APM 2011-01, “Service Contract Act”

March 25, 2011

ACQUISITION POLICY MEMORANDUM 2011-01

This Acquisition Policy Memorandum (APM) reminds you that all current and planned contracts for services in the United States must be in compliance with the Service Contract Act (SCA), unless exempted in accordance with FAR 22.1003-3 and 22.1003-4. The SCA requires contractors and subcontractors performing services on a federal contract in excess of $2,500 to pay service employees no less than the wage rates and fringe benefits prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement.

Recently it has been brought to my attention that certain contracts awarded for services were not in compliance with the SCA, specifically for HHS’ survey and longitudinal studies.   This practice could result in financial and other ramifications for the Department.  I need your assistance to ensure compliance with the SCA for current and future service contracts.  Please review current service contracts to ensure compliance with the SCA and make sure proper consideration is given to the SCA for all future service contracts in excess of $2,500.

All current and future service contracts should include the SCA or a written determination for an exemption.  Your contract specialists must complete a written determination for the contract file when an exemption to the SCA applies.  This determination should be approved by your contracting officer prior to issuing a solicitation for services in excess of $2,500. At a minimum, the determination should include: (1) description of services; (2) estimated cost including options; (3) identify the exemption; and (4) justification for the use of the proposed exemption (please see attached sample determination).  

As a result of your review of current service contracts, please modify those where the SCA should have been applied and ensure an exemption determination is in the file if the SCA does not apply.  The incorporation of and adherence to the SCA for current contracts will be prospective to actions requiring administration (i.e. exercising an option, modifications, etc.) in FY 2011 and beyond. 

Ms. Alexis Williams is standing by to assist with any questions about SCA applicability or exemptions. She may be reached at Alexis.Williams@hhs.gov.

Attachment

DETERMINATION OF SERVICE CONTRACT ACT (SCA) EXEMPTION

INSTRUCTIONS: The contracting officer must approve this determination prior to issuing a  solicitation: (a) with an estimated cost exceeding $2,500; (b) to furnish services in the United States; and (c) that is exempt from the Service Contract Act.

Requiring Activity: 

Contracting Activity:  

1. Description of Services: 
2. Estimated Cost (including options):  
3. Select the ONE exemption that applies to the proposed acquisition.

 [ ] Any contract for construction, alteration, or repair of public buildings or public works, including painting and decorating {FAR 22.1003-3(a)}

 [ ] Any work required to be done in accordance with the provisions of the Walsh-Healey Public Contracts Act (41 U.S.C. 35-45) {FAR 22.1003-3(b)}

 [ ] Any contract for transporting freight or personnel by vessel, aircraft, bus, truck, express, railroad, or oil or gas pipeline where published tariff rates are in effect {FAR 22.1003-3(c)}

 [ ] Any contract for furnishing services by radio, telephone, telegraph, or cable companies subject to the Communications Act of 1934 {FAR 22.1003-3(d)}

 [ ] Any contract for public utility services {FAR 22.1003-3(e)}

 [ ] Any employment contract providing for direct services to a Federal agency by an individual or individuals {FAR 22.1003-3(f)}

 [ ] Any contract for operating postal contract stations for the U.S. Postal Service {FAR 22.1003-3(g)}

 [ ] Contracts entered into by the United States with common carriers for the carriage of mail by rail, air (except air star routes), bus, and ocean vessel, where such carriage is performed on regularly scheduled runs of the trains, airplanes, buses, and vessels over regularly established routes and accounts for an insubstantial portion of the revenue there from {FAR 22.1003-4(b)(1)}

 [ ] Any contract entered into by the U.S. Postal Service with an individual owner-operator for mail service if it is not contemplated at the time the contract is made that the owner-operator will hire any service employee to perform the services under the contract except for short periods of vacation time or for unexpected contingencies or emergency situations such as illness, or accident {FAR 22.1003-4(b)(2)}

 [ ] Contracts for the carriage of freight or personnel if such carriage is subject to rates covered by section 10721 of the Interstate Commerce Act {FAR 22.1003-4(b)(3)}

 [ ] Maintenance, calibration or repair of automated data processing equipment and office information/word processing systems if the conditions of 22.1003-4(c)(2) are met {FAR 22.1003-4(c)(1)(i)}

 [ ] Maintenance, calibration or repair of scientific equipment and medical apparatus or equipment if the application of micro-electronic circuitry or other technology of at least similar sophistication is an essential element (for example, Federal Supply Classification (FSC) Group 65, Class 6515, “Medical Diagnostic Equipment;” Class 6525, “X-Ray Equipment;” FSC Group 66, Class 6630, “Chemical Analysis Instruments;” and Class 6665, “Geographical and Astronomical Instruments,” are largely composed of the types of equipment exempted in this paragraph) if the conditions of 22.1003-4(c)(2) are met. {FAR 22.1003-4(c)(1)(ii)}

 [ ] Maintenance, calibration or repair of office/business machines not otherwise exempt pursuant to 22.1003-4(c)(1)(i), if such services are performed by the manufacturer or supplier of the equipment and if the conditions of 22.1003-4(c)(2) are met. {FAR 22.1003-4(c)(1)(iii)}

  [ ] Automobile or other vehicle (e.g., aircraft) maintenance services (other than contracts or subcontracts to operate a Government motor pool or similar facility)if the conditions of 22.1003-4(d)(2) are met. {FAR 22.1003-4(d)(1)(i)}

 [ ] Financial services involving the issuance and servicing of cards (including credit cards, debit cards, purchase cards, smart cards, and similar card services) if the conditions of 22.1003-4(d)(2) are met. {FAR 22.1003-4(d)(1)(ii)}

 [ ] Hotel/motel services for conferences, including lodging and/or meals, that are part of the contract or subcontract for the conference (which must not include ongoing contracts for lodging on an as needed or continuing basis) if the conditions of 22.1003-4(d)(2) are met. {FAR 22.1003-4(d)(1)(iii)}

 [ ] Maintenance, calibration, repair, and/or installation (where the installation is not subject to the Davis-Bacon Act, as provided in 29 CFR 4.116(c)(2)) services for all types of equipment where the services are obtained from the manufacturer or supplier of the equipment under a contract awarded on a sole source basis if the conditions of 22.1003-4(d)(2) are met. {FAR 22.1003-4(d)(1)(iv)}

 [ ] Transportation by common carrier of persons by air, motor vehicle, rail, or marine vessel on regularly scheduled routes or via standard commercial services (not including charter services) if the conditions of 22.1003-4(d)(2) are met. {FAR 22.1003-4(d)(1)(v)}

 [ ] Real estate services, including real property appraisal services, related to housing Federal agencies or disposing of real property owned by the Government if the conditions of 22.1003-4(d)(2) are met. {FAR 22.1003-4(d)(1)(vi)}

 [ ] Relocation services, including services of real estate brokers and appraisers to assist Federal employees or military personnel in buying and selling homes (which shall not include actual moving or storage of household goods and related services) if the conditions of 22.1003-4(d)(2) are met. {FAR 22.1003-4(d)(1)(vii)}

[ ] Remanufacturing of equipment shall be deemed to be manufacturing when the criteria in either 22.1003-6(a)(1) or 22.1003-6(a)(2) are met. {FAR 22.1003-6(a)}

[ ] Executive employee: (1) Compensated on a salary basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities;(2) Whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;(3) Who customarily and regularly directs the work of two or more other employees; and (4) Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight. {29 CFR Part 541}

[ ] Administrative employee: 1) Compensated on a salary or fee basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities;(2) Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and (3) Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. {29 CFR Part 541}

[ ] Professional employee: (1) Compensated on a salary or fee basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging, or other facilities; and (2) Whose primary duty is the performance of work: (i) Requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; or (ii) Requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. {29 CFR Part 541}

1. Explain how the selected exemption applies to the proposed acquisition.

Individually address how each requisite criterion of the applicable exemption applies to the proposed acquisition.  Please provide all pertinent details and supporting documentation specific to your requirement (e.g., citing specific sections of the Statement of Work) that supports your conclusion. 

For factors to consider in justifying potential executive, administrative, or professional employee exemptions, refer to the Department of Labor’s Fact Sheets listed below. 

Fact Sheet #17B:  Exemption for Executive Employees Under the Fair Labor Standards Act (FLSA)  

Fact Sheet #17C: Exemption for Administrative Employees Under the Fair Labor Standards Act (FLSA) 

Fact Sheet #17D: Exemption for Professional Employees Under the Fair Labor Standards Act (FLSA)

For more detailed guidance, see 29 CFR Part 541.

I certify that this determination is accurate and complete to the best of my knowledge and belief. 

________________________________ _________________                                             

[TYPED NAME], Contract Specialist                                                                                     Date

_________________________________ _________________                                               Date

[TYPED NAME], Contracting Officer