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Request for Equitable Adjustment under the Service Contract Act

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Has anyone ever had a case where the contractor has requested equitable adjustments citing the Service Contract Act. The contractor's REA states that the Government did not provide Department of Labor Wage rates at the begining of the contract performance or on an annual basis. Therefore the contractor did not pay his employees the prevailing wage rate. The contractor is seeking an adjustment over a five year period (2005 through 2009). The contract is complete.

Thanks

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Has anyone ever had a case where the contractor has requested equitable adjustments citing the Service Contract Act. The contractor's REA states that the Government did not provide Department of Labor Wage rates at the begining of the contract performance or on an annual basis. Therefore the contractor did not pay his employees the prevailing wage rate. The contractor is seeking an adjustment over a five year period (2005 through 2009). The contract is complete.

Thanks

Did the contract include the clauses at FAR 52.222-41 and 52.222-43? Has the contractor been forced by the Department of Labor to pay back wages to his employees?

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Did the contract include the clauses at FAR 52.222-41 and 52.222-43? Has the contractor been forced by the Department of Labor to pay back wages to his employees?

The contract does include FAR 52.222-41 and 52.222-43. The contractor was not forced to pay back wages, the contractor claims that this was noticed during and internal investigation and they made the decision to pay back wages.

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The contract does include FAR 52.222-41 and 52.222-43. The contractor was not forced to pay back wages, the contractor claims that this was noticed during and internal investigation and they made the decision to pay back wages.

If there were no wage determinations attached to the original contract, nor later incorporated into the contract, how did the contractor know how much to pay?

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If there were no wage determinations attached to the original contract, nor later incorporated into the contract, how did the contractor know how much to pay?

Good afternoon Navy Contracting 4,

The contractor's proposal was for a base plus two option periods (the proposal included escalation for the option periods). I've reserached archived DOL WD, and it looks like for the base period the Government did pay prevailing wages, but not for the option periods. The contract period of performance was from 10/1/06 - 9/30/09, the contractor filed a Request for Equitable Adjustment on 8/5/10. The questions that I have is there a time limit for filing a REA and is it the sole responsibility of the Government to provide the contractor with revised DOL WD. I've checked the FAR, GAO, DOL and 29 CFR 4.5. FAR 52.222.43 and 44 state that the contractor must submit an REA within 30 days of being notified by the Government regarding increase or decrease to wages, 29 CFR 4.5 states within 30 days of the DOL decision of wage violations. I would greatly appreciate any insight or help.

Thanks,

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The contractor's proposal was for a base plus two option periods (the proposal included escalation for the option periods).

Thanks,

If the contractor's proposal escalated SCA wages for the outyears in contravention of 52.222-43 - "(B) The Contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause" - I wouldn't think the contractor is entitled to equitable adjustment (the wage was adjusted through the escalation) - except to the extent that the delta between the precedent WD (assuming that is the wage that was actually paid) and the subsequent WD (same assumption) exceeds the escalation. No adjustment is available for voluntary wage payments exceeding the WD minimums. It's possible that the escalation exceeded the equitable adjustment entitlement and the contractor was overpaid.

If there is a remaining equitable adjustment entitlement, why wouldn't one construe the FARs and CFR literally? Since there was no Government notification regarding increase/decrease 30 days has not elapsed since notification and no time period has tolled. Similarly, no DOL decision of wage violation was issued - again 30 days has not elapsed since decision and no time period has tolled.

In my experience a revised WD and request for an REA proposal ordinarily arrive with a 52.217-9 "Notice of Intent". One occasionally sees a non-FAR provision governing notification re wage increase/decrease in Section H of the uniform contract format.

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If the contractor's proposal escalated SCA wages for the outyears in contravention of 52.222-43 - "(B) The Contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause" - I wouldn't think the contractor is entitled to equitable adjustment (the wage was adjusted through the escalation) - except to the extent that the delta between the precedent WD (assuming that is the wage that was actually paid) and the subsequent WD (same assumption) exceeds the escalation. No adjustment is available for voluntary wage payments exceeding the WD minimums. It's possible that the escalation exceeded the equitable adjustment entitlement and the contractor was overpaid.

If there is a remaining equitable adjustment entitlement, why wouldn't one construe the FARs and CFR literally? Since there was no Government notification regarding increase/decrease 30 days has not elapsed since notification and no time period has tolled. Similarly, no DOL decision of wage violation was issued - again 30 days has not elapsed since decision and no time period has tolled.

In my experience a revised WD and request for an REA proposal ordinarily arrive with a 52.217-9 "Notice of Intent". One occasionally sees a non-FAR provision governing notification re wage increase/decrease in Section H of the uniform contract format.

Thank you for your replay.

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The government exercised contract options without obtaining or providing the SCA WDs applicable to the option years The contractor performed, apparently without demanding new WDs, and paid its employees based on an outdated WD. Now, after the contract has expired, the contractor wants a price adjustment.

Milwcontractspecialist (What a moniker!) has asked the following questions:

1. Is there a time limit for requesting a price adjustment. The answer is that there is a six year deadline on claims from the date of accrual. See FAR 33.206.

2. Is it the sole responsibility of the Government to provide the contractor with revised DOL WD? The answer is yes. See FAR 22.1007. Should the contractor have asked for it? Yes, in its own interests, but that does not change the fact that it is the government's responsibility to provide it.

Is the contractor entitled to a price adjustment? I don't know. That would have to be researched. It appears that the contractor still has time to meet the claim deadline, since the first option year would have begun in October 2007, which is when the claim for that year probably accrued. If it were to submit a claim the CO would have to make a decision. I presume that he or she would seek legal advice. My guess is that the contractor would stand a reasonably good chance at recovery, depending on what it asks for and how it explains its entitlement. But that's just a guess.

I won't ask how this happened.

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The government exercised contract options without obtaining or providing the SCA WDs applicable to the option years The contractor performed, apparently without demanding new WDs, and paid its employees based on an outdated WD. Now, after the contract has expired, the contractor wants a price adjustment.

Milwcontractspecialist (What a moniker!) has asked the following questions:

1. Is there a time limit for requesting a price adjustment. The answer is that there is a six year deadline on claims from the date of accrual. See FAR 33.206.

2. Is it the sole responsibility of the Government to provide the contractor with revised DOL WD? The answer is yes. See FAR 22.1007. Should the contractor have asked for it? Yes, in its own interests, but that does not change the fact that it is the government's responsibility to provide it.

Is the contractor entitled to a price adjustment? I don't know. That would have to be researched. It appears that the contractor still has time to meet the claim deadline, since the first option year would have begun in October 2007, which is when the claim for that year probably accrued. If it were to submit a claim the CO would have to make a decision. I presume that he or she would seek legal advice. My guess is that the contractor would stand a reasonably good chance at recovery, depending on what it asks for and how it explains its entitlement. But that's just a guess.

I won't ask how this happened.

Adding to what Vern has said, remember, the SCA was passed to protect service employees. They are entitled to be paid at least the wages and fringe benefits set out in the applicable WD when they are performing on a service contract. The contracting officer is required to include the applicable WD in a contract and the contractor is to pay its covered employees in accordance with the WD included in the contract. When the government exercises an option, the contracting officer has to ensure that the proper WD is included in the contract for the option period. If the contractor must increase or decrease what it pays covered employees as a result of the new wage determination being added to the contract, the contract price is to be adjusted to reflect the difference in what the contractor had been paying its employees and what is required under the new WD. If the goverment does not include the proper WD with an option, the employees are still entitled to be paid the wages and fringe benefits called for by the proper WD. The contractor can request an adjustment to the contract to recover increased wages and fringe benefits it is required to pay its employees. However, this adjustment is for the benefit and protection of the employees, not the contractor.

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I should add that the contractor is not entitled to an "equitable adjustment," just a price adjustment. There is a difference.

Thanks Vern, this is a case where the service center procured services without including the contracting officer from the begining. Now that the contractor has requested an equitable adjustment, I'm trying to sort this mess out. Thanks for your reply I fear that we may have to pay the contractors request.

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Adding to what Vern has said, remember, the SCA was passed to protect service employees. They are entitled to be paid at least the wages and fringe benefits set out in the applicable WD when they are performing on a service contract. The contracting officer is required to include the applicable WD in a contract and the contractor is to pay its covered employees in accordance with the WD included in the contract. When the government exercises an option, the contracting officer has to ensure that the proper WD is included in the contract for the option period. If the contractor must increase or decrease what it pays covered employees as a result of the new wage determination being added to the contract, the contract price is to be adjusted to reflect the difference in what the contractor had been paying its employees and what is required under the new WD. If the goverment does not include the proper WD with an option, the employees are still entitled to be paid the wages and fringe benefits called for by the proper WD. The contractor can request an adjustment to the contract to recover increased wages and fringe benefits it is required to pay its employees. However, this adjustment is for the benefit and protection of the employees, not the contractor.

Thank You for all your help and for taking the time to provide a answer to my post.

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Is the contractor entitled to a price adjustment? I don't know. That would have to be researched... My guess is that the contractor would stand a reasonably good chance at recovery, depending on what it asks for and how it explains its entitlement. But that's just a guess.

I won't ask how this happened.

If the contractor escalated wages in the outyears in violation of its 52-222.43 warranty, I think it may be vulnerable to False Claims allegations, to the extent that the escalation exceeds any price adjustment (thank you, I didn't know there was a distinction) entitlement, and was invoiced. I think both premises may be true: that the contractor is entitled to price adjustment for the WD (& allowable related costs) differential, and the government is entitled to recovery of the escalation differential invoiced. Calculating the difference might be the most pragmatic way to settle things.

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Thank You for all your help and for taking the time to provide a answer to my post.

If your agency awarded an SCA covered contract with no wage determination (WD) attached, and exercised options for additional periods without obtaining and incorporating a new WD, it's apparent that there was a lack of knowledge, experience and expertise in SCA matters. Before taking any further action, I highly recommend you coordinate with your agency labor advisor. A list of Agency Labor Advisors is at: WDOL Listing of Agency Labor Advisors

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If your agency awarded an SCA covered contract with no wage determination (WD) attached, and exercised options for additional periods without obtaining and incorporating a new WD, it's apparent that there was a lack of knowledge, experience and expertise in SCA matters. Before taking any further action, I highly recommend you coordinate with your agency labor advisor. A list of Agency Labor Advisors is at: WDOL Listing of Agency Labor Advisors

Navy Contracting 4, thank you for the information. You are correct, the service division completed the acquisition without consultanting the contracting office. Now that contracting is involved I'm trying to clear it up.

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Navy Contracting 4, thank you for the information. You are correct, the service division completed the acquisition without consultanting the contracting office. Now that contracting is involved I'm trying to clear it up.

Wouldn't you know it the LA position for my agency is vacant.

Veterans Affairs (VA), Department of

The Agency Labor Advisor position for the Department of Verterans Affairs is currently vacant.

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Wouldn't you know it the LA position for my agency is vacant.

Veterans Affairs (VA), Department of

The Agency Labor Advisor position for the Department of Verterans Affairs is currently vacant.

I'm sorry to say the Navy position is likewise vacant at the moment, but when it was filled, I know that both the last two incumbents were happy to field inquiries from personnel in other agencies who lacked LAs. It might be worthwhile calling an LA from another agency.

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