Services
A contract can be covered by the SCA even if the solicitation does not necessarily specify that it will. This means that if no one asks for clarification, the better contractor might lose out because it, but not the awardee, included higher prices to account for SCA requirements. Then, the awardee must go through the ordeal of requesting a price adjustment once the SCA is determined by the contracting officer to comply.
There has recently been a crackdown on SCA violations, resulting in debarment for some government contractors based on one violation of the SCA. The only way contractors can escape debarment is if: 1) the Department of Labor (DOL) instructs the contractor to correct the mistake rather than institutes debarment proceedings); or 2) if the contractor can show “unusual circumstances.”
It used to be that if the DOL came to investigate a contractor’s wage practices, this was because an employee reported a violation. Certainly, this still remains a reason for the DOL to investigate, but recently the DOL is engaging in impromptu reviews of contractor practices because it has found that employees have been less willing to come forth with violations. This is largely in part to the poor economy and fear of losing their jobs.
This is likely an obvious fact, but it is often overlooked. Contractors must account for the fact that while they will receive their price adjustment, there may be a gap in time when they have less working capital given that they were liable to their employees for higher wages while their contract price has not yet increased.
