TL;DR. Your service contract labor rates are set by the government, not by you, and 2026 moved a few of the dials (so no, you cannot negotiate this one).
- Pricing a bid? The health and welfare fringe rate rose to $5.92 an hour effective 10 August 2026, but confirm it against the primary DOL notice before you price.
- Running an existing contract? A new rate does not bind you until a modification brings the new wage determination in. Raising pay early can cost you a price adjustment.
- Bidding a recompete? The federal rule requiring successors to offer jobs to the incumbent workforce was removed in December 2025.
- Reading the rulebook? The FAR's labor standards section was reorganized and renamed, so check the current text before citing it.
The fringe rate moved, but your contract may not have
On service contracts, the government hands you a wage determination. It lists job categories, the minimum hourly wage for each, and a required fringe benefit payment on top. You can pay more. You cannot pay less. And you cannot argue the number down in your proposal because it would make you more competitive.
The fringe piece is the health and welfare rate, and it just stepped up. According to the law firm PilieroMazza, the Wage and Hour Division raised it from $5.55 to $5.92 an hour, effective 10 August 2026. For contracts that carry the paid sick leave obligation from Executive Order 13706, it went from $5.09 to $5.42. Hawaii employees covered by the state's Prepaid Health Act get their own rates: $2.51 an hour without the sick leave order and $2.01 with it.
Onsi Group translates the $5.92 figure to $236.80 a week or $1,026.13 a month. That is the number your payroll person will actually care about.
The catch: A new national rate does not automatically rewrite your contract. It binds you once a wage determination carrying it is added by modification. If you raise pay early on your own, you may lose the chance at a price adjustment. If your costs go up, you can also request an adjustment for related tax or insurance increases.
So what: For an existing contract, wait for the modification, then ask for the adjustment in writing. For a new bid, price at the rate in the wage determination attached to the solicitation. One honest caveat: I could not find the primary DOL or SAM.gov notice for the 2026 rate. Pull it before any number goes into a proposal.
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Nobody has to offer the incumbents a job anymore
If you have ever bid a recompete, you know the worry. You win, and suddenly there is a crowd of experienced workers you were told to interview first. That requirement came from a 2023 Department of Labor rule that implemented Executive Order 14055. It made successor contractors offer the predecessor's employees a right of first refusal.
On 22 December 2025, DOL issued a final rule removing that rule (29 CFR part 9) entirely. DOL's reasoning is that the regulation rested only on Executive Order 14055, which was revoked on 20 January 2025, so it served no purpose.
Note what did not change. The core wage determination and fringe obligations are separate and still apply. You just no longer carry a federal duty to hire the incumbent workforce.
So what: Your recompete staffing plan is a business decision again, not a compliance requirement. Still, incumbents know the site, the customer and the work, so many smart bidders will recruit them anyway. I did not verify whether any specific agency or state imposes its own incumbent workforce rules, so check your solicitation.
The FAR rewrite: new layout, same wage floor
The FAR Council issued the completed Part 22 revisions as part of the "Revolutionary FAR Overhaul" on 30 September 2025. Agencies are adopting them through deviations, and I saw versions from GSA, HUD and the Udall Foundation. The section on the Service Contract Act is now Subpart 22.10, titled "Service Contract Labor Standards," under the same federal statute. GSA's version reorganizes Part 22 around the acquisition lifecycle: presolicitation, evaluation and award, and postaward.
One critic, attorney Abrahams Wolf-Rodda, argues the overhaul mostly reorganizes text rather than rewriting it, and that it will cause more disputes. He also says a block of wage-related clauses was deleted, but I could not confirm exactly which ones, so verify against the actual overhaul text.
So what: If your compliance checklist or subcontract templates cite old section numbers, they may be stale. And since I do not know whether the overhaul has been formalized through notice-and-comment rulemaking, treat the version in your solicitation as the one that governs.
The scorecard
| Change | Status | What you do |
|---|---|---|
| Health and welfare rate to $5.92 per hour | Effective 10 August 2026 (secondary source) | Confirm with DOL notice, wait for the modification, request an adjustment |
| Incumbent job offer rule removed | Final rule, 22 December 2025 | Treat hiring incumbents as your choice, check solicitation for other rules |
| FAR Part 22 rewritten | Adopted by agency deviation since 30 September 2025 | Update templates, read the version in your solicitation |
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Start This Module Free →What I could not verify, and what to check this week
My research ran into gaps, and you deserve to know where they are. I found nothing on 2026 changes to the process for adding job categories that are missing from a wage determination (called conformance). I found no GAO protest decisions on wage determinations, though that reflects my search, not proof none exist. I also have no current minimum wage floor figures to give you, so I am not guessing.
Here is your short to-do list:
- Read the DOL Wage and Hour Division SCA page and SAM.gov announcements for the official 2026 health and welfare notice.
- Check acquisition.gov's FAR overhaul Part 22 page for the current Subpart 22.10 text.
- Search GAO's bid protest database for "Service Contract Labor Standards" and "wage determination."
- Look at the DoD class deviation page for any Part 222 deviations if you sell to the Pentagon.
The rates are not yours to choose, but knowing exactly when they bind you is the part you can control.
Where Your Labor Rate Actually Comes From
| Situation | Who Sets the Rate | Your Room to Move | If You Get It Wrong |
|---|---|---|---|
| Service work, covered labor category | Department of Labor wage determination | You may pay more, never less | Back wages, interest, possible debarment |
| Category not on the determination | You propose, DOL conforms it | Some, the comparison must be defensible | Conformance dispute and repricing |
| Collective bargaining agreement in place | The CBA carries into the successor contract | Very little | Successorship claim |
| Professional exempt staff | The market | Full | Misclassification exposure |