94th Congress T
2d SesionC01YEMITTEE PRINT ? 2d Sessionf
SERVICE CONTRACT ACT OF 1965
With Amendments Through 1 Public Law 94-489 &!
PREPARED FOR TIE 8UBCOMALA1TTEE ON LAB
COMMITTEE ON LABOR AND
UNITED STATES SENATE
Printed for the use of the Committee on Labor and Public Welfare
U.S. GOVERNMENT PRINTING OFFICE
77-833 WASHINGTON : 1976
COMMITTEE ON LABOR AND PUBLIC WELFARE
HARRISON A. WILLIAMS, JR., New Jersey, Chairman
JENNINGS RANDOLPH, West Virginia JACOB K. JAVITS% New York CLAIBORNE PELL, Rhode Island RICHARD S. SCHWEIKBR, Pennsylvania
EDWARD M. KENNEDY, Massachusetts ROBERT TAFT, JR., Ohio GAYLORD NELSON, Wisconsin J. GLENN BEALL, JR., Maryland
WALTER F. MONDALE, Minnesota ROBERT T. STAFFORD, Vermont
THOMAS F. EAGLETON, Missouri PAUL LAXALT, Nevada
ALAN CRANSTON, California WILLIAM D. HATHAWAY, Maine JOHN A. DURKIN, New Hampshire DONALD ELISBURG, General Counsel MARJORIZ M. WHITTAKER, Chief Clerk JAY B. CUTLER, Minority Counsel
SUBCOMMITTEE ON LABOR HARRISON A. WILLIAMS, JR., New Jersey, Chairman
JENNINGS RANDOLPH, West Virginia JACOB K. JAVITS, New York CLAIBORNE PELL, Rhode Island RICHARD S. SCHWEIKER, Pennsylvania
GAYLORD NELSON, Wisconsin ROBERT TAFT, JR., Ohio
WALTER F. MONDALE, Minnesota ROBERT T. STAFFORD, Vermont
WILLIAM D. HATHAWAY, Maine JOHN A. DURKIN, New Hampshire DONALD ELISBURG, Counsel
DoN ZIMMERMAN, Minority Counsel
This Committee Print of the Service Contract Act with Amendments through 1976 has been prepared for use by the Members of Congress and their staffs in familiarizing themselves with the labor standards provided for certain persons employed by Federal contractors to furnish services to Federal agencies. Other interested individuals will also find this a very useful document.
Hmusoiv A. WMMAMS, Jr.,
Digitized by the Internet Archive
SERVICE CONTRACT ACT OF 19651
AN ACT To provide labor standards for certain persons -employed by Federal
contractors to furnish services to Federal agencies, and for other purposes.
Be it enacted by the Senate and Homse of Representatives of the United States of America in Con gress asseimb led, That this Act be cited as the "Service Contract Act of 1965".
SEC. 2. (a) Every contract (and any bid specification therefor) entered into by the United States or the District of Columbia in excess of $2,500, except as provided in section 7 of this Act, whether negotiated or advertised, the principal purpose of which is to furnish services in the United States through the use of service employees shall contain the following:
(1) A provision specifying the minimum monetary wages to be
paid the various classes of service employees in the'performance of the contract or any subcontract thereunder, as determined by the Secretary, or his authorized representative, in accordance with prevailing rates for such employees in the locality, or where a collective-bargaining agreement covers any such service employees, in accordance with the rates for such employees provided for in such agreement, including prospective wage increases provided for in such agreement as a result of arm's-lengrth negotiations. In no case shall such wages be lower than the minimum specified in
(2) A provision specifying the fringe benefits to be furnished
the various classes of service employees, engaged in the performance of the contract or any subcontract thereunder, as determined by the Secretary or his authorized representative to be prevailing for such employees in the locality, or, where a collective-bargaining agreement covers any such service employees, to be provided for in such agreement, including prospective fringe benefit increases prov ided for in such agreement as a result of arm's-length negotiations. Such fringe benefits shall include medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting f rom. occupational activity, or insurance to provide any of the foregone, unemployment benefits, life insurance, dIisability and sickness insurance, accident insurance, vacation and holiday pay, costs of apprenticeship or other similar programs and other bona fide fringe benefits not otherwise required by Federal, State, or local law to be provided by the contractor or subcontractor. The obligation, under this subparagrraph may be discharged by furnishing any equivalent combinations of fringe benefits or by making equipment or differential payments in cash under rules and regulations established by the Secretar-y.
1Showing changes made by Public Law 94-489 In italic.
(3) A provision that no part of the services covered ty this Act
will be performed in buildings or surroundings or under working conditions, provided by or under the control or supervision 6f the contractor or any subcontractor, which are unsanitary or hazardous or dangerous to the health or safety of service employees engag to furnish the services.
(4) A provision that on the date a service employee commences
work on a, contract to which this Act applies, the contractor or subcontractor will deliver to the employee a notice of the compensation required under paragraphs (1) and (2) of this subsection, on a form prepared by the Federal ag ncy, or will post a notice of the required compensation in a promise t place at the
(5) A statement of the rates that would be paid by the Federal agency to the various classes of service emplo.*es if section 5341 or section 53.32 of title 5, United States Code, were applicable to them. The Secretary shall give due consideration to such rates in making the wage and fringe benefit determinations specified in this section.
(b) (1) No contractor who enters into any contract with the Federal Government the principal purpose of which is to furnish services through the use of service employees and no subcontractor thereunder shall pay any of his employees engaged in performing work on such contracts less than the minimum wage specified under section 6 (a) (1) as amended (52 Stat. 1060
of the Fair Labor Standards Act of 19381 1
29 U.S.C. 201, et seq.).
(2) The provisions of sections 3, 4, and 5 of this Act shall be applicable to violations of this subsection.
SEC. 3. (a) Any violation of any of the contract stipulations required by section 2 (a) (1) or (2) o*r of section 2 (b) of this Act shall render the party responsible therefor liable for a sum equal to the amount of any deductions, rebates, refunds, or underpayment of compensation due to any employee engaged in the performance of such contract. So much of-the accrued payment due on the contract Or any other contract between the same contractor and the Federal Government may be withheld as is necessary to pay such employees. Such withheld sums shall be held in a depo it fund., On order of the Secretary, any compensation which the head of the Federal agency or the Secretary has found to be due pursuant to this Act shall be paid directly to the underpaid employees from any accrued payments withheld under this Act.
(b) In accordance with regulations prescribed pursuant to section 4 of this Act, the Federal agency head or the Secretary is hereby authorized to carry out the provisions of this section.
(c) In addition, when a violation is found of any contract stipulation, the contract is subject upon written notice to cancellation by the contracting agency. Whereupon, the United States may enter into other contracts or arrangements for the completion of *the original contract, charging anyadditional cost to the original contractor.
SEC. 4. (a) Sections 4 and 5 of the Act of June 30, 1936 (49 Stat. 2036), as amended, shall govern the Secretary's authority to enforce
make rules regulations issue orders, hold hearings, and make this Act, I t5
decisions 0 based upon findings of fact, and take other appropriate action hereunder.
a (b) The Secretary may provide such reasonable limitations and
may make such rules and regulations allowing reasonable variations, tolerances, and exemptions to and from any or all provisions of this Act (other than section 10), but only in special circumstances where he determines that such limitation, variation, tolerance, or exemp ion is necessary and proper in the public interest or to avoid the serious impairment of government business, and is in accord with the remedial purpose of this Act to protect prevailing labor standards.
(e) No contractor or subcontractor under a contract, which sue-.! ceeds a contract subject to this Act and under which substantially the same services are furnished, shall pay any service, employee under sucli contract less than the wages and fringe benefits, including accrued wales and fringe benefits, and any prospective increases in wages and fringe benefits provided for in a collective-bargaining agreement as a result of arm's-length negotiations to which such service employees would have been entitled if they were employed
-under the predecessor contract: Provided, That in any of the foregoing circumstances such obligations shall not apply if the Secretary finds after a hearing in accordance with regulations adopted by the Secretary that such wages and fringe benefits are substantially at variance with those which prevail for services of a character similar in the locality.
(d) Subject to limitations in annual appropriation Acts but notwithstanding any other provision of law, contracts to which this Act applies may, if authorized by the Secretary, be for any term of years not exceeding five, if each such contract provides for the periodic adjustment of wages and fringe benefits pursuant to future determinations, issued in the manner prescribed in section 2 of this Act no less often than once every two years during the term of the contract, covering the various classes of service employees.
SEc. 5. (a) The Comptroller General is directed to distribute a list to all agencies of the Government giving the names of persons or firms that the Federal agencies or the Secretary have found to have violated this Act. Unless the Secretary otherwise recommends because of unusual circumstances, no contract of the United States shall be awarded to the persons or firms appearing on this list or to any firm, corporation, partnership, or association in which such persons or firms have a substantial interest until three years have elapsed from the date of publication of the list containing the name of such persons or firms. Where the Secretary does not otherwise recommend because of unusual circumstances, he shall, not later than ninet-y days after a hearing examiner has made a finding of a violation of this Act, for%vard to the Comptroller General the name of the individual or firm found to have violated the provisions of this Act.
(b) If the accrued payments withheld under the terms of the contract are insufficient to reimburse all service employees with respect to whom there has been a failure to pay the compensation required pursuant to this Act, the United States may bring action against the
-contractor, subcontractor, or any sureties in any court of competent jurisdiction to recover the remaining amount of underpayments. Any
sums thus recovered by the United States shall be held in the deposit fund and shall be paid, on order of the Secretary, directly to the underpaid employee or employees. Any sum not paid to an employee because of inability to do so within three years shall be covered into the Treasury of the United States as miscellaneous receipts.
SEC. 6. In determining any overtime pay to which such service employees are entitled under any Federal law, the regular or basic hourly rate of pay of such an employee shall not include any fringe benefit payments computed hereunder which are excluded from the regular rate under the Fair Labor Standards Act by provisions of section 7 (d) thereof.
SEC. 7. This Act shall not apply to(1) any contract of the United States or District of Columbia
for construction, alteration and/or repair, including painting and
decorating of public buildings or public works;
(2) any work required to be done in accordance with the provisions of the Walsh-Healey Public Contracts Act (49 Stat. 2036) ;
(3) any contract for the carriage of freight or personnel by
vessel, airplane, bus, truck, express, railway line or oil or gas pipeline where published tariff rates are in effect;
(4) any contract for the furnishing of services by radio, telephone, telegraph, or cable companies, subject to the Communications Act of 1934;
(5) any contract for public utility services, including electric
light and power, water, steam, and gas
(6) any employment contract providing for direct services to
a Federal agency by an individual or individuals; and
(7) any contract with the Post Office Department, the principal
purpose of which is the operation of postal contract stations.
SEC. 8. For the purposes of this Act(a) "Secretary" means Secretary of Labor.
(b) The term 11service employee" means any person engaged in the performance of a contract entered into by the United States and not exempted under -section 7, whether negotiated or advertised. the principal purpose of which is to furnish services in the United States (other than an person employed in a bona flde executive, administrative, or professional capacity, as those terms are, defined in part 541 of title 29, Code of Federal Regulations, as of July 30, 1976, and any subsequent revision of those regulations); and shall include all 8uch, persons regardless o any contractual relationship that may be alleged to exist between a contractor or subcontractor and suc& persons.
(c) The term "compensation" means any of the payments or fringe benefits described in section 2 of this Act.
(d) The term "United States" when used in a geographical sense shall include any State of the United States, the Drstri7t of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf lands as defined in the Outer Continental Shelf Lands Act, American Samoa, Guam, Wake Island, Eniwetok Atoll, Kwajalein Atoll, Johnston Island, and Canton Island, but shall not include -any other territory under the jurisdiction of the United Statesor any United States base or possession with-in a foreign country.
SFc. 9 This Act shall apply to all contracts entered into pursuant to negotiations concluded or invitations Sor bids issued on"'or after ninety days from the date of enactment of this Act.
-SEc. 10. It is the intent of the Conaress that determinations of m monetary wages and fringe benefits for the various
classes of service employees under the provisions of paragraphs (1) and (2) of section 2 should be made with respect to all contracts subject to this Act, as soon as it is administratively feasible to do so. In any event, the Secretary shall make such determinations with respect to -at least the following contracts subject to this Act which are entered into during the applicable fiscal year:
(1) For the fiscal year ending June 30, 1973, all contracts under
which more than twenty-five service employees are to be
(2) For the fiscal year endij -g June 30,1974, -all contracts under
which more than twenty service employees are to be employed.
(3) For the fiscal year ending June 30,1975, all contracts under
which more than fifteen service employees are to be employed.
(4) For the fiscal year ending June 30, 1976, all contracts under
which more than ten service employees are to be employed.
(5) For the fiscal year ending June 30, 1977, and for each fiscal
year thereafter, all contracts under which more than five, service
employees are to be employed.
UNIVERSITY OF FLORIDA 3 1262 09114 2405