Is the Government responsible for the cost associated with a wage increase under FAR 52.222-41?
This response is based on the information you provided.
First, it is our opinion FAR 52.222-41(c)(3) requires the contractor (emphasis added) to make any adjustment to employee compensation to stay compliant and that it does not require the contracting officer to make an equitable adjustment. That’s because it is FAR 52.222-43(f) which requires that.
Additionally, even though your acquisition is for multiple years and has options, FAR 52.222-43 is an optional clause if you are under the SAT (and you state your are), see FAR 22.1006(c)(1). Because your acquisition is also commercial, suggest you see if your solicitation and/or resultant contract inadvertently checked 52.212-5(c)(3); which would have incorporated FAR 52.222-43. If not, then therefore, we agree with your position the contractor should have taken potential adjustments into consideration when deeloping their offer; They could have used various escalation methods such as indices to estimate option years on the contract.
Finally, it may be a good idea to contact your Agency’s Labor Advisor to DOL to see if they concur. Contact information can be found here: https://sam.gov/content/wage-determinations/resources/labor-advisors