Review of Compliance with Labor Standards for Service Contracts by Defense and Labor Departments

The Service Contract Act of 1965 requires service employees working under federal contracts worth over $2,500 to be paid the minimum wages and fringe benefits earned by similar employees in the locality.

Most of the 14 selected Department of Defense (DOD) procurement offices were not fully complying with the act and requirements in the Armed Services Procurement Regulation for obtaining wage determinations. Several offices did not request the determinations, some did not include them in contracts, many failed to make requests within the required time period, and some failed to give the Department of Labor the required notices of contract award. Other DOD problems noted were: (1) lack of personnel awareness of regulations for requesting wage determinations; (2) minimal training related to the act; and (3) little monitoring of compliance. Labor has had difficulty in enforcing compliance with the act and restoring employees' back wages. It does not have a direct enforcement program to review contractors or adequate staff to ensure compliance. The lack of a requirement for performance and payment bonds did not seriously affect contractors' work but did hurt Labor's efforts to restore back wages.