Court Shifts Responsibility for Making Service Contract Act Classifications to the Government

Any contractor providing services to the government knows that complying with the Service Contract Act (SCA) is a critical element of contract performance. Normally, when the SCA applies to a contract, the contractor is responsible for classifying any workers who are not clearly within any particular class of service employees included in the applicable Department of Labor (DOL) wage determination. If the contracting officer, the worker, or the DOL disagrees with the contractor’s classification of a particular worker, then that dispute must be submitted to the DOL’s Wage and Hour Division for administrative resolution. These requirements are implemented by FAR 52.222-41 and 52.222-43, which must be included in contracts subject to the SCA.

It turns out that the contract may shift responsibility for making initial wage classifications to the government.  In  Appeal of Sotera Defense Solutions, Inc. v. Dep’t of Agric., 2019 CIVBCA LEXIS 182, 2019-1 B.C.A. (CCH) P37,421 (B.C.A. August 29, 2019), the U.S. Department of Agriculture (USDA) issued several task orders for IT services to Sotera under a Government Wide Acquisition Contract (GWAC).  The GWAC provided that the IT service positions involved in task orders under the GWAC would be exempt from the SCA as “bona fide executive, administrative, professional labor” positions.  However, to the extent any positions were determined to be non-exempt and subject to the SCA, the GWAC specified that the contracting officer would make the necessary wage classification.

Several positions on Sotera’s task orders from the USDA turned out to be non-exempt employees, subject to the SCA.  Neither the contracting officer nor Sotera had originally classified these employees under the applicable DOL wage determinations.  Sotera had not included the costs to pay these positions SCA wages in its proposals.  This left Sotera liable for millions of dollars of unpaid back wages, for which Sotera submitted claims.  One of the task orders at issue did not include FAR 52.222-41 and 52.222-43 at all.  The Civilian Board of Contract Appeals (CBCA) held that for that task order, the contracting officer was clearly responsible for making the initial wage classification.  However, the other task orders did include FAR 52.222-41 and 52.222-43.  Nonetheless, the CBCA held that the specific provision in the GWAC making it the contracting officer’s responsibility to make the initial wage classifications controlled over the general requirements of the FAR provisions.  Ultimately, the CBCA determined that the Government was responsible for the unpaid back wages because it had failed to make the initial wage classification as required.

This case will only apply when the contract shifts responsibility from the contractor to the government to make the initial wage classification.  But it is important for contractors to know that the Boards and Courts will rule in their favor when they rely on such language in their contracts.  If you need help with wage classifications or other SCA related issues, give us a call.

 

About the Authors

Maria L. Panichelli

Partner

Maria is a partner and the Chair of the Government Contracting department.   She focuses her practice exclusively on federal government contracting and procurement, guiding her clients throughout the entire lifecycle of their...

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Michael A. Richard

Associate

Michael is an attorney in Obermayer’s Government Contracting Department, where he excels at getting clients to the settlement table. Michael’s tenacity is truly a force to be reckoned with. Over the past...

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