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Companies gear up to fight service contracting law

The Labor Policy Association--an organization that represents 200 major corporations on labor issues--is readying an attack on the way the Labor Department currently implements the 1965 Service Contract Act. Labor Policy Association officials said they plan to seek a common front with union officials on the issue. Another group--the Contract Services Association of America--recently ranked reform of the act among its top policy priorities for this year. Under the Service Contract Act, contractors who provide services to the federal government must pay their employees the "prevailing" wage in the locality where the work is being done. In this way, the act is analogous to other laws governing contracting, such as the 1931 Davis-Bacon Act, which mandates that prevailing wages be paid to employees on federal construction projects. The problem, the critics say, is that the statistical surveys that determine the Service Contract Act wage level have not been conducted since 1995 because of internal budgetary pressures at the Bureau of Labor Statistics. As a result, the act's wage levels have not risen in tandem with marketplace wages. So an act that should have set a floor for wages is actually serving as a ceiling, said Tim Bartl, assistant general counsel at the Labor Policy Association. This ceiling, Bartl said, not only hampers the earnings of employees on government contracts but also complicates life for employers. That's because workers covered by the act are likely to flee to other, higher-paying jobs, leaving federal contractors in the lurch. "It's become amazingly difficult to attract and retain employees," Bartl said. Raytheon Techical Services Co., a contractor whose business is about 85 percent government-related, is "interested" in improving the Service Contract Act process, said spokesman Bob Valentine. "We certainly want the surveys to be more timely. Our employees would be able to benefit from that." In 1999, the Labor Department's Wage and Hour Division agreed to make up for the missing surveys by increasing wages under the act by an average of 3.5 percent. But because not all jobs had their wages raised by that amount, the association considers the changes to be insufficient. Jobs typically covered by the act include janitorial work, food service, printing and copying, engineering, design, computer programming and aircraft maintenance. Beyond easing immediate difficulties, the association also wants to see a major restructuring of the wage-determination system. For instance, the association notes that the act's covered employment categories have not changed since the 1960s, despite the advent of many new types of jobs, including high-tech positions with substantial private-sector demand. The association is urging that these categories be updated. It also favors further clarification of the term "locality" for the purposes of prevailing wages. Bartl said that association officials have discussed this issue with Bush officials at the Labor Department, following ongoing attempts to engage the Clinton administration on the issue. The association will also go to Congress to focus on "both the short-term and the longer-term problems," he said. Because the effort is just getting underway, Bartl said that the association has not yet finalized its team of allies, either on the management or labor side. "We have not at this point reached out to labor, though we believe it would be an issue that they would welcome because we're talking about increasing employees' wages," he said.