Here are the two laws governing these contracted employees
Service Contract Act http://www.dol.gov/compliance/laws/comp-sca.htm These employees perform services such as Food Service, Custodial, Security and Admin Support on military bases or federal buildings. The hourly fringe rate for Health and Welfare is currently $3.59 an hour. There are thousands of uninsured employees under these contracts receiving an extra $7,000 a year meant for health coverage, approximately half of contractors do not mandate or provide coverage.
Davis Bacon Act http://www.dol.gov/compliance/laws/comp-dbra.htm These employees perform work on federal construction projects. Health and Welfare Fringe rates can range from $4.00 to $25.00 an hour. There are thousands of employees under these contracts and most employers pay the fringe in wage.
While congress is trying to figure out how to save tax payer money, someone with some clout needs to push to close the cash option loop hole on these laws, and save billions of dollars from being wasted. This money should be used only to purchase group health coverage as intended, or go toward the Employee's retirement if they have a non government provided group health plan already in place from another employer or Spouse's employer. This money should also not be allowed to be administered by Union plans which is often the case with SCA employees,