Here Comes the SCA – What Does it Mean?

It’s a really big deal that the Global Household Goods Contract (GHC) triggers the Service Contract Act (SCA) for all military shipments – but what does it mean? We don’t fully know what it means, and that’s the problem. The new GHC is the first time we’ll see the requirements of the SCA applied to long-distance interstate military shipments handled by van operators who are also independent owner-operators.

Put simply, the SCA dictates how businesses are paid – and how those businesses pay their employees – when they service contracts for the federal government. It will apply to everyone who hauls military shipments, even independent owner-operators.

With local test moves already underway and all domestic military moves still scheduled to happen under the GHC by next peak season, our industry still hasn’t seen a compliance guide from the federal government and we still don’t have transparency from TRANSCOM. This is why an evaluation by the Government Accountability Office is critical, and why a strategic pause is needed until the results are in.

Here are some of the major changes under the Service Contract Act that have yet to be explained:

Moving companies will have to pay employees prevailing hourly wages based on whatever location they’re working in.

Like us, companies are probably asking themselves several questions: When does the job clock start and stop? How should companies compensate the drivers who haul mixed military and civilian shipments? What happens when drivers cross multiple municipal and state lines to service a military move? Does the origin of the prevailing wage carry through to the destination? If paid by the hour, what will motivate the drivers to service a job as efficiently as possible?

The SCA will require independent owner-operators to do business as employees.

Under the SCA, independent operators will lose the flexibility to choose which shipments to haul and how long they’ll have to complete a job, effectively turning them into employees. Shifting to an employee status means owner-operators would no longer be able to own their trucks when hauling military shipments, forcing them to sell their rigs to the moving companies. It would also shift certain costs from independent contractors to the Agency owners. We’ll take a deeper dive in a future email about what the shift in certain costs could mean for Agency owners.

The SCA will also require more recordkeeping on the identities of labor and their Social Security numbers, will eliminate the use of day labor, and will require pay for each helper.

Combined with the other requirements, is working under the SCA feasible for our industry, including independent owner-operators?

Has TRANSCOM given any of these scenarios any meaningful consideration? They certainly haven’t discussed any of these potential ramifications or fallout with the industry, which begs another question – have they even vetted the entire concept of the GHC at all? With so much uncertainty and blatant lack of transparency, How can a business even make a reasonable assessment of the profit if they don’t have clear understanding of their cost? It’s ludicrous to expect quality service providers to commit capacity to the GHC when there is no clear guidance on how some of their largest operating expenses will be impacted by SCA.

Whether you own an Agency, work for a small or large van line, are a contractor or day laborer, or are an independent owner-operator, having to operate under the SCA will certainly affect you and your business – the question is how. The American Trucking Association has even asked the Department of Labor for a compliance guide so the industry can get some idea of how to follow the new regulations, but no luck. It seems we’ve hit a roadblock with the feds.

Thankfully, the annual Defense bill so far includes a provision requiring the Government Accountability Office to evaluate the GHC. We urge the DOD to hit a strategic pause until all stakeholders fully understand how the GHC provisions will affect military families and the moving industry – American service families and American businesses are on the line.