Department of Labor

Recommendations and Actions

DOL14: Apply Information Technology to Expedite Wage Determinations for Federal Contracts


The McNamara-O'Hara Service Contract Act of 1965 (SCA) provides protection to workers employed on federal service contracts. Most covered employees tend to be low-skill, low-wage workers, associated with janitorial services, refuse collection, grounds maintenance, food service, laundry and dry cleaning, and guard services. The intent of this law is to ensure that taxpayers' money is not used to undermine locally prevailing wages and that such workers receive no less than locally prevailing wages and benefits on all federal service contracts of $2,500 or more.

The SCA requires federal agencies to file with the Department of Labor (DOL) a notice of intent to enter into a service contract. Each year, the Wage and Hour Division processes more than 50,000 such notices. The division responds to each notice prior to contract bid solicitation by furnishing the contracting agency with a wage determination that specifies the minimum wage and fringe benefit rates to be paid service employees for each occupation to be utilized on the contract.

The Wage and Hour Division responds to more than 80 percent of all wage determination requests within the 60-day regulatory target (in an average of 57 days). However, because of increased service contracting and reductions in the division's staffing, each year more than 10,000 requests are not met in 60, 90, or sometimes even in 120 days. Furthermore, the determinations provided within 60 days often do not meet customer needs, as most agency requests are received less than 30 days before the wage determination is actually needed.

A majority of SCA wage determination customers do not get the service they need from the Wage and Hour Division and procurements are often delayed because the federal procurement agencies do not have the required wage determinations. Each year, these delays mean thousands of telephone calls to check on the status of wage determination requests, actions to extend solicitations, and actions to amend contracts that result from options exercised without the current wage determination. Other actions include requests to extend current contracts because the award of Request for Proposals (RFPs) has been delayed due to the absence of a current wage determination; responses to complaints from members of Congress, unions, contractors, and employees, either because procurements have been delayed or the proper wage determination has not been included in the solicitation or contract; and work to revise and resubmit incorrect/incomplete requests for wage determinations.

To explore ways of improving the SCA wage determinations process, the Wage and Hour Division formed a quality management outreach project in 1991 that resulted in a recommendation to use electronic data interchange (EDI)/data mapping (DM) technology. Wage and Hour Division staff have been developing this recommendation, and they currently envision that the system would perform as follows:

--- appropriate federal agencies will obtain computer software that their staff can use to create and transmit requests for SCA wage determinations;

--- the agencies will request wage determinations via computer, assisted by the software, which helps staff enter all required data by specifying the information needed and furnishing relevant listings for possible agency use;

--- as Wage and Hour receives determination requests electronically, the system will automatically code them and make appropriate entries in an on-line tracking system;

--- if it is appropriate to issue an existing wage determination (it is estimated that this will be an appropriate response to more than 50 percent of requests), the wage determination will be issued electronically with little or no staff input, log out and tracking system routines will be initiated automatically, and the procurement agency then will print the newly issued wage determination for its use in solicitation and contract actions; and

--- if no existing wage determination is appropriate, the request will be referred to an analyst, who will either revise an existing wage determination or develop a new one. This work will occur on a terminal; when completed it will be issued electronically to the requesting agency.

In the absence of sufficient funding, the Wage and Hour Division has explored alternative means of implementation (e.g., a joint venture with the National Technical Information Service); however, alternative efforts have not yet succeeded because of a lack of resources.


DOL should develop an electronic data interchange/data mapping system and integrate it into the Service Contract Act wage determinations process.


Implementation of this action will be an appropriate response to the Wage and Hour Division's quality management initiative. The system will eliminate most procurement delays resulting from lack of timely wage determinations and it will ensure the delivery of many wage determinations in minutes instead of months.

With the federal mandate to use EDI and the significant time savings likely to result from this application, it will be relatively easy to get federal agencies committed to the system. Federal agencies will need personal computers, modems, and the knowledge and the commitment to use the new SCA system. Cost-sharing through a transaction or user fee may be appropriate.

Fiscal Impact

This improvement in customer service will be achieved at low cost. Estimates place total system design and implementation costs between $300,000 and $500,000. The first step of the proposed project to apply EDI/DM will be to initiate a system requirements study that will provide more reliable preliminary cost estimates. The cost estimates include the acquisition of some hardware, in the form of a microcomputer, a communication server, and multi-port cards. Total system design and implementation are estimated to take one to two years. Officials at the Wright-Paterson Air Force Base and the General Services Administration have volunteered to help field test the new system.

The primary beneficiaries of the system will be the federal procurement agencies, which will realize considerable workload and staff-time savings. Conservative estimates set annual savings for federal agencies at $5 million. In addition, some modest savings, in the form of reduced contractor staff required ($150,000 per year), will accrue to the Wage and Hour Division.

The estimated cost of work to be completed during fiscal years 1994 and 1995 is as follows:

 Systems Requirements     $100,000

Design $100,000

Hardware/software $50,000 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Total $250,000

1995 **** Field Test Evaluation $100,000

Hardware/Software $50,000 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Total $150,000

Cross Reference to other NPR Accompanying Reports Reinventing Federal Procurement, PROC 05: Reform Labor Laws and Transform the Labor Department into an Efficient Partner for Meeting Public Policy Goals.

Budget Authority (BA) and Outlays (Dollars in Millions) *******************************************************

Fiscal Year 1994 1995 1996 1997 1998 1999 Total ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BA $0.3 $0.2 $0.1 -$0.1 -$0.2 -$0.2 $0.1

Outlay $0.3 $0.2 $0.1 -$0.1 -$0.2 -$0.2 $0.1

Change in FTEs 0 0 0 0 0 0 0

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