Gulf Pacific Contracting, LLC
Docket: ASBCA 61434
Decision date: 2021-09-16

1 
ARMED SERVICES BOARD OF CONTRACT APPEALS 
 
Appeal of -- ) 
 ) 
Gulf Pacific Contracting, LLC ) 
 ) 
   ) 
 
 
APPEARANCE FOR THE APPELLANT: Laurence J. Zielke III, Esq. 
  Zielke Law Firm, PLLC 
  Louisville, KY 
  
APPEARANCES FOR THE GOVERNMENT: Jeffrey P. Hildebrant, Esq. 
  Air Force Deputy Chief Trial Attorney 
Christopher M. Judge-Hilborn, Esq. 
Maj Michelle E. Gregory, USAF 
  Trial Attorneys 
 
MAJORITY OPINION BY ADMINISTRATIVE JUDGE PROUTY 
 
The Davis-Bacon Act, 40 U.S.C. §§ 3131-3148, is a fact of life in federal 
government construction contracting.  By requiring the payment of local prevailing 
wages to contractor employees in certain circumstances, it may force contractors to pay 
their employees more than they might otherwise when they begin contract performance 
and to further increase wages in the midst of performance or following the exercise of 
options by the government.  The Federal Acquisition Regulation (FAR) provides a 
contracting officer (CO) multiple ways to address these increased costs through 
prescribed clauses to be inserted into a contract.  One such clause (which we will refer to 
as “the no-adjustment clause” throughout) takes the approach of informing the contractor 
that there will be no adjustment to the prices in the awarded contract unless it is provided 
for elsewhere in the contract, which implies that (unless there is a separate contract 
provision saying otherwise) the contractor should price its option years to take into 
account the risk of increased wages.  That is the clause that was included in the above-
captioned contract (the contract) which is the subject of today’s dispute. 
 
This appeal is before us under the auspices of Board Rule 11, which permits its 
resolution on the record, without a hearing and live testimony.  As detailed below, 
appellant, Gulf Pacific Contracting, LLC (Gulf Pacific), had a contract to perform various 
construction-related services at Hurlburt Field in Florida.  Coincident with the 
government’s exercise of its first option year, the Department of Labor (DOL) issued new 
wage determinations, with the upshot being that Gulf Pacific needed to pay some of its 
employees more during the option period.  Gulf Pacific demanded additional 
ASBCA No.   61434 
Under Contract No.  FA4417-16-D-0002 

2 
compensation from the government and the CO refused, pointing to the no-adjustment 
clause, which precluded such additional payment.  Gulf Pacific appeals this decision, 
arguing that it was not on notice that it would be required to absorb this cost in its option 
pricing and that the no-adjustment clause is defective. 
 
Judge Clarke agrees with Gulf Pacific, contending that the FAR-required 
no-adjustment clause contained in the contract did not meet the requirements of the 
policy portion of the FAR which set forth the CO’s options for addressing wage 
adjustments.  We respectfully disagree with Judge Clarke.  The drafters of the FAR made 
the no-adjustment clause consistent with their earlier dictates about how to handle such 
situations.  Gulf Pacific also argues that the no-adjustment clause is ambiguous.  It is not.  
Gulf Pacific, as discussed below, is entitled to no additional compensation. 
 
FINDINGS OF FACT 
 
On September 26, 2016, the United States Air Force 1st Special Operations 
Contracting Squadron awarded to Gulf Pacific the contract, a firm-fixed-price, indefinite-
delivery indefinite-quantity (IDIQ) construction contract, to paint the interior of facilities, 
paint the exterior of facilities, and stripe runway pavement at Hurlburt Field in Florida 
(R4, tab 4 at 1-4).  The base period of performance was one year, with four option years 
(id. at 5-6). 
 
As part of the solicitation that led to the award of the contract, offerors were 
required to provide prices for the base year and each option year, and those prices were to 
come from a “Line Item List” attached to the solicitation that the contractor was to fill out 
(app. supp. R4, tab 14 at 4-6).  The Line Item List is an extensive 15-page document and 
includes services that may be ordered under separate contract line items, estimated 
quantities of those services, and space for the contractor to insert its pricing.  It includes 
separate pricing lists for the base year and all four individual option years.  (See R4, tab 
4a)  In its initial bid, Gulf Pacific, in fact, priced some components of its option years1 
differently than the base year (compare R4, tab 11 at 13-15 to R4, tab 11 at 19-21).  A 
number of Gulf Pacific’s prices in the line items went down between the base year and 
the option years – enough for the government to raise the issue with Gulf Pacific during 
pre-award discussions.  In response to these concerns, Gulf Pacific ascribed the decreased 
                                              
1 Based on the parties’ discussions during the government’s consideration of Gulf 
Pacific’s proposal, we can conclude that there were changes in unit pricing 
between the base year and the option years as well (see R4, tab 2 at 3 (referencing 
discussions about variance in base and option years)), but the Line Item List for 
the base year, as completed by Gulf Pacific does not appear to be part of the 
record for us to report it directly.  Apparently, neither party was able to find it 
during discovery (see gov’t br. at 6 n.1), but this is of no significance since the 
matter is not in dispute. 

3 
prices to its anticipated “increased production efficiency” as it performed the contract 
(R4, tab 2 at 3).  To be clear, however, at least one2 price component increased between 
option years 1 and 3 (compare CLIN 1004AG, located at R4, tab 11 at 15 to CLIN 
3004AG, located at R4, tab 11 at 21). 
 
The contract incorporates by reference FAR 52.222-6, CONSTRUCTION WAGE 
RATE REQUIREMENTS (MAY 2014) (R4, tab 4 at 14).  In part, this provision requires 
“laborers and mechanics employed or working upon the site of the work will be paid 
unconditionally . . . at rates not less than those contained in the wage determination of the 
Secretary of Labor which is attached hereto and made a part hereof.”  FAR 52.222-
6(b)(1) 
 
The contract also incorporates by reference FAR 52.222-30, CONSTRUCTION 
WAGE RATE REQUIREMENTS—PRICE ADJUSTMENT (NONE OR 
SEPARATELY SPECIFIED METHOD) (MAY 2014) (R4, tab 4 at 14).  This is the no-
adjustment clause referenced herein.  In relevant part, this provision inserts the following 
text into the contract:   
 
(a)  The wage determination issued under the Construction 
Wage Rate Requirements statute by the [DOL], that is 
effective for an option to extend the term of the contract, 
will apply to that option period. 
 
(b)  The Contracting Officer will make no adjustment in 
contract price, other than provided for elsewhere in this 
contract, to cover any increases or decreases in wages and 
benefits as a result of [such a wage determination] 
 
FAR 52.222-30. 
 
For the contract at issue here, there is no other mechanism for adjusting the option 
price to cover increases or decreases in wages caused by wage determinations “provided 
for elsewhere in th[e] contract” (see R4, tab 4).
3 
For unknown reasons, the contract also incorporates by reference FAR 52.216-7, 
ALLOWABLE COST AND PAYMENT – ALT I (JUN 2013) (see R4, tab 4 at 14).  This 
                                              
2 The government identified this one particular increase, but no others, and we have not 
compared the remainder of the prices line by line as it is unnecessary for our 
decision today. 
3 Gulf Pacific argues that two particular contract provisions may constitute mechanisms 
to pay wage rate increases, which we will address in the Decision section, below, 
but identifies no provision establishing an entitlement to payment for wage rate 
increases. 

4 
FAR provision, by its terms, governs compensation in cost reimbursement or 
time-and-materials contracts and the first line of the clause directs that it is used “as 
prescribed in 16.307(a).”  FAR 16.307(a), in turn, prescribes the use of the clause in 
FAR 52.216-7 in cost reimbursement and time-and-materials contracts.  Subpart 16.3 of the 
FAR (of which FAR 16.307 is a subsidiary part) is entitled “COST-REIMBURSEMENT 
CONTRACTS.”  As stated earlier, the contract at issue is not a cost reimbursement contract, 
but is a firm-fixed-price contract. 
 
Of relevance to the arguments advanced by Gulf Pacific here, we also note that the 
contract incorporated by reference the clause found in the Department of Defense 
Supplement to the FAR (DFARS) 252.243-7002, REQUESTS FOR EQUITABLE 
ADJUSTMENT (DEC 2012) (R4, tab 4 at 16). 
 
On September 8, 2016 (18 days before contract award), the government amended 
the solicitation for the contract to include the most recent applicable DOL Wage Rate 
Schedule, No. FL160029, dated August 5, 2016 (app. supp. R4, tab 15).  Gulf Pacific 
submitted its final prices on September 15, 2016 (R4, tab 12) and, as previously noted, 
the contract was awarded on September 26, 2016. 
 
On September 8, 2017, the DOL issued a wage determination increasing the 
hourly prevailing wages for painters (see R4, tab 7 at 5).  Thus, on September 14, 2017, 
while unilaterally modifying the contract to exercise Option Year 1, the CO incorporated 
this new wage determination (R4, tab 7). 
 
Upon receipt of the contract modification the same day, Gulf Pacific asked the CO 
how it would be compensated for the increased wage costs.  The CO initially responded 
in an email stating that it could file a request for equitable adjustment, but reversed 
himself 18 minutes later, informing Gulf Pacific that the FAR’s no-adjustment clause, 
incorporated into the contract, did not allow for such compensation.  (R4, tab 13) 
 
Gulf Pacific submitted a certified claim to the CO on October 11, 2017, seeking an 
equitable adjustment in the amount of $120,000, representing the additional costs it 
expected it would incur as a result of the prevailing wage adjustment (R4, tab 8).  The CO 
denied the claim in a final decision dated October 23, 2017 (R4, tab 9). 
 
Gulf Pacific timely appealed this decision to the Board. 
 
DECISION 
 
The question before us is whether the CO’s inclusion in the contract, by reference, 
of the FAR’s no-adjustment clause was sufficient to preclude Gulf Pacific from 
recovering the extra costs it incurred by imposition of higher wage rates after contract 
award.  The answer is that it does. 

5 
 
I. The FAR Permits the Government to Make no Compensation to the Contractor 
for Wage Increases if the Contract so Specifies 
 
The no-adjustment clause is not included in the contract by happenstance, nor is its 
wording careless.  Rather, it fits within a well-planned regulatory scheme to address the 
consequences of the Davis-Bacon Act, which begins with FAR 22.404-12, LABOR 
STANDARDS FOR CONTRACTS CONTAINING CONSTRUCTION 
REQUIREMENTS AND OPTION PROVISIONS THAT EXTEND BEYOND THE 
TERM OF THE CONTRACT (MAY 2014).  Subsection (c) of this regulatory provision 
requires the CO to include, in fixed price construction contracts, a clause that specifies 
one of four methods, “to provide an allowance for any increases or decreases in labor 
costs that result from the inclusion of the current wage determination at the exercise of an 
option to extend the term of the contract.”  The four methods are:  1) no adjustment, but 
the contractor may have the opportunity to take the possible changes into account when it 
bids the options; 2) some sort of adjustment separately specified in the contract; 3) a price 
adjustment based on a percentage rate of a published economic indicator specified by the 
contract; and 4) a price adjustment based upon actual costs. 
 
Since method (1) (no adjustment) was the choice of the CO here, it is helpful to 
quote it in its entirety:   
 
(1)  The contracting officer may provide the offerors the 
opportunity to bid or propose separate prices for each 
option period.  The contracting officer must not further 
adjust the contract price as a result of the incorporation of 
a new or revised wage determination at the exercise of 
each option to extend the term of the contract.  Generally, 
this method is used in construction-only contracts (with 
options to extend the term) that are not expected to exceed 
a total of 3 years. 
 
FAR 22.404-12(c)(1) 
 
Just a few pages later in the FAR, FAR 22.407 specifies that pre-drafted contract 
clauses contained in the FAR are to be inserted into contracts to effect the four particular 
options denoted by FAR 52.222-30.  As stated in FAR 22.407(e), both the “no 
adjustment” method and the “separately specified” method were to be reflected by the 
insertion of the contract clause contained in FAR 52.222-30, the no-adjustment clause.  
This is what happened here. 
 
Gulf Pacific argues that, by law, the government is required to compensate a 
contractor through the use of an equitable adjustment when compliance with a DOL wage 

6 
determination increases its costs, and cites our opinion in Sonoran Tech. and Prof’l Svs., 
LLC, ASBCA Nos. 61040, 61101, 17-1 BCA ¶ 36,792, in support of this conclusion (see 
app. br. at 13).  But in Sonoran Technology, the government used a different type of 
contract than present here (it was a services contract, rather than a construction contract), 
and, instead of including the no-adjustment clause, the contract (properly) used the clause 
in FAR 52.222-43, which expressly required adjustment of the contract price to account 
for increased wage rates.  See FAR 52.222-43(d) (quoted in Sonoran Tech., 17-1 BCA ¶ 
36,792 at 179,329).4 
 
Thus, the FAR permits the government to draft a contract to preclude additional 
payment to a contractor for increased costs during performance of an option that are 
caused by new Davis-Bacon Act labor rates and direct that the method it uses to do so be 
the inclusion of the contract provision set forth in FAR 52.222-30, the no-adjustment 
clause. 
 
II. The No-Adjustment Clause Complies With the FAR’s Davis-Bacon Act 
Framework 
 
Judge Clarke’s dissenting opinion is based upon the notion that the no-adjustment 
clause does not comply with the Davis-Bacon Act framework set forth in FAR 22.404-12.  
As Gulf Pacific and Judge Clarke would have it, a FAR-compliant contract provision for the 
no-adjustment option would specifically inform the contractor that it would not receive any 
adjustment in contract price for labor rate adjustments and direct them to price their option 
years accordingly.  They argue that the no-adjustment clause does not do so.  They are 
incorrect both in terms of what the FAR required and about what was included in the 
contract.5 
  
                                              
4 Sonoran Technology was also a single-judge decision, issued under the auspices of 
Board Rule 12.2, which means that it has no value as precedent.  See Sonoran 
Tech., 17-1 BCA ¶ 36,792 at 179,328 n.1.  Thus, even if its facts were similar to 
those presented here, it would not be controlling. 
5 We do, however, agree with Judge Clarke that whether the contract complies with the 
FAR provisions relating to adjusting payment to account for wage rate increases is 
a matter that may be challenged by a contractor.  See Freightliner Corp. v. 
Caldera, 225 F.3d 1361, 1365 (Fed. Cir. 2000). 

7 
A. We Read the FAR as a Whole 
 
The argument that one part of the FAR is not compliant with another, and 
therefore must be set aside, is problematic and unsupported by law cited to us.  To be 
sure, the FAR is comprehensive, spanning multiple volumes, but the R in FAR stands for 
regulation:  singular.  As such, we interpret it as we would any other regulation.  Thus, 
we read it in a manner that seeks to avoid finding portions of it “inoperative or 
superfluous, void or insignificant,” an interpretation that is disfavored by the law.  See, 
e.g., Baude v. United States, 955 F.3d 1290, 1305 (Fed. Cir. 2020) (quoting Corley v. 
United States, 556 U.S. 303, 314 (2009)).  Put another way, we generally presume that 
the authors of the FAR, the FAR Council, knew what they were doing and drafted their 
mandatory contract provisions to be consistent with the portions of the FAR laying out 
the policy those provisions were drafted to effect.
6 
 
B. “May” Does not Mean “Must” and the Mandatory Contract Clause at FAR 
52.222-30 – the No-Adjustment Clause – is Consistent With the Policy set 
Forth in FAR 22.404-12 
 
Judge Clarke’s dissent argues that the provision in FAR 22.404-12 governing the 
“no change” option which states that “[t]he contracting officer may provide the offerors 
the opportunity to bid or propose separate prices for each option period” (emphasis 
added) means that the no-adjustment clause, in fact, must give the contractor such an 
opportunity.  The basis for this conclusion is the earlier, introductory language in FAR 
22.402-12 stating that the purpose of the mandatory contract clause was “to provide an 
allowance for any increases or decreases in labor costs that result from the inclusion of 
the current wage determination at the exercise of an option to extend the term of the 
contract.”  To Judge Clarke, if the contractor were not given an opportunity to propose 
separate prices for option years in the mandatory clause, there would be no “allowance 
for” the increases or decreases in costs due to wage determinations.  We do not find this 
argument compelling. 
 
First, of course, when we interpret a regulation (or statute or contract for that 
matter), in addition to reading it as a whole, we generally give its words their normal or 
usual meanings.  See, e.g., Tesoro Hawaii Corp. v. United States, 405 F.3d 1339, 1346 
(Fed. Cir. 2005); Lockheed Corp. v. Widnall, 113 F.3d 1225, 1227-28 (Fed. Cir. 1997) 
(plain language and “ordinary meaning”).  The normal use of “may” is that it is a 
permissive choice, not a command.  Indeed, that is the word’s essence, so we see the 
FAR Council’s selection of “may” rather than “shall” or “must” to bear particular 
significance. 
                                              
6 Of course, if there were an unresolvable contradiction between a policy portion of the 
FAR and its mandatory contract provisions, we would need to address it.  As 
discussed below, we do not have that here. 

8 
Second, the fact that the no-adjustment clause does not require the CO to provide 
an allowance for separate offers for option periods is also proof that the FAR Council 
meant “may” as “may.”  At first blush this may seem as circular reasoning, but it is not:  
there would need to be good evidence for us to find that the FAR Council intended “may” 
to mean “must,” but, instead, the same body that chose “may” in FAR 22.402-12 drafted 
the provision in FAR 52.222-30 differently than it would have if “may” meant “must.”  
This is good evidence that, yes, “may” meant “may.” 
 
An argument that rhymes with the previous one (though is not exactly the same) is 
that reading “may” as “must” in FAR 52.222-30 would be to make the no-adjustment 
clause “inoperative or superfluous, void or insignificant,” see Baude, 955 F.3d at 1305, 
which we have already stated is a disfavored interpretation. 
 
We answer Judge Clarke’s argument, that the no-adjustment clause would not 
provide any allowance for an increase in costs if it was not required to allow for them, by 
making two observations:  the first is that this language may be read as prefatory or 
introductory, explaining what the general intent (or aspiration) of the provision is without 
imposing direct requirements – the actual requirements being what comes in the 
sentences to follow.  The second is that the “allowance for cost” is made by the multiple 
options that follow in this FAR provision, and that if the CO chooses the one option 
where there is no ability to charge for costs and no requirement to permit the submission 
of different prices for option years7, then the very act of stating as much in the contract 
provision provides for such an allowance in its own way:  the contractor is on notice that 
it must price its entire contract so that the possible exercise of an option after a wage 
increase is accounted for.  Put slightly differently, if the contractor knows before it prices 
its contract that it risks its options being exercised after a wage increase and that there 
will be no other recompense, it may price its contract to account for such a contingency.  
Thus, a contract provision making this statement would meet the goal of “providing an 
allowance for the increase or decrease” of labor costs during option years. 
 
Finally, even if may meant must, nothing in FAR 22.402-12 would require that the 
allowance for separately-priced option years be placed in the no-adjustment clause, itself.  
The CO would only be required to do that somewhere in the contract.  And, of course, the 
contract permitted different option year pricing, which Gulf Pacific took advantage of, as 
described above in the Facts section. 
 
                                              
7 Even though we find this permissible, we find it an extremely unlikely circumstance.  
Although technically possible, we have never seen a solicitation in which the 
government required option year pricing to be exactly the same as that in the base 
year (it certainly did not require it here).  To be sure, a contractor might choose to 
bid a contract that way, but that would be by choice, not government mandate. 

9 
With all of this in mind, we find that the contract provisions set forth in the FAR’s 
no-adjustment clause meet the relatively simple requirements of FAR 22.402-12 since all 
that is truly required in the no-adjustment option is that the contracting officer make no 
adjustment to the contract price.  FAR 22.404-12(c)(1). 
 
III. The Inclusion of the No-Adjustment Clause in the Contract Precluded 
Payment to Gulf Pacific for Labor Rate Increases During the Option Years 
 
A. The CO was Within his Rights to Include the No-Adjustment Clause in 
the Contract 
 
Gulf Pacific makes the argument that the no-adjustment clause was only to be 
used in circumstances in which the contract was limited to three years of total 
performance (see app. br. at 3; app. reply br. at 5-6).  Like Judge Clarke, we find that the 
regulation was not so limiting.  The regulatory language provided that, “generally,” the 
no adjustment provision was to be used in contracts not expected to last more than three 
years.  See FAR 22.404-12(c)(1).  It did not preclude its use in contracts that lasted 
longer:  it was “general” in application and, indeed, could be read to say when the no-
adjustment clause was to be used, not when it wasn’t. 
 
B. The Language of the No-Adjustment Clause Included in the Contract is 
not Ambiguous and Precludes Payment to Gulf Pacific 
 
Having held above that the FAR permits the CO to decide to preclude extra 
compensation for wage adjustments and that the language in the no-adjustment clause 
effecting that decision is not defective because it does not separately inform the contractor 
that it should price its option years to account for the possibility of Davis-Bacon Act wage 
adjustments, we turn to the final significant challenge made by Gulf Pacific:  its assertion 
that the no-adjustment clause is ambiguous.  This alleged ambiguity rests upon the clause’s 
statement that no adjustment to the price would be made “other than provided for elsewhere 
in this contract.”  Gulf Pacific argues that both the clause allowing for requests for equitable 
adjustment (REAs) and the Allowable Payment clause provide some venue “elsewhere in the 
contract” for payment (see app. reply br. at 7-8).  The argument is unpersuasive. 
 
The REA clause incorporated by reference in the contract is DFARS 252.243-7002.  
This clause explains how to file an REA for “contract adjustment[s] for which the Contractor 
believes the Government is liable.”  DFARS 252.243-7002(a)  It does not establish 
entitlement to the adjustment in the first place.  Id.  Thus, it does not create an ambiguity 
because the REA clause cannot be reasonably read to create an independent basis for the CO 
to pay Gulf Pacific for the wage increase.  See NVT Tech., Inc. v. United States, 370 F.3d 
1153, 1159 (Fed. Cir. 2004) (citing Metric Constructors, Inc. v. NASA, 169 F.3d 747, 751 
(Fed. Cir. 1999)) (contract ambiguous if susceptible to more than one reasonable 
interpretation). 

10 
 
The Allowable Payment clause, too, does nothing to make the meaning of the no-
adjustment clause ambiguous.  As noted above, this standard clause, though included in 
the contract, has no applicability to it since, by its terms, it governs cost-reimbursement 
contracts.  Gulf Pacific argues that it must have some applicability to the contract on the 
basis that a contact “must” be read so as to leave no portion superfluous (app. reply br. at 
7 (citing NVT, 370 F.3d at 1159)).  But the law is not quite what Gulf Pacific says it is.  It 
does not require the impossible action of forcing a square contractual peg into a round 
hole that has no room for it, but merely prefers an interpretation that harmonizes all parts 
of the contract, if possible.  See NVT, 370 F.3d at 1159 (“interpretation that gives 
meaning to all parts of the contract is to be preferred over one that leaves a portion of the 
contract useless, inexplicable, void, or superfluous”).  Indeed, we have recognized that, 
contracts being assembled by people, surplus boilerplate can, on occasion, be included 
without changing the meaning of the contract.  See Watts Constructors, LLC, ASBCA 
No. 61493, 20-1 BCA ¶ 37,563 at 182,385-86.  The Allowable Payments clause, since it 
cannot be applicable to the contract, creates no vehicle for adjusting the price of the 
contract and thus creates no ambiguity. 
 
Finally, we note that, had there been any confusion on the part of Gulf Pacific, that 
confusion should have been eliminated when it looked up the no-adjustment clause in the 
FAR.8  The preface to the clause states that it is inserted pursuant to the direction in FAR 
22.407(e).  FAR 22.407(e), in turn, refers the reader to FAR 22.404-12(c)(1) and (2), 
which underscore exactly how the regulatory scheme is laid out.  Thus, Gulf Pacific’s 
arguments that the contract was ambiguous are even less supported, just as its 
generalized, equitable arguments that it was not on notice that it would need to deal with 
Davis-Bacon Act wage adjustments (see app. reply br. at 8-9) are unpersuasive.9 
 
With this in mind, there is no basis for us to read the no-adjustment clause in any 
way besides precluding additional payment by the CO. 
  
                                              
8 Because the clause is incorporated by reference, recourse to the FAR provision would 
be necessary. 
9 Of course, Gulf Pacific was on particular notice of the salience of Davis-Bacon Act 
wage adjustments by virtue of the fact that the government required a re-bid just 
prior to contract award when a DOL wage adjustment was issued. 

11 
CONCLUSION 
 
For the reasons stated herein, the appeal is denied. 
 
Dated:  September 16, 2021 
 
 
 
J. REID PROUTY 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 
 
I concur 
 
 
 
 I concur 
 
 
 
RICHARD SHACKLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
 JAMES SWEET 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
   
   
I concur 
 
 
 
 I dissent (see attached opinion) 
 
 
 
BRIAN S. SMITH 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
 CRAIG S. CLARKE 
Administrative Judge 
Armed Service Board 
of Contract Appeals 
 
 
  


12 
I respectfully dissent.  I would hold that FAR 52.222-30 fails to comply with FAR 
22.404-129(c).  Gulf Pacific (GP) was not given sufficient pre-award notice of an 
opportunity to price its options to account for a possible wage increase as required by 
FAR 22.404-12(c).  The Air Force (AF) contends that FAR 52.222-30 is clear and 
unambiguous and provides sufficient notice and opportunity to increase option prices and 
it should be enforced.  I disagree. 
 
This case was originally assigned to me and I drafted the preliminary decision 
with which my colleagues disagree.  I attach that decision as my dissent. 
 
FINDINGS OF FACTS 
 
This appeal and decision deal primarily with questions of law which is why there 
are no detailed recitation of facts other than the FAR provisions to be interpreted. 
 
1.  On 27 September 2016, the 1st Special Operations Contracting Squadron 
awarded to Gulf Pacific Contracting, LLC (GP) a firm-fixed-price, indefinite delivery 
indefinite-quantity (IDIQ) construction contract, contract number being FA4417-16-D-
0002 (Contract No. 0002), to paint the interior of the facilities, paint the exterior of the 
facilities, and stripe runway pavement at Hurlburt Field in Florida. (R4, tab 4 at 1-4). The 
base period of performance is one year, with four option years. (R4, tab 4 at 5-6). 
 
2.  The contract incorporates FAR 52.222-6, CONSTRUCTION WAGE RATE 
REQUIREMENTS (AUGUST 2018), subparagraph (b)(1), that requires “laborers and 
mechanics employed or working upon the site of the work will be paid unconditionally. . 
. at rates not less than those contained in the wage determination of the Secretary of 
Labor which is attached hereto and made a part hereof (R4, tab 4 at 14).  Attached to 
Contract No. 0002 was Schedule of Wage Rates No. FL160029, August 5, 2016 (R4, tab 
4 at 33).   
 
3.  FAR 22.404-12, LABOR STANDARDS FOR CONTRACTS CONTAINING 
CONSTRUCTION REQUIREMENTS AND OPTION PROVISIONS THAT EXTEND 
THE TERM OF THE CONTRACT (MAY 2014), includes10:   
 
(a)  Each time the contracting officer exercises an option to 
extend the term of a contract for construction, or a contract 
that includes substantial and segregable construction work, 
                                              
10 FAR 22.404-12 is not a FAR Part 52 clause and is not specifically incorporated into the 
contract, thus no cite to the record. 

13 
the contracting officer must modify the contract to 
incorporate the most current wage determination. 
 
. . . .  
 
(c)  The contracting officer must include in fixed-price 
contracts a clause that specifies one of the following methods, 
suitable to the interest of the Government, to provide an 
allowance for any increases or decreases in labor costs that 
result from the inclusion of the current wage determination at 
the exercise of an option to extend the term of the contract:   
 
(1)  The contracting officer may provide the offerors the 
opportunity to bid or propose separate prices for each option 
period.  The contracting officer must not further adjust the 
contract price as a result of the incorporation of a new or 
revised wage determination at the exercise of each option to 
extend the term of the contract.  Generally, this method is 
used in construction-only contracts (with options to extend 
the term) that are not expected to exceed a total of 3 years. 
 
(2)  The contracting officer may include in the contract a 
separately specified pricing method that permits an 
adjustment to the contract price or contract labor unit price at 
the exercise of each option to extend the term of the contract.  
At the time of option exercise, the contracting officer must 
incorporate a new wage determination into the contract, and 
must apply the specific pricing method to calculate the 
contract price adjustment.  An example of a contract pricing 
method that the contracting officer might separately specify is 
incorporation in the solicitation and resulting contract of the 
pricing data from an annually published unit pricing book 
(e.g., the U.S. Army Computer-Aided Cost Estimating 
System or similar commercial product), which is multiplied in 
the contract by a factor proposed by the contractor (e.g., .95 
or 1.1). At option exercise, the contracting officer 
incorporates the pricing data from the latest annual edition of 
the unit pricing book, multiplied by the factor agreed to in the 
basic contract.  The contracting officer must not further adjust 
the contract price as a result of the incorporation of the new 
or revised wage determination. 
 

14 
(3)  The contracting officer may provide for a contract price 
adjustment based solely on a percentage rate determined by 
the contracting officer using a published economic indicator 
incorporated into the solicitation and resulting contract.  At 
the exercise of each option to extend the term of the contract, 
the contracting officer will apply the percentage rate, based 
on the economic indicator, to the portion of the contract price 
or contract unit price designated in the contract clause as 
labor costs subject to the provisions of the Construction Wage 
Rate Requirements statute.  The contracting officer must 
insert 50 percent as the estimated portion of the contract price 
that is labor unless the contracting officer determines, prior to 
issuance of the solicitation, that a different percentage is more 
appropriate for a particular contract or requirement. This 
percentage adjustment to the designated labor costs must be 
the only adjustment made to cover increases in wages and/or 
benefits resulting from the incorporation of a new or revised 
wage determination at the exercise of the option. 
 
(4)  The contracting officer may provide a computation 
method to adjust the contract price to reflect the contractor’s 
actual increase or decrease in wages and fringe benefits 
(combined) to the extent that the increase is made to comply 
with, or the decrease is voluntarily made by the contractor as 
a result of incorporation of, a new or revised wage 
determination at the exercise of the option to extend the term 
of the contract.  Generally, this method is appropriate for use 
only if contract requirements are predominately services 
subject to the Service Contract Labor Standards statute and 
the construction requirements are substantial and segregable.  
The methods used to adjust the contract price for the service 
requirements and the construction requirements would be 
similar. 
 
(Emphasis added).  I refer to FAR 22.404-12(c)(1) as the “none” method, (c)(2) as the 
“separately specified pricing” method, (c)(3) as the “percentage” method and (c)(4) as the 
“actual” method. FAR 22.407. 
 
4.  FAR 22.407 Solicitation Provision and Contract clauses, includes:   
 
(e)  Insert the clause at 52.222-30, Construction Wage Rate 
Requirements-Price Adjustment (None or Separately 

15 
Specified Pricing Method), in solicitations and contracts if the 
contract is expected to be- 
 
(1)  A fixed-price contract subject to the Construction Wage 
Rate Requirements statute that will contain option provisions 
by which the contracting officer may extend the term of the 
contract, and the contracting officer determines the most 
appropriate contract price adjustment method is the method at 
22.404-12(c)(1) or (2); or 
 
(2)  A cost-reimbursable type contract subject to the 
Construction Wage Rate Requirements statute that will 
contain option provisions by which the contracting officer 
may extend the term of the contract. 
 
(f)  Insert the clause at 52.222-31, Construction Wage Rate 
Requirements-Price Adjustment (Percentage Method), in 
solicitations and contracts if the contract is expected to be a 
fixed-price contract subject to the Construction Wage Rate 
Requirements statute that will contain option provisions by 
which the contracting officer may extend the term of the 
contract, and the contracting officer determines the most 
appropriate contract price adjustment method is the method at 
22.404-12(c)(3). 
 
(g)  Insert the clause at 52.222-32, Construction Wage Rate 
Requirements-Price Adjustment (Actual Method), in 
solicitations and contracts if the contract is expected to be a 
fixed-price contract subject to the Construction Wage Rate 
Requirements statute that will contain option provisions by 
which the contracting officer may extend the term of the 
contract, and the contracting officer determines the most 
appropriate method to establish contract price is the method at 
22.404-12(c)(4). 
 
5.  Contract No. 0002 incorporates FAR 52.222-30 Construction Wage Rate 
Requirements-Price Adjustment (None or Separately Specified Method) that reads:   
 
(a)  The wage determination issued under the Construction 
Wage Rate Requirements statute by the Administrator, Wage 
and Hour Division, U.S. Department of Labor, that is 

16 
effective for an option to extend the term of the contract, will 
apply to that option period. 
 
(b)  The Contracting Officer will make no adjustment in 
contract price, other than provided for elsewhere in this 
contract, to cover any increases or decreases in wages and 
benefits as a result of- 
 
(1)  Incorporation of the Department of Labor’s wage 
determination applicable at the exercise of the option to 
extend the term of the contract; 
 
(2)  Incorporation of a wage determination otherwise applied 
to the contract by operation of law; or 
 
(3)  An increase in wages and benefits resulting from any 
other requirement applicable to workers subject to the 
Construction Wage Rate Requirements statute. 
 
(R4, tab 4 at 14).  FAR 52.222-30 implements both the “none” and “separately specified 
pricing” methods, FAR 22.404-12(c)(1) &(c)(2).  Surprisingly there is no mention of the 
“separately specified pricing” method in FAR 52.222-30. 
 
6.  FAR 52.222-31 implements the “percentage” method:   
 
(b)  The Contracting Officer will adjust the portion of the 
contract price or contract unit price(s) containing the labor 
costs subject to the Construction Wage Rate Requirements 
statute to provide for an increase in wages and fringe benefits 
at the exercise of each option to extend the term of the 
contract in accordance with the following procedures.”   
 
(1)  The Contracting Officer has determined that the portion 
of the contract price or contract unit price(s) containing labor 
costs subject to the Construction Wage Rate Requirements 
statute is __________ [Contracting Officer insert percentage 
rate] percent. 
 
(2)  The Contracting Officer will increase the portion of the 
contract price or contract unit price(s) containing the labor 
costs subject to the Construction Wage Rate Requirements 
statute by the percentage rate published in _____________ 
[Contracting Officer insert publication]. 

17 
 
52.222-31(b) 
 
7.  FAR 22.404-12(c)(3), and FAR 52.222-32 implement the “actual” method:   
 
(c)  The Contracting Officer will adjust the contract price or 
contract unit price labor rates to reflect the Contractor’s actual 
increase or decrease in wages and fringe benefits to the extent 
that the increase is made to comply with, or the decrease is 
voluntarily made by the Contractor as a result of— 
 
8.  The second,
11 third and fourth methods provide for an increase in contract price 
when an option is exercised to compensate the contractor for the increase in costs caused 
by the inclusion of a new wage determination increasing wages, the first “none” method 
does not.  The only protection available to a bidder when the “none” method is selected 
by the contracting officer is setting option prices to anticipate increased wages before 
award. 
 
9.  On 8 September 2017, the Department of Labor issued Wage Determination 
FL170262, adjusting the hourly prevailing wage for brush, roller, and spray painters to 
$16.55, representing $14.54 in wages and $2.01 in fringe benefits. (R4, tab 7 at 5)  On 
September 14, 2017, while unilaterally modifying the contract to exercise Option Year 1, 
the AF incorporated Wage Determination FL170262.  (R4, tab 7) 
 
10.  On October 11, 2017, GP filed with the AF a certified claim for an equitable 
adjustment in the amount of $120,000, representing the additional costs it would incur as 
a result of the prevailing wage adjustment.  (R4, tab 8 at 1)  GP stated, “[t]here was no 
opportunity to negotiate an increase in the event of an increase in the wage 
determination” (id. at 2). 
 
11.  On October 23, 2017 the AF issued a final decision, relying on FAR 51.222-
30, denying the claim:   
 
Contract FA4417-16-D-0002 was awarded on September 26, 
2016.  The requirement was set aside for 8(a) competitive 
proposals.  The contract is a firm-fixed price IDIQ contract 
with a base and four option years.  The contract contains a 
                                              
11 While FAR 52.222-31 and 32 provide instructions on how the increase for the 
“percentage method” and “actual method” is calculated.  FAR 52.222-30 which 
implements both the “none” and “separately specified pricing” methods provides 
no instructions on the “separately specified pricing” method.  We see no obvious 
explanation for this omission.  

18 
pre-priced schedule for the base year and each option year.  
The contractor was given the opportunity to include pricing 
for wage rate increases in their proposal. 
 
. . . . 
 
As a result of FAR 52.222-30 being incorporated into the 
solicitation and resulting contract, no adjustment in contract 
price will be made.  The clause is very specific in stating that 
no adjustment in contract price to cover any increases or 
decreases in wages and benefits will be made as a result of 
incorporation of the wage determination applicable to the 
exercise of the option to extend the term of the contract.  This 
is the final decision of the Contracting Officer.  You may 
appeal this decision to the agency board of contract appeals. 
 
(R4, tab 9)  On November 20, 2017, GP appealed the final decision to the Board (R4, tab 
10) and the appeal was docketed as ASBCA No. 61434 on November 24, 2017. 
 
DECISION 
 
Positions of the Parties 
 
GP relies on three arguments.  First, GP states there was nothing in the solicitation 
or contract warning GP that its only ability to recover for an increased wage 
determination was by adjusting its option bid prices upward before award.  (App. reply 
br. at 2)  It is undisputed that based on FAR 52.222-30, GP was not allowed an 
adjustment upon option exercise and incorporation of a new wage determination that 
increased GP labor costs.  (App. amended br. at 1)  According to GP, the inclusion of 
FAR 52.222-30 in the contract “does not sufficiently notify the contractor of the mandate 
in FAR 22.404-12(c)(1) that the contracting officer must not further adjust the contract 
price as a result of the incorporation of a new or revised wage determination.”  (App. 
amended br. at 11)  GP argues that it was entitled to a clear warning pointing out that its 
only ability to recover for increased labor costs was to adjust its pre-award option bids 
upward to account for the possibility of an increase in wages at option exercise.  (id.)  
Second, GP argues that the conflicting language of FAR 52.222-30 and FAR 22.404-12 
create ambiguity that should be decided in GP’s favor.  (App. amended br. at 12)  Finally, 
the Contract was for a total potential term of up to 5 years.  (Finding 1)  FAR 22.404-
2(c)(1) includes, “Generally, this method is used in construction-only contracts (with 
options to extend the term) that are not expected to exceed a total of 3 years.”  (App. 
reply br. at 5-6, FAR 22.404-12(c)(1))  GP argues that, based on the 3 year language in 
FAR 22.404-2(c)(1), the CO should not have selected the “none” option. 
 

19 
For its part, the AF argues it complied with the requirements associated with FAR 
22.404-12(c)(1).  The Solicitation incorporated the mandatory clause at FAR 52.222-30, 
warning that no price adjustment would be provided.  (Gov’t br. at 2)  Accordingly, by 
virtue of FAR 52.222-30 alone, offerors12 were provided the opportunity to propose 
separate prices for each option period.  The AF also points out that offerors were required 
to complete the Line Item List, proposing separate unit prices and line item prices for the 
base period and each option period.  The Line Item List provides each service that may 
be ordered and the estimated quantity to be ordered.  (Gov’t br. at 5)  The AF concludes 
by stating that it satisfied the requirements of FAR 22.404-12(c)(1) and it was not 
required to highlight a contract clause appellant should have read.  See Systems & 
Computer Information, Inc., 78- 1 BCA ¶ 12,946.  (Gov’t br. at 5-7) 
 
GP May Challenge the AF’s Adherence to FAR 22.404-12(c) 
 
As a preliminary matter I must determine if GP has a cause of action to challenge 
the AF’s adherence with FAR 22.404-12.  In this regard I follow the guidance of the 
Court of Appeals for the Federal Circuit in Freightliner Corp. v. Caldera, 225 F.3d 1361 
(Fed. Cir. 2000):   
 
In order for a private contractor to bring suit against the 
Government for violation of a regulation, that regulation must 
exist for the benefit of the private contractor. See Cessna, 126 
F.3d at 1451; Rough Diamond Co. v. United States, 173 Ct. 
Cl. 15, 351 F.2d 636, 640-42 (Ct. Cl. 1965). If, however, the 
regulation exists for the benefit of the Government, then the 
private contractor does not have a cause of action against the 
Government in the event that a contracting officer fails to 
comply with the regulation. See Cessna, 126 F.3d at 1451-52; 
Rough Diamond, 351 F.2d at 642. 
 
(Id. at 1365)  FAR 22.404-12(c) starts with:   
 
The contracting officer must include in fixed-price contracts a 
clause that specifies one of the following methods, suitable to 
the interest of the Government, to provide an allowance for 
any increases or decreases in labor costs that result from the 
inclusion of the current wage determination at the exercise of 
an option to extend the term of the contract:   
 
                                              
12 We use “offeror” synonymously with bidder and proposer. 

20 
(emphasis added) (Finding 3).  What follows are four “Methods” to provide relief to the 
contractor when a new wage determination is incorporated into their contract at an option 
exercise as follows:   
 
(1) The “none” method.  The contracting officer, before award, may allow the 
offerors to increase the price of each option year to account for the risk of a new 
wage determination increasing the wage rate being incorporated into the contract 
upon option exercise. 
 
(2) The “separately specified pricing” method.  The contracting officer may 
include in the contract a separately specified pricing method that permits an 
adjustment to the contract price or contract labor unit price at the exercise of each 
option to extend the term of the contract. 
 
(3) The “percentage” method.  The contracting officer may provide for a contract 
price adjustment based solely on a percentage rate determined by the contracting 
officer using a published economic indicator incorporated into the solicitation and 
resulting contract. 
 
(4) The “actual” method.  The contracting officer may provide a computation 
method to adjust the contract price to reflect the contractor’s actual increase or 
decrease in wages and fringe benefits (combined) to the extent that the increase is 
made to comply with, or the decrease is voluntarily made by the contractor as a 
result of incorporation of, a new or revised wage determination at the exercise of 
the option to extend the term of the contract. 
 
(Finding 3, 5-7)  It is clear that each of these four “methods” benefits contractors by 
allowing them to account for the risk of mandatory inclusion of new wage determinations 
increasing wages at each option exercise.  Therefore, GP has a cause of action to 
challenge the AF’s compliance with FAR 22.404-12 and may pursue its defense. 
 
FAR 22.404-12(c)(1) is Not Limited to Contracts Lasting Three Years 
 
FAR 22.404-12(c)(1) ends with the following language:   
 
(1)  The contracting officer may provide the offerors the 
opportunity to bid or propose separate prices for each option 
period. The contracting officer must not further adjust the 
contract price as a result of the incorporation of a new or 
revised wage determination at the exercise of each option to 
extend the term of the contract.  Generally, this method is 
used in construction-only contracts (with options to extend 
the term) that are not expected to exceed a total of 3 years. 

21 
 
(Finding 3) (Emphasis added)  GP argues that because its contract had a base year and 
four option years for a total of five years it was improper for the AF to select Method (1).  
(App. reply br. at 5-6)  I disagree.  The word “Generally” cannot reasonably be 
interpreted as mandatory language imposing a strict limit on the use of 22.404-12(c)(1) to 
contracts lasting no more than three years.  It may well have been “inappropriate” for the 
AF to select Method (1) for a five year contract, but it was within the CO’s discretion.  I 
would hold GP’s interpretation is unreasonable.   
 
There is No Ambiguity Between FAR 52.222-30 and FAR 22.404-12 
 
GP argues:   
 
At a minimum, the provisions of FAR 52.222-30 and 
FAR 22.404-12 create an ambiguity within the Contract with 
respect to how increased costs resulting from the 
incorporation of a new wage determination during the option 
years will be handled. 
 
(Emphasis added) (App. br. at 14)  The flaw in this argument is readily seen in GP’s own 
language.  FAR 22.404-12 is not “within the Contract.”  (Id.)  I deal with both FAR Part 
52 and Part 22 in this decision.  FAR Part 52 contains clauses that may be incorporated 
into contracts, the other FAR Parts do not.  FAR 22.404-12 provides policy guidance to 
procurement officials to include which FAR Part 52 clauses should be incorporated into 
contracts.   
 
The AF cites well-known contract interpretation case precedence:   
 
The contract terms are interpreted and read as a whole, giving 
reasonable meaning to all of its parts, and without leaving ‘a 
portion of the contract useless, inexplicable, void, or 
superfluous.’  Certified Construction Company of Kentucky, 
LLC, 15-1 BCA ¶ 36,068 at 176,133. 
 
(Gov’t br. at 11)  Since FAR 22.404-12 is not incorporated into the “whole” of the 
contract this contract interpretation law cannot apply.  While ambiguities may exist 
between clauses or language within a contract, I know of no precedent finding an 
ambiguity between contract clauses within a contract and FAR policy guidance outside of 
a contract as is the case with FAR 22.404-12 and FAR 52.222-30.  There is no ambiguity. 
 
Line Item List 
 

22 
I disagree with the AF’s argument that the fact offerors were required to break out 
prices by line item affords GP the clear warning it believes it is entitled to.  I see nothing 
in line item pricing that informs offerors that the only way to protect themselves from 
wage determination price increases at option exercise was to increase option prices before 
award. 
 
Other than FAR 522.222-30(b), the AF did not Inform GP of its Rights and Risks Under 
FAR 22.404-12(c)(1) 
 
It is undisputed that except for FAR 52.222-30(b), the AF did not inform GP in the 
solicitation, or otherwise, that its only protection against increases in wages at option 
exercise was to adjust its bid prices upward to cover the risk.  (App. br. at 2- 6)  The AF 
does not point to any evidence, other than the language of FAR 52.222-30(b), providing 
such notice to GP.  (Finding 10)  I do not consider FAR 52 222-30(b) to provide such 
notice. 
 
FAR 52.222-30(b) is Unambiguous 
 
The contract incorporates FAR 52.222-30(b) that read in part:   
 
(b)  The Contracting Officer will make no adjustment in 
contract price, other than provided for elsewhere in this 
contract, to cover any increases or decreases in wages and 
benefits as a result of- 
 
(1)  Incorporation of the Department of Labor’s wage 
determination applicable at the exercise of the option to 
extend the term of the contract; 
 
(Finding 5)  I agree with the AF that FAR 52.222-30(b) is unambiguous for our 
purposes
13.  It clearly states that the contracting officer “will make no adjustment in 
contract price” for increases in wages resulting from incorporation of DOL wage 
determinations at option exercise.  However, this case involves other FAR policy 
provisions that must be complied with. 
. 
The Obligation to Read the Contract Does not Extend to FAR Policy  
 
The AF argues:   
                                              
13 FAR 22.407(e) directs that FAR 52.222-30 address both the None or Separately 
Specified Pricing Method.  (Finding 4)  It says nothing about the Separately 
Specified Pricing Method, as do FAR 52.222-31 & 32 do for their pricing 
methods.  (Finding 4, 5)  This is another flaw in FAR 52.222-30.  

23 
 
By incorporating the mandatory clause at FAR 52.222-30 and 
providing “offerors the opportunity to bid or propose separate 
prices for each option year,” Respondent met the 
requirements of FAR 22.404-12(c)(1). Respondent was not 
required to highlight a contract clause Appellant should have 
read. 
 
(Gov’t br. at 2, 17)  I agree that the AF “was not required to highlight a contract clause 
Appellant should have read.”  However, this argument does not apply to FAR 22.404-12(a) & 
(c) and FAR 22.407 that are not contract clauses and not within the scope of the above quote.  
They set forth FAR policy, and are not “contract clause[s] that Appellant should have read.”  I 
would not impose upon offerors an obligation to review FAR’s numerous “Parts” to ferret out 
and interpret FAR policy guidance such as FAR 22.404-12 and FAR 22.407 that are not 
contract clauses “within the contract.” 
 
Interpreting the First Sentence in FAR 22.404-12(c)(1) 
 
FAR 22.404-12(c)(1), Method (1), selected by the AF for Contract 0002 reads:   
 
(1)  The contracting officer may provide the offerors the 
opportunity to bid or propose separate prices for each 
option period.  The contracting officer must not further 
adjust the contract price as a result of the incorporation of 
a new or revised wage determination at the exercise of 
each option to extend the term of the contract. Generally, 
this method is used in construction-only contracts (with 
options to extend the term) that are not expected to 
exceed a total of 3 years. 
 
(Finding 3) (Emphasis added)  I first deal with the perplexing use of the word “may” in 
the first sentence.  Taken literally it means “may” or “may not.”  The “may not” 
interpretation seemingly would allow the CO to prohibit offerors from pricing option 
years to account for wage determination risk.  This is an absurd interpretation because it 
is totally at odds with the intent expressed in FAR 22.404-12(c) to protect offerors.  
Offerors have the unilateral right to price their offers any way they want.  Contracts 
should be interpreted so as to avoid such absurd results.  Ash Britt, Inc., ASBCA 
Nos. 55613, 55614, 09-1 BCA ¶ 34,086 at 168,536 (“Contract construction should avoid 
absurd results.”  (Citation omitted)); Applied Companies, ASBCA No. 50593, 05-2 BCA 
¶ 32,986 at 163,478 (“Construction of contract terms should avoid absurd and whimsical 
results.”  (Citation omitted)); C.S. McCrossan Construction, Inc., ASBCA No. 49647, 
00-1 BCA ¶ 30,661 at 151,381 (“A contract should be construed in a reasonable manner 
to ‘avoid absurd and whimsical results.’”  (Citation omitted))  To avoid the absurd result I 

24 
will not interpret the word “may” in FAR 22.404-12(c)(1) literally.  The word “may” 
without “may not” excludes any interpretation limiting an offeror’s right to price its offer.  
Therefore, the most reasonable interpretation under these circumstances is to interpret 
“may” to mean “will.”  Otherwise, the first sentence might be unenforceably vague.  
Metro Machine dba General Dynamics NASSCO Norfolk, ASBCA No. 61817, 20-1 BCA 
¶ 37633 at 182,713.  Interpreting “may” to mean “will” resolves this potential “can of 
worms” and compliments our conclusion that FAR 22.404-12(c) requires the CO to 
provide notice to offerors of how they can protect themselves from the risks associated 
with the “none” Method (1).  This interpretation deals with an ambiguity, but does not 
substantially contribute to the interpretation discussed below that I rely upon to reach my 
suggested decision. 
 
FAR 22.404-12(c) is Unambiguous 
 
Next I consider the language of FAR 22.404-12(c):   
 
(c)  The contracting officer must include in fixed-price 
contracts a clause that specifies one of the following 
methods, suitable to the interest of the Government, to 
provide an allowance for any increases or decreases in 
labor costs that result from the inclusion of the current 
wage determination at the exercise of an option to extend 
the term of the contract:   
 
(Emphasis added)  The CO “must” afford the offerors and opportunity to “provide an 
allowance for any increases or decreases in labor costs that result from the inclusion of 
the current wage determination at the exercise of an option to extend the term of the 
contract.”  Not-with-standing FAR 22.404(c)(1)’s interpretation, FAR 22.404(c) is clear 
and unambiguous and requires notice to bidders of how to mitigate loss from Method (1). 
 
FAR 52.222-30 Does Not Satisfy the Obligation Imposed by FAR 2.404-12(c) 
 
The AF argues that the “no adjustment” language in FAR 52.222-30 provides 
notice and opportunity to adjust option prices to protect against an increase in the wage 
determination.  The relevant language in FAR 52.222-30 is:   
 
(b)  The Contracting Officer will make no adjustment in 
contract price, other than provided for elsewhere in this 
contract, to cover any increases or decreases in wages and 
benefits as a result of-(1) Incorporation of the Department of 
Labor’s wage determination applicable at the exercise of the 
option to extend the term of the contract; 
 

25 
(Finding 4).  I disagree that this language provides sufficient notice that “The contracting 
officer may14 provide the offerors the opportunity to bid or propose separate prices for 
each option period.”  This language says nothing about the greater risk imposed by 
Method (1) or explains when and how offerors may make adjustments to account for this 
risk.  Methods (2), (3), and (4) detailed in FAR 22.404-12(c) and implementing 
provisions FAR 52.222-31 & -32 explain how the option price will be adjusted, FAR 
52.222-30, Method (1), does not.  (Findings 3, 4-7)  As stated above, FAR 22.404-12(c) 
requires that a warning about the risk of a new wage determination increasing costs and 
an opportunity for offerors to address this risk by pricing the options be included in the 
implementing Part 52 clause.  This is particularly important because under “none” 
Method (1) if wages increase there is no ability to recover increased costs after award as 
there is with the other three methods.  The prohibition against post award option price 
increase in FAR 52.222-30 is extremely harsh and FAR 22.404-12(c) demands that it be 
made clear to offerors, in the solicitation, that the only opportunity they have to mitigate 
the risk is by pricing the option years before award.  The AF’s interpretation of FAR 
52.222-30 is unreasonable and I would not enforce it. 
  
                                              
14 We interpreted “may” to mean “will” above. 

26 
CONCLUSION 
 
In accordance with the above I would sustain GP’s appeal. 
 
Dated:  September 16, 2021 
 
 
 
 
 
 
 
 
 
I certify that the foregoing is a true copy of the Opinion and Decision of the 
Armed Services Board of Contract Appeals in ASBCA No. 61434,
 Appeal of Gulf 
Pacific Contracting, LLC, rendered in conformance with the Board’s Charter. 
 
Dated:  September 16, 2021   
 
 
 
 
 
CRAIG S. CLARKE 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
 
 
 
PAULLA K. GATES-LEWIS 
Recorder, Armed Services 
Board of Contract Appeals