Federal Contracting: Actions Needed to Improve Department of Labor's Enforcement of Service Worker Wage Protections
Fast Facts
The Service Contract Act provides pay and benefit standards for service workers—such as security guards and janitors—on covered federal contracts.
The Department of Labor conducted more than 5,000 compliance investigations over 5 years and found violations of the Act leading to over $220 million in back wages for workers. Labor also determined that 60 contractors should be excluded from receiving new federal contracts for 3 years.
But we found that Labor didn't consistently share key information with contracting agencies—increasing the risk that excluded contractors might get contracts.
Our recommendations address this and other issues we found.
Highlights
What GAO Found
The Department of Labor (DOL) completed over 5,000 Service Contract Act (SCA) cases, which for many resulted in the awarding of back wages to federally contracted security guards, janitors, and other service workers, in fiscal years 2014 through 2019, according to available data. DOL enforces the SCA, which was enacted to protect workers on certain types of federal service contracts. DOL found SCA violations—primarily of wage and benefit protections—in 68 percent of cases. Employers across a range of service industries agreed to pay around $224 million in back wages (see figure for examples). Sixty cases resulted in debarment—a decision to prevent an employer from being awarded new federal contracts for 3 years. DOL's strategic plan emphasizes optimizing resources for resolving cases using all available enforcement tools. However, DOL does not analyze its use of enforcement tools, such as debarment or employer compliance agreements. Therefore, DOL may lack a complete picture of how it uses resources on different strategies for resolving SCA cases, as well as the effectiveness of these enforcement strategies.
Back Wages Paid for SCA Cases in Example Industries, Fiscal Years 2014-2019
Note: Mail haul refers to surface mail transportation by contract carriers. Values are adjusted for inflation and expressed in fiscal year 2019 dollars using the Gross Domestic Product Price Index from the U.S. Department of Commerce, Bureau of Economic Analysis.
DOL reported various challenges to enforcing the SCA, including difficulty communicating with contracting agencies. For example, DOL officials told GAO that poor communication with contracting agencies—particularly with the U.S. Postal Service (USPS)—can affect and delay cases, though USPS officials told GAO they were unaware of any communication gaps. Without addressing communication issues between USPS and DOL, USPS's implementation and DOL's enforcement of the SCA may be weakened.
GAO found that contracting agencies may face SCA implementation challenges, including not having key information about SCA debarments and violations from DOL. When recording SCA debarments, DOL does not always include the unique identifier for an employer so that contracting agencies can accurately identify debarred firms. DOL also does not have a process that consistently or reliably informs contracting agencies about SCA violations by employers. Without improved information sharing by DOL, an agency may award a contract to an employer without being aware of or considering its past SCA violations.
Why GAO Did This Study
The SCA ensures that service workers on certain federal contracts receive pay and benefits that reflect current employment conditions in their locality. From fiscal years 2014 through 2019, the U.S. government obligated over $720 billion on service contracts covered under the SCA.
GAO was asked to review SCA implementation and enforcement. This report examines (1) what available data reveal about past SCA cases, (2) what challenges DOL reports facing in enforcing the SCA, and (3) how contracting agencies implement the SCA. GAO analyzed DOL and federal procurement data for fiscal years 2014 through 2019, the most recent years available; reviewed a nongeneralizable sample of contract performance assessments; examined practices at three agencies selected to represent a range of contracting services and agency size; interviewed DOL officials; and reviewed relevant federal laws, policy, and guidance.
Recommendations
GAO is making six recommendations, including that DOL analyze its use of enforcement tools; that DOL and USPS implement written protocols to improve communication with each other; and that DOL improve its information sharing with contracting agencies on SCA debarments and investigation outcomes. DOL and USPS generally concurred with the recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Labor | The Secretary of Labor should ensure that the Administrator of the Wage and Hour Division standardizes data entry on contracting agencies associated with SCA investigations in WHISARD by providing guidance to staff on how to make these data more consistent. (Recommendation 1) |
DOL agreed with this recommendation. To improve the consistency of information on contracting agencies, WHD updated its enforcement database to include a list of government agencies to include in SCA enforcement investigations.
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| Department of Labor | The Secretary of Labor should ensure that the Administrator of the Wage and Hour Division analyzes information on its enforcement actions, including compliance agreements used by WHD's regional offices and SCA debarment processes and outcomes. (Recommendation 2) |
DOL agreed with this recommendation. In 2023, DOL reported that it had implemented its revised internal tracking system, which it said now incorporates information on enforcement actions, including compliance agreements used by WHD's regional offices and SCA debarment processes and outcomes. According to DOL, the updated process includes trend data analysis and participation in routine discussions with national and regional staff to assist the agency's strategic enforcement and planning efforts. They noted that these efforts, along with trend data, have helped identify which industries have high rates of violations compared to others. Through this revised process, DOL reported that it was able to identify a significant reduction (4 total) of SCA debarments in the previous year. We will consider closing this recommendation when DOL provides evidence of analyses from the revised system, such as trend reports on offenses by entities under compliance agreement.
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| Department of Labor | The Secretary of Labor should ensure that the Administrator of the Wage and Hour Division, in collaboration with the U.S. Postmaster General, develops and implements written protocols to improve communication and collaboration between the two agencies to support SCA enforcement and implementation. In doing so, they should revisit the effectiveness of existing protocols and other methods of collaboration with USPS on SCA-related issues. (Recommendation 3) |
DOL agreed with this recommendation. In November 2022, the two agencies reached and executed an agreement on a joint Memorandum of Understanding (MOU) that outlines protocols and procedures to increase collaboration and SCA compliance. In April 2023, DOL issued guidance on implementing the MOU to its field staff. The guidance included points of contact and expected timeframes, among other things. USPS communicates with DOL on SCA enforcement under the MOU.
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| United States Postal Service | The U.S. Postmaster General, in collaboration with the Administrator of the Wage and Hour Division, should develop and implement written protocols to improve communication and collaboration between the two agencies to support SCA enforcement and implementation. In doing so, they should revisit the effectiveness of existing protocols and other methods of collaboration with the Department of Labor on SCA-related issues. (Recommendation 4) |
USPS agreed with this recommendation. In November 2022, the two agencies reported that they had reached and executed an agreement on a joint Memorandum of Understanding (MOU) that outlines protocols and procedures to increase collaboration and SCA compliance. In April 2023, DOL issued guidance on implementing the MOU to its field staff. The guidance included points of contact and expected timeframes, among other things. In August 2023, USPS shared with us examples of communication with DOL that focused on SCA enforcement under the MOU. Based on this information, we consider the MOU to be implemented.
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| Department of Labor | The Administrator of the Wage and Hour Division should take steps to ensure that the unique company identifier designated by the Federal Acquisition Regulation (currently a Data Universal Numbering System number) is included in SCA debarment records in the System for Award Management whenever appropriate and available. (Recommendation 5) |
DOL agreed with this recommendation. In 2023, WHD reported that it was making progress on developing its new case management system, WISE, which now has a collection mechanism for an identification number for SCA contractors for whom WHD will recommend debarment. WHD states it will use these numbers to ensure proper reporting of debarments into the System for Award Management. We will close this recommendation once Labor provides documentation that WISE is operational and functioning as described.
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| Department of Labor | The Administrator of the Wage and Hour Division should develop written procedures for consistently and reliably informing the relevant contracting agency about the Wage and Hour Division's findings in SCA investigations that identify violations. (Recommendation 6) |
DOL agreed with this recommendation. In May 2023, WHD issued a memorandum that requires its investigators to send written invitations requesting contracting agency representatives attend final conferences in SCA investigations. Investigators must also record in the case file whether the contracting agency representative attended the final conference, and any significant discussions that occurred. If the contracting agency representative does not attend, the investigator must inform them about any violations, and then record in the case file that the contracting agency has been provided with this information. These procedures were required starting May 22, 2023. In addition, WHD will be updating its field operations handbook to reflect these changes.
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