Timing of Wage Determinations and Price Adjustments

Contractors are required to comply with the Service Contract Act of 1965 to avoid the likelihood of being subject to the Department of Labor Investigations resulting from employee complaints. Although not all investigations are initiated for that reason, operating in compliance reduces investigation times and potential findings, should an investigator show up at your doorstep.

The main document that dictates contractor obligations with regards to compensation and benefits is the Wage Determination (The “WD”). The WD lists the Prevailing Wage (i.e., hourly rate), the #Health and Welfare rate and the Holiday, Vacation and Paid Sick Leave requirements that contractors must provide all service employees performing work on the contract.

For a WD to be effective (and a contractor be obligated to abide by its terms), it must be incorporated by the Contracting Officer, thereby becoming part of the contract

The SCA (Service Contract Act) requires Contracting Agencies to incorporate a Wage Determination at specific times during the life of the contract: Prior to the issuance of a Solicitation, Prior to Award (if the WD is modified prior to the contract being Awarded*), and in most instances when an option is exercised on the contract anniversary date.

But a Contractor is not in business to comply with the law, they are in it to meet their financial goals and their stakeholder’s expectations. Therefore, the name of the game is “smart compliance”.

You are probably aware of this, but if you are not, you are about to be pleasantly surprised. Although required to comply with every Wage Determination that has been incorporated by contracting, the contractor is entitled to a “Price Adjustment” to recoup any costs associated with any increases in wages or benefits caused by the incorporation of a new Wage Determination.

The only caveat is: Any Price Adjustment request must meet specific timelines to be accepted by the Contracting Agency. FAR 52.222-43 and FAR 52.222-44 require “claims to be submitted within 30 days after the effective date of any unilateral modification incorporating a new Wage Determination, unless the Contracting Officer extends the notification period in writing”

This means that as soon as a Contract Option is exercised, contractors must begin working on their price adjustment claim (or extension request) so they can meet the deadlines established by the FAR.

Not sure how to calculate your price adjustment request? What method to use? Forward Pricing? Actual Cost?

Luckily, Onsi is here to help. Our specialized evaluation and analysis of prevailing wage and bona fide fringe benefit plans will enable you to offer compensation plans that meet your business needs and comply with applicable labor laws. We understand how important it is for your business to be compliant with the latest government regulations and we’re here to help you. To learn more, visit our website today or email trust@onsigroup.com