Service Contract Act Minimum Health & Welfare Amount Increased to $4.02 an Hour

July 30, 2014

Effective July 22, 2014, the prevailing health and welfare (HW) fringe rate under the McNamara-O’Hara Service Contract Act (SCA) is $4.02 an hour. The new rate is a $.21 increase from the previous rate of $3.81 an hour. Current service contracts will be impacted only once the new wage determination (WD) containing the updated HW rate has been incorporated into the contract via official modification from the Contracting Officer (CO). Price adjustments may not be granted to service contractors that increase employee wages or health and welfare rates before the new WD is incorporated into the contract (See FAR 52.222-43 Fair Labor Standards Act and Service Contract Act—Price Adjustment). COs should incorporate the most recent WD at the time a contract option is exercised, a contract is extended, or the scope of work is changed (but only in a way that significantly affects labor standards requirements), but not less than every two years.  Service contractors should be proactive with the CO to request the most recent WD be incorporated into the contract. For more information, please see Department of Labor All Agency Memorandum 216 or view Aronson’s webinar on SCA Compliance.

For assistance with price adjustments on your SCA-covered contracts, please contact Hope Lane, Partner at Aronson LLC’s Government Contract Consulting Practice, at  301.231.6266.