Service Contract Act vs. Davis-Bacon: Which Applies, and What Changes

David Gul · Last updated November 3, 2026

ExcelGurus is not affiliated with, endorsed by, or acting for the U.S. Department of Labor, the U.S. General Services Administration or any other federal agency. This guide describes the regulations, clauses and decisions it cites as read on November 3, 2026; they change, so check them, the clauses in your own contract and its current wage determination before you rely on it. It is not legal advice.

The Service Contract Act (SCA) covers federal contracts whose principal purpose is to furnish services through service employees; the Davis-Bacon Act covers contracts over $2,000 for the construction, alteration or repair, including painting and decorating, of public buildings or public works. The SCA leaves out the construction work that Davis-Bacon covers, and a contract that is principally for services can carry both, each for its own part of the work. The two differ where it costs money: a Davis-Bacon contractor may meet the fringe part of the rate with a higher cash wage, while an SCA contractor cannot count wages above the wage determination rate toward health and welfare; and only Davis-Bacon requires certified payrolls submitted every week. EG SCA Wage Pack (52.222-43) is for the SCA side only and does not cover Davis-Bacon work.

Which law applies to a contract

The SCA applies to every government contract “the principal purpose of which is to furnish services in the United States through the use of service employees”, and the name or form of the contract does not decide it (FAR 22.1003-1). Davis-Bacon, which the FAR now calls the Construction Wage Rate Requirements statute, applies to contracts over $2,000 for construction, alteration or repair, including painting and decorating, of public buildings or public works, and protects the laborers and mechanics employed at the site of the work (FAR 22.403-1). The service contract carries the clause at FAR 52.222-41; the construction contract carries the Davis-Bacon clause at 52.222-6.

The two Acts are written not to overlap. The SCA exempts “any contract … for construction, alteration and/or repair, including painting and decorating of public buildings or public works”, language that corresponds to Davis-Bacon’s own description of its coverage, and the Department of Labor’s regulation says the purpose is “to avoid overlapping coverage of the two acts” (29 CFR 4.116(a)). Three cases in that section settle most questions:

• Clearing or demolition with nothing to follow. Clearing timber or demolishing a building can be Davis-Bacon work when a public building or work is to be built on the site afterward. When no construction is planned there, Davis-Bacon does not apply, and the contract may be an SCA contract if its principal purpose is services (4.116(b)).
• One contract for installation and upkeep. An agency may buy the installation of a security alarm system and a year of maintenance in a single contract. If the contract is principally for services, the exemption covers only the installation; the SCA covers the maintenance (4.116(c)(1)).
• Service contracts with construction in them. Both Acts generally apply to a contract that is principally for services but involves construction. Davis-Bacon applies to the construction part where the contract calls for substantial construction, alteration or repair, or substantial construction will plainly be needed, and that work is physically or functionally separate from the service work and can in practice be done on its own. “Substantial” refers to the type and quantity of the work, not to its dollar share of the contract (4.116(c)(2)).

So for a base maintenance contract that includes repair work, the test is whether the repair is substantial and can be separated from the maintenance. Where it is, that work comes under Davis-Bacon and the rest under the SCA, each with its own wage determination. The clauses in your contract show what the contracting officer decided.

The two side by side

Thresholds and wage determinations

Davis-Bacon’s clause goes in construction contracts over $2,000 (29 CFR 5.5(a); FAR 22.403-1). On the SCA side, the contracting officer obtains a wage determination for each new solicitation and contract over $2,500, for each modification that extends the contract by option or otherwise, and at each anniversary of a multiyear contract (FAR 22.1007). That new wage determination at an option is the one FAR 52.222-43 adjusts the contract price for.

The two kinds of wage determination look different. An SCA wage determination lists occupations by code and title, each with an hourly rate, and then the benefits that “all occupations listed above receive”: one health and welfare rate, the vacation tiers and the paid holidays. On the standard wage determinations revised in August 2026, such as WD 2015-5619, Revision 30, health and welfare is $5.92 an hour, or $5.42 on a contract that also carries FAR 52.222-62 (paid sick leave under Executive Order 13706). The guide to reading an SCA wage determination goes through one line by line.

A Davis-Bacon wage determination, headed with a General Decision Number, gives each classification of laborer or mechanic a basic hourly rate and, where fringe benefits prevail in the area, a fringe amount beside it; where they do not prevail, it lists the basic rate alone (29 CFR 5.30). The obligation is the sum of the two, which the certified payroll guide to prevailing wage and fringe works through with a table.

Fringe benefits: where the two differ most

Davis-Bacon. A contractor may meet both the basic rate and the fringe “by paying in cash, making payments or incurring costs for ‘bona fide’ fringe benefits … or by a combination thereof” (29 CFR 5.31(a)). The regulation’s own example is a common laborer at a basic rate of $21.93 and a fringe of $6.27: a contractor with no benefit plan meets it by paying $28.60 an hour in cash (5.31(b)(2)).

SCA. Fringe benefits are furnished “separate from and in addition to the specified monetary wages” (29 CFR 4.170(a)). Cash in place of the benefits is allowed, but the same paragraph closes the door Davis-Bacon leaves open: “An employer cannot offset an amount of monetary wages paid in excess of the wages required under the determination in order to satisfy his fringe benefit obligations”, and the employer must keep records showing wages and fringe payments separately. Paying $2.00 an hour over the wage determination rate does not cover a $5.92 health and welfare obligation; paying the wage determination rate plus $5.92 recorded as cash in lieu of benefits does.

The SCA’s health and welfare also has its own hours rule. It is due for every hour paid, paid vacation, sick leave and holiday hours included, up to 40 hours a week and 2,080 a year on each contract (29 CFR 4.175(a)(1)), and it is measured employee by employee: one worker’s family premium cannot make up another worker’s gap. The guide to SCA health and welfare covers the rate, the hours and cash in lieu.

Payroll paperwork: weekly certified payroll or records on hand

Davis-Bacon requires the contractor to submit certified payrolls weekly, for each week in which covered work is performed, to the contracting agency, and the prime contractor is responsible for the payrolls of every subcontractor (29 CFR 5.5(a)(3)(ii)(A)). The weekly payroll may be on Optional Form WH-347 “or in any other format desired”, and shows an identifying number for each worker rather than the full Social Security number (5.5(a)(3)(ii)(B)). The basic payroll records are kept for at least 3 years after all the work on the prime contract is completed (5.5(a)(3)(i)(A)). The certified payroll guides cover the form column by column.

The SCA clause asks for records, not a weekly submission. Under FAR 52.222-41(i) and 29 CFR 4.6(g)(1), the contractor and each subcontractor make and keep, for 3 years from the completion of the work, each employee’s name, address and Social Security number, classification, wage rates and fringe benefits provided or paid in lieu, daily and weekly hours and pay, and deductions, and make them available to the Department of Labor’s Wage and Hour Division for inspection. What the clause does ask you to hand over is narrower: a Standard Form 1444 for a class of employee the wage determination does not list (see SCA conformance and SF-1444), and, at least 10 days before a contract at a federal facility ends, a certified list of the service employees on the last month’s payroll with their anniversary dates, for the successor contractor (52.222-41(n)). Read your contract for any reporting the agency has added, and keep the payroll ready: under 52.222-43 the contracting officer may ask for payroll records to support a price adjustment.

On a hybrid contract the two run side by side: weekly certified payrolls for the weeks with Davis-Bacon work, and SCA records for the service employees.

Overtime works the same way on both

“The Act does not provide for compensation of covered employees at premium rates for overtime hours of work,” says the SCA regulation (29 CFR 4.180). Overtime on an SCA contract comes from the Fair Labor Standards Act and, where the contract contains FAR 52.222-4, from the Contract Work Hours and Safety Standards Act, whose laborers and mechanics include guards and watchmen (4.181). The FAR leaves 52.222-4 out of contracts valued at or below $200,000 and out of contracts for commercial products and commercial services (FAR 22.305), so on many smaller SCA contracts only the FLSA applies.

On Davis-Bacon work the premium likewise comes from those statutes, and 29 CFR 5.32(a) lets the contractor leave its fringe contributions out of the rate the premium is figured on, as long as that never takes the rate below the basic hourly rate in the wage determination. The SCA treats fringe payments the same way (4.180). One SCA difference carries into overtime: health and welfare stops at 40 hours a week, so overtime hours earn none.

The executive orders apply to both

Executive Order 13706 paid sick leave (FAR 52.222-62) covers employees whose wages are governed by either Act, and sick leave given to meet the order cannot be credited toward the prevailing wage or fringe obligations of either one (29 CFR 13.5(f)(2)(i)). The Executive Order 13658 minimum wage applies to Davis-Bacon and SCA contracts entered into from January 1, 2015 to January 29, 2022 and not renewed or extended since January 30, 2022: $13.65 an hour now, and $14.05 from January 6, 2027 (91 FR 64403). The guide to the executive order minimum wage and paid sick leave has the detail, including the revoked Executive Order 14026.

Price adjustments for a new wage determination

FAR 52.222-43 and 52.222-44 are SCA clauses. They go in fixed-price, time-and-materials and labor-hour contracts that carry 52.222-41, and adjust the price for the increase in wages and fringe benefits you actually pay to meet a new wage determination, plus the accompanying social security and unemployment taxes and workers’ compensation, and nothing for overhead or profit (FAR 22.1006(c); 52.222-43(e)). The 52.222-43 guide covers what is in the adjustment, the payroll hours behind it and the 30-day notice.

Sources

Primary sources, as read on November 3, 2026. They change; the current versions are the ones that count.

• 29 CFR 4.116, Contracts for construction activity (www.ecfr.gov)
• 29 CFR 4.170, Furnishing fringe benefits or equivalents (www.ecfr.gov)
• 29 CFR 4.175, Meeting requirements for health, welfare, and/or pension benefits (www.ecfr.gov)
• 29 CFR 4.6, Labor standards clauses for Federal service contracts (www.ecfr.gov), paragraph (g), records
• 29 CFR 4.180, Overtime pay, in general (www.ecfr.gov)
• 29 CFR 4.181, Overtime pay provisions of other Acts (www.ecfr.gov)
• 29 CFR 5.5, Contract provisions and related matters (www.ecfr.gov), paragraph (a) and (a)(3), records and certified payrolls
• 29 CFR 5.30, Types of wage determinations (www.ecfr.gov)
• 29 CFR 5.31, Meeting wage determination obligations (www.ecfr.gov)
• 29 CFR 5.32, Overtime payments (www.ecfr.gov)
• 29 CFR 13.5, Paid sick leave for Federal contractors (www.ecfr.gov), paragraph (f)(2)
• FAR 22.1003-1, Service Contract Labor Standards: General (www.acquisition.gov)
• FAR 22.1007, Requirement to obtain wage determinations (www.acquisition.gov)
• FAR 22.403-1, Construction Wage Rate Requirements statute (www.acquisition.gov)
• FAR 22.305, Contract clause (52.222-4) (www.acquisition.gov)
• FAR 52.222-41, Service Contract Labor Standards (www.acquisition.gov), paragraphs (i) and (n)
• FAR 22.1006, Solicitation provisions and contract clauses (www.acquisition.gov), paragraph (c)
• Minimum Wage for Federal Contracts Covered by Executive Order 13658, Notice of Rate Change in Effect for 2027, 91 FR 64403 (www.federalregister.gov), October 8, 2026
• Standard wage determinations 2015-5619 to 2015-5721 (WD 2015-5619, Revision 30, 8/27/2026), as reproduced by GSA (www.gsa.gov), MAS Refresh #33, October 2026

More Service Contract Act guides: FAR 52.222-43 Price Adjustments for Service Contract Act Contractors · SCA Health and Welfare: The 2026 Rate and the Hours That Earn It · The SCA Price Adjustment Letter: What a 52.222-43 Notice Says · How to Read an SCA Wage Determination · Common SCA Payroll Mistakes, and How to Catch Them · SCA Holiday Pay: Who Earns It, How Much, and a Holiday Worked · SCA Vacation: Service, Vesting and the Deadline to Give It · Successor Contractors and CBA Wage Rates Under the SCA · SCA Conformance: When an Occupation Is Not on the Wage Determination · Executive Order Minimum Wage and Paid Sick Leave on SCA Contracts · All SCA guides