EP 1180-1-1
1 Aug 01
a. Exempt employees. No adjustment in contract price is permitted for employees who are exempt
from the SCA and FLSA. The contractor must exclude exempt employees from the payroll
documentation before calculating adjustments. Typical exempt classifications are degreed engineers,
doctors, project managers, directors, contract management officials. Any questions concerning the
allowability of a particular classification should be directed to the CIR Specialist.
b. Adjustments for changed work conditions. The historical payroll data must be adjusted for any
peculiarities that would not apply in the future or would otherwise impact future workload. Examples
include changes in contract scope, equipment changes which may impact labor requirements, and
scheduled reductions or increases in the services provided. If unusual events occurred in the payroll
period as the basis for the computation, the impact of such events would have to be factored out of the
adjustment computation for the following period.
c. Prorated periods. When using FPAM, the contractor may have less than 12 months of historical
payroll data to use as a basis for projecting the next fiscal year's hours. The historical data may be
prorated to apply an adjustment claim across the 12 months of the next period, provided the work is not
subject to seasonal or other significant fluctuations. If the work is subject to fluctuation, contact the CIR
Specialist for guidance before proceeding. To prorate the available data for the next fiscal year, calculate
the average monthly hours worked for each labor category and multiply by 12.
Example: The contractor provided four months of payroll data for employees in
several labor categories. After eliminating exempt employees, the records indicate
one category of employees worked a total of 12,000 hours, and the other category
of employees worked a total of 16,440 hours. The prorated hours are calculated
by dividing the hours worked (12,000 and 16,440) by 4 (the number of months of
data) to establish the monthly average by labor category (3,000 and 4,110 respectively),
and then multiplying by 12. The applicable hours for the next fiscal year would be
36,000 for the first classification and 49,320 for the other labor classification.
d. Non-work hours. Production as well as non-production hours are adjusted for SCA wage
increases (and decreases). Paid non-work hours, such as SCA-required vacation, sick leave, holidays,
and other specified leave benefits are included in the applicable hours. Reference the sections on
adjustments for fringe benefits concerning increases in the number of holidays or vacation days specified
by the WD.
9-3
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