52.222-32
Construction Wage Rate Requirements-Price Adjustment (Actual Method)
FAR 52.222-32 requires contractors to request price adjustments based only on actual wage and benefit changes due to new wage determinations, with strict documentation and notification requirements.
Overview
FAR 52.222-32 establishes the procedures for adjusting contract prices on construction contracts when wage determinations under the Construction Wage Rate Requirements (formerly Davis-Bacon Act) change, specifically using the "actual method." This clause applies when an option to extend the contract is exercised and a new wage determination is issued. It details how contractors and contracting officers must handle wage and fringe benefit increases or decreases, ensuring that only actual changes in labor costs (and related taxes/insurance) are considered for price adjustments, not overhead or profit.
Key Rules
- Applicability of Wage Determinations
- The wage determination effective at the time of exercising an option applies to that option period.
- Exclusion of Allowances
- Contractors must not include any pre-allowed wage or benefit increases in their price adjustment requests.
- Documentation Requirement
- Contractors must certify that their price adjustment requests do not include previously allowed increases and provide supporting data.
- Scope of Adjustments
- Adjustments are limited to actual changes in wages, fringe benefits, and associated taxes/insurance, excluding overhead and profit.
- Notification and Timeliness
- Contractors must notify the Contracting Officer of increases within 30 days of receiving a revised wage determination and promptly for decreases.
- Computation Method
- The clause provides detailed formulas for calculating adjustments for both single and multiple craft hour unit prices, including an example.
Responsibilities
- Contracting Officers: Must verify documentation, compute adjustments per the clause, and modify contract prices accordingly.
- Contractors: Must submit timely, accurate requests with required certifications and supporting payroll data, and continue performance during adjustment negotiations.
- Agencies: Oversee compliance and ensure proper application of wage determinations and price adjustments.
Practical Implications
- This clause ensures fair compensation for labor cost changes due to updated wage determinations, protecting both contractors and the government from unanticipated wage fluctuations. Failure to follow notification or documentation requirements can delay or invalidate price adjustments. Contractors must maintain accurate payroll records and understand the computation methods to avoid disputes.