XL EagleService Contract Act (Service Contract Act (Service Contract Labor Standards))
Service Contract Act stands for Service Contract Act (Service Contract Labor Standards). The Service Contract Act, now called the Service Contract Labor Standards in the FAR, covers federal contracts over $2,500 whose main purpose is providing services through service employees. Examples include janitorial, grounds, guard, food service, and maintenance work.
Covered contractors must pay at least the wages and fringe benefits in the Department of Labor wage determination attached to the contract, including health and welfare, vacation, and holidays. When a new contractor takes over, it may have to honor the wages and benefits in the previous contractor's collective bargaining agreement.
Why it matters to a small contractor
For service trades, the SCA is the single biggest factor in your labor price. Build your rates from the wage determination, add health and welfare for every hour paid, and include paid holidays and vacation. Bidding below those costs is not a deal, it is a loss.
Example
A janitorial company bids on a federal office building. The wage determination sets a janitor rate plus an hourly health and welfare amount, so they build their price from those numbers instead of their usual commercial rate.
Service Contract Act: common questions
What is the Service Contract Act threshold?
It applies to covered service contracts over $2,500. This is a statutory figure that the October 2025 inflation adjustment did not change.
What is SCA health and welfare?
It is a fringe benefit amount per hour set in the wage determination. You must provide it as benefits, cash, or a mix.
Does the SCA apply to subcontractors?
Yes. The clause flows down, and subcontractors must meet the same wage determination.
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