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November 12, 2003
Security Company Barred from Federal Contracts
An administrative law judge has ordered Allstate Security of Silver Spring, Maryland, to be debarred from obtaining any federal contracts for a period of three years. In addition, the company, which provides security services at military installations, has paid $265,367 in back wages to 155 employees.

"The labor department sought to prohibit the company from obtaining contracts with the U.S. government in this case because the employer deliberately violated the law and the violations were widespread throughout the company," says Tammy D. McCutchen, administrator of the Wage and Hour Division. "The government should not be party to the underpayment of workers, especially those who provide important services."

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Allstate Security had contracts with the Navy to provide armed guard perimeter security services at two facilities in Virginia.

The firm failed to pay employees for all hours worked, failed to pay pension benefits, and failed to pay the correct basic hourly rates, in violation of the McNamara-O'Hara Service Contract Act, according to investigators from the Wage and Hour Division.

The act requires that every federal service contract in excess of $2,500 contain a wage determination reflecting wages and fringe benefits prevailing in the locality or contained in the collective bargaining agreement of the predecessor contractor.

The act covers contracts entered into by federal agencies where the principal purpose of the contract is to furnish services to the United States through the use of "service employees."

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