The standards established pursuant to the Act for minimum monetary
wages to be paid by contractors and subcontractors under service
contracts in excess of $2,500 to service employees engaged in
performance of the contract or subcontract are required to be specified
in the contract and in all subcontracts (see Sec. 4.6). Pursuant to the
statutory scheme provided by sections 2(a)(1) and 4(c) of the Act, every
covered contract (and any bid specification therefor) which is in excess
of $2,500 shall contain a provision specifying the minimum monetary
wages to be paid the various classes of service employees engaged in the
performance of the contract or any subcontract thereunder, as determined
by the Secretary or his authorized representative in accordance with
prevailing rates for such employees in the locality, or, where a
collective bargaining agreement applied to the employees of a
predecessor contractor in the same locality, in accordance with the
rates for such employees provided for in such agreement, including
prospective wage increases as provided in such agreement as a result of
arm's-length negotiations. In no case may such wages be lower than the
minimum wage specified under section 6(a)(1) of the Fair Labor Standards
Act of 1938, as amended. (For a detailed discussion of the application
of section 4(c) of the Act, see Sec. 4.163.) If some or all of the
determined wages in a contract fall below the level of the Fair Labor
Standards Act minimum by reason of a change in that rate by amendment of
the law, these rates become obsolete and the employer is obligated under
section 2(b)(1) of the Service Contract Act to pay the minimum wage rate
established by the amendment as of the date it becomes effective. A
change in the Fair Labor Standards Act minimum by operation of law would
also have the same effect on advertised specifications or negotiations
for covered service contracts, i.e., it would make ineffective and would
supplant any lower rate or rates included in such specifications or
negotiations whether or not determined. However, unless affected by such
a change in the Fair Labor Standards Act minimum wage, by contract
changes necessitating the insertion of new wage provisions (see
Secs. 4.5(c) and 4.143-4.145) or by the requirements of section 4(c) of
the Act (see Sec. 4.163), the minimum monetary wage rate specified in
the contract for each of the classes of service employees for which wage
determinations have been made under section 2(a)(1) will continue to
apply throughout the period of contract performance. No change in the
obligation of the contractor or subcontractor with respect to minimum
monetary wages will result from the mere fact that higher or lower wage
rates may be determined to be prevailing for such employees in the
locality after the award and before completion of the contract. Such
wage determinations are effective for contracts not yet awarded, as
provided in Sec. 4.5(a).
