Service Contract Act Wage Determinations: How To Find And Price Them
Short answer: if a federal contract is mainly for services performed in the United States by service employees, and it is over $2,500, it is usually covered by the Service Contract Labor Standards statute (still widely called the Service Contract Act, or SCA). The solicitation will include a Department of Labor wage determination that sets the minimum hourly wage and fringe benefits for each job class in that location. Your price has to be built on rates at or above those minimums.
Bidders who skip the wage determination either underprice the job and lose money, or get flagged for labor rates that do not meet the minimums. Here is how to avoid both.
What The Law Requires
The statute is 41 U.S.C. chapter 67, Service Contract Labor Standards. In the FAR, it is implemented in subpart 22.10 and the clause at FAR 52.222-41, Service Contract Labor Standards.
Under the FAR rewrite most agencies have used since 2025:
The coverage applies to government contracts whose principal purpose is to furnish services in the United States through the use of service employees, with listed exemptions (for example, construction, public utility services, and certain transportation with published tariff rates).
Service contracts over $2,500 must contain provisions on minimum wages and fringe benefits, safe and sanitary working conditions, and notice to employees of their minimum pay.
The contracting officer must obtain a wage determination for each new solicitation and contract over $2,500.
Covered service contracts may not exceed 5 years.
Construction is different. Construction work over $2,000 falls under the Construction Wage Rate Requirements statute (the old Davis-Bacon Act) and the clause at FAR 52.222-6, with its own wage determinations. If your bid mixes services and construction, check which rules apply to which part.
Two Kinds Of Wage Determinations
Prevailing rate wage determinations. The Department of Labor sets minimum wages and fringe benefits that prevail in the locality. These are the ones posted on SAM.gov, under Wage Determinations.
Collective bargaining agreement wage determinations. If the incumbent contractor's employees have a collective bargaining agreement, the statute (41 U.S.C. 6707(c)) generally requires a successor contractor to pay at least the wages and fringe benefits in that agreement, including accrued ones.
If the place of performance is not known, the solicitation may include several wage determinations, or a clause that lets you request one for your location.
Where To Find The Wage Determination
In the solicitation package. Look in Section J (the list of attachments) or the attachments on the SAM.gov notice. It is often named with "WD" and a number.
On SAM.gov. The Wage Determinations section lets you search by state, county, and type, and see every revision.
In amendments. A new revision can be added by amendment. Always price from the revision the solicitation says applies.
How To Read A Wage Determination
An SCA wage determination usually contains:
Part | What It Tells You |
|---|---|
Number And Revision | Which version applies (for example, a WD number followed by "Revision No.") |
Area | The states and counties it covers |
Occupation List | Job titles with occupation codes and a minimum hourly rate for each |
Fringe Benefits | A health and welfare amount per hour, plus vacation and holiday rules |
Footnotes | Special rules, such as uniform allowances, hazard pay, or executive order requirements |
Match each job you plan to staff to the closest occupation on the list, using the Department of Labor's directory of occupations as a guide. If a job you need is not on the list, the clause sets out a conformance process. Do not guess.
How To Build Your Labor Price
Here is a simple build for one labor category. Use your own numbers from the actual wage determination.
Line | How To Figure It |
|---|---|
Base hourly wage | At or above the wage determination rate for that occupation |
Health and welfare | At or above the wage determination's per-hour fringe amount |
Vacation | Per the wage determination's vacation rule, spread across hours worked |
Holidays | The number of paid holidays in the wage determination, spread across hours worked |
Payroll taxes and insurance | FICA, unemployment, workers' compensation |
Overhead | Supervision, uniforms, equipment, office costs |
Profit | Your margin |
Fully burdened rate | The sum, times the hours the schedule requires |
Then check that the hours match your staffing plan. In grades we ran on real federal solicitations in October 2026, a frequent price fix was exactly this: tie the labor build to the wage determination classes and make the totals match the crew and hours stated in the technical volume.
Other Clauses That Travel With The SCA
FAR 52.222-42, Statement of Equivalent Rates for Federal Hires. Lists what the government would pay its own employees in similar jobs. It is for information; your minimums come from the wage determination.
FAR 52.222-43 or 52.222-44, price adjustment clauses. For many fixed-price service contracts, these allow price adjustments when wage determinations change at an option or new contract year, limited to the increases needed to comply.
Posting requirement. You must give employees notice of the required compensation.
Common Wage Determination Mistakes
Pricing from an old revision instead of the one in the solicitation.
Mapping a job to the wrong occupation code.
Forgetting health and welfare, vacation, or holidays.
Using a wage determination for the wrong county.
Pricing option years at today's rates with no thought for revisions.
Leaving the labor build out of the price volume when the solicitation asks for it.
Under a lowest price technically acceptable buy, the pressure to go low is real. Go low on margin and overhead, never below the wage determination. Underpriced labor is also on our list of why government proposals get rejected.
A Note On Responsibility
This article is general education. The Department of Labor's Wage and Hour Division enforces these rules, and the details (exemptions, conformances, successor obligations) can be technical. When something is unclear, ask the contracting officer before the question deadline, or talk to an employment attorney.
How GradeTheBid Helps
GradeTheBid reads the wage determination attached to the solicitation, notes the occupation classes and fringe requirements, and flags a price volume that does not show a labor build or does not tie back to those classes. It checks your work. It does not set your prices or give legal advice.
Get Your Free Proposal Grade
Find the pricing gaps before the contracting officer does.
No credit card. No win promises. Just a clear list of what to fix before you submit. GradeTheBid never submits anything to the government. You download your files and submit them yourself.
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Sources
FAR Overhaul Part 22 (Subpart 22.10, Service Contract Labor Standards; 22.402-1, Construction Applicability), Acquisition.gov
FAR 52.222-41, Service Contract Labor Standards, Acquisition.gov
U.S. Department Of Labor, Wage And Hour Division, Service Contracts
A note on rule numbers: in 2025 the federal government began rewriting the Federal Acquisition Regulation (the Revolutionary FAR Overhaul). Most agencies now use overhaul deviation text, and the formal rule was still in progress in October 2026, so a section number in your solicitation may differ from the one cited here. When they differ, follow your solicitation. GradeTheBid is not a law firm, and this article is general education, not legal advice.
