In a preceding case,8 the Court's decision held “that the benefits were due entirely to the Wage Determination applicable at the beginning of the renewal option period and were required to be paid in accordance with the Price Adjustment Clause.”
In both cases, the employer's costs of compliance changed. In the LSI case, “a Wage Determination required LSI to pay whatever was necessary for it to meet its obligations to its employees, in light of changes in the costs of providing them with an agreed upon level of health care benefit.”
The Court held that “the Price Adjustment Clause is triggered by changes in an employer's cost of compliance with the terms of a Wage Determination.” The Court further held that the fact “that there was no change in the level of benefit provided by the defined benefit plan is simply irrelevant.”
The moral of the story here is that, if you have a service contract with the Government you, as an employer, must pay your service employees the wages and fringe benefits mandated in the Wage Determinations. If your cost for compliance increases, then you are entitled to recover those costs from the Government. Do not be deterred if the Contracting Officer objects to paying the increased costs-you now have firm legal grounds from which to obtain those costs. Of course, you must also pass
along to the Government any cost decreases.
Tom Petruska, Owner
Contracts Unlimited, Incorporated
Do you need assistance with price adjustment or other contracting issues?
Footnotes:
1. 41 U.S.C. 351-358
2. FAR 52.22-41
3. FAR 52.22-43
4. id
5. 4 CFR 4.50; 48CFR52.22-43 (a)
6. FAR 52.222-43(d)
7. 29 CFR 4.177(a)(3)
8. United States vs. Service Ventures, Inc 899 F.2d1 (FED.CIR1990)
The foregoing is not legal advice nor is it a legal opinion. Please contact your attorney for legal advice.
