ASBCA decision granting the agency summary judgment on a wage adjustment claim is affirmed. The contractor claimed it was entitled to an adjustment of contract price to reflect new Department of Labor wage determinations. The court, however, found that the contractor had not met its burden of proof. A contractor is only entitled to an adjustment for an increase in wages that a contractor actually experiences. Here, while DOL had increased applicable wages, the contractor had not shown that the wage determination had actually resulted in the contractor paying employees more money.
Billie O. Stone d/b/a Stobil Enterprise had a contract with the Department of Veterans Affairs to provide janitorial and food support services. The contract required Stobil to pay employees wages in accordance with the Department of Labor’s (DOL) wage determinations. The contract also incorporated FAR 52.222-43, which states that the contract price would be adjusted to reflect an actual increase or decrease in applicable wages. After the expiration of Stobil’s contract in 2014, the VA awarded Stobil another contract to continue to provide food support services.
In 2015, the DOL determined that Stobil owed about $100,000 in back wages to employees. The Department of Labor requested that the VA withhold funds due to Stobil and to transfer those funds to the DOL.
While DOL was investigating, Stobil submitted a request for adjustment to the VA, seeking an increase in its contract price due to DOL wage determination and compensation for the loss of equipment. Stobil sought $116,000 from the agency.
In response to Stobil’s request, the VA asked Stobil’s pay records. Based on those records, the VA determined that it only owed Stobil $21,000 in increases for health and welfare benefits. The VA did not grant Stobil any adjustment for the wage determinations because Stobil had been paying his employees more than the rates required by DOL. The VA transferred $21,000 to DOL.
Stobil then submitted a certified claim to the VA seeking the $95,000 difference between his request for an adjustment and the actual $21,000 adjustment the VA paid. The VA denied the claim.
Stobil appealed to the ASBCA. Stobil moved for summary judgment on its wage adjustment claim. The board denied the motion, finding that Stobil had not met its burden of proof. Instead, the board granted the VA summary judgment on the claim. Stobil appealed to the Federal Circuit.
On appea,l Stobil argued that it was entitled to a bigger wage adjustment—i.e., $116,000 instead of $21,000. But the court noted that FAR 52.222-43 only allows a wage adjustment for increases that a contractor actually experiences. Thus, for example if DOL raises wages from $10.00 per hour to $10.50, a contractor is only entitled to the portion of that $.50 increase it wasn’t already paying. So, if a contractor was already paying employees $10.25, it can only recover the $.25 increase above actual wages, not the entire $.50 increase.
Here, Stobil failed to show that its actual increase in wages exceeded the wage determination. Stobil had claimed that an adjustment based on 2080 work hours, but it failed to provide evidence showing that its employees had actually worked 2080 hours. The only increase Stobil had demonstrated was the $21,000 the VA paid.
Stobil alleged that the board ignored probative evidence of its actual wages, including admissions under oath that the VA contracting officer was willing to compensate the company for wage increases. But the court found that none of this evidence created a dispute of material fact.
Stobil attempted to argue the case was fraudulently decided and that no substantial evidence supported the board’s decision. The court reasoned that these arguments were based on standards of review for questions of fact. In this case, however, the board did not engage in factfinding but made a legal decision.
Stobil is represented by Billie Stone. The government is represented by Eric John Singley, Brian M. Boynton, Robert Edward Kirschman, Jr., and Patricia M. McCarthy of the Department of Justice.
