52.222-31 Construction Wage Rate Requirements-Price Adjustment (Percentage Method)
Source: FAR 52.222-31 on acquisition.gov
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.
As prescribed in 22.407(f), insert the following clause:
Construction Wage Rate Requirements-Price Adjustment (Percentage Method) (Aug 2018)
(a) The wage determination issued under the Construction Wage Rate Requirements statute by the Administrator, Wage and Hour Division, U.S. Department of Labor, that is effective for an option to extend the term of the contract, will apply to that option period.
(b) The Contracting Officer will adjust the portion of the contract price or contract unit price(s) containing the labor costs subject to the Construction Wage Rate Requirements statute to provide for an increase in wages and fringe benefits at the exercise of each option to extend the term of the contract in accordance with the following procedures:
(1) The Contracting Officer has determined that the portion of the contract price or contract unit price(s) containing labor costs subject to the Construction Wage Rate Requirements statute is __________ [Contracting Officer insert percentage rate] percent.
(2) The Contracting Officer will increase the portion of the contract price or contract unit price(s) containing the labor costs subject to the Construction Wage Rate Requirements statute by the percentage rate published in _____________ [Contracting Officer insert publication].
(c) The Contracting Officer will make the price adjustment at the exercise of each option to extend the term of the contract. This adjustment is the only adjustment that the Contracting Officer will make to cover any increases in wages and benefits as a result of-
(1) Incorporation of the Department of Labor’s wage determination applicable at the exercise of the option to extend the term of the contract;
(2) Incorporation of a wage determination otherwise applied to the contract by operation of law; or
(3) An increase in wages and benefits resulting from any other requirement applicable to workers subject to the Construction Wage Rate Requirements statute.
(End of clause)