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  • Question

    Should the Government issue an REA for the difference between original RFP and the updated WD that should have been placed on contract with each order, or the WD that went on contract and the updated WD that should have been placed on contract with each order? Was the Government legally culpable for not specifically asking the contractors to update their proposals to the new WD?


    Answer

    The Service Contract Act requires contractors and subcontractors to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement. The Department of Labor issues wage determinations(WDs) on a contract-by-contract basis in response to specific requests from contracting agencies. The contracting officer ensures that these WDs are incorporated into the contract on the anniversary of the IDIQ.

    Per clause 52.222-43 “(d) The contract price, contract unit price labor rates, or fixed hourly labor rates will be adjusted to reflect the Contractor’s actual increase or decrease in applicable wages and fringe benefits to the extent that the increase is made to comply with or the decrease is voluntarily made by the Contractor as a result of:

          (e) Any adjustment will be limited to increases or decreases in wages and fringe benefits as described in paragraph (d) of this clause, and the accompanying increases or decreases in social security and unemployment taxes and workers’ compensation insurance, but shall not otherwise include any amount for general and administrative costs, overhead, or profit.”

    Based on the above and assuming the request is valid, the Government would not issue an equitable adjustment based on the difference between the WD attached to the original RFP and the updated WDs.    The price would be adjusted based on the difference between the applicable WD and what the contractor actually paid.

    The contractor must provide proof to support any adjustment.  Documentation such as actual pay(wage) records for the prior periods of performance, actual contract work hours, documents supporting accompanying costs (payroll taxes and workers compensation insurance costs) and documents supporting impact on fringe benefit costs, should be included in the request.  If the contracting officer receives adequate documentation to support a price adjustment, they could adjust accordingly.

    Regarding legal culpability, I recommend you consult your legal counsel and or the applicable labor advisor.  You can find your labor advisor on the beta.sam.gov site at https://beta.sam.gov/help/wage-determinations.  Just click on the Labor Advisors tab. 

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