Customized Benefits Plan for Government Contractors

Customized Benefits Plan for Government Contractors

In order to win a new federal contract, filed bids must incorporate the cost of being an employer – inclusive of health and welfare benefits.  Often referred to as “fringe,” these bundled employee-related expenses become major cost components of competing proposals. 

Federal mandates, including the Service Contract Act (SCA) and the Davis Bacon Act (DBA), have been put in place to keep contractors from marginalizing their employees’ health and welfare benefits.  Both mandates require a minimum “living wage” plus standardized fringe, monetized per employee per hour to be built into all relevant federal new business proposals.

The SCA pertains to all federal contractors working on something routine or requires regular maintenance such as snow removal, custodial and heating/ventilation.  The DBA is typically work related to construction, restoration, alteration, replacement or fixing something that is broken. The segment of employee population that is subject to these mandates must be handled differently in regards to their benefits to prevent administrative burdens and compliance risks.

Compliance Risks

It is not uncommon to run across contractors that are unaware that they had employees that were subject to the Service Contract Act (SCA).  As a result, future audits may find the company liable for back wages of their SCA employee population. In some cases, companies have had to declare bankruptcy in an effort to pay those back wages of these employees that they did not realize were subject to the SCA.  To make sure that their compensation and benefits are compliant with these Acts, contractors rely on their consultants and brokers to design and place the correct policies and ultimately, protect their bottom line. 

Administrative Burdens

Government contractors who try utilizing a traditional benefits plan to meet specific fringe requirements quickly realize that they have to spend an inordinate amount of time administering the benefits for this segment of their employee population to ensure compliance with the regulations.

One way to ease the administrative burden and cost associated with these laws and regulations is to team with a knowledgeable benefits consultant. This consultant can help design an employee benefits plan that is tailored for government contract employees.  Customized plans provide a competitive advantage and help win more contracts.

In the government contracting industry, contracts are won and lost by very thin margins.  Partnering with experts in the field can not only assure compliance but, perhaps more importantly, help win more new business.