EP 1180-1-1
1 Aug 01
for wage increases.
9-11. Equivalent Fringe Benefits. As previously stated, adjustments are limited to the difference between
the new benefits required on the WD or CBA, and the actual benefits provided by the contractor in the
prior contract period. A contractor may furnish any combination of bona fide fringe benefits to their
employees to meet the requirement of the WD.
Example: The WD requires H&W benefits of
||content||
.39 per hour and $.50 per hour in
pension benefits. The contractor provided a health plan costing
||content||
.99 per hour and
met the requirements for both benefits. If either benefit increases, the contractor may
claim an adjustment for that amount. However, if the contractor had paid .13 per
hour for a plan providing similar benefits, any price adjustment claim for an increase in
either benefit would be offset by the payment made in excess of the former minimum
benefits.
A review of price adjustment claims for increased benefits under SCA should include an inquiry on
equivalent benefits provided by the contractor. Note that any payments by a contractor for benefit plans,
in excess of those benefits required by the WD, do not offset wage requirements under SCA.
However, payment of additional wages may be used to offset required fringe benefits, provided they are
clearly identified as such on payroll records and communicated as fringe benefit `cash equivalents' to the
affected employees. All such payments need to be considered when evaluating SCA price adjustment
claims.
Example: The contractor's minimum pay rate under the WD is .00 per hour and the
minimum H&W fringe benefit level is $.90 per hour. The contractor was paying employees
.10 per hour plus a health insurance plan payment that costs
||content||
.00 per hour. The new
WD leaves the wage rate at .00 per hour, but increases the H&W fringe benefit minimum
to
||content||
.15. The employer decides to maintain his health insurance plan payments of
||content||
.00
per hour, but begins paying employees $.25 per hour in additional wages separately
identified as a cash equivalent fringe benefit payment. The contractor would be entitled to
only $.05 per man hour price adjustment under these circumstances. The minimum required
under the WD is .15 (.00 hourly rate +
||content||
.15 H&W). The rate actually paid prior to
the WD change was .10 (.10 hourly rate +
||content||
.00 health insurance). The cost increase
that will actually be incurred by the contractor and caused by the WD change is $.05
9-13
Previous Page
