Failure to account for these local conditions may not always allow the company to seek an adjustment to its federal contracts, as one contractor recently found out the hard way.  A company providing janitorial services in Montgomery County, Maryland was obliged to pay its workers the prevailing county wage rate.  That rate was somewhat higher than the federal SCLS rate.  The contractor ultimately had to take the issue to the Civilian Agency Board of Contract Appeals (CBCA) when the agency contracting officer refused to allow the company a higher rate to match the local county requirement.

Incredibly, the contractor lost at the CBCA.  The Board took a fairly narrow view of the circumstances under which the company could seek a price increase.  This is despite the fact that their contract specifically allowed for such increases “…where there is an increased wage determination otherwise applied to the contract by operation of law…”.  Apparently the CBCA interpreted that as being only federal law.  In addition, the Board rejected the contractor’s claim that an adjustment was due to them because of the general contract provision requiring companies to abide by all applicable laws, including state and local statutes.  There are several take aways for contractors here.  First, companies must make sure that they pay attention to local wage rate requirements and adjust their prices accordingly.  Second, while the company is required to apply by all applicable laws, that apparently does not allow them to seek a price increase when doing so costs extra money.