Cost and Pricing Issues Under The Services Contract Act - Conformance
When a WD included in a solicitation or contract omits categories of service employees the contract intends to employ, that contractor must classify the employees in a way that results in payment of appropriate wages and fringe benefits. The classification chosen must provide a reasonable relationship between the unclassified employees and the classifications listed in the WD based on comparing appropriate level of "skill required and the duties performed".
Contractors can obtain guidance on conforming rates from the way jobs are rated under federal pay systems or other WDs issued for the same general locality. Contractors can also rely on standard wage and salary administration practices that rank various job classifications by pay grade based on point systems or other job factors. Rates may be conformed by looking at similar occupational categories and increases in the rate may be extrapolated by looking at average increases under the WD.
Ideally, a contractor should do a mini-conformance as part of its bid pricing. A contractor must institute its conforming rates procedures before employing a person in a missing job classification. Within 30 days after employment, the contractor must prepare a written report of the proposed conforming action for unclassified employees for submittal to the CO. The contractor must also discuss proposed conforming rates with unclassified employees or their representatives and address any agreements or disagreements in the report. A Standard Form 1444, "Request for Authorization of Additional Classification and Rate" should be submitted in requesting approval of conforming rates.
Next the CO is required to submit the contractor’s report, along with the agency recommendations to the Wage & Hour Administrator for review. The SCA regulations state that the Administrator should approve, modify or disapprove the proposed rates within 30 days after which the decision is transmitted to the contractor who then must give a copy to affected employees. The contractor must then pay those employees in accordance with the Administrator’s decision. If the contractor disagrees with the decision, it can appeal it to the Labor Department’s Administrative Review Board.
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