Service Contract Act fringe is not the same thing as your company fringe rate, and treating it as one is how SCA work goes wrong. The Act sets a health and welfare amount per hour that must be delivered to the covered employee as benefits or as cash. This calculator models what you are actually delivering against what is required, so the fringe you bid matches the fringe you owe.
Why SCA fringe needs its own calculation
Your company fringe rate is an average across everybody — a pool divided by productive labor. SCA health and welfare is a per-hour obligation attached to a specific covered employee on a specific contract. The two numbers answer different questions, and the second one is enforceable.
- It is a floor, not an average. Meeting it across your workforce does not mean you met it for a covered employee.
- Benefits and cash are interchangeable, but only up to the obligation. Whatever the benefit package does not deliver has to be paid out.
- Hours are the multiplier. The obligation attaches to hours worked, so a bid built on the wrong hours assumption carries the error straight through.
- It layers with everything else. SCA fringe still has to sit correctly inside the wrap rate, alongside overhead and G&A.
Run the calculator
JENNY W CLARK GovConCFO Stop Guessing. Start Knowing.
Fringe on a typical services contract with corporate benefits runs around 30%.
Unless your bid used an SCA fringe rate, you’re probably losing money every day.
| IT Services | SCA Contract | ||
| 1 | Hourly Pay Rate | $/hr |
$/hr |
| 2 | Direct Labor Hours/Year Productive hours (2,080 minus leave) |
— | — |
| 3 | Holiday Hours | hrs |
— |
| 4 | Vacation / PTO Hours | hrs |
— |
| 5 | Sick Leave Hours | 0 | hrs |
| 6 | Annual Gross Labor Cost Pay rate × 2,080 hours |
— | — |
| 7 | Direct Labor Cost Pay rate × productive hours |
— | — |
| 8 | Monthly Group Insurance (Corporate) Company-paid premium / employee |
$/mo |
N/A — see H&W |
| 9 | H&W Rate under EO 13706 Required fringe benefit rate ($/hr) |
N/A | $/hr |
| 10 | Group Benefits Cost per Employee (Annual) | — | — |
| IT Services | SCA Contract | Average | ||
| 11 | Payroll Taxes Applied to direct labor cost |
% |
— | — |
| 12 | Holiday Pay | — | — | — |
| 13 | Vacation Pay | — | — | — |
| 14 | Sick Leave Pay | $0 | — | — |
| 15 | Group Health Benefits | — | — | — |
| 16 | Workers Compensation | $ |
$ |
— |
| 17 | 401K Plan | $ |
$ |
— |
| 18 | Total Fringe Pool | — | — | — |
| 19 | Fringe Rate Total Fringe Pool ÷ Direct Labor Cost |
— | — | — |
CONCLUSION: Don’t just bid AVERAGE Fringe — know your SCA Fringe Rate and bid it separately.
Why This Matters
SCA contracts require employers to pay a minimum Health & Welfare (H&W) benefit rate set by the Department of Labor — currently $5.09/hr under EO 13706. This is in addition to mandated leave, not a replacement for it.
When you have a mix of IT services and SCA work, blending the fringe rates understates your true SCA cost. If you bid the average rate on an SCA contract, you are subsidizing the government’s work out of your own fee from day one.
The rule: Build a separate fringe rate for your SCA population. Bid it separately. Track it separately.
Bidding SCA work?
Getting the fringe right is the first step; getting it into a wrap rate that holds up is the rest of it.
Fringe and overhead calculation helpFrequently asked questions
Is SCA fringe the same as my company fringe rate?
No. Your company fringe rate is a pool divided by a labor base — an average. SCA health and welfare is a per-hour obligation owed to a specific covered employee. You can meet your average and still fall short on the obligation.
Can I pay SCA health and welfare in cash instead of benefits?
The obligation can generally be satisfied with bona fide benefits, with cash, or with a combination. What matters is that the covered employee receives the full amount for the hours worked. Anything the benefit plan does not deliver has to be made up in cash.
How does SCA fringe fit into a wrap rate?
It sits in the fringe layer, but it has to be modeled for the covered population specifically rather than blended into the company average. Once it is right, it layers with overhead, G&A and fee the same way any other fringe does.