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General Session: Service Contracting

SERVICE CONTRACT ACT: A CONTRACTOR’S PERSPECTIVE. General Session: Service Contracting Tom Roell, Senior V.P., Parsons Infrastructure & Technology Group Inc. July 17, 2003 3:00 – 4:15 p.m. Labor Laws – Distinguishing Among The Triumvirate.

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General Session: Service Contracting

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  1. SERVICE CONTRACT ACT: A CONTRACTOR’S PERSPECTIVE General Session: Service Contracting Tom Roell, Senior V.P., Parsons Infrastructure & Technology Group Inc. July 17, 2003 3:00 – 4:15 p.m. NCMA 41st Annual West Coast Educational Conference Risks And Rewards--Achieving the Proper Balance

  2. Labor Laws – Distinguishing Among The Triumvirate • All address prevailing “minimum wages and benefits” • Davis Bacon – Construction • $2,000 threshold • Walsh-Healy – Goods and Materials • $10,000 threshold • Service Contract Act – Services • $2,500 threshold NCMA 41st Annual West Coast Educational Conference Risks And Rewards--Achieving the Proper Balance

  3. Impact on Parsons • Three contracts account for over 80% of our SCA staff • TSSC III, Kaho’olawe, and Newport – 500 employees NCMA 41st Annual West Coast Educational Conference Risks And Rewards--Achieving the Proper Balance

  4. Benefits to Parsons • A level playing field when bidding • Forces the bidding focus on to indirects and management efficiency; not hourly rates • Eliminates lengthy salary negotiations for new hires • Much easier to project labor costs on long term programs NCMA 41st Annual West Coast Educational Conference Risks And Rewards--Achieving the Proper Balance

  5. Problems and Challenges Encountered • Promoting out of the non-exempt pool very difficult where there is substantial OT • Ex post facto WD’s • Geophysicists deemed non-exempt after employee instigated complaint (Kaho’olawe) • Half of the staff “demoralized” by the reclassification • Modifying HR and payment systems for rapidly changing rates; on a DoD contract up to three rates for one person in one day • Implementation increases costs by 5% • Cost conscious clients may view WD’s as a ceiling not a floor NCMA 41st Annual West Coast Educational Conference Risks And Rewards--Achieving the Proper Balance

  6. If We Could Change the SCA….. • Cash paid in lieu of benefits should be counted toward meeting the health and welfare benefits test • Employees who travel subject to different rates • A grace period before the new rate is applied • No retroactive imposition of Wage Determinations based on new definitions • Bona fide executive, administrative, or professional subject to interpretation and evolution. NCMA 41st Annual West Coast Educational Conference Risks And Rewards--Achieving the Proper Balance

  7. Maximizing Compliance and Minimizing Risk of Citation and Penalties • Monitor the wage determinations…your employees do! • Develop a strategy for staff promotion from exempt to non-exempt • Coordinate WF categories with the client – be proactive • Monitor and promptly pay employees for any WD adjustments; just 1 hour in a different prevailing wage area requires compensation adjustments • Maintain quality labor relations; complaint adjudication is costly and time consuming NCMA 41st Annual West Coast Educational Conference Risks And Rewards--Achieving the Proper Balance

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