Rice Business Report May 2019 Rice Business Report | Page 48

48
Is Your Company SCA Compliant? Figure It Out Before the
United States Department of Labor Figures It Out for You
Continued from page 8……
While the regulations on their face do not appear to impose any liability or obligation on the contractor
to pay prevailing wages in a revised WD until action is taken by the contracting agency to incorporate
the WD in the contract, we encourage clients to be proactive in this regard. First, it is unclear what posi-
tion DOL or a Board of Contract Appeals would take on a contractor's liability, especially if a contractor
had knowledge of the updated WD and was choosing to simply wait until the contracting officer acted
(and as a result delayed paying any higher wages required by the updated WD). Second, failure to ad-
dress the problem could lead to an inability for the contractor to obtain appropriate price adjust-
ments. In any event, a contracting officer cannot waive the application of a federal statute like the
SCA. If DOL discovers that a contracting officer has failed to incorporate the most recent WD, DOL may
direct the contracting officer to include it in contract, which if incorporated “late” could again impact the
contractor's ability to obtain appropriate price adjustments
nother common issue we have observed involves post-award changes to the place of contract perfor-
mance. For DOL WDs, the geographic locality or place of performance identified in the solicitation or by
the contractor in its proposal will often determine which WD governs your obligations. (Note: The place
of performance and applicable WDs may be identified in the solicitation, but they could be left open, per
FAR 52.222-49, Place of Performance Unknown). As contract performance progresses, however, it is
possible that the place of performance may change for many reasons. For instance, a contractor may
acquire or open a new facility to support contract performance or may permit certain employees to tele-
commute and perform in a different locality than has been identified in the contract.
It is the contractor's responsibility to ensure that the contracting officer recognizes any place of perfor-
mance change by reporting such changes in order to ensure that the appropriate WDs are incorporated
into the contract to account for any new performance locations. A change in the place of performance
that has not been properly coordinated with the contracting officer can result in a number of potential
problems, including a failure to recover wage amounts that exceed the wage rates for the place of per-
formance identified in the contract or, in extreme cases, default under the contract. Furthermore, if no
WD was incorporated following any change, the contractor may not realize that a different WD applies,
resulting in a potential underpayment of wages (or an overpayment). As noted, it is highly unlikely a
contractor will be able to pass through these increased costs of performance without the WD(s) for the
correct location(s) being incorporated into the contract.
Rice Business Report