DOCUMENT FOR PUBLIC RELEASE. The decision issued on the date below is 

subject to an ASBCA Protective Order. This version has been approved for public 

release.

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of - )

)

Innovative Technologies, Inc. ) ASBCA Nos. 61686, 62185

)

Under Contract No. HQ0028-07-D-0003 )

APPEARANCE FOR THE APPELLANT: Andrew P. Hallowell, Esq.

 Pargament & Hallowell, PLLC

 Washington, DC

APPEARANCES FOR THE GOVERNMENT: Leslie K Stolasz, Esq.

 General Counsel

Thomas Trinti, Esq. 

 Trial Attorney 

 Defense Media Activity 

 Riverside, CA 

Christopher J. Hilborn, Esq. 

 Air Force Senior Trial Attorney

OPINION BY ADMINISTRATIVE JUDGE SMITH 

These appeals concern the basis and amount of an equitable adjustment to 

which appellant, Innovative Technologies, Inc. (ITI), is entitled following performance 

of ITI’s 2006-2011 service contract with respondent, the Defense Media Agency 

(DMA). DMA acknowledges that ITI is entitled to an equitable adjustment but 

disputes the entitlement basis claimed by ITI. We are proceeding under Rule 11, 

supplemented by an oral argument, to determine entitlement. We agree that an 

equitable adjustment is due, but ITI’s entitlement is limited to a discrete and 

comparatively small element of its claim. 

FINDINGS OF FACTS 

Solicitation and Contract Structure 

 Solicitation No. HQ0028-06-R-0023 (the solicitation) 1

 was issued on June 19, 

2006, for a firm fixed price requirements contract (R4, tab 5 at 1, 54). The solicitation 

1

 We refer to both the solicitation, as amended, and the almost-identical contract (R4, 

tabs 5 and 11 respectively) as “the contract” and cite to R4 tab 11 unless there is 
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2 

was for an “engineering services contract” and each of the 40 Contract Line Item 

Numbers (CLINS) indicated that they were for “services” (id. at 2-25, 54). 

 The contract was awarded and administered by DMA to provide customer 

agencies in the Department of Defense with visual information/media system 

installation services and equipment based upon subsequent task descriptions, proposals 

and awarded task orders (TOs) that were also administered by DMA (R4, tab 3 at 2, 

tab 11 at 40, tab 540 at 1). The contract was patently for the furnishing of services in 

the United States through the use of service employees, so it was governed by the 

Service Contract Act (SCA), 41 U.S.C. §§ 6701-6707. 

 An earlier engineering service contract between the parties (the predecessor 

contract) had been performed between 2001 and 2006 (R4, tabs 1-2). And there is 

some indication, though no supporting evidence, that a still-earlier engineering service 

contract between the parties occurred between 1998 and 2001 (R4, tab 547 at 2). 

 The solicitation required contractors to propose fully burdened fixed hourly 

rates for several categories of labor (R4, tab 11 at 34). Offerors were instructed that 

“[p]roposed labor rates should be ‘loaded’ rates, that is including base hourly wages 

paid, all fringes and benefits as required by the Department of Labor; G&A, 

Overhead(s) and Profit” (R4, tab 11 at 35). During the source selection for the 

contract, DMA’s acquisition personnel were instructed to compare offerors’ proposed 

labor rates with applicable “Department of Labor rates” (R4, tab 3 at 11) which are 

defined by Department of Labor (DOL)-issued wage determinations (WDs). 

The labor rates set by the contract constituted “the firm-fixed hourly labor rates 

at which all task order proposals for services must be submitted” (R4, tab 11 at 35). 

After award, the parties were to negotiate a firm fixed price for each task order (TO) 

(R4, tab 11 at 40). 

Relevant Federal Acquisition Regulation (FAR) Clauses 

The contract included FAR 52.222-42, STATEMENT OF EQUIVALENT 

RATES FOR FEDERAL HIRES (MAY 1989), which is required in SCA contracts by 

FAR 22.1006(b). FAR 52.222-42 provided several labor rates applicable to Federal 

employees that perform the functions expected to be performed by workers2

 for this 

contract (R4, tab 11 at 29-30). 

a reason to distinguish one from the other in which case we refer to “the 

solicitation” (tab 5) and “the awarded contract” (tab 11). 

2

 We use the term “workers” to broadly include employees, independent contractors, 

subcontractor employees, etc. 
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3 

FAR 52.222-41 (the SCA clause) describes the wage determination process in 

contracts subject to the SCA and is required in service contracts. FAR 22.1006. But 

contrary to FAR 22.1006, the SCA clause was not included in full text or incorporated 

by reference in the contract – or in any of the post-award TOs (R4, tab 11, tab 540 

at 1). DMA later described the omissions as “error” and “administrative oversight,” 

but could not provide details on these mistakes (R4, tab 550 at 10; app. mot. at ex. A, 

response to appellant’s Interrogatory Nos. 3, 11). 

Our comparison of the predecessor contract with the contract here suggests that 

DMA’s administrative oversight was to omit from the current contract FAR 52.212-5 

CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT 

STATUTES OR EXECUTIVE ORDERS--COMMERCIAL ITEMS (AUG 2000), 

which lists 37 FAR clauses, including the SCA clause, that can be check-marked to 

incorporate them by reference (R4, tab 1 at 32-35). DMA included FAR 52.212-5 in 

the predecessor contract and checked 12 of the optional clauses, including the SCA 

clause (id.). The omission of FAR 52.212.5 may have been due to confusion between 

it and a similarly titled Department of Defense Supplement to the Federal Acquisition 

Regulation (DFARS) clause, 252.212-7001, which lists various DFARS clauses to be 

checked to incorporate them by reference (R4, tab 1 at 38-39, tab 11 at 35). Slightly 

different versions of DFARS 252.212-7001 were included in both the predecessor 

contract and this contract (R4, tab 1 at 38-39, tab 11 at 35). 

Regardless of how it occurred, DMA’s omission of FAR 52.212-5, and its 

12 checked clauses incorporated by reference, appears to be a considerable oversight. 

But there is no evidence that the omission was intentional or focused upon the SCA 

clause or any particular aspect of the SCA at all.3

 Instead, it appears to have been a 

bona fide administrative oversight in the assembly of the contract. 

Attachments to the Contract and Wage Determination No. 35 

The “EXHIBITS AND ATTACHMENTS” section of the contract indicated 

that “[t]he following documents, exhibits or other attachments, if any, form a part of 

this document” (R4, tab 11 at 29). It listed an Exhibit A, which was the performance 

work statement, and Attachments 1, 2, and 3. Id. 

3

 FAR 22.1006 also requires an agency to expressly indicate if a contract is exempt 

from the SCA via the inclusion of other FAR clauses that notify the parties of 

the exemption. See FAR 22.1006(a)(2). No exemption language was in the 

contract here. 
DOCUMENT FOR PUBLIC RELEASE. The decision issued on the date below is 

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4

Attachment 1 was described as “Contractor Labor Categories (Contractor FillIn)” (R4, tab 11 at 29), and the document itself was a one-page “Contractor Labor 

Categories Summary” that listed eight job description labels (Project Manager, 

Engineer, Equipment Specialist, Technical Writer, Cable Installer, Draftsman, 

Clerical, and Electronic Helper) with blank areas for offerors to propose “Fully 

Burdened/Escalated Rates” that would apply for the base year and each of the four 

option years for each of the eight job descriptions (R4, tab 11 at 49). 

Attachment 2 was a series of lists of equipment that might be ordered in the 

TOs that are not germane to this dispute (R4, tab 11 at 50-58).

Attachment 3 was described as “Wage Determination No. 94-2103 REV (35)”

effective on May 23, 2006 (WD35) (R4, tab 11 at 29). The wage determination 

document indicated that WD35 was the 35th revision of WD No. 94-2103 (R4, tab11 

at 59). WD35 was geographically applicable to Washington, DC, and several nearby 

counties in Maryland and Virginia, generally considered to be the Washington, DC, 

metropolitan area. Id.

Amendment 2 to the solicitation, issued on July 19, 2006, and acknowledged by 

ITI in its price proposal, responded to offeror questions and provided clarifications, 

one of which was “[O]n page 56 of 62 of solicitation 3.1.2 Site Survey/ Report, due to 

administrative error delete . . .T-ASA Trip Report Format, Attachment (3).

Attachment (3) is the Wage Determination” (R4, tab 7 at 2, tab 9 at 14).

DOL publishes WDs and WD revisions for all locations within the United States 

and for some foreign locations, which are required to be included in virtually all service 

contracts. FAR 22.1007. WDs define minimum wage and fringe benefits to be paid to 

numerous categories of contractor employees performing a wide range of services for 

the federal government (R4, tab 11 at 59-68); see also 41 U.S.C. § 6703(1)-(2). 

WDs also describe a multi-part “conformance” process where contractor job 

descriptions that are not already listed in a WD can be assessed by DOL and their 

minimum wages and benefits established (R4, tab 11 at 67-68). See also FAR 

22.1019; 52.222-41(c)(2)(ii). It is the contractor’s responsibility to initiate the

conformance process where applicable. See FAR 22.1019(a) (requiring that “[t]he 

contractor shall initiate the conforming procedure before unlisted classes of employees 

perform contract work”); see also Collins Int’l Serv. Co. v. United States, 744 F.2d 

812, 814-15 (Fed. Cir. 1984) (describing contract provision requiring the contractor to 

classify service employees not included in DOL wage determination distributed to 

bidders); Northern NEF, Inc., ASBCA No. 44996, 94-3 BCA ¶ 27,094 at 135,004

(noting that “the burden of inaccurate or missing wage rate classifications is placed on 
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5 

the contractor”) . The process for preparing a conformance request was described in 

the contract (R4, tab 11 at 67-68). 

ITI was located in Chantilly, Fairfax County, Virginia, where WD35 applied 

(R4, tab 11 at 1, 59). The contract did not identify any specific locations outside the 

scope of WD35 where TOs could or would be performed, but the predecessor contract 

had TOs performed in several locations worldwide, in addition to Chantilly VA (R4, 

tab 10 at 39-51). 

The Parties’ Pre-Award Actions 

a. The Predecessor Contract 

In contrast to the contract here, the predecessor contract included the mandatory 

FAR SCA clause, but did not contain any WDs (R4, tab 1 at 34-35). The solicitation 

for the predecessor contract contained bidder questions and answers that described 

how WDs would be issued, and TO prices adjusted accordingly (R4, tab 548 at 54). It 

is unclear from the record whether and how WDs were actually used by either party 

during the performance of the predecessor contract. 

b. DMA’s Acquisition Plan 

The SCA applies to service contracts, whether or not the contracting parties 

expressly acknowledge that fact. Alutiiq Com. Enter., LLC, ASBCA No. 61503, 

20-1 BCA ¶ 37,506 at 182,199 n.7. And, as discussed above, there is no allegation 

(or evidence that we have found) that DMA intended to exempt or preclude the 

contract from the SCA while keeping all other aspects essentially the same as the 

predecessor contract. Instead, the Source Selection Evaluation Guide for this contract 

indicated that DMA would “determine whether the offerors used the applicable 

Department of Labor (DoL) direct labor rates (Service Contract Act) for the requested 

labor requirements (skill mix)” and that DMA would “review whether the offerors 

used the applicable DoL health and welfare rates to the specific labor requirements” 

(R4, tab 4 at 15). The Source Selection Plan stated that “[t]he offeror’s proposed 

prices for labor categories will be reviewed and compared to the government 

equivalent rates and Department of Labor rates (where applicable)” (R4, tab 3 at 11). 

That said, DMA indicated in discovery that there is no documentation or evidence that 

these source selection comparisons actually took place (app. mot. at ex. A, response to 

appellant’s Interrogatory No. 8). 

DMA indicated in a 2017 letter (well after the conclusion of the contract) that it 

“awarded the subject contract . . . with the understanding that the Service Contract Act 
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6 

of 1965 applied . . . just as it had expressly applied to the nearly identical [predecessor 

contract] awarded to ITI in 2001” (R4, tab 540 at 1). 

DMA’s factual assertion that “[w]hile planning for the . . . contract, the Agency 

understood that the SCA would apply” (gov’t mot. at 6), is unsupported in the 

pre-award record, except for the terms of the solicitation itself. But we also cannot 

agree with ITI’s contention that the parties did not consider the SCA applicable (app. 

opp’n, Addendum Nos. 5, 12 at 2-3). 

ITI’s Proposal 

Repeating the contract requirement for labor rates almost verbatim, ITI’s price 

proposal of July 20, 2006, included “PROPOSED LABOR RATES FOR 

PERFORMANCE OF SERVICES” that represented in sections B-1 and B-2 that 

“[t]he labor rates proposed . . . are ‘loaded labor rates’ . . . [that] include base hourly 

wages paid, all fringes and benefits required by the Department of Labor, Overhead(s), 

G&A, and Profit . . . .” (R4, tab 9 at 22). ITI also said “[i]t is anticipated that the 

loaded labor rates submitted will become part of any contract resulting from this 

proposal and will constitute the firm-fixed hourly labor rates at which all task orders 

for services will be submitted by ITI” (id.). 

ITI’s technical proposal indicated in the “Compensation” section that 

“[a]nnually, the firm’s management reviews such data as the Bureau of Labor 

Statistics ‘National Compensation Survey’; industry salary surveys, USDOL Service 

Contract Act Wage Determinations; and related data (such as the various Job sites on 

the Internet) to ensure our compensation structure remains fair and competitive with 

the market” (R4, tab 10 at 38 (emphasis added)). 

ITI’s proposal referred to ITI’s “employees” throughout, including a check box 

that ITI’s average number of employees was between 101-250 and a specific 

description of ITI as “a $20 million dollar company with 170 employees” (R4, tab 9 

at 17, tab 10 at 52). Our review of ITI’s proposal did not find any express or implicit 

indication that ITI would perform the contract with independent contractors or 

subcontractors instead of ITI’s own employees (R4, tabs 9-10). 

Despite the instruction to do so, ITI’s proposal did not include a filled-in 

version of Attachment 1 (R4, tab 11 at 49). Nor did ITI adopt the labor categories or 

labor rates contained in WD35. Instead, ITI’s proposal listed 51 labor categories that 

for the most part were not listed in the solicitation, Attachment 1, or in WD35 (R4, 

tab 9 at 23, 29-55). ITI proposed a labor rate for each of its 51 labor categories that 

increased incrementally from the base year through each of four option years. Id.

at 30-33. 
DOCUMENT FOR PUBLIC RELEASE. The decision issued on the date below is 

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7 

Based upon our review of the record, neither ITI nor DMA sought to obtain 

conformance WDs from DOL for ITI’s 51 labor categories (see also R4, tab 550 

at 36). Nor did ITI explain why it used its own labor categories or why ITI chose not 

to obtain conformances for them. It is unclear how DMA compared ITI’s price 

proposal to other offerors’ proposals without an apples-to-apples comparison of labor 

categories – as the solicitation contemplated with Attachment 1. Without identical 

labor categories between ITI’s proposal and WD35, or a conformance before or after 

award, it is unclear whether all, or any, of the labor rates proposed by ITI, accepted by 

DMA, and memorialized in the contract were in compliance with WD35 (R4, tab 9 

at 23, 30, tab 11 at 59-65). 

It is also unclear whether or how ITI used WD35 or any other wage 

determination internally when proposing its labor rates for the contract (R4, tab 9 

at 22, tab 11 at 35). Although ITI proposes facts regarding how ITI interpreted the 

presence of WD35 and the lack of the SCA clause in the solicitation, which we address 

below, the record does not contain any contemporaneous documents showing whether 

ITI internally considered it unusual, or even noticed, that a WD was included in the 

solicitation but the SCA clause was not. 

Although ITI submitted two pre-bid questions about other matters, ITI did not 

submit any pre-bid questions regarding the applicability of the SCA, the omission of 

the SCA clause, or the applicability of WD35 (R4, tabs 7, 552). 

ITI does not contend, or offer any evidence, that it would have proposed 

different contract labor rates, or acted differently in any other way, if the SCA clause 

had been incorporated into the solicitation. And we have found no evidence in the 

record regarding ITI’s contract labor rates other than the technical proposal, quoted 

above, where ITI said that it compared its compensation to “USDOL Service Contract 

Act Wage Determinations” (R4, tab 10 at 38). 

Based upon the contents of the solicitation and ITI’s proposal, we find as a fact 

that ITI’s proposal indicated that the contract would be performed by ITI’s own 

employees who would be paid consistent with ITI’s proposal which was, in turn, 

compliant with DOL and SCA requirements (R4, tabs 9-10). 

Award and Performance of the Contract 

 The contract was awarded to ITI on November 7, 2006, as Contract 

No. HQ0028-07-D-0003 (R4, tab 11). Performance occurred between 

2006 and 2013, with ITI completing 155 TOs in 100 locations in the U.S. and abroad, 

both inside and outside of the geographic scope of WD35 (R4, tabs 11-527, 529-537). 
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TOs ranged widely in dollar amount from a few thousand dollars to several million 

dollars (R4, tab 2). 

WD No. 94-2103 was superseded after 2006 by WD No. 05-2103 (R4, tab 530). 

Thus, WD35 only applied during the base contract year and none of the four option 

years. As with the solicitation and award periods, neither party appears to have 

mentioned WD35 or any WD to the other during the entire course of performance. 

After this dispute arose, DMA acknowledged that “there were numerous other Wage

Determinations which were omitted that should have been incorporated into the 

contract to reflect the various locations throughout the U.S. where work was 

performed during the five and one half year contract term” (R4, tab 540 at 1).

The record does not reflect whether, after contract award, ITI internally 

considered any WDs when proposing for, or performing, the TOs. Consistent with the 

contract requirement, and ITI’s contract proposal, ITI’s TO proposals used the contract 

labor rates for the labor categories listed in ITI’s proposal (compare, e.g., R4, tab 9 

at 23 with tab 66 at 9, tab 428 at 22). ITI’s TO proposals said “ITI proposes to furnish 

material and labor in accordance with above quotation” (see, e.g., R4, tab 66 at 9, 

tab 428 at 22).

There is no indication in the record that DMA audited, questioned, or otherwise 

concerned itself whether ITI actually paid its workers consistent with the contract 

labor rates that were incorporated into ITI’s TO proposals. As became evident later, 

ITI did not actually pay its workers consistent with the contract labor rates, at least in 

some instances (R4, tabs 535, 545, 550). Similarly, either by conscious choice or 

based on a mistaken conclusion that it was not required by contract or the SCA, during 

the first year of the contract, ITI paid at least some of its workers less than the rates 

required by WD35.4

 Id. ITI also paid some of its workers less than the rates required 

by WDs that applied beyond the geographic scope and timeframe of WD35. Id.

In sum, despite the applicability of the SCA and inclusion of WD35 in the 

contract, both parties failed to mention or take action upon the numerous WDs that 

applied before and during ITI’s contract performance. 

4 This is contrary to the SCA clause which requires that “[e]ach service employee . . . 

shall be paid not less than the minimum monetary wages . . . as specified in any 

wage determination attached to this contract.” FAR 52.222-41(c)(1). 
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DOL’s Investigation, Assessment, Enforcement, and Settlement with ITI 

In May 2012, as ITI was completing its final task orders, “informants” notified 

DOL of several different types of alleged labor violations (R4, tab 535 at 2 (para. 8), 

tab 550 at 2-3). DOL promptly began an enforcement investigation. Id.

Early in DOL’s investigation, DOL told DMA, apparently by telephone because 

there is no contemporaneous written record, that, per FAR 22.1015, DMA should have 

incorporated the SCA clause and all applicable WDs into the contract (R4, tab 550 

at 10) (noting agency’s acknowledgement of same). DOL indicated that the omissions 

should be corrected by contract amendment, which would provide DOL with 

enforcement jurisdiction. Id.

DMA and ITI formally modified the contract in 2012-2013 to add the SCA 

clause, FAR 52.222-4, CONTRACT WORK HOURS AND SAFETY STANDARDS 

ACT – OVERTIME COMPENSATION (JUL 2005) (hereinafter CWHSSA clause),5

and the WDs that applied to all of the timeframes and locations of ITI’s TO 

performance for the duration of the contract, including WD35 (R4, tab 528-34, tab 550 

at 30; app. supp. R4, tab 10). These modifications occurred as follows. 

Modification No. 10 added the SCA and CWHSSA clauses and did not include 

any equitable adjustment language (R4, tab 528). 

Modifications Nos. 11-16 were divided by each of the contract years and added 

a total of approximately 50 WDs applicable in both time and geographic location to 

the work ITI had performed (R4, tabs 529-534). All six modifications included this 

equitable adjustment language: 

The Government shall equitably adjust the contract price to 

reflect any changed cost of performance resulting from 

incorporating the attached wage determination rates or any 

revisions thereto. The execution of this modification by 

Innovative Technologies, Inc. shall not constitute an 

admission or waiver of rights of the company, and all 

rights are reserved. 

5

 The CWHSSA applies to several types of Federal and “federally assisted” contracts, 

not just service contracts. 40 U.S.C. §3141(b). The CWHSSA clause is not 

required to be included in service contracts. Thus, the absence of the CWHSSA 

clause in the contract (prior to modification 10) was not one of DMA’s 

administrative oversights. 
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Id.

ITI’s performance concluded on or about January 12, 2013 (R4, tab 536 at 2). 

Modifications Nos. 11-15 were signed subsequent to completion, on June 25-26, 2013, 

and Modification No. 16 was signed on November 6, 2013 (R4, tabs 529-534).

DOL’s investigation ended in October 2013 with a report that charged ITI with 

several types of labor violations (R4, tab 550 at 54 (noting date of final conference)). 

DOL found that ITI’s “failure to pay [the] prevailing wage mostly resulted from

misclassification of employees” as independent contractors and exempt salaried 

employees (R4, tab 550 at 8-10). DOL also found that ITI had misclassified workers 

as temporary employees or in lower labor categories than their work justified (R4, 

tab 550 at 10-25, 27) and that “[t]he misclassification of employees resulted in wage 

payments inconsistent with the requirements under the applicable wage 

determinations” (R4, tab 550 at 24). We refer to this group of labor violations as 

“misclassification.”

DOL also determined that, in violation of the CWHSSA,6 ITI had failed to pay 

overtime (time and a half wages) where “some employees were just paid straight time 

for all hours worked over 40 in a workweek” (R4, tab 550 at 46). We refer to this as 

“nonpayment of overtime.”

DOL also found that ITI failed to pay appropriate fringe benefits, which we 

refer to as “insufficient fringes” (R4, tab 550 at 26-29).

In some instances, DOL found that, even in the absence of other labor 

violations, the wages actually paid by ITI (which were often below the rates it had 

promised to pay its workers in its proposal and in the contract itself) were lower than 

the applicable WD rates (R4, tabs 550 at 10). We refer to this as “WD underpayment.”

Finally, although no back pay was assessed as a result (in contrast to the other 

violations noted above), DOL determined that ITI violated the SCA by failing to keep 

sufficient employee and payroll records and by failing to post required employee 

notification posters (R4, tab 550 at 29-30).

In sum, we count at least four distinct types of labor violations committed by 

ITI that resulted in monetary assessments by DOL and back pay to ITI’s workers. It is 

important to note that, when comparing job classifications between ITI’s proposal and 

equivalent WDs (i.e. the conformance that ITI should have done prior to award), DOL 

6 DOL’s investigation report is divided into separate SCA (R4, tab 550 at 1-37) and 

CWHSSA sections (id. at 37-55).
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did not find that ITI’s contract labor rates had been set below WD35. Similarly, DOL 

did not analyze or expressly find that ITI’s contract labor rates were below the newer 

WDs that became applicable during contract performance.7

Based upon DOL’s review of all 155 TOs, DOL made a $1,767,807.55 

assessment against ITI to retroactively pay 175 of ITI’s workers the difference 

between what they were actually paid and what they should have been paid if properly 

classified, paid overtime, provided fringes, and paid according to the applicable WDs 

(see R4, tab 535 at 2-3, 5 (DOL back pay claim), 5; R4, tab 550 at 24-25 (DOL back 

wage calculations).8

ITI contested DOL’s $1,767,807.55 assessment, arguing that ITI “. . . did not 

violate the SCA provisions because SCA clauses and wage determinations were not 

incorporated into the contract until the very end of the contract” (R4, tab 550 at 31). 

DOL disagreed and concluded that “[t]here is no reasonable excuse for the violations 

and [ITI’s] unwillingness to make employees whole” (id. at 36). The matter became a 

DOL administrative enforcement proceeding in May 2015 which was concluded in 

May 2016 with a negotiated settlement of $1,530,000 – $237,807.55 lower than 

DOL’s $1,767,807.55 assessment (id. at 3-4, 8). DMA did not directly contribute to 

DOL’s investigation, enforcement action, or the settlement agreement between DOL 

and ITI (R4, tab 535 at 1, 5-6). 

The settlement agreement indicated that “[t]he [DOL] Administrator has no 

position regarding the availability of an equitable adjustment, which is a decision 

made by the DMA, but agrees that the amounts released from the above-referenced 

escrow account . . . stem[] from the retroactive application of the Service Contract Act 

of 1965 and the associated wage determinations” (R4, tab 535 at 5 (italics added)). 

Despite the additive word “and” in the quotation above, there is no evidence of 

a separately calculated assessment for “application of the Service Contract Act of 

1965” (R4, tab 539). Instead, DOL’s assessment corrected ITI’s misclassification, 

nonpayment of overtime, insufficient fringes, and WD underpayments then calculated 

7 A subsequent DCAA audit indicated that ITI’s contract labor rates were often 

substantially higher than the equivalent WD rates (see R4, tab 544 at 12 (labor 

analysis results), tab 545 at 19-45 (labor analysis by task order and labor 

category), and that overall, ITI’s total labor costs would have been considerably 

lower if it had paid its workers at the WD rates versus the contract labor rates 

during the entire contract period. Id.

8 This finding is supported by the recitation of facts in the settlement agreement 

discussed below. Oddly, we have not located a written DOL assessment of 

$1,767,807.55 in the record.
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back pay for each worker using the WDs applicable to the dates and locations where 

their work was performed (R4, tab 550). In sum, DOL’s assessment against ITI was 

the difference between what ITI’s workers were actually paid and what they should 

have been paid but for ITI’s multiple labor violations. Id.

The settlement agreement did not describe the precise basis, if any, upon which 

DOL’s original assessment of $1,767,807.55 was reduced by $237,807.55 to 

$1,530,000 (R4, tab 535).

Once the settlement took effect, DOL provided back pay to individual workers 

that are shown on DOL’s “agreed to pay” (ATP) reports (R4, tab 539 at 3-14). The 

back pay for each worker ranged from approximately $20 to over $51,000.9 Id.

DOL issued a press release on June 23, 2016, that described the conclusion of 

its action against ITI (R4, tab 537). According to DOL: 

The [DOL enforcement] lawsuit was filed based on the 

division’s investigation, which found ITI:

• Incorrectly categorized and paid approximately 127 

engineering technicians as lower-paid audio-visual and 

installation technicians. 

• Incorrectly categorized and paid approximately 10 

warehouse specialists and supply technicians as lower-paid 

warehouse assistants.

• Failed to provide legally required fringe benefits to 

approximately 130 employees.

• Failed to properly provide vacation pay and holiday 

pay to several employees, including those employed by 

subcontractors.

9 Presumably, because DOL made payments totaling $1,530,000 to ITI’s workers, 

documents exist that break out the specific labor violations and WDs used to 

calculate each worker’s back pay. We have not located documents meeting that 

description in the record, which may be important for determining quantum, but 

they are not necessary for this entitlement decision.
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The division also concluded that the contractor failed to 

pay employees overtime at time and one-half the required 

prevailing wage rates when they worked over 40 hours in a 

workweek, in violation of the Contract Work Hours and 

Safety Standards Act. 

(Id. at 1) 

Notably, DOL’s description of ITI’s labor violations did not include WD 

underpayment, which, based upon a supplemental DCAA audit conducted in early 

2019, appears to be only a small portion of DOL’s original assessment and the parties’ 

subsequent settlement amount (R4, tab 545 at 10-11, 45). 

ITI’s Equitable Adjustment Claim 

 In January 2017 ITI submitted an REA that sought payment from DMA for the 

entire DOL settlement amount of $1,530,000, plus “the applicable burdens” of 

$853,450.78, for a total of $ $2,383,450.78 (R4, tab 536). ITI contended that “[t]he 

need for this REA arose when it was retroactively determined by the U.S. Department 

of Labor (DOL) that this contract was subject to the Service Contract Act. DOL ruled 

all service employees working on this contract should have been compensated per the 

applicable wage determinations”10 (R4, tab 536 at 2). ITI argued that it was entitled to 

an equitable adjustment under FAR 22.1015,11 but also based on the equitable 

10 DOL’s narrative report (R4, tab 550) and DOL’s press release (R4, tab 537) do not 

support ITI’s characterization of DOL’s investigation and conclusions. 

Throughout its claim and these appeals ITI largely ignores the several labor 

violations found by DOL. Instead, ITI inaccurately portrays DOL’s assessment 

as a simple finding that ITI did not pay its workers at the rates in the WDs that 

had been omitted by DMA (see, e.g., R4, tab 536 at 2). 

11 FAR 22.1015, DISCOVERY OF ERRORS BY THE DEPARTMENT OF LABOR, 

provides: 

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 Labor Standards statute 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 
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adjustment language in modifications 11-16 (R4, tab 536). DMA rejected ITI’s REA 

(R4, tab 538), whereupon ITI submitted a certified claim for a revised amount of 

$2,291,404.08 (R4, tab 543). In addition to reiterating its entitlement arguments based 

upon FAR 22.1015 and modifications 11-16, ITI added an argument for entitlement 

under the changes clause, FAR 52.243-1 (id. at 6). 

 When evaluating ITI’s certified claim, DMA obtained two DCAA audits that 

analyzed ITI’s contract labor rates, certified claim, and actual performance costs (R4, 

tabs 544-45). 

 DMA did not issue a decision on ITI’s certified claim within 60 days and ITI 

filed the first of the two appeals before us ( ASBCA No. 61686), in the same amount 

as the certified claim, on the basis of a deemed denial. Subsequent to the appeal, 

DMA issued a Contracting Officer’s Final Decision (COFD) that found that ITI was 

entitled to an equitable adjustment in the amount of $568,754 (R4, tab 547). ITI 

submitted a second appeal (ASBCA No. 62185), challenging this COFD and seeking 

“in excess of $2,291,404.08” which includes immediate payment of the $568,754 

offered in the COFD. 

In response to ITI’s appeals to the Board, DMA disputes the legal and factual 

bases of ITI’s claim, disavows the COFD’s calculation of quantum, and seeks de novo

resolution of the entitlement parameters for ITI’s equitable adjustment. 

DECISION 

Standard of Review 

By agreement of the parties following their summary judgment briefing and 

oral argument, entitlement is being decided pursuant to Board Rule 11 “Submission 

Without a Hearing.” Unlike a motion for summary judgment, which must be 

adjudicated on the basis of undisputed facts, Rule 11 authorizes the Board to “make 

findings of fact on disputed facts” based upon the written record. U.S. Coating 

and any applicable wage determination issued by the 

Administrator. If the contract is subject to 41 U.S.C. 

§ 6707(f), 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. 

See also 29 C.F.R. § 4.5(c) (parallel DOL regulation). 
DOCUMENT FOR PUBLIC RELEASE. The decision issued on the date below is 

subject to an ASBCA Protective Order. This version has been approved for public 

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15 

Specialties & Supplies, LLC, ASBCA No. 58245, 20-1 BCA ¶ 37,702 at 183,031. 

While the parties identified relatively few fact disputes in their briefs and at oral 

argument, we have conducted a thorough review of the record upon which our findings 

of fact, above, are based. 

I. The SCA Applied To ITI’s Contract and ITI Was Required to Comply 

With WD35 When Setting its Contract Labor Rates 

The SCA applies where a contract is for “the furnishing of services in the 

United States through the use of service employees.” 41 U.S.C. § 6702(a)(3). The 

SCA directs DOL to issue WDs that set minimum pay12 for enumerated classifications 

of workers that vary by geographic region. See generally 41 U.S.C. § 6701 et. seq. 

Among other things, WDs prevent contractors from underbidding competitors and 

winning contracts at the expense of their own workers. See Lear Siegler Servs., Inc. v. 

Rumsfeld, 457 F.3d 1262, 1266 (Fed. Cir. 2006); see also Gov’t Contracting Res., Inc., 

ASBCA No. 59162, 15-1 BCA ¶ 35,916 at 175,575 (citing Lear Siegler for the 

proposition that successor contractors are prohibited from paying less than a 

predecessor paid under its collective bargaining agreement). 

 Here, ITI’s “engineering services contract” plainly fell within the purview of 

the SCA, whether or not ITI correctly interpreted the express title of the contract, all of 

the CLIN descriptions, the several invocations of the SCA within the contract, the 

inclusion of a Wage Determination directly applicable to ITI’s primary place of 

business, the fact that the nearly-identical predecessor contract was expressly an SCA 

contract, and the fundamental nature of the contract to provide services to the 

government. DMA’s omission of the SCA clause and other administrative lapses, 

however negligent, did not alter the fundamental nature of the contract, nor the 

applicability of the SCA. Thus, as a matter of law, the SCA’s requirements and the 

wage determination process applied to both parties from the contract’s inception.13 

Alutiiq Com. Enter., LLC, 20-1 BCA ¶ 37,506 at 182,199 n.7 (“SCA provisions will 

apply to a government contract even where they were left out of the solicitation or the 

contract.” (quoting Miller’s Moving Co., ASBCA No. 43114, 92-1 BCA ¶ 24,707 

at 123,325-26)); see Christian & Assocs. v. United States, 312 F.2d 418, 427 (Ct. Cl. 

12 We use the terms “pay” and “labor rates” to refer to the total compensation earned 

by service workers. Where necessary to distinguish the individual components 

of pay, we use the specific terms “wages,” “fringe benefits,” “overtime,” etc. 

13 Although we make this finding as a matter of law, ITI’s factual argument that it 

considered the SCA inapplicable due to omission of the SCA clause is both 

unsupported by any affirmative contemporaneous evidence and it is 

contradicted by the language in ITI’s proposal regarding the SCA and WDs, 

reviewed in detail above. 
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1963) (mandatory contract clause expressing a significant public procurement policy 

will be incorporated into the contract by operation of law). For this reason, the 

fundamental premise of ITI’s claim, that the SCA did not apply to the contract or ITI 

prior to the SCA clause’s incorporation in 2012, is without merit.

Regarding WD35, ITI also argues, as it did to DOL and in its certified claim, 

that it considered WD35 “ineffective” and “left dangling and without meaning” due to 

the absence of the SCA clause (app. mot. at 3; app. reply at 3). This is an ambitious 

argument given the language to the contrary in the contract,14 that WD35 was 

inarguably designated in the contract as “the wage determination,” that WD 35 was 

attached to the solicitation and contract, and that ITI’s own proposal said ITI used 

DOL WDs to set the compensation of its workers.15 Further, ITI offers no authority or 

precedent where a contractor was excused from complying with an applicable WD that 

was attached to its contract, and the case law holds exactly the opposite – that WDs 

apply even when they are omitted. Miller’s Moving Co., 92-1 BCA ¶ 24,707

at 123,326 (“[w]e conclude that the DOL wage rate determinations under the Service

Contract Act were binding on appellant whether it had actual notification thereof or 

not.”); BUI Constr. Co. & Bldg. Supply, ASBCA No. 28707, 84-1 BCA ¶ 17,183

at 85,578 (Wage determinations and labor standards provisions are binding on 

contractor despite omission from solicitation – no equitable adjustment due under the 

changes clause); but see BellSouth Commc’ns Sys., Inc., ASBCA No. 45955, 94-3 

BCA ¶ 27,231 at 135,699-700 (Christian doctrine does not override contracting 

officer’s affirmative conclusion that Davis-Bacon standards did not apply; equitable 

adjustment was due for retroactive application of Davis-Bacon wages). Here, despite 

its other pre-award errors, DMA attached WD35 to the solicitation and contract as 

required, and WD35 was the current and most geographically appropriate WD at the 

time – even if ITI unilaterally chose to ignore it. 

Regarding ITI’s argument that DMA did not consider the SCA applicable, we 

find that, regardless of individual DMA employees’ subjective intent, inattention to 

FAR requirements, and actions or inaction, the contract itself, including the attachment 

14 “The following documents, exhibits or other attachments [including WD35] . . . 

form a part of this document” (R4, tab 5 at 40, tab 11 at 29) and “[p]roposed 

labor rates should be “loaded” rates . . . as required by the Department of Labor 

. . . .” (R4, tab 5 at 48, tab 11 at 35). 15 It is also contrary to the cannon of contract interpretation which provides that we

should read the contract “as a whole and [interpret it] to harmonize and give 

reasonable meaning to all its parts,” if possible, leaving no words “useless, 

inexplicable, inoperative, insignificant, void, meaningless or superfluous.” 

Precision Dynamics, Inc., ASBCA No. 50519, 05-2 BCA ¶ 33,071 at 163,922

(citations omitted).
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of WD35, indicate that the SCA and the DOL labor rates set by WD35 were applicable 

(R4, tab 7 at 2, tab 11 at 2-25, 29, 35, 59-68). 

 In sum, ITI’s arguments about the absence of the SCA clause notwithstanding, 

the SCA applied to ITI’s contract and it required ITI to heed WD35’s minimum pay 

requirements when setting its contract labor rates and when paying its workers for 

work performed in the first year of the contract and within the geographic scope of 

WD35. 

II. ITI’s Claim Does Not Fit The Criteria For A FAR 22.1015 Equitable 

Adjustment 

 FAR 22.1015 is a remedial and fact-specific regulation that was promulgated in 

1989. See FAR, Application of Labor Laws to Government Acquisitions, 54 Fed. Reg. 

19812-01,19,816 (May 8, 1989) (codified at 48 CFR Subpart 22.10). By its clear 

terms, and as it has been applied by the Boards over the years, FAR 22.1015 steps in 

when an agency omission or incorrect use of WDs causes a contractor to set its labor 

rates below what is required by the applicable WDs. See, e.g., Sotera Def. Sols., Inc., 

v. Dep’t of Agric., CBCA Nos. 6029, 6030, 19-1 BCA ¶ 37,421 at 181,881. 

FAR 22.1015 is consistent with case precedent that has provided relief to contractors 

whose labor costs rose as a result of government errors or omissions regarding labor 

standards. See Kleenco, Inc., d/b/a Superior Linen-Laundry, ASBCA No. 44348, 

93-2 BCA ¶ 25,619 at 127,522-23; Sterling Services, Inc., ASBCA No. 40475, 91-2 

BCA ¶ 23,714 at 118,699-700. Under FAR 22.1015, when WD errors or omissions 

occur, and a contractor’s labor rates do not meet or exceed applicable WDs, and the 

errors or omissions are corrected by DOL at the expense of the contractor, the 

contracting agency is required to provide an equitable adjustment for the increased 

labor costs to comply with the applicable WDs. 

Here, in contrast, ITI has not shown, nor attempted to show to DOL, DMA, or 

the Board, that its claim meets the fundamental FAR 22.1015 criteria – that any 

omission of WDs (or ITI’s own opinion that WD35 was “ineffective”) induced ITI to 

set its contract rates below applicable WD rates. And, as we have found above, very 

few of ITI’s contract rates were, in fact, below the applicable WDs (including WD35) 

anyway. 

 To the contrary, we have already found that DMA’s inclusion of WD35 was not 

an error or omission, so any DOL assessment based on WD35 is categorically 

excluded from entitlement under FAR 22.1015. Further, our attempt to compare ITI’s 

contract rates with WD35 (made difficult by ITI’s failure to seek DOL conformance 
DOCUMENT FOR PUBLIC RELEASE. The decision issued on the date below is 

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for its 51 contract labor categories16) suggests that ITI’s contract labor rates were, in 

fact, compliant with WD35, whether ITI specifically used WD35 in its contract labor 

rate setting decisions or not. Similarly, DCAA’s supplemental audit shows that ITI’s 

contract labor rates were above the applicable WD rates both in the aggregate, and in 

many individual instances (R4, tab 545 at 6, 12-45). Because FAR 22.1015 only 

applies when a contractor incurs unanticipated labor costs, and ITI’s contract labor 

rates were by-definition anticipated, there can be no equitable adjustment in those 

instances where ITI’s contract rates met or exceeded WD35 or any of the subsequent 

WDs.17 

Next, the remedies in FAR 22.1015 are limited to costs caused by a government 

wage determination mistake and this FAR provision is not a free pass for contractors 

to obtain compensation for unrelated labor problems of their own making. There is no 

entitlement under FAR 22.1015, or any other law or legal precedent of which we are 

aware, that DOL assessments against the contractor for misclassification, nonpayment 

of overtime, and insufficient fringes can or should be reimbursed by the government. 

So here, even where DMA failed to incorporate applicable WDs during performance, 

and where DOL used those omitted/applicable WDs as part of the back pay 

calculations for the unrelated labor violations, there is no entitlement to an equitable 

adjustment under FAR 22.1015 for the unrelated labor violations. This applies to the 

majority of DOL’s assessment against ITI which was based primarily upon ITI’s 

misclassifications, not ITI’s contract labor rates (R4, tab 550 at 8-10, 24).

ITI also asserts entitlement under the equitable adjustment language in 

Modification Nos. 11-16, and under the Changes clause, as a contractual route to 

entitlement seemingly separate from FAR 22.1015 (R4, tab 543 at 6; app. mot. 

at 13-15; app. reply at 3-6). But both of those claimed bases of entitlement are 

redundant to ITI’s FAR 22.1015 claim, and we fail to see – nor has ITI demonstrated –

how those clauses could entitle ITI to a recovery where FAR 22.1015 does not. As ITI 

recognized in its certified claim, the equitable adjustment language in Modification 

Nos. 11-16 “mirrored” the language in FAR 22.1015 (R4, tab 543 at 3). So, for the 

same reasons discussed above, ITI’s entitlement is limited to the relatively few WD 

underpayments where ITI’s contract rates were below the later-added WDs. ITI’s other 

costs – imposed upon ITI by DOL for ITI’s misclassifications and other labor 

violations, did not arise solely from application of the additional WDs so they are not

16 See Sterling Services, Inc., 91-2 BCA ¶ 23,714 at 118,698 (“[T]he burden of 

inaccurate or missing wage rate classifications is placed on [the contractor], not 

the Government, by the contract, the Service Contract Act and the case law.”).

17 This is true even if we were to accept ITI’s argument that WD35 was ineffective 

without the SCA clause and/or that ITI justifiably ignored WD35 when setting 

its contract labor rates.
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recoverable under the equitable adjustment language in the modifications, or under the 

changes clause. 

III. ITI Is Entitled To An Equitable Adjustment For A Portion Of DOL’s 

WD Underpayment Assessment

It is only where ITI’s contract labor rates were actually below the later WDs 

that applied to work outside the scope of WD35 and which were not included in the 

contract, and DOL assessed backpay that included the difference between the contract 

rates and the applicable WD rates, and DOL’s assessment was not based upon any of 

the unrelated labor violations, that ITI qualifies for an equitable adjustment under 

FAR 22.1015. And, at the risk of repetition, ITI’s own decision to pay its workers 

below its own contract labor rates cannot be attributed to DMA’s omission of WDs 

and cannot qualify for equitable adjustment entitlement under FAR 22.1015. Thus, 

ITI’s WD underpayment entitlement is limited to the difference between ITI’s contract 

labor rates and the back pay actually paid by DOL that was based solely on WD 

underpayment – not the difference between any lower actual pay and the correct WD 

rates, as ITI’s claim seeks. While we do not consider specific quantum calculations 

here, DCAA’s supplemental audit (R4, tab 545) appears aimed at comparing ITI’s 

contract labor rates to the applicable WD rates, which may help the parties negotiate 

quantum. 

IV. ITI is not entitled to an interlocutory judgment of $568,754 Because 

The Board Reviews ITI’s Claim De Novo

ITI seeks $568,754 based on the contracting officer’s final decision which 

determined that amount to be the appropriate equitable adjustment (app. mot. at 21; 

app. reply at 8-9). But an appellant is not free to pick and choose elements of a COFD 

to appeal while leaving the remainder binding on the government. Instead, we review 

contractors’ claims and contracting officers’ final decisions de novo giving no 

deference to the COFD findings. 41 U.S.C. § 7104(b)(4); Wilner v. United States, 

24 F.3d 1397, 1401 (Fed. Cir. 1994) (en banc); Naseem Al-Oula Co., ASBCA 

No. 61321 et al., 20-1 BCA ¶ 37,490 at 182,149 (citing Lebolo-Watts Constructors 01 

JV, LLC, ASBCA Nos. 59738, 59909, 19-1 BCA ¶ 37,301 at 181,453 and 41 U.S.C. 

§ 7103(e)). So, as DMA correctly points out, the Board’s de novo review of ITI’s 

certified claim means that the Board, not the Contracting Officer, decides ITI’s 

entitlement and quantum. 
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CONCLUSION 

 We have considered all arguments advanced by the parties, whether discussed 

here or not. Based upon our decisions above, we resolve entitlement, with respect to 

Appeal No. 61686, as follows: 

1. ITI is not entitled to an equitable adjustment for the portions of the DOL 

settlement that were based upon labor violations unrelated to DMA’s 

omission of applicable WDs, to wit, ITI is not entitled to recover its 

DOL-induced back pay for ITI’s misclassification, nonpayment of overtime, 

and insufficient fringes violations. 

2. ITI in not entitled to an equitable adjustment for any portion of the DOL 

settlement where WD35 was used to calculate the assessment. 

3. ITI is not entitled to an equitable adjustment where its contract labor rates 

were not exceeded by applicable WDs. 

4. ITI is entitled to an equitable adjustment for the portion of the DOL induced 

back pay based solely upon ITI’s WD underpayment, measured by the 

difference between ITI’s contract labor rates and any higher WD rates. 

Appeal No. 62185 is denied. 

It appears that there is sufficient information in the record that, combined with 

our entitlement decision, should enable the parties to calculate and agree upon the 

quantum element of this dispute. Therefore, the parties will submit a joint status report 

within 60 days indicating their proposal, or in the event of disagreement separate 

proposals, for remand to negotiate quantum or for further proceedings. 

 Dated: July 26, 2023 

(Signatures continued) 

BRIAN S. SMITH

Administrative Judge 

Armed Services Board 

of Contract Appeals
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I concur

RICHARD SHACKLEFORD

Administrative Judge 

Acting Chairman 

Armed Services Board 

of Contract Appeals

I concur

J. REID PROUTY

Administrative Judge

Vice Chairman

Armed Services Board

of Contract Appeals

I certify that the foregoing is a true copy of the Opinion and Decision of the 

Armed Services Board of Contract Appeals in ASBCA Nos. 61686, 62185, Appeals of 

Innovative Technologies, Inc., rendered in conformance with the Board’s Charter. 

Dated: 

PAULLA K. GATES-LEWIS

Recorder, Armed Services 

Board of Contract Appeals

July 28, 2023