U.S. Department of Labor 
Employment Standards Administration 
Wage and Hour Division
Washington, D.C. 20210
AUG 8 1994
MEMORANDUM NO. 178
MEMORANDUM TO: ALL CONTRACTING AGENCIES OF THE FEDERAL
GOVERNMENT AND THE DISTRICT OF COLUMBIA
FROM: MARIA ECHAVESTE
Administrator
SUBJECT: Updating of Service Contract Act Health and
Welfare Benefit Levels
SUMMARY
Effective August 8, 1994, most prevailing wage determinations
issued under the McNamara-O’Hara Service Contract Act (SCA) are
being revised to reflect changes in health and welfare (H&W)
contribution requirements. The new levels will be:
1. $.90 per hour for those wage determinations previously
requiring an $.89 per hour contribution for each
employee (except those governed by the terms of a
collective bargaining agreement pursuant to section
4(c) of the SCA); and
2. $2.56 per hour for those wage determinations previously
requiring a $2.39 per hour contribution for each
employee (except those governed by the terms of a
collective bargaining agreement pursuant to section
4(C) of the SCA).
Pen and ink changes are to be made to current wave determinations
to affect the latest health and welfare increases.
It is not required that contracting agencies request revised wage
determinations.
BACKGROUND
The SCA requires the Secretary of Labor to determine minimum wage
and fringe benefits to be paid service employees engaged in the
performance of work on covered contracts in accordance with the
wage rates and fringe benefits prevailing for such employees in
the locality. The SCA regulations provide that such
determinations will be reviewed periodically and, where
prevailing wage rates or fringe benefits have changed, these
changes are to be reflected in revised wage determinations.

















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The new H&W levels are based on March 1994 size-of-establishment
data published by the Bureau of Labor Statistics. Data for
establishments employing fewer that 100 employees provide the
basis for the H&W level for most, and generally routine service
contracts. Data for establishments employing 100 or more
employees provide the basis for the HSW level for certain service
contracts, including: (1) major base support contracts: (2)
solicitations involving an A-76 study/action, with potential for
displacement of federal civilian workers; and (3) solicitations
that require bidders to be large, national corporations, major
competitors, or providers of highly technical services.
REQUIRED AGENCY ACTION
In accordance with 29 CFR 4.5(a)(2), the new H&W levels should be
incorporated into the wage determination of any invitation for
bids in any case where this notice is received at least ten (10)
days prior to bid opening. If this notice is received less than
ten (10) days before bid opening, the new rates should be applied
unless the contracting agency finds there is not a reasonable
time frame available to notify bidders of the revision.
In the case of a procurement entered into pursuant to
negotiations, or in the case of a contract option or extension,
the new rates are effective it this notice is received before the
date of contract award, contract extension, or exercise of
option, provided contract performance begins within 30 days of
the award, contract extension, or exercise of option. If the
contract's start of performance is delayed for more than 30 days
(or if the contract does not specify a start of performance date
which is within 30 days of award), the new rates are effective
and must be incorporated if this notice is received by the agency
not less than 10 days before the start of contract performance.
Evaluation of Alternative Methodologies .
For your information, the Service Employees International Union
has challenged the Department of Labor's (DOL) methodology by
which H&W is determined. The DOL has committed to engage in
rulemaking in the near future to evaluate alternative
methodologies for possible use in determining H&W benefit levels.