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rkulak

SCA and vendors utilized by the Prime

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I'm working on a Contract for Electronics Recycling and Disposal. The Contractor states that they're unable to get their vendors/subcontractors (scrap metal dealers) to comply with the Service Contract Act because the industry doesn't allow for it. Although the Contractor (Prime) is willing to comply to the provisions of SCA, they are unwilling to accept responsbiltiy for the compliance of vendors they utilize. My question is when does SCA flow down to vendors utilized by the Prime? What if there is no agreement or contract between the Prime and their vendor, does the vendor still have to comply with SCA? What if the value of the work being done by the vendor(s) is less than 1% of the value of my Contract with the Prime (but still over $2,500), does the vendor still have to comply with SCA?

Do you have any experience with applying SCA to this type of service? Did you run into any issues, or is this issue unique to this particular Contractor?

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FAR 22.1003-7 Questions concerning applicability of the Act.

If the contracting officer questions the applicability of the Act to an acquisition, the contracting officer shall request the advice of the agency labor advisor. Unresolved questions shall be submitted in a timely manner to the Administrator, Wage and Hour Division, for determination.

Having said that, remember that the Act applies to "a subcontractor at any tier whose subcontract is subject to the provisions of the Act" (FAR 22.1001). My first supposition is that the scrap metal dealer subcontracts are not for the principal purpose of furnishing services through the use of service employees, so the Service Contract Act doesn't reach to them. The Act also will not reach down to the subcontractor that supplies the prime contractor's pencils or office supplies. Maybe they are better called vendors rather than subcontractors.

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Considering the quote below from the CFR at Title 29 Part 4 Labor Standards for Federal Service Contracts I would add that the Prime would want to be the one doing due diligence with the DOL to determine applicability. Agencies can assist in raising the issue but the Prime has a lot riding on the answer.

§4.114 Subcontracts.

(a) “Contractor” as including “subcontractor.” Except where otherwise noted or where the term Government prime contractor is used, the term contractor as used in this part 4 shall be deemed to include a subcontractor. The term contractor as used in the contract clauses required by subpart A in any subcontract under a covered contract shall be deemed to refer to the subcontractor, or, if in a subcontract entered into by such a subcontractor, shall be deemed to refer to the lower level subcontractor. (See §4.1a(f).)

(B)Liability of prime contractor. When a contractor undertakes a contract subject to the Act, the contractor agrees to assume the obligation that the Act's labor standards will be observed in furnishing the required services. This obligation may not be relieved by shifting all or part of the work to another, and the prime contractor is jointly and severally liable with any subcontractor for any underpayments on the part of a subcontractor which would constitute a violation of the prime contract. The prime contractor is required to include the prescribed contract clauses (§§4.6-4.7) and applicable wage determination in all subcontracts. The appropriate enforcement sanctions provided under the Act may be invoked against both the prime contractor and the subcontractor in the event of failure to comply with any of the Act's requirements where appropriate under the circumstances of the case.

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