Assessment of Federal Agency Compliance With the Service Contract Act

In response to a congressional request, GAO made a followup review on a report which evaluated Federal agencies' compliance with the Service Contract Act and the Department of Labor's implementation of regulations. The Act requires that, when a Federal contract is in excess of $2,500 and its purpose is to furnish services within the United States using service employees, those employees are to be paid the minimum wages and fringe benefits prevailing in the locality.

GAO found that many procurement officials did not always comply with the Act's wage determination requirements or with the regulations, rulings, and interpretations Labor issued on the Act's coverage of Federal contracts and purchase orders. However, the review did not disclose any evidence to suggest that agencies intentionally failed to comply with statutory or regulatory provisions in not including determinations in bid solicitations and subsequent award documents. Noncompliance by procurement offices resulted primarily from: (1) reliance on the language of the Act and regulations without knowledge of the varying interpretations developed by Labor since they were first issued; and (2) misinterpretation and misunderstanding of the Act's coverage in the current regulations and of other prevailing wage and procurement laws. GAO determined that the lack of agency compliance with other administrative requirements did not significantly affect the labor standards protection for the service workers.