Service Contract Act & Davis-Bacon Act

Efficient, compliant and affordable benefits for government contractors

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An Easier, More Affordable Solution

Whether you’re providing IT, security, construction, engineering, data management, facilities operations and maintenance or any other related service to the federal government, PSA’s Federal Government Contractor’s Benefit Program will deliver a true single source solution for all of your government contract fringe benefit administration needs.

Our program is designed to help you provide attractive benefits packages to employees while making you more competitive by saving you money and time, and staying compliant with the Service Contract Act/Davis-Bacon Act and Patient Protection and Affordable Care Act (PPACA).

  • Zero Net Cost

    100% of the cost associated with the benefits offered through this program charge directly back to the contract fringe dollars. This is a ZERO NET COST solution that lowers your overhead, which makes you more competitive when bidding on contracts. This is a benefits program that helps you win more contracts!

  • Correct Allotment of Fringe Dollars

    We provide turnkey fringe accounting services including a review of current fringe accounting reports to ensure correct allotment of fringe dollars.

  • Cost-Effective

    PSA offers access to full-service benefits administration that provides employees with the most cost-effective and comprehensive employee benefits package available in the industry.

  • Simple

    With us you’ll have a full-service team of SCA experts to ease your government contract fringe benefit administration. From design to implementation to employee communication—we handle it all.

  • Compliance and Audit Support

    We provide fringe dollar compliance and PPACA compliance consulting services, as well as support and advocacy in the event of an audit.

It is safe to assume, if you have a service contract, you will be audited. The Hour and Wage Division of the Department of Labor is shifting from a reactive approach to a proactive, systematic review of service contracts.

Program FAQs

Do you have 50 or more employees?

The Service Contract Act and Davis-Bacon Act only apply to government contractors with 50 or more employees.

Do you have hourly employees that you are billing directly to a federal service contract?

The Service Contract Act and Davis-Bacon Act require minimum wages and benefits paid to all hourly employees charging time directly to a federal service contract as part of a total compensation package. These amounts are subject to audit by the Department of Labor, Defense Contract Audit Agency, or other agency audit procedures. Failure to prove compliance may subject the contractor to debarment from all government contracts for up to three years.

Do you currently have a fringe accounting report?

A fringe accounting report tracks employee hours and how fringe benefits (medical, dental, disability, life, AD&D, sick leave, bereavement leave, civic leave, and retirement) are being applied to those hours. The Service Contract Act and Davis-Bacon Act contracts require fringe dollars to provide employee benefits. These fringe dollars are defined by prevailing wage determinations and the benefits costs are charged directly to the contract.

Are you currently paying cash in lieu?

Due to the normally onerous administration of delivering benefits that meet Fringe Accounting standards, many contractors have chosen to pay “cash in lieu.” There are two significant issues that make this option no longer viable.

  1. The Affordable Care Act stipulates employers with 50 or more employees that do not offer coverage to their employees will be subject to penalties (up to $2,000/yr. for each full-time employee who receives a government subsidy for health coverage). Employers who offer coverage, but whose employees receive tax credits, will also be subject to fines. Employers will be required to report to the federal government on health coverage they provide.
  2. Paying “cash in lieu” increases employee wages which in turn increases Social Security, FICA, Unemployment and Workers Compensation premiums, and State/federal taxes. The average contractor paying “cash in lieu” is spending an extra $1,100 on average per employee.

PSA Pro Tip

Understand The Hidden Costs of “Cash In Lieu”

See the math behind the competitive disadvantage created by paying cash in lieu of benefits, and find out why it’s a bad business strategy.

The true cost of paying CASH IN LIEU can be as high as $3,100 per employee per year!

PSA Pro Tip

Making The Transition

Ready to start offering benefits but concerned about employee blowback? Communication matters. Download our recommendations for communicating the transition from cash in lieu to offering benefits.

Let’s talk about getting compliant, saving money and streamlining benefits administration.

Contact us