Appeal of the contracting officer’s denial of a request for equitable adjustment based on the terms of a new collective bargaining agreement is denied, where there is no evidence the Department of Labor has issued a new wage determination based on the agreement.
Alcazar Trades Inc. appealed the contracting officer’s denial of its request for an equitable adjustment in relation to additional costs it expected to incur as a result of a newly negotiated collective bargaining agreement. The government moved to dismiss for lack of jurisdiction.
NRC awarded Alcazar a hybrid firm fixed-price/time-and material task order, with a cost reimbursable line for reimbursable work, not to exceed $75,000 per year. After award, the union representing ATI’s employees successfully renegotiated its contract. When NRC informed ATI that it planned to exercise the first option year of the contract, ATI informed NRC’s contracting officer about the new collective bargaining agreement and asked for an equitable adjustment to cover the increases in wages and benefits. However, because the majority of the contract was fixed price, with the labor, wage, and fringe benefits built in, the CO concluded that NRC was not obligated to increase the ceiling of the contract.
NRC also asked the GSA CO about ATI’s new collective bargaining agreement. The GSA CO explained that ATI had submitted a collective bargaining agreement with an economic price adjustment modification to GSA for consideration, that GSA had “rejected” the collective bargaining agreement, and that ATI was supposed to resubmit, but had not done so. When ATI submitted its claim to NRC, NRC forwarded it to the GSA CO.
From July 18, 2017, until August 7, 2017, GSA informed NRC that GSA was handling the claim, and that GSA understood that ATI intended to withdraw its claim with NRC. Ultimately, ATI never did. The NRC CO eventually denied the claim, stating that the resolution required an interpretation of ATI’s GSA schedule contract and that GSA had not approved ATI’s proposed price increases.
CBCA noted that the task order and the underlying FSS contract are subject to the Service Contract Act, which requires contractors or subcontractors entering into service contracts in excess of $2500 to pay no less than the prevailing wage rates set forth in either a Department of Labor wage determination or the rates contained in an applicable collective bargaining agreement. The SCA states that if the prevailing wage rates or the collective bargaining wage rates are subject to an increase during a period of contract performance, the contractor is entitled to a price increase in the option years if a new wage determination causes the contractor to pay increased wages or benefits.
However, CBCA found no evidence that DOL had issued a new wage determination based upon the new collective bargaining agreement when ATI filed its claim. Although ATI sought to apply the new agreement to its GSA contract and first option year under the task order, CBCA noted that the decision of whether a CBA should be the basis of a revised wage determination applicable to the option year has, in the past, been left to the Department of Labor.
ATI argued that it is the CO’s responsibility to obtain the wage determination upon exercising any option to extend the contract, and that CBCA has jurisdiction because the CO failed to fulfill his duty. However, because CBCA held that it is within DOL’s jurisdiction to decide whether ATI’s new CBA should form the basis of a wage determination, it declined to address ATI’s alternative argument.
Alcazar Trades Inc. is represented by Jonathan M. Bailey and Kristin E. Zachman of Bailey & Bailey, P.C. The government is represented by Ruth Kowarski Cooke, Shelbie R. Lewman, and Robin A. Baum, Office of the General Counsel, Nuclear Regulatory Commission.
