1

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of -- )

)

Gulf Pacific Contracting, LLC )

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 )

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 abovecaptioned 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, indefinitedelivery 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.
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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 noadjustment 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.
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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).
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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 noadjustment 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).
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The Allowable Payment clause, too, does nothing to make the meaning of the noadjustment 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
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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-D0002 (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 

purposes13. 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