Fixed-price is now the default for federal service contracts
The White House just rewrote the playbook for SCA-heavy pricing. Your 120-day clock started April 30.
Welcome to Part 31, the prevailing wage newsletter that helps federal SCA contractors protect their margins and stay compliant on post-award operations.
This week: The White House ordered agencies to default to fixed-price contracting, shifting all SCA cost risk to contractors. WHD’s FY2025 enforcement numbers are final. Fewer audits, bigger hits. And DOL’s new joint employer NPRM could make your sub’s wage violations your problem.
In this issue:
🏛️ White House EO: Fixed-price is now the default
⚖️ WHD FY2025: Fewer investigations, bigger hits
🔗 Joint employer rule: Your sub’s problem is now yours
💊 ACA subsidies gone, ICHRA tripling
📖 Know the Reg: SCA fringe under fixed-price
📅 Dates to remember
LEAD STORY
The White House just made fixed-price the default. SCA fringe costs are now entirely contractor-borne.
What happened
President Trump signed an EO on April 30 directing agencies to default to fixed-price, performance-based contracting for new awards. Cost-reimbursement contracts above specific thresholds now require written head-of-agency approval:
$10M for most civilian agencies,
$25M for DHS, $35M for NASA,
$100M for DoD.
FAR Council has 120 days to propose implementing amendments, but agencies can start preferring FFP in solicitations immediately. (White House EO, Apr. 30) | (Crowell & Moring, May 1)
Why it matters
SCA-heavy service contracts (facilities management, janitorial, food service, IT support, logistics) have historically been cost-reimbursable or T&M, letting contractors pass WD increases, H&W adjustments, and conformance costs through to the government. Under FFP, those costs are yours. A compliance mistake under cost-plus is a mod; under FFP, it’s a loss.
What to do now
Model an FFP baseline for every recompete bid you’re pricing over the next 6 months, with SCA wage determination rates, H&W fringe, and conformance costs as locked-in assumptions. Build in the July 2026 H&W rate update; it has increased every year since 2014. Flag this for your pricing team now. The FAR amendment is 120 days out, but agencies don’t have to wait.
In Brief
1. ENFORCEMENT
WHD’s FY2025 numbers are final. Fewer audits, bigger hits.
FY2025 SCA enforcement data is in:
125 compliance actions with violations (down from 188 in FY2024),
1,070 workers received back wages (up from 709),
$563,326 total recovery (up from $317,979).
WHD is running fewer investigations but selecting them more carefully; if you’re audited, you’re a targeted case, not a random sweep. Pull your certified payroll records and confirm fringe contributions match your WD obligations. A self-audit is cheaper than an investigation. (DOL WHD Enforcement Data)
2. REGULATORY · COMMENT PERIOD OPEN
DOL’s joint employer rule would make your sub’s wage problem your problem.
WHD published an NPRM on April 22 proposing a single national standard for joint employer status under the FLSA, FMLA, and MSPA (Docket WHD-2026-0067). Under a broad standard, flowing down SCA clauses in your subcontract is not enough; if the sub pays workers below WD rates, the prime can be on the hook for back wages and debarment risk. Monitor the NPRM and consider submitting comments if your business model depends on sub-tier labor compliance. (DOL Press Release) | (On the Labor Front, Apr. 24)
3. FRINGE & BENEFITS
ACA enhanced credits are gone. ICHRA enrollment just tripled.
The ACA enhanced premium tax credits expired at year-end with no extension; premiums are up a median 18% in 2026, the largest jump since 2018. ICHRA adoption has tripled year-over-year as SCA contractors shift to defined-contribution models to cap fringe spend and give employees portable coverage. Two compliance numbers: the 2026 ACA affordability threshold is 9.96% of household income, and the FPL safe harbor for self-only ICHRA coverage is ~$129.89/month; if your allowance falls below that, employees can claim premium tax credits and your ACA exposure becomes real. (KFF/Health System Tracker) | (AJMC, Apr. 29) | (HRP Network, Apr. 27)
Know the Reg
29 CFR Part 4, Subpart D
SCA Fringe Compliance Under a Firm-Fixed-Price Contract
Under 29 CFR Part 4, the SCA H&W and wage obligation attaches to the work, not the contract structure; if covered employees are performing services on a qualifying contract, you owe the full WD rate and fringe contribution for every hour worked regardless of whether the contract is cost-plus, T&M, or FFP. The difference is the funding mechanism: under cost-plus, a mid-contract WD update flows to a mod; under FFP, a $0.50/hr raise across 30 employees working 2,000 hours a year is $30,000 you don’t get back. FFP SCA contractors must build WD rate escalation, the annualized H&W rate ($5.55/hr standard), and conformance-driven wage adjustments into their pricing models at bid, not after award.
Dates to remember
May 11: ⚠️ EO 13658 minimum wage ($13.65/hr) takes effect. Update payroll systems for legacy SCA/DBA contracts awarded Jan. 1, 2015 through Jan. 29, 2022 that have not been renewed or extended since Jan. 30, 2022. Hard date.
May 12 — SCA Unlocked. Practical solutions for fringe, finance, and legal experts. Free. Vienna, VA. Presented by the MarshMcLennan Agency.
May 20–21: DOL Virtual Prevailing Wage Seminar, SCA & DBA. Free. Two days. Covers wage determinations, conformances, enforcement. Forward to your contract managers.
May 26: H-1B/PERM Prevailing Wage NPRM comments due. If you employ H-1B workers on SCA contracts, the proposed wage floor changes have layered implications. (Federal Register)
Jul 24: ⚠️ Deadline: Modify all existing contracts to incorporate FAR 52.222-90 (DEI anti-discrimination clause). Missing this modification creates FCA exposure. Build it into your contract administration queue now.
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