What Happens When There Is No SCA Wage Determination In a Contract— Part II?

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

– Anonymous (often misattributed to Mark Twain)

Sometimes contracts are awarded without either the proper Service Contract Act (“SCA”) contract clauses or wage determinations (“WDs”). So, what tis the remedy for the omission of these mandatory requirements? I went over some of the case law a month ago, but thought it might be useful to more fully explore the regulations as well. See https://www.awrcounsel.com/blog/2026/8/24/what-happens-when-there-is-no-sca-wage-determination-in-a-contract .

The Federal Acquisition Regulation (“FAR”) contemplates exactly how the government contract is supposed to be corrected. It is the contracting agency's obligation to incorporate the WD, not the contractor's duty. FAR § 22.1015 provides that “the contracting officer. . .  shall include in the contract . . .  any applicable wage determination.”

The DOL regulation also memorializes that this is the contracting agency’s obligation, not the contractor’s obligation, and specifies the remedy when the contracting agency fails to follow through properly:

(1) If the notice of intention required by Sec. 4.4 is not filed with the required supporting documents within the time provided in such section, the contracting agency shall, through the exercise of any and all of its power and authority that may be needed (including, where necessary, its authority to negotiate, its authority to pay any necessary additional costs, and its authority under any provision of the contract authorizing changes), include in the contract any wage determinations communicated to it by the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, within 30 days of the receipt of such wage determination(s). With respect to any contract for which section 10 of the Act requires an applicable wage determination, the Administrator may require retroactive application of such wage determination.

(2) Where the Department of Labor discovers and determines, whether before or subsequent to a contract award, that a contracting agency made an erroneous determination that the Service Contract Act did not apply to a particular procurement and/or failed to include an appropriate wage determination in a covered contract, the contracting agency, within 30 days of notification by the Department of Labor, shall include in the contract the stipulations contained in Sec. 4.6 and any applicable wage determination issued by the Administrator or his authorized representative through the exercise of any and all authority that may be needed (including, where necessary, its authority to negotiate or amend, its authority to pay any necessary additional costs, and its authority under any contract provision authorizing changes, cancellation, and termination).  With respect to any contract subject to section 10 of the Act, the Administrator may require retroactive application of such wage determination. (See 53 Comp. Gen. 412, (1973); Curtiss-Wright Corp. v. McLucas, 381 F. Supp. 657 (D NJ 1974); Marine Engineers Beneficial Assn., District 2 v. Military Sealift Command, 86 CCH Labor Cases para.33,782 (D DC 1979); Brinks, Inc. v. Board of Governors of the Federal Reserve System, 466 F. Supp. 112 (D DC 1979), 466 F. Supp. 116 (D DC 1979).) (See also 32 CFR 1-403.)

29 C.F.R. § 4.5(c) (emphasis added). Accordingly, the proper procedure is to modify the contract, add the missing WD, and the contracting agency is on the hook to pay the additional costs caused by the Government's procurement error.

This same error correction process is picked up in the FAR which states:

Sec. 22.1015 Discovery of errors by the Department of Labor.

If the Department of Labor discovers and determines, whether before or after a contract award, that a contracting officer made an erroneous determination that the Service Contract Act did not apply to a particular acquisition or failed to include an appropriate wage determination in a covered contract, the contracting officer, within 30 days of notification by the Department of Labor, shall include in the contract the clause at 52.222-41 and any applicable wage determination issued by the Administrator. If the contract is subject to section 10 of the Act (41 U.S.C. 358), the Administrator may require retroactive application of that wage determination. The contracting officer shall equitably adjust the contract price to reflect any changed cost of performance resulting from incorporating a wage determination or revision.

FAR § 22.1015 (emphasis added). Thus, the error correction process of the mandatory FAR regulations is that the omitted WD is to be included in the contract by modification and the "contracting officer shall equitably adjust the contract price to reflect any change cost of performance resulting from incorporation of a wage determination." Id. (emphasis added). And the case law is equally clear that the change results in a full equitable adjustment for contractors and subcontractors. I am not going to brief it all now, but it is extensive.

Since contracting agency is required to pay up for the change, I am puzzled why the Wage & Hour Division (“WHD”) would ever think it proper to withhold money from the prime contractor in this circumstance. One of the WHD duties is to not withhold money from the contractor for issues which relate to changes in the contract which were ordered by the Government. That is a breach of contract. Instead, a price adjustment must be processed by the procuring agency, and that means funding the change order and paying for the cost of the increased wages and benefits arising from the correction of the Government’s own errors.