22.1904
Annual Executive Order Minimum Wage Rate
FAR 22.1904 requires annual publication of the E.O. minimum wage and allows contractors to request price adjustments only for specific increased labor costs resulting from these changes, with strict calculation and documentation requirements.
Overview
FAR 22.1904 establishes the procedures for the annual adjustment and publication of the Executive Order (E.O.) minimum wage rate for federal contractors, as well as the process for contractors to request price adjustments due to changes in the minimum wage. The section details how the new wage rate is announced, where it is published, and how contractors may seek price adjustments for increased labor costs resulting from the updated wage. It also clarifies what costs are eligible for adjustment and provides calculation examples.
Key Rules
- Annual Publication of E.O. Minimum Wage
- The Administrator must notify the public of the new E.O. minimum wage rate at least 90 days before it becomes effective, publish it on SAM.gov, and include a general notice on relevant wage determinations.
- Contractor Price Adjustment Requests
- Contractors may request price adjustments only after the new wage rate becomes effective, and only for increased labor costs (including certain associated costs) directly resulting from the wage increase.
- Calculation of Price Adjustments
- The adjustment is the lowest amount calculated by subtracting the current wage (E.O., service/construction wage determination, or actual wage paid) from the new E.O. wage rate; if the result is zero or negative, no adjustment is made.
- Limitations on Adjustments
- Only specific labor-related costs are eligible for adjustment; no duplicate adjustments are allowed with other wage-related clauses.
Responsibilities
- Contracting Officers: Ensure proper notification, publication, and application of wage adjustments; avoid duplicate adjustments.
- Contractors: Monitor wage updates, request adjustments only for eligible costs, and provide accurate calculations and documentation.
- Agencies: Oversee compliance with publication and adjustment procedures.
Practical Implications
- This section ensures transparency and fairness in wage adjustments for federal contracts, helping contractors manage labor costs when the E.O. minimum wage changes. Contractors must carefully calculate and document eligible adjustments and be aware of the limitations to avoid compliance issues or denied requests.