DENIED:  December 3, 2024
CBCA 8075
MELWOOD HORTICULTURAL TRAINING CENTER, INC.,
Appellant,
v.
GENERAL SERVICES ADMINISTRATION,
Respondent.
Meghan A. Douris and Zachary F. Jacobson of Seyfarth Shaw LLP, Seattle, WA,
counsel for Appellant.
Jay Bernstein and David C. Charin, Office of General Counsel, General Services
Administration, Washington, DC, counsel for Respondent.
Before Board Judges SHERIDAN, KULLBERG, and O’ROURKE.
SHERIDAN, Board Judge.
This appeal presents the issue of whether proposed direct labor hours or actual labor
hours worked should be used to calculate the annual price adjustments for labor cost
increases under the Fair Labor Standards Act and the Service Contract Act in the contract’s
first option year.  Because the clear language in Federal Acquisition Regulation (FAR)
52.222-43 (48 CFR 52.222-43 (2022)) requires that adjustments to labor rates reflect actual
increases of wages or benefits, we deny appellant’s appeal.
The appeal was submitted for decision on the written record pursuant to Rule 19 ((48
CFR 6101.19) (2023)).


CBCA 8075 2
Background
The Contract
The General Services Administration (GSA) awarded a firm-fixed-price contract to
Melwood Horticultural Training Center, Inc. (Melwood or appellant) in January 2022. 
Melwood is a 501(c)(3) nonprofit and an AbilityOne Program participant through
SourceAmerica.  Under the contract, Melwood provides custodial services at the Franconia
Warehouse Complex for the GSA Region 3 National Capital Region Building Services
Branch.
The contract allows for economic price adjustments and includes options for four
follow-on years with an additional possible six-month extension.  The maximum period of
performance is five-and-a-half years, ending in July 2027.
The contract, which commenced on February 1, 2022, included base period labor
hours as follows:  18,636 hours for janitors; 3502 hours for infrequent janitors; and 2008
hours each for the lead worker, foreman, and site supervisor.  In outlining these hours, the
contract contains a price adjustment clause, which states that “[p]rice adjustments for all
[option years] shall be established in accordance with FAR 52.222-43, Fair Labor Standards
Act and Service Contract Act – Price Adjustment (Multiple Year and Option Contracts).” 
In addition, the price adjustment clause states that “[a]djustments shall be based upon actual
costs and limited to allowable costs associated with the applicable Labor Categories.”
(emphasis added).
Contract Performance and Option Year One Execution
GSA paid Melwood $1,145,890.12 for Melwood’s performance on the contract’s base
year, which ran from February 1, 2022, to January 31, 2023.  Ahead of option year one, GSA
gave Melwood a ninety-day notice of its intent to exercise option year one.  In this
November 1, 2022, notice, GSA provided the relevant Department of Labor wage
determination and asked Melwood to notify GSA within thirty days if Melwood thought it
was entitled to a price adjustment.  In response to this notice, appellant asked GSA in
December 2022 if the pricing adjustment was to be based on actual as opposed to proposed
hours.  GSA replied that the adjustment was to be based on actual costs and asked Melwood
to “provide payrolls so that we [can] review based on [the] actuals.”
On January 6, 2023, Melwood provided GSA with a price adjustment proposal based
on the contract’s base year hours and requested a $29,670.19 increase for option year one. 
GSA then asked Melwood for its “base year payrolls” in order to review the proposal.  As
Melwood did not provide its base year payroll in a timely manner, GSA’s contract

CBCA 8075 3
modification PS0003 to continue contract performance did not include price adjustments. 
GSA stated it would issue any needed requests for equitable adjustment upon review of the
payrolls.  On January 27, 2023, modification PS0003 was approved by the parties without
the yet-to-be-reviewed price adjustment for option year one.  The contract value for option
year one was $1,124,891.16.
Between February and August 2023, Melwood provided GSA with two revised option
year one proposals as well as several emails following-up on its request for equitable
adjustment.  In September 2023, GSA provided Melwood with a counteroffer in which GSA
concluded that the number of hours Melwood’s employees actually worked in the base year
differed from the hours listed in Melwood’s option year one proposal.  GSA found that the
allowable adjustment on option year one was $16,542.63.  Melwood responded, stating that
it was owed $24,273.50 because it was owed wage and fringe benefits for “the hours in the
contract.”
Certified Claim
Melwood submitted its certified claim on November 17, 2023, requesting $29,670.19
in additional compensation for option year one.  This amount is $13,127.56 more than GSA’s
September 2023 adjustment offer of $16,542.63.
Contracting Officer’s Final Decision (COFD)
A COFD was issued in January 2024.  The contracting officer denied the claim in full
because Melwood’s calculated wage increase was based on proposed costs rather than actual
costs and its method of calculation violated FAR 52.222-43.  Melwood, in turn, filed its
appeal and complaint with the Board on April 15, 2024.
Discussion
We recently decided Melwood Horticultural Training Center, Inc. v. General Services
Administration, CBCA 7989 (Dec. 3, 2024), which had similar facts and law to this case. 
In that case, the Board determined that, even though the parties had been calculating price
adjustments through projected hours in the contract for prior option years, that did not release
the appellant from providing proof of actual costs when the Government requested such
proof in accordance with the plain text of FAR 52.222-43.  Prior dealings between the parties
in performing a contract does not change the plain language of the contract, and extrinsic
evidence is not used when the contract’s language is clear.  The same reasoning applies here.

CBCA 8075 4
Decision
The appeal is DENIED.
    Patricia J. Sheridan      
PATRICIA J. SHERIDAN
Board Judge
We concur:
    H. Chuck Kullberg            Kathleen J. O’Rourke    
H. CHUCK KULLBERG KATHLEEN J. O’ROURKE
Board Judge Board Judge