Three Common Service Contract Act Compliance (SCA) Stumbling Blocks

• Being a government contractor has always been complicated. As of recently, it seems that the government is almost determined to make it harder than ever. Over the past few years, the Department of Labor’s (DOL) has ramped up its enforcement efforts. They’ve been hiring more investigators to proactively audit contractors outside of the standard “complaint-initiated” method.
• In FY15 federal agencies completed 918 suspension actions and 1873 debarments (double what it was five years ago: 973 in 2010).
• The reality of SCA contracts is that there are several “moving” performance pieces to compliance reporting, some of which may change over the life of the contract. Contractors that don’t stay on top of these ongoing changes put themselves at serious risk.

Incorrect Labor Category Classifications

• While the DOL has an SCA Directory of Occupations to help determine proper labor categories… it’s still a difficult process. Include a few non-traditional SCA services to the contract and it adds a whole other level of complexity.
• Watch Out For SCA covered employees that perform work in multiple labor categories. Be sure you are able to distinguish hours worked for employees performing both SCA and non-SCA services. In both cases, you must be able to prove how many hours were spent in each category.

Inaccurate Wage Determinations

• Contractors “occasionally” fail to notice changes in wage determinations during the contract, and fixing this issue after the fact can be a time-consuming and costly process.
• Watch Out For: Adjustments to wage determinations and “place of performance” changes (affecting wages).

Health and Welfare, Cash-in-lieu, and the ACA

• ACA requirements have made providing the traditional fringe rate ($4.27 current) even more complicated. And while contractors still have some say in how they provide their fringes, things can get tricky and the financial consequences of inaccuracy can be significant.
• Watch Out For: Being SCA compliant doesn’t necessarily mean you’re also ACA compliant. Be sure your health care plan is “bona-fide” by the government. Also, note paying CIL of benefits can lead to additional ACA violations.
• Realistically, compliance and health care law are probably not going to get easier any time soon. Contractors are forced to walk a “fault line” between two different (and confusing) government benefit situations.
• Even with the new administration’s focus on repealing/replacing the ACA, compliance and health care law are probably not going to get easier any time soon.
• Our recommendation is to work with someone who understands both worlds. One that can help manage the complications that come with government contracting while making the most of their benefits and fringe spend.
• AXIM Fringe Solutions Group eliminates the cost and liability of compliance reporting. Our technological platform allows us to guarantee a contractor’s fringes or we pay the fine. All while AXIM’s fees are paid out of the fringe spend, which decreases office/overhead costs.
• Guard yourself against these common SCA compliance stumbling blocks. Find a partner that can keep your fringe benefits and compliance on the right track.