52.222-31
Construction Wage Rate Requirements-Price Adjustment (Percentage Method)
This clause ensures construction contractors receive price adjustments for wage increases only at option exercise, using a predetermined percentage method tied to updated wage determinations.
Overview
- FAR 52.222-31 establishes the procedures for adjusting contract prices on construction contracts subject to the Construction Wage Rate Requirements (formerly Davis-Bacon Act) when an option to extend the contract is exercised. The adjustment is based on a percentage method, ensuring that increases in wages and fringe benefits mandated by updated Department of Labor wage determinations are reflected in the contract price.
Key Rules
- Application of Updated Wage Determinations
- The wage determination effective at the time of exercising an option to extend the contract applies to that option period.
- Price Adjustment Procedure
- The contracting officer identifies the percentage of the contract price attributable to labor costs subject to wage requirements and specifies the publication used for determining the adjustment rate.
- Timing and Exclusivity of Adjustments
- Price adjustments for wage and benefit increases are made only at the time of exercising each option, and no other adjustments for wage increases are permitted during the option period.
Responsibilities
- Contracting Officers: Must specify the labor cost percentage and the publication for adjustment rates, and apply the wage determination effective at each option exercise.
- Contractors: Must comply with the updated wage determinations and understand that price adjustments for labor costs will only occur at option exercise.
- Agencies: Ensure proper application and documentation of wage determinations and price adjustments.
Practical Implications
- This clause ensures contractors are compensated for mandatory wage increases during contract extensions, but only at specified times and by a set method. Contractors should track wage determination updates and understand that no additional adjustments for wage increases will be made outside the option exercise. Common pitfalls include misunderstanding the timing or method of adjustment, or failing to document the labor cost percentage accurately.