CODIFICATION

The Secretary of the Air Force was inserted under the authority of section 207 (a), (f) of act July 26, 1947, ch. 343, title II, 61 Stat. 501. The Department of War was designated the Department of the Army and the title of the Secretary of War was changed to Secretary of the Army by section 205 (a) of such act July 26, 1947. Sections 205 (a) and 207 (a), (f) of act July 26, 1947 were repealed by section 53 of act Aug. 10, 1956, ch. 1041, 70A Stat. 641. Section 1 of act Aug. 10, 1956 enacted “Title 10, Armed Forces", which in sections 3011—3013 and 8011– 8013 continued the military Departments of the Army and Air Force under the administrative supervision of a Secretary of the Army and a Secretary of the Air Force, respectively.

AMENDMENTS 1955-Act June 3, 1955, authorized the Secretary of the Treasury to waive re quirement of performance and payment bonds in connection with certain Coast Guard contracts, included the Secretary of the Air Force for purposes of clarification, made specific reference to cost-type contracts, and eliminated proviso permitting bonds to be required for contracts which on Apr. 29, 1941, would have been subject to the provisions of esctions 2700—270d of this title.

TRANSFER OF FUNCTIONS

The powers and duties of the Secretary of the Treasury relating to the Coast Guard were transferred to the Secretary of Transportation by section 1655(b) (1) of Title 49, Transportation.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 39 section 410. § 207f. Same; waiver of sections 270a to 270d with respect to Com

merce contracts. The Secretary of Commerce may waive sections 270a to 270d of this title, with respect to contracts for the construction, alteration, or repair, of vessels of any kind or nature, entered into pursuant to the Act of June 30, 1932 (47 Stat. 382, 417-418), as amended, the Merchant Marine Act, 1936, or the Merchant Ship Sales Act of 1946, regardless of the terms of such contracts as to payment or title. (Apr. 29, 1941, ch. 81, $ 2, as added Oct. 21, 1970, Pub. L. 91-469, $ 39, 84 Stat. 1036.)

REFERENCE IN TEXT

Act of June 30, 1932 (47 Stat. 382, 417–418), as amended, referred to in the text, and known as one of the Economy Acts, is classified in part to sections 686 and 686b of Title 31, Money and Finance. For distribution and status of other provisions of such Act, see Tables Volume.

Merchant Marine Act, 1936, referred to in the text, is classified to chapter 27 of Title 46, Shipping.

Merchant Ship Sales Act of 1946, referred to in the text, is classified to section 1735 et seq. of Appendix to Title 50, War and National Defense.

SERVICE CONTRACT ACT OF 1965, AS AMENDED

41 C.S.C. 351-358, 79 Stat. 1034 (1965), 86 Stat. 789 (1972),

87 Stat. 140 (1973)

(Section Nos. refer to U.S. Code)

Summary and Description The Service Contract Act of 1965 provides labor standards for contracts (and any bid specification therefor) entered into by any agency or instrumentality of the United States or the District of Columbia which have as their principal purpose the furnishing of services in the United States through the use of service employees.

Examples of contracts which are principally for services subject to this act include laundry and drycleaning, mail transportation, custodial, janitorial, maintenance and guard services, certain packing and crating services, cafeteria and food service, ambulance services, certain equipment and facility repair and maintenance services, linen supply services, lodging services, support services at military installations, and warehousing or storage services, stenographic reporting, and data processing. The act applies to service contracts, whether oral or written.

SERVICES EMPLOYEES

Many types of employees may be regarded as service employees under the act, including "guards, watchmen, and any person engaged in a recognized trade or craft, or other skilled mechanical craft, or in unskilled, semiskilled, or skilled manual labor occupations; and any other employee including a foreman or supervisor in a position having trade, craft, or laboring experience as the paramount requirement; and shall include all such persons regardless of any contractual relationship that may be alleged to exist between a contractor or subcontractor and such persons.

Employees who qualify for exemption as being employed in a bona fide executive, administrative, or professional capacity in accordance with regulations, 29 CFR Part 541, issued under the Fair Labor Standards Act, are not considered to be service employees under the Service Contract Act.

LABOR STANDARDS FOR COVERED CONTRACTS IN EXCESS OF $ 2,500

Contractors and subcontractors performing work under a Government service contract in excess of $2,500 must observe the following requirements: Minimum wage and fringe benefits

A provision must be included in the contract specifying the minimum monetary wages and the fringe benefits to be given to the service employees as determined by the Secretary of Labor to be prevailing for such employees in the community. The Secretary of Labor shall give due consideration to the rates paid corresponding classifications of service employees under the Federal wage board system in arriving at the prevailing wage rates.

The obligation of a contractor to furnish any specified fringe benefits may be discharged by furnishing any equivalent combinations of benefits, or by making equivalent, or differential payments in cash.

The wage determination for employees who perform work under a covered contract cannot be less than the minimum wage required under section 6(a)(1) of the Fair Labor Standards Act, which is $2.00 effective May 1, 1974, $2.10 effective January 1, 1975, and $2.30 an hour effective January 1, 1976. The same wage applies in the absence of a wage determination. Safe and healthful working conditions

Contractors and subcontractors are obligated to assure that no part of the services covered by the act will be performed in buildings or surroundings or under working conditions, provided by or under the control or supervision of the contractor or any subcontractor, which are unsanitary or hazardous or dangerous to the health or safety of service employees. Minimum wage for corered contracts under $2,500

No wage or fringe benefit determinations are issued for contracts of $2,500 or less, nor are these contracts subject to the safety and health requirements of the Act. The minimum monetary rate specified in section 6(a)(1) of the Fair Labor Standards Act is applicable to employees engaged in the performance of such a contract. Labor standards for other employees of a service contractor

Under section 6(e) of the Fair Labor Standards Act, other employees of contractor whose rate of pay is not governed by either the Service Contract Act or by section 6(a)(1) of the Fair Labor Standards Act must be paid a minimum wage of not less than $1.90 an hour, beginning May 1, 1974; $2.00 an hour, beginning January 1, 1975; $2.20 an hour, beginning January 1, 1976; and $2.30 an hour after December 31, 1976. Overtime pay standards

Although the Service Contract Act does not contain overtime standards, payment of time and one-half for all hours in excess of 40 in a workweek may be required by the Fair Labor Standards Act. Also, if the contract is in excess of $2,500, the Contract Work Hours and Safety Standards Act generally applies. The latter act requires time and one-half for all hours worked in the contract in excess of 40 in the workweek or 8 in any calendar day, whichever number of overtime hours is greater. Notice to employees

In contracts in excess of $2,500, the contractor or subcontractor must provide a service employee, when he commences work on a contract subject to the act, with a notice of the compensation required by the act or shall post such notice in a location where it may be seen by

all employees performing on the contract, using such poster as may be provided by the Department of Labor.

RECORDKEEPING REQUIREMENTS

The contractor or subcontractor must make, and maintain for a period of 3 years from the completion of the work, certain records for each service employee performing work under the contract which are open for inspection and transcription by representatives of the Wage and Hour Division.

NOTICE IN SUBCONTRACTS

Each contractor subject to the act is required to insert clauses relating to the Service Contract Act in all his subcontracts.

EXEMPTIONS

The Service Contract Act does not apply to the following:

(1) Any contract for construction, alteration, and/or repair, including painting and decorating of public buildings or public works (contracts subject to the Davis-Bacon Act);

(2) Any work required to be done in accordance with the provision of the Walsh-Healey Public Contracts Act.

(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 or where such carriage is subject to rates covered by section 22 of the Interstate Commerce Act.

(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;

(7) Any contract with the Post Office Department, the principal purpose of which is the operation of postal contract stations;

(8) Any services to be furnished outside the United States as defined in the act; and

(9) Any contract exempted by the Secretary of Labor under section 4(b) of the act. This section authorizes the Secretary to provide such reasonable limitations, variations, tolerances and exemptions to and from any or all provisions of the act (other than section 10) but only in special circumstances where he determines it may be necessary and proper in the public interest or to avoid serious impairment to the conduct of Government business.

VIOLATIONS AND PENALTIES

In the event of violations, the act authorizes the withholding of accrued payments due on the contract or any other contract between the same contractor and the Government to the extent necessary. The Government may also bring court action against the contractor, subcontractor, or surety to recover any remaining amount of the underpayment. In addition, the contract may be terminated because of violations and the contractor may be held liable for any resulting cost to the Government. Any persons or firms found to have violated the act shall not be awarded a contract for a period of 3 years from the date such name appears on the debarment list published by the Comptroller General, unless the Secretary of Labor recommends otherwise because of unusual circumstances.

OTHER OBLIGATIONS

Observance of the labor standards of this act does not relieve the employer of any obligation he may have under any other laws or agreements providing for higher labor standards.

SUCCESSOR-PREDECESSOR CONTRACTS

If a contract succeeds a contract, subject to the act, under which substantially the same services were furnished and service employees were paid wages and fringe benefits provided for in a collective bargaining agreement, then neither the contractor nor any subcontractor under such a contract shall pay any service employee performing any of the contract work less than the wages and fringe benefits, provided for in such collective bargaining agreement, to which such employee would be entitled if employed under the predecessor contract, including accrued wages and fringe benefits and any prospective increases in wages and fringe benefits provided for under such agreement. No contractor or subcontractor may be relieved of the foregoing obligation unless the Secretary of Labor or his authorized representative determines that the collective bargaining agreement applicable to service employees employed under the predecessor contract was not entered into as a result of arms-length negotiations or finds, after a hearing, that the wages and fringe benefits provided for in such agreement are substantially at variance with those which prevail for services of a character similar in the locality.

Text of Act

SERVICE CONTRACT ACT OF 1965, AS AMENDED 1

(41 U.S.C. 351, et seq.)

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 House of Representatives of the United States of America in Congress assembled, That this Act may 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