The Need to Reform the McNamara – O’Hara Service Contract Act
15 Pages Posted: 14 May 2022
Date Written: April 27, 2022
The nearly sixty-year-old McNamara-O’Hara Service Contract Act (SCA) is a federal statute that governs and regulates service contracts between the federal government and individuals and/or companies. These regulations explicitly govern minimum wage and health/welfare benefits requirements and corresponding contractor compensation. However, several aspects of the SCA’s regulatory structure leave the Federal government (through its contracting partners) in a position where it is less able to recruit and retain a quality workforce.
The regulatory strictures of the SCA impact both the quality of services that Federal contractors are able to provide and implicitly leaves many of the over three million workers employed by government contractors without affordable or quality health and welfare benefits. The recent changes to federal contractor minimum wage mandates have revealed various shortcomings of the SCA, and Congress should consider legislative remedies to alleviate the labor market frictions and notable inefficiencies that have been created in this market.
Keywords: Services Contract Act, Government Contractors, non-wage compensation, contracting
JEL Classification: J45
Suggested Citation: Suggested Citation