The Service Contract Act (SCA) requires contractors on covered service contracts to pay prevailing wages and fringe benefits, and the health and welfare (H&W) fringe benefit listed on the wage determination is a minimum amount that must be provided, either as a cash payment or as bona fide fringe benefits. The SCA applies to service contracts over $2,500 and requires the inclusion of the clause at FAR 52.222-41. The wage determination will list the H&W fringe benefit as a flat hourly rate, or sometimes as a different rate for different employee categories, as you observed. You must pay at least this amount for each hour worked or paid, including paid time off. If your current benefits package does not meet the H&W amount, you must make up the difference with additional cash wages or by providing additional benefits. The union agreement of the incumbent contractor does not directly affect your pricing, but the wage determination may incorporate terms from a collective bargaining agreement if it was applicable to the predecessor contract. Vacation and holiday pay are part of the fringe benefit requirements under the SCA and are typically outlined in the wage determination itself, specifying accrual rates and holiday observances. You must account for these by either providing the paid time off or making an equivalent cash payment.