EP 1180-1-1
1 Aug 01
CHAPTER 9. SERVICE CONTRACT ACT PRICE ADJUSTMENTS
9-1. General. The DOL periodically revises their SCA WDs to reflect current prevailing wage and
benefit rates for the various localities. As provided by the DOL's regulations (29 CFR 4.4), the CO
incorporates annual WD revisions into the contract when options are exercised, annual appropriations
(new fiscal year funds) are added, or when the scope of the work is significantly modified, provided the
WD revisions are received timely in accordance with FAR 22.1012. For multi-year contracts without
annual appropriations or options, revised WDs are incorporated biennially.
9-2. Requests for Price Adjustments. In response to revised WDs having been incorporated into the
contract and increases in the Fair Labor Standards Act minimum wage rate, the contractor may request a
price adjustment. The revised WD must be officially incorporated into the contract before an adjustment
claim can be processed. SCA and FLSA contract price adjustments apply to labor categories, listed on
the contract's WD, which perform the work of the contract. The CO must assess the allowability and
accuracy of the request and make the appropriate contract price adjustment. These adjustments are
addressed in FAR 52.222-43, Fair Labor Standards Act and Service Contract Act - Price Adjustment
(Multiple Year and Option Contracts), and FAR 52.222-44, Fair Labor Standards Act and Service
Contract Act - Price Adjustment (Fixed Price, Not Multiple Year or Option Contracts).
9-3. Price Adjustment Methods.
a. Generally, a contractor's claim is based upon the projected impact of new or revised contract
labor standards. The projection uses the service employee hours worked in the prior contract period,
factoring in any expected changes to contract scope or workforce. This method is known as the
Forward Pricing Adjustment Method (FPAM). If the price adjustment request has been delayed by
either an approved extension to the usual 30-day requirement for filing (see FAR 52.222-43(f) or
52.222-44(e)), or by a delay in contract modification, the contractor should use actual employee hours
worked and pay/benefit records for the basis of the claim. This method is known as the Actual Cost
Adjustment Method (ACAM). Regardless of method used, there are four types of documentation needed
from the contractor to process an adjustment claim: (1) Actual or projected contract work hours; (2)
Actual or projected pay (wage) records; (3) Documents supporting impact on fringe benefit costs; and
(4) Documents supporting accompanying payroll tax increases.
b. An adjustment must never exceed the differential in wages, fringe benefits and additional taxes
between the `old' WD and the `new' WD, nor should the `old' minimum wage exceed the `new'
9-1
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