Service Contract Modernization Act
Key claim: The bill would raise the Service Contract Act coverage threshold above the current $2,500 floor by inflation-adjusting it from 1965 and indexing future increases to inflation.
Abstract
(S335 · 118th Congress) Service Contract Modernization Act This bill increases a threshold used to determine whether an employee of a federal services contractor or subcontractor is entitled to wages and fringe benefits prevailing in the locality where services are performed (or in a predecessor contractor’s collective bargaining agreement). Under current law, a federal contractor or subcontractor that enters into a service contract in excess of $2,500 must comply with prevailing wage and related requirements. This bill increases that amount by adjusting it for inflation since 1965 and provides for future increases based on inflation. Latest action (2023-02-09): Read twice and referred to the Committee on Homeland Security and Governmental Affairs.
Why this matters
The Service Contract Act’s $2,500 coverage threshold has not been updated since 1965, so an inflation adjustment would substantially expand the universe of federal service contracts subject to prevailing-wage and fringe-benefit requirements. For workers on small federal service contracts, this could mean access to SCA wage floors; for employers, it would increase compliance obligations and bidding costs on lower-dollar federal work.