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  • Question

    Under the SCA, the contractor is entitled to an equitable adjustment for actual costs associated with increases to a specific wage determinations. Given that the CBA Wage Determination has not changed, is the contractor entitled to an equitable adjustment for CBA merit increases?


    Answer

    Thank you for your question. I am going to assume that we're dealing with a FP contract.

    If we're in a cost scenario, it's another matter altogether- somewhat simpler since 52.216-7 essentially

    renders most if not all compensation related costs allowable.

     

    FAR 22.1002-3, 22.1008-2 and 52.222-41(f) address section 4(c), as does 29

    CFR 4.1b. SCA extends down to all layers/levels of subcontractors. Anyhow,

    in this situation let's presume that the CBA is still in effect as a WD- and

    under FAR 22.1007, unless the contracting officer has changed WDs, it still

    would be. So any terms specifying an increase in pay or benefits would be

    effective and binding on the employer, and presumably are passed on to the

    prime. FAR 52.222-43 allows a contractor to seek equitable adjustment

    if/when those costs increase as a result of being featured in a wage

    determination. Based on the above, I would say that yes, these

    increases are allowable under 52.222-43 provided that my assumptions are

    correct.

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