 5 years and found violations of the Act leading to over $220 million in back wages for workers. Labor also determined that 60 contractors should be excluded from receiving new federal contracts for 3 years.

But we found that Labor didn't consistently share key information with contracting agencies—increasing the risk that excluded contractors might get contracts.

Our recommendations address this and other issues we found.

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Highlights

What GAO Found

The Department of Labor (DOL) completed over 5,000 Service Contract Act (SCA) cases, which for many resulted in the awarding of back wages to federally contracted security guards, janitors, and other service workers, in fiscal years 2014 through 2019, according to available data. DOL enforces the SCA, which was enacted to protect workers on certain types of federal service contracts. DOL found SCA violations—primarily of wage and benefit protections—in 68 percent of cases. Employers across a range of service industries agreed to pay around $224 million in back wages (see figure for examples). Sixty cases resulted in debarment—a decision to prevent an employer from being awarded new federal contracts for 3 years. DOL's strategic plan emphasizes optimizing resources for resolving cases using all available enforcement tools. However, DOL does not analyze its use of enforcement tools, such as debarment or employer compliance agreements. Therefore, DOL may lack a complete picture of how it uses resources on different strategies for resolving SCA cases, as well as the effectiveness of these enforcement strategies.

Back Wages Paid for SCA Cases in Example Industries, Fiscal Years 2014-2019

Back Wages Paid for SCA Cases in Example Industries, Fiscal Years 2014-2019

Note: Mail haul refers to surface mail transportation by contract carriers. Values are adjusted for inflation and expressed in fiscal year 2019 dollars using the Gross Domestic Product Price Index from the U.S. Department of Commerce, Bureau of Economic Analysis.

DOL reported various challenges to enforcing the SCA, including difficulty communicating with contracting agencies. For example, DOL officials told GAO that poor communication with contracting agencies—particularly with the U.S. Postal Service (USPS)—can affect and delay cases, though USPS officials told GAO they were unaware of any communication gaps. Without addressing communication issues between USPS and DOL, USPS's implementation and DOL's enforcement of the SCA may be weakened.

GAO found that contracting agencies may face SCA implementation challenges, including not having key information about SCA debarments and violations from DOL. When recording SCA debarments, DOL does not always include the unique identifier for an employer so that contracting agencies can accurately identify debarred firms. DOL also does not have a process that consistently or reliably informs contracting agencies about SCA violations by employers. Without improved information sharing by DOL, an agency may award a contract to an employer without being aware of or considering its past SCA violations.

Why GAO Did This Study

The SCA ensures that service workers on certain federal contracts receive pay and benefits that reflect current employment conditions in their locality. From fiscal years 2014 through 2019, the U.S. government obligated over $720 billion on service contracts covered under the SCA.

GAO was asked to review SCA implementation and enforcement. This report examines (1) what available data reveal about past SCA cases, (2) what challenges DOL reports facing in enforcing the SCA, and (3) how contracting agencies implement the SCA. GAO analyzed DOL and federal procurement data for fiscal years 2014 through 2019, the most recent years available; reviewed a nongeneralizable sample of contract performance assessments; examined practices at three agencies selected to represent a range of contracting services and agency size; interviewed DOL officials; and reviewed relevant federal laws, policy, and guidance.

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Recommendations

GAO is making six recommendations, including that DOL analyze its use of enforcement tools; that DOL and USPS implement written protocols to improve communication with each other; and that DOL improve its information sharing with contracting agencies on SCA debarments and investigation outcomes. DOL and USPS generally concurred with the recommendations.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Labor The Secretary of Labor should ensure that the Administrator of the Wage and Hour Division standardizes data entry on contracting agencies associated with SCA investigations in WHISARD by providing guidance to staff on how to make these data more consistent. (Recommendation 1)
Open
DOL agreed with this recommendation and plans to provide guidance to staff on standardizing data entry on contracting agencies associated with SCA investigations. We will await the completion of these efforts.
Department of Labor The Secretary of Labor should ensure that the Administrator of the Wage and Hour Division analyzes information on its enforcement actions, including compliance agreements used by WHD's regional offices and SCA debarment processes and outcomes. (Recommendation 2)
Open
DOL agreed with this recommendation. DOL noted that the universe of enhanced compliance agreements and debarments under SCA is too small to support a data analysis, but it has developed specific protocols to ensure oversight of these actions at the national level and will use this information to make key enforcement decisions. We believe that compiling and analyzing information on these enforcement actions, such as their results and general distribution, will improve DOL's understanding of them and inform its enforcement activities.
Department of Labor The Secretary of Labor should ensure that the Administrator of the Wage and Hour Division, in collaboration with the U.S. Postmaster General, develops and implements written protocols to improve communication and collaboration between the two agencies to support SCA enforcement and implementation. In doing so, they should revisit the effectiveness of existing protocols and other methods of collaboration with USPS on SCA-related issues. (Recommendation 3)
Open
DOL agreed with this recommendation. The agency will reexamine its existing protocols to determine the extent to which new protocols need to be implemented, and will provide the resulting new protocols to its staff and USPS. They will continue to work with USPS on increasing SCA compliance. We will consider closing this recommendation when the agency completes this effort.
United States Postal Service The U.S. Postmaster General, in collaboration with the Administrator of the Wage and Hour Division, should develop and implement written protocols to improve communication and collaboration between the two agencies to support SCA enforcement and implementation. In doing so, they should revisit the effectiveness of existing protocols and other methods of collaboration with the Department of Labor on SCA-related issues. (Recommendation 4)
Open
USPS agreed with this recommendation. The agency plans to work with DOL to develop and implement written protocols to improve communication and collaboration between the agencies. The target implementation date is April 2021. We will consider closing this recommendation when these efforts are completed.
Department of Labor The Administrator of the Wage and Hour Division should take steps to ensure that the unique company identifier designated by the Federal Acquisition Regulation (currently a Data Universal Numbering System number) is included in SCA debarment records in the System for Award Management whenever appropriate and available. (Recommendation 5)
Open
DOL agreed with this recommendation. They will take steps to improve the collection of the Data Universal Numbering System number for SCA cases and will enter the number into the System for Award Management in the case of contractor debarment, when applicable. We will consider closing this recommendation when these efforts are complete.
Department of Labor The Administrator of the Wage and Hour Division should develop written procedures for consistently and reliably informing the relevant contracting agency about the Wage and Hour Division's findings in SCA investigations that identify violations. (Recommendation 6)
Open
DOL agreed with this recommendation and will develop written procedures to prioritize informing the contracting agency when investigations identify violations. We await the completion of these efforts.

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