AMS 3.6.2-30 Fair Labor Standards Act and Service Contract Labor Standards - Price Adjustment (Multiple Year and Option Contracts) (April 2025). If an offeror bids on a contract and before award there are changes to wage rates and conversion to collective bargaining agreements that took place. If this activity happened prior to award, shouldnt the contractor be entitled to the adjustments below as well as G&A and Fee? The contracting officer contends that adjustments are limited to the below clause and contends that is the case if the changes happen prior to award. This doesnt seem rational for wage changes happening prior to award and after the bid is submitted considering the contractor also is warranting they arent including in any allowance for increased costs

(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.

(e)  Any adjustment will be limited to increases or decreases in wages and fringe benefits as described in paragraph (d) of this clause, and the accompanying increases or decreases in social security and unemployment taxes and workers' compensation insurance, but must not otherwise include any amount for general and administrative costs, overhead, or profit.

Is there no rationale for adjusting upon award the significant impact wage changes to union could have on a multi-year contract?

16 hours ago, CFO said:

Is there no rationale for adjusting upon award the significant impact wage changes to union could have on a multi-year contract?

While I am not real familiar with FAA procurement policy I believe that the CO is off base.

First and foremost how can a contract clause apply if there is not award of a contract as you have stated "prior to award". By comparison and in the world of the Federal Acquisition Regulations the CO would be faced in such a situation with the option of delaying the award by amending the solicitation to revise the wage determination or cancelling all together and reissueing the solicitation with the new wage detemination.

Also the CO's position seems to be off base with the stated "Procurement Guidance" of the FAA which in my view should be the reference the CO should be using and not a contract clause for a contract yet to be awarded. The FAA Guidance can be found at the following 2 links which I encourage to read for yourself. The first is the link to the full guidance and the second is the link to that dealing with labor.

https://fast.faa.gov/PPG_Procurement_Guidance.cfm

https://fast.faa.gov/docs/procurementGuidance/guidanceT3.6.2.pdf

In the end I believe there should be more detailed conversation with the CO......good luck.

Another thought.

Both the Federal Acquisition Regulations and the FFA regulation and guidance are a spin off of the US Department of Labor Regulations regarding the Service Contract Act. In this regard I also encourage you to refer to and read the Code of Federal Regulations regarding the Act. I think you will find it supports the language in the FAA guidance, again supporting that the CO should not be referring to a contract clause for an action that is with regard to post award correction if in fact award has not occurred. I might add if award has occurred and the agency did not include the appropriate Agreement and/or determination then there is process in the regulation and FAA guidance as well.

https://www.ecfr.gov/current/title-29/subtitle-A/part-4

Assume the provision you mentioned was included in the solicitation, which the offeror was responding to. This provision clearly states that adjustments to G&A, overhead, or profit are not permitted, and this was known to the offerors. However, the provision does not seem to prevent an offeror from proposing the G&A, overhead, and profit they believe are necessary to cover their costs, especially in the case of a fixed-price contract. It's important to note that higher G&A, overhead, or profit do not qualify as contingencies under the SCA definition. A contingency would involve proposing wages and benefits that are not valid at the time of the proposal, based on possible future changes. Based on these considerations and the Service Contract Labor Standards (SCLS), it appears the contractor might be eligible for adjustments to wages, fringe benefits, and associated taxes as outlined in the provision. Also, refer to section 4(c) of the Service Contract Labor Standards for requirements related to successorship and timeliness. Specific conditions apply for these adjustments to be applicable. See https://www.ecfr.gov/current/title-29/subtitle-A/part-4

The offeror should bring the contracting officer the basis (agency guidance, contract clause, law or statute) to the offeror's entitlement to an adjustment to any expense. Basically what you are calling "rationale". Show it to them to make your case.

3 hours ago, Neurotic said:

Assume the provision you mentioned was included in the solicitation, which the offeror was responding to.

The original poster should not make this assumption but rather clarify with the CO. Further per this quote that the original poster provided -

23 hours ago, CFO said:

The Contractor warrants that the prices in this contract

I would suggest strongly that it is not wording that applies to the solicitation but to a contract.

On 5/28/2025 at 1:46 PM, CFO said:

AMS 3.6.2-30 Fair Labor Standards Act and Service Contract Labor Standards - Price Adjustment (Multiple Year and Option Contracts) (April 2025).

(To help a little further.....)

Is a clause and is found here - https://fast.faa.gov/contractclauses.cfm

Paragraph (a) of the clause states this - "(a)  This clause applies to both contracts subject to area prevailing wage determinations and contracts subject to collective bargaining agreements."