
[Code of Federal Regulations]
[Title 29, Volume 1]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR4]

[Page 46-50]
 
                             TITLE 29--LABOR
 
PART 4--LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS--Table of Contents
 
Subpart B--Wage Determination Procedures

Sec. 4.50  Types of wage and fringe benefit determinations.

    The Administrator specifies the minimum monetary wages and fringe 
benefits to be paid as required under the Act in two types of 
determinations:
    (a) Prevailing in the locality. Determinations that set forth 
minimum monetary wages and fringe benefits determined to be prevailing 
for various classes of service employees in the locality (sections 
2(a)(1) and 2(a)(2) of the Act) after giving ``due consideration'' to 
the rates applicable to such service employees if directly hired by the 
Federal Government (section 2(a)(5) of the Act); and
    (b) Collective Bargaining Agreement--(Successorship). Determinations 
that set forth the wage rates and fringe benefits, including accrued and 
prospective increases, contained in a collective bargaining agreement 
applicable to the service employees who performed on a predecessor 
contract in the same locality (sections 4(c) and 2(a)(1) and (2) of the 
Act).

Sec. 4.51  Prevailing in the locality determinations.

    (a) Information considered. The minimum monetary wages and fringe 
benefits set forth in determinations of the Secretary are based on all 
available pertinent information as to wage rates and fringe benefits 
being paid at the time the determination is made. Such information is 
most frequently derived from area surveys made by the Bureau of Labor 
Statistics, U.S. Department of Labor, or other Labor Department 
personnel. Information may also be obtained from Government contracting 
officers and from other available sources, including employees and their 
representatives and employers and their associations. The determinations 
may be based on the wage rates and fringe benefits contained in 
collective bargaining agreements where they have been determined to 
prevail in a locality for specified occupational class(es) of employees.
    (b) Determination of prevailing rates. Where a single rate is paid 
to a majority (50 percent or more) of the workers in a class of service 
employees engaged in similar work in a particular locality, that rate is 
determined to prevail. The wage rates and fringe benefits in a 
collective bargaining agreement covering 2,001 janitors in a locality, 
for example, prevail if it is determined that no more than 4,000 workers 
are engaged in such janitorial work in that locality. In the case of 
information developed from surveys, statistical measurements of central 
tendency such as a median (a point in a distribution of wage rates where 
50 percent of the surveyed workers receive that or a higher rate and an 
equal number receive a lesser rate) or the mean (average) are considered 
reliable indicators of the prevailing rate. Which of these statistical 
measurements will be applied in a given case will be determined after a 
careful analysis of the overall survey, separate classification data, 
patterns existing between survey periods, and the way the separate 
classification data interrelate. Use of the median is the general rule. 
However, the mean (average) rate may be used in situations where, after 
analysis, it is determined that the median is not a reliable indicator. 
Examples where the mean may be used include situations where:
    (1) The number of workers studied for the job classification 
constitutes a relatively small sample and the computed median results in 
an actual rate that is paid to few of the studied workers in the class;
    (2) Statistical deviation such as a skewed (bimodal or multimodal) 
frequency distribution biases the median rate due to large 
concentrations of workers toward either end of the distribution curve 
and the computed median results in an actual rate that is paid to few of 
the studied workers in the class; or
    (3) The computed median rate distorts historic wage relationships 
between job levels within a classification family (i.e., Electronic 
Technician Classes A, B, and C levels within the Electronic technician 
classification family), between classifications of different skill 
levels (i.e., a maintenance electrician as compared with a maintenance 
carpenter), or, for example, yields a wage movement inconsistent with 
the pattern shown by the survey

[[Page 47]]

overall or with related and/or similarly skilled job classifications.
    (c) Slotting wage rates. In some instances, a wage survey for a 
particular locality may result in insufficient data for one or more job 
classifications that are required in the performance of a contract. 
Establishment of a prevailing wage rate for certain such classifications 
may be accomplished through a ``slotting'' procedure, such as that used 
under the Federal pay system. Under this procedure, wage rates are 
derived for a classification based on a comparison of equivalent or 
similar job duty and skill characteristics between the classifications 
studied and those for which no survey data is available. As an example, 
a wage rate found prevailing for the janitorial classification may be 
adopted for the classification of mess attendant if the skill and duties 
attributed to each classification are known to be rated similarly under 
pay classification schemes. (Both classifications are assigned the same 
wage grade under the Coordinated Federal Wage System and are paid at the 
Wage Board grade 2 when hired directly by a Federal agency.)
    (d) Due consideration. In making wage and fringe benefit 
determinations, section 2(a)(5) of the Act requires that due 
consideration be given to the rates that would be paid by the Federal 
agency to the various classes of service employees if section 5341 or 
section 5332 of title 5 U.S.C., were applicable to them. Section 5341 
refers to the Wage Board or Coordinated Federal Wage System for ``blue 
collar'' workers and section 5332 refers to the General Schedule pay 
system for ``white collar'' workers. The term due consideration implies 
the exercise of discretion on the basis of the facts and circumstances 
surrounding each determination, recognizing the legislative objective of 
narrowing the gap between the wage rates and fringe benefits prevailing 
for service employees and those established for Federal employees. Each 
wage determination is based on a survey or other information on the wage 
rates and fringe benefits being paid in a particular locality and also 
takes into account those wage rates and fringe benefits which would be 
paid under Federal pay systems.

Sec. 4.52  Fringe benefit determinations.

    (a) Wage determinations issued pursuant to the Service Contract Act 
ordinarily contain provisions for vacation and holiday benefits 
prevailing in the locality. In addition, wage determinations contain a 
prescribed minimum rate for all other benefits, such as insurance, 
pension, etc., which are not required as a matter of law (i.e., 
excluding Social Security, unemployment insurance, and workers' 
compensation payments and similar statutory benefits), based upon the 
sum of the benefits contained in the U.S. Bureau of Labor Statistics, 
Employment Cost Index (ECI), for all employees in private industry, 
nationwide (and excluding ECI components for supplemental pay, such as 
shift differential, which are considered wages rather than fringe 
benefits under SCA). Pursuant to Section 4(b) of the Act and Sec. 4.123, 
the Secretary has determined that it is necessary and proper in the 
public interest, and in accord with remedial purposes of the Act to 
protect prevailing labor standards, to issue a variation from the Act's 
requirement that fringe benefits be determined for various classes of 
service employees in the locality.
    (b) The minimum rate for all benefits (other than holidays and 
vacation) which are not legally required, as prescribed in paragraph (a) 
of this section, shall be phased in over a four-year period beginning 
June 1, 1997. The first year the rate will be $.90 per hour plus one-
fourth of the difference between $.90 per hour and the rate prescribed 
in paragraph (a) of this section; the second year the rate will be 
increased by one-third of the difference between the rate set the first 
year and the rate prescribed; the third year the rate will be increased 
by one-half of the difference between the rate set in the second year 
and the rate prescribed; and the fourth year and thereafter the rate 
will be the rate prescribed in paragraph (a) of this section.
    (c) Where it is determined pursuant to Sec. 4.51(b) that a single 
fringe benefit rate is paid with respect to a majority of the workers in 
a class of service employees engaged in similar work in a locality, that 
rate will be determined to prevail notwithstanding the rate

[[Page 48]]

which would otherwise be prescribed pursuant to this section. 
Ordinarily, it will be found that a majority of workers receive fringe 
benefits at a single level where those workers are subject to a 
collective bargaining agreement whose provisions have been found to 
prevail in the locality.
    (d) A significant number of contracts contain a prevailing fringe 
benefit rate of $2.56 per hour. Generally, these contracts are large 
base support contracts, contracts requiring competition from large 
corporations, contracts requiring highly technical services, and 
contracts solicited pursuant to A-76 procedures (displacement of Federal 
employees), as well as successor contracts thereto. The $2.56 benefit 
rate shall continue to be issued for all contracts containing the $2.56 
benefit rate, as well as resolicitations and other successor contracts 
for substantially the same services, until the fringe benefit rate 
determined in accordance with paragraphs (a) and (b) of this section 
equals or exceeds $2.56 per hour.
    (e) Variance procedure. (1) The Department will consider variations 
requested by contracting agencies pursuant to Section 4(b) of the Act 
and Sec. 4.123, from the methodology described in paragraph (a) of this 
section for determining prevailing fringe benefit rates. This variation 
procedure will not be utilized to routinely permit separate fringe 
benefit packages for classes of employees and industries, but rather 
will be limited to the narrow circumstances set forth herein where 
special needs of contracting agencies require this procedure. Such 
variations will be considered where the agency demonstrates that because 
of the special circumstances of the particular industry, the variation 
is necessary and proper in the public interest or to avoid the serious 
impairment of government business. Such a demonstration might be made, 
for example, where an agency is unable to obtain contractors willing to 
bid on a contract because the service will be performed at the 
contractor's facility by employees performing work for the Government 
and other customers, and as a result, paying the required SCA fringe 
benefits would cause undue disruption to the contractor's own work force 
and pay practices.
    (2) It will also be necessary for the agency to demonstrate that a 
variance is in accordance with the remedial purpose of the Act to 
protect prevailing labor standards, by providing comprehensive data from 
a valid survey demonstrating the prevailing fringe benefits for the 
specific industry. If the agency does not continue to provide current 
data in subsequent years, the variance will be withdrawn and the rate 
prescribed in paragraph (a) of this section will be issued for the 
contract.

[61 FR 68664, Dec. 30, 1996]

Sec. 4.53  Collective bargaining agreement (successorship) 
          determinations.

    Determinations based on the collective bargaining agreement of a 
predecessor contractor set forth by job classification each provision 
relating to wages (such as the established straight time hourly or 
salary rate, cost-of-living allowance, and any shift, hazardous, and 
other similar pay differentials) and to fringe benefits (such as holiday 
pay, vacation pay, sick leave pay, life, accidental death, disability, 
medical, and dental insurance plans, retirement or pension plans, 
severance pay, supplemental unemployment benefits, saving and thrift 
plans, stock-option plans, funeral leave, jury/witness leave, or 
military leave) contained in the predecessor's collective bargaining 
agreement, as well as conditions governing the payment of such wages and 
fringe benefits. Accrued wages and fringe benefits and prospective 
increases therein are also included. Each wage determination is limited 
in application to a specific contract succeeding a contract which had 
been performed in the same locality by a contractor with a collective 
bargaining agreement, and contains a notice to prospective bidders 
regarding their obligations under section 4(c) of the Act.

[48 FR 49762, Oct. 27, 1983. Redesignated at 61 FR 68664, Dec. 30, 1996]

[[Page 49]]

Sec. 4.54  Locality basis of wage and fringe benefit determinations.

    (a) Under section 2(a) of the Act, the Secretary or his authorized 
representative is given the authority to determine the minimum monetary 
wages and fringe benefits prevailing for various classes of service 
employees ``in the locality''. Although the term locality has reference 
to a geographic area, it has an elastic and variable meaning and 
contemplates consideration of the existing wage structures which are 
pertinent to the employment of particular classes of service employees 
on the varied kinds of service contracts. Because wage structures are 
extremely varied, there can be no precise single formula which would 
define the geographic limits of a ``locality'' that would be relevant or 
appropriate for the determination of prevailing wage rates and 
prevailing fringe benefits in all situations under the Act. The locality 
within which a wage or fringe benefit determination is applicable is, 
therefore, defined in each such determination upon the basis of all the 
facts and circumstances pertaining to that determination. Locality is 
ordinarily limited geographically to a particular county or cluster of 
counties comprising a metropolitan area. For example, a survey by the 
Bureau of Labor Statistics of the Baltimore, Maryland Standard 
Metropolitan Statistical Area includes the counties of Baltimore, 
Harford, Howard, Anne Arundel, and the City of Baltimore. A wage 
determination based on such information would define locality as the 
same geographic area included within the scope of the survey. Locality 
may also be defined as, for example, a city, a State, or, under rare 
circumstances, a region, depending on the actual place or places of 
contract performance, the geographical scope of the data on which the 
determination was based, the nature of the services being contracted 
for, and the procurement method used. In addition, in Southern Packaging 
& Storage Co. v. United States, 618 F.2d 1088 (4th Cir. 1980), the court 
held that a nationwide wage determination normally is not permissible 
under the Act, but postulated that ``there may be the rare and 
unforeseen service contract which might be performed at locations 
throughout the country and which would generate truly nationwide 
competition''.
    (b) Where the services are to be performed for a Federal agency at 
the site of the successful bidder, in contrast to services to be 
performed at a specific Federal facility or installation, or in the 
locality of such installation, the location where the work will be 
performed often cannot be ascertained at the time of bid advertisement 
or solicitation. In such instances, wage determinations will generally 
be issued for the various localities identified by the agency as set 
forth in Sec. 4.4(a)(2)(i).
    (c) Where the wage rates and fringe benefits contained in a 
collective bargaining agreement applicable to the predecessor contract 
are set forth in a determination, locality in such a determination is 
typically described as the geographic area in which the predecessor 
contract was performed. The determination applies to any successor 
contractor which performs the contract in the same locality. However, 
see Sec. 4.163(i).

[48 FR 49762, Oct. 27, 1983. Redesignated at 61 FR 68664, Dec. 30, 1996]

Sec. 4.55  Issuance and revision of wage determinations.

    (a) Section 4.4 of subpart A requires that the awarding agency file 
a notice of intention to make a service contract which is subject to the 
Act with the Wage and Hour Division, Employment Standards 
Administration, prior to any invitation for bids or the commencement of 
negotiations for any contract exceeding $2,500. Upon receipt of the 
notice, the Wage and Hour Division may issue a new determination of 
minimum monetary wages and fringe benefits for the classes of service 
employees who will perform work on the contract or may revise a 
determination which is currently in effect.
    (b) Determinations will be reviewed periodically and where 
prevailing wage rates or fringe benefits have changed, such changes will 
be reflected in revised determinations. For example, in a locality where 
it is determined that the wage rate which prevails for a particular 
class of service employees is the rate specified in a collective 
bargaining agreement(s) applicable in that

[[Page 50]]

locality, and such agreement(s) specifies increases in such rates to be 
effective on specific dates, the determinations would be revised to 
reflect such changes as they become effective. Revised determinations 
shall be applicable to contracts in accordance with the provisions of 
Sec. 4.5(a)(2) of subpart A.
    (c) Determinations issued by the Wage and Hour Division with respect 
to particular contracts are required to be incorporated in the 
invitations for bids or requests for proposals or quotations issued by 
the contracting agencies, and are to be incorporated in the contract 
specifications in accordance with Sec. 4.5 of subpart A. In this manner, 
prospective contractors and subcontractors are advised of the minimum 
monetary wages and fringe benefits required under the most recently 
applicable determination to be paid the service employees who perform 
the contract work. These requirements are, of course, the same for all 
bidders so none will be placed at a competitive disadvantage.

[48 FR 49762, Oct. 27, 1983. Redesignated at 61 FR 68664, Dec. 30, 1996]

Sec. 4.56  Review and reconsideration of wage determinations.

    (a) Review by the Administrator. (1) Any interested party affected 
by a wage determination issued under section 2(a) of the Act may request 
review and reconsideration by the Administrator. A request for review 
and reconsideration may be made by the contracting agency or other 
interested party, including contractors or prospective contractors and 
associations of contractors, representatives of employees, and other 
interested Governmental agencies. Any such request must be accompanied 
by supporting evidence. In no event shall the Administrator review a 
wage determination or its applicability after the opening of bids in the 
case of a competitively advertised procurement, or, later than 10 days 
before commencement of a contract in the case of a negotiated 
procurement, exercise of a contract option or extension. This limitation 
is necessary in order to ensure competitive equality and an orderly 
procurement process.
    (2) The Administrator shall, upon receipt of a request for 
reconsideration, review the data sources relied upon as a basis for the 
wage determination, the evidence furnished by the party requesting 
review or reconsideration, and, if necessary to resolve the matter, any 
additional information found to be relevant to determining prevailing 
wage rates and fringe benefits in a particular locality. The 
Administrator, pursuant to a review of available information, may issue 
a new wage determination, may cause the wage determination to be 
revised, or may affirm the wage determination issued, and will notify 
the requesting party in writing of the action taken. The Administrator 
will render a decision within 30 days of receipt of the request or will 
notify the requesting party in writing within 30 days of receipt that 
additional time is necessary.
    (b) Review by the Administrative Review Board. Any decision of the 
Administrator under paragraph (a) of this section may be appealed to the 
Administrative Review Board within 20 days of issuance of the 
Administrator's decision. Any such appeal shall be in accordance with 
the provisions of part 8 of this title.

[48 FR 49762, Oct. 27, 1983. Redesignated at 61 FR 68664, Dec. 30, 1996]
