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During a recent self-inspection audit I was written up because we exercised an option unilaterally, included the new wage determination, and 'only' used the authority of 52.217-9. Her opinion was that the option clause only authorized exercising the option, it does not also include updating a wage determination and in order to add it/replace the old one, you'd need to have another authority. I have NEVER seen a unilateral option mod that incorporates a revised WD cite any other authority than 52.217-9, so I don't agree with her. However, I can't find the right verbiage in the FAR. Curious if someone with more time under his/her belt can give me a better explanation of why 52.217-9 is sufficient (or why she's right). Thanks!

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See FAR Clause 52.222-43, Fair Labor Standards Act and Service Contract Act—Price Adjustment (Multiple Year and Option Contracts). Read © of that clause.

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I told her that the clause above was in the contract, marked on 52.212-5...made no difference. She still says I have to put another authority on the face of the mod.

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I told her that the clause above was in the contract, marked on 52.212-5...made no difference. She still says I have to put another authority on the face of the mod.

Are you saying that you have a contract for commercial services with an option period?

Are you saying that 52.222-43, Fair Labor Standards Act and Service Contract Act—Price Adjustment (Multiple Year and Option Contracts) is referenced in Clause 52.212-5?

Why do you think that 52.217-9 provides the authority to issue a revised wage decision? Where is that mentioned in the clause?

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Well, I'm interesting in knowing what authority is in the contract at hand to modify the wage decision. It doesnt appear to be in 52.217-9. Does jjpaci know?

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Same old tired argument about reciting authority in the mod. Either you have the authority or you don't. Whether or not the modification recites it is of no consequence whatsoever.

Cardinal, do you know where the contract provides the authority to issue a new wage decision? Do you think that perhaps the contractor might be interested in knowing where the authority is after receiving a unilateral mod incorporating a new wage decision? How about a third party reviewing the contract or the mod? How about someone having to do a forensic analysis of a contract for some reason?

I was taught years ago (before FAR) not to write a mod without being able to cite the applicable authorities for issuing it; not to write a letter to the Contractor without citing the applicable contract terms and conditions. Like I mentioned in another, recent thread - it isn't rocket science.

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I'm not sure that there is a FAR clause that expressly authorizes the CO to unilaterally change the wage determination that is attached to the contract. I don't think the SCA clause, FAR 52.222-41 provides any such express authority, but I might have missed it. The price adjustment clause, FAR 52.222-43, says only that the WD issued by the Dept. of Labor that is current on the beginning of an option renewal period shall apply to that period, but describes no procedure for attaching it to the contract. In light of the language of the price adjustment clause, I doubt that the propriety of the procedure used to attach the applicable WD affects its enforceability. This is probably more a matter of form than of substance.

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Vern, our service and construction contracts are supposed to contain wage decisions applicable as of award. If clause 52.222-43 states that the SCA wage decision that is current at "the beginning of each renewal option period, shall apply to this contract" and provides for a price adjustment, if necessary, then I would think that the contract should be modified to reflect the correct wage decision for contract administration purposes, if nothing else. This assumes that -43 is in the contract or should be in the contract.

The clauses have been developed to implement various "operation(s) by law" of various Labor laws, I assume.

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I understand all of that. I thought that the question is what gives the CO the authority to add the new WD by unilateral mod, as opposed to bilateral mod. I don't doubt that the applicable WD will apply no matter how it's added. We're just dealing with the old SF 30 block 13 issue.

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I understand all of that. I thought that the question is what gives the CO the authority to add the new WD by unilateral mod, as opposed to bilateral mod. I don't doubt that the applicable WD will apply no matter how it's added. We're just dealing with the old SF 30 block 13 issue.

Vern, I think that the wording of the -43 clause would provide the authorization. For example, "...(f) The Contractor shall notify the Contracting Officer of any increase claimed under this clause within 30 days after receiving a new wage determination unless this notification period is extended in writing by the Contracting Officer." This would imply to me that the KO issues the new WD to replace the earlier one for the applicable period. The Contractor complies and requests a price adjustment, if applicable.

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To me, this -43 clause administratively implements portions of the labor laws. OK, so I would cite this clause, unless there is something more direct to the point. The Changes clause isnt specifically applicable because it provides for an equitable adjustment for certain "changes within the scope of the contract". This clause doesn't authorize an equitable adjustment, only a price adjustment - but not including overhead, G&A, etc.

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The Changes clause isn't applicable, specifically or generally, because it doesn't say that a CO can change WDs, not because it calls for an equitable adjustment.

I don't see any language in the clause that says that the CO may attach a new WD by unilateral mod, or even that the CO may attach a new WD. It just says that a new WD shall be "applicable".

You are inferring such authority, but I don't think that the inference is valid based on the plain language of the clause. I'm a plain language guy.

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I know that the OP was talking about a commercial item services contract, but I did want to mention that for construction, FAR 22.404-2(a) states:

"When exercising an option to extend the term of a contract, the contracting officer must select the most current wage determination(s) from the same schedule(s) as the wage determination(s) incorporated into the contract."

Emphasis added on must, showing an imperative requirement. If the CO were to incorporate the WD as a bilateral modification, thereby potentially allowing the Contractor not to agree with it, you would compel the CO to violate law. Therefore, a WD must be a unilateral modification.

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As a followup to my last post, as a CAB oversight puke, as a contract administrator and in my claims resolution role, I learned that it is important for everyone to know exactly what terms of the contract are involved or being invoked to modify or enforce a contract. I see time and time again where one or both parties have little clue as to what or why there are or are not grounds for price or time adjustments. Its good contract administration and reflects an understanding of the contract requirements. One shouldn't have to comb through an entire contract to understand the basis of a modifuication, order, directive, letter, etc.

I have seen KO's and ACO's pay for things that are the Contractor's responsibility and I've seen where they failed to properly take a contractor's rights into consideration because they don't know the contract. I've seen the wrong clauses used as the basis for an adjustment, profit incorrectly allowed , not allowed, etc. I've also seen many, many incompetent COR's who don't have a clue as to anything other than certain technical requirements in a contract but have been assigned to administer the entire contract.

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The Changes clause isn't applicable, specifically or generally, because it doesn't say that a CO can change WDs, not because it calls for an equitable adjustment.

I don't see any language in the clause that says that the CO may attach a new WD by unilateral mod, or even that the CO may attach a new WD. It just says that a new WD shall be "applicable".

You are inferring such authority, but I don't think that the inference is valid based on the plain language of the clause. I'm a plain language guy.

So, are you saying that the KO or ACO simply mails or hands the Contractor the new applicable WD? Since the contract contains a prior WD, then I believe it must be modified to reflect the current WD and what it is applicable to. Unless the SCA procedures are totally different than DBA procedures for developing wage determinations, it isnt the Contractor's responsibility to develop the WD, it is the Government's.

I don't think that a separate, bilateral mod is necessary or advisable to implement the wage determination applicable to the option being awarded, then wait for a claim or request for price adjustment. It makes sense to me to incorporate the WD in the mod incorporating the option and cite the clause that applies once the WD is provided.

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I know this is a little technical, but...

The SCA clause, 52.222-41( c)(1), says that the WD that the contractor must pay "as specified in any wage determination attached to this contract." So let's pretend for the moment that words mean something and that the oft-cited "plain language" rule applies. (The Davis-Bacon Act clause also says "attached")

If words mean something, then when exercising an option, the parties should (1) delete the old SCA WD and (2) attach the new one, or retain the old WD for historical purposes. How to add the new WD: by unilateral mod or by bilateral mod? No express language in the SCA clause or in the price adjustment clause says that the CO may do it unilaterally. Thus, if words mean something, the parties must do it bilaterally. It's clear that the new WD would apply by operation of law even it it weren't attached, and doing it bilaterally would mean more work, so COs do it unilaterally. But does the fact that the new WD would apply anyway by operation of law justify COs in doing so? That's the philosophical question of the moment.

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Vern, under that premise, where does it say that you need to include the WD by a modification at all? Once DOL provides a new WD, it has the force and effect of law, and would apply to your contract by operation of law (however, FAR 22.1012-1© does include exceptions).

In that case, would not the modification be pursuant to FAR 43.103(d )(1), as an administrative action? FAR 43.101 defines an administrative action as a "unilateral contract change that does not change the substantive rights of the parties." Incorporating the WD is just informing the Contractor that a new law is in effect. FAR Clause 52.222-41 already compels the Contractor to adhere to the WD, so the modification replacing the WD would not change the rights of the parties. The WD affects the substantive rights of the parties, but the modification does not.

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Again, the SCA clause says that the contractor must pay as specified in the attached wage determination. So I think a WD must be attached to the contract. As for adding a new WD by administrative change, I don't know if that would be acceptable to reviewers, but it is a reasonable question. It is clear to me that the WD would apply by operation of law even if it were not attached to the contract, but attaching it to the contract puts the parties on notice and reduces the chances for misunderstanding. Moreover, it is consistent with the SCA clause. A reviewer would probably say that an admin change as defined in FAR 43.101 would not be appropriate, because the WD affects the substantive rights of the parties.

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The discussion in this thread has raised my curiosity about several things in regard to SCA compliance and the FAR clauses. If a revised WD is in effect on the date an option is exercised on a contract that properly includes 52.222-41 and -43, but the contracting officer does not include the revised WD in the mod exercising the option, would the contractor have an obligation to search WDOL to determine if a revised WD has been issued that covers workers employed on the contract? If the contractor has such an obligation, it would seem the contractor would also have an obligation to pay the revised wages and fringe benefits to its covered employees. If it did, would the contractor be entitled to a price adjustment based upon the increased wages and fringe benefits in the revised WD although the contracting officer has not incorporated the revised WD into the contract?

As a practical matter, in this situation, I would expect the contractor to ask the contracting officer if there is a revised WD when the option is exercised. If the contracting officer says no, should the contractor search WDOL anyway?

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1. I don't know if the contractor is obligated to search WDOL, but I think it would be foolish not to, given that DOL will hold it responsible for paying the wages and fringe benefits regardless of whether the CO added the new WD to the contract or even told the contractor about it.

2. I believe that the contractor would be obligated to pay the new wages and fringes.

3. I believe that if there is a new WD, and if the criteria for a price adjustment are met, then the contractor will be entitled to an adjustment even though the CO had failed to incorporate them.

4, If the contractor asks and the CO says no, the contractor should search WDOL anyway. A contractor should never rely on a COs statement of the facts or interpretation of a rule. It should always independently verify.

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Regarding Retreadfed's third question, FAR Clause 52.222-43(f) states:

“The Contractor shall notify the Contracting Officer of any increase claimed under this clause within 30 days after receiving a new wage determination unless this notification period is extended in writing by the Contracting Officer.”

The word “receives” begs the question “from whom?” Does “receiving a new wage determination” mean when the CO incorporated the WD into the contract or when DOL publically issues the WD? I am not sure when that 30-day timer would begin. I would think that the standard would be the same as with any law. Since DOL publically publishes the WD, the Contractor knew, or should have known, about the revised rates, and had a duty to timely notify the CO to seek an equitable adjustment 30-days after DOL published the WD.

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The answers to some of your questions may be found by reading 29 CFR PART 4—LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS. The KO must incorporate the WD into the contract, including the options that extend the contract.

§ 4.55 Issuance and revision of wage determinations.

(a) Determinations will be reviewed periodically and where prevailing wage rates or fringe benefits have changed, such changes will be reflected in revised determinations. For example, in a locality where it is determined that the wage rate which prevails for a particular class of service employees is the rate specified in a collective bargaining agreement(s) applicable in that locality, and such agreement(s) specifies increases in such rates to be effective on specific dates, the determinations would be revised to reflect such changes as they become effective. Revised determinations shall be applicable to contracts in accordance with the provisions of § 4.5(a) of subpart A."

( bee) (darned modicoms) "Determinations issued by the Wage and Hour Division with respect to particular contracts are required to be incorporated in the invitations for bids or requests for proposals or quotations issued by the contracting agencies, and are to be incorporated in the contract specifications in accordance with § 4.5 of subpart A. In this manner, prospective contractors and subcontractors are advised of the minimum monetary wages and fringe benefits required under the most recently applicable determination to be paid the service employees who perform the contract work."

I also noted that the KO is specifically required to incorporate Davis Bacon wage determinations into contract modifications for options extending construction contracts and, of course, for task orders on ID/IQ construction contracts. I didn't check the 29 CFR but FAR 22.404-6 (d ) (2) requires the KO to modify the contract to incorporate the WD. Then FAR 22.404-12 – Labor Standards for Contracts Containing Construction Requirements and Option Provisions That Extend the Term of the Contract requires this to be done at the time the mod to exercise the option is issued. So, there is specific authority to issue these unilaterally with the exercise of the option for construction contracts. This makes sense because there is usually no way to know the exact cost effect of the new decision at that point.

So the SCA regulations in 29 CFR and th FAR appear to be less specific than those for the DBA in FAR. However, if the DOL learns that the contracting agency failed to incorporate or mistakenly thought that the SCA wage determination didnt apply, 29 CFR 4.5 (c ) directs the agency to "include in the contract the stipulations contained in § 4.6 and any applicable wage determination issued by the Administrator or his authorized representative through the exercise of any and all authority that may be needed (including, where necessary, its authority to negotiate or amend, its authority to pay any necessary additional costs, and its authority under any contract provision authorizing changes, cancellation, and termination)." I think that includes unilateral mods.

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