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  • Question

    Are wage adjustments (increase or decrease) required if a collective bargaining agreement (CBA) becomes effective for Exempt employees after contract award?


    Answer

    First the disclaimer. This is not a legal opinion and is not binding, nor to be construed or in any way a substitute for legal counsel. Urge you to reach out to the PCO as it remains their decision, and if you disagree, obviously there is the disputes process.  Because this is a unique and uncommon situation, the PCO should be encouraged to involve the Department of Labor.  The contract you signed was for labor. In accordance with FAR Part 22, it included service contract act clauses.  At FAR 22.102-2 Administration, the DOL is responsible for the administration and enforcement of numerous wage and hour statutes. As a practical matter, the PCO and or the Department of Labor did and will  protect some, or all of the workers with the clauses. As an aside the wage increase only impacts what the employee is earning, only wages and fringe.  The portion of the fully loaded negotiated bill rate associated with company overhead, and G&A, and Profit is not impacted or increased.   The labor rate increase is a pass thru to the employee.  Not sure I follow the arguement, that on one hand the employees were and are professional/exempt, and on the other hand in opposition that the SCA is applicable and the remedy entitles you to re-negotiate the billing rates.. Nevertheless, for the applicability of 41 U.S.C. 6707(c) and successorship with incumbent contractor Collective Bargaining Agreement, see  FAR 22.1008-2 (c)(2) regarding new CBA during period of incumbent performance. Finally, See FAR 22.1012-2 – Wage Determinations Based on Collective Bargaining Agreements...(b) For contractual actions other than sealed bidding, a new or changed collective bargaining agreement shall not be effective under 41 U.S.C. 6707(c) if notice of the terms of the new or changed collective bargaining agreement is received by the contracting agency after award of a successor contract or a modification as specified in 22.1007(b), provided that the contract start of performance is within 30 days of the award of the contract or of the specified modification. 

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