EP 1180-1-1
1 Aug 01
minimum wage for an FLSA adjustment. A greater adjustment would indicate that the contractor was
previously paying less than the minimum wage rates required under the SCA or FLSA and, therefore, that
difference would strictly be the liability of the contractor.
9-4. Required Documentation for SCA Price Adjustments.
a. Documentation period. Using the FPAM, the contractor must provide wage and fringe benefit
data from the previous contract period with their claim for adjustment. The data will normally cover a 12-
month period, but may be for a shorter period if less than 12 months have elapsed on the contract. A
shorter time period may not produce an accurate forecast, particularly if the workload fluctuates by month
or season. Projected adjustments for an extension period (generally three months or less) should utilize
only the corresponding months from the prior contract year if the workload is subject to fluctuations.
b. Content. The contractor is obligated to provide sufficient documentation, in the opinion of the
CO, to substantiate the claim. The supporting payroll documentation must list the hourly wage rate
actually paid each employee in the prior contract period. In addition to hourly wage rates, documentation
concerning any additional payments made to the employees, such as performance-based merit bonuses or
commissions should be provided. These payments must be considered in determining the total actual
wages paid to the employees. They are frequently overlooked by contractors, and the CO should
specifically ask the contractor whether any such compensation payments were provided. Stock
dividends received by employee-stockholders, and other payments that represent a return on the owner's
investment in the business, are not considered when calculating the wage rate. If a Health and Welfare
(H&W) rates adjustment is claimed, the CO may require data supporting the actual premiums paid by the
contractor, or the contractor's actual costs for equivalent benefits provided.
c. Contract Price Adjustment Computation Format. In addition to supporting documentation, COs
are encouraged to use a standard format for consistency in evaluating and computing contractor price
adjustment claims.
9-5 Applicable Contract Work Hours. The applicable hours subject to adjustment under these clauses
are projected from the historical payroll data after adjustments are made for the following: (1) exempt
employees; (2) changed work conditions or contract requirements; (3) prorated contract periods; and (4)
employees not performing the services under the contract. These adjustments are set forth below.
9-2
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