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SCA Contract Bids Must Account for Applicable CBA Wages and Benefits

On Behalf of | Mar 6, 2014 | Business Litigation

Service employees working on a federal contract subject the
Service Contract Act must be paid wages and fringe benefits not less than the
prevailing wage determination or the wage rates and fringe benefits contained
in a predecessor contractor’s Collective Bargaining Agreement (“CBA”). Because
an existing CBA sets the floor for wages and benefits on follow-on contracts, offerors
need a copy of the CBA to be able to adequately price their bid. A recent
decision by the Armed Services Board of Contract Appeals confirmed that the
agency is required to provide a complete copy of the CBA to offerors as part of
the solicitation, so they can accurately bid for a contract.
In CAE USA Inc., ASBCA No. 58006 (Jan. 27, 2014), the Air Force posted
a solicitation for services in support of the KC-135 Aircrew Training System at
thirteen Air Force bases. The copy of the predecessor contractor’s CBA
incorporated into the solicitation referred to but did not attach information
regarding the fringe benefits the predecessor contractor provided to its
employees on the current contract.
Inc. (CAE) was the successful bidder on the contract. During the solicitation
process, CAE was aware that the copy of the CBA the agency provided to the
bidders did not include details of the fringe benefits. Instead of bringing
this to the attention of the contracting officer, CAE decided to base its bid
on its estimate of what those benefits would cost. After award, CAE met with
the Union and was provided with the missing information. CAE realized that the
estimate used in its bid understated the actual fringe benefits provided in the
CBA. As required by the Service Contract Act, CAE paid the higher fringe
benefits. CAE then submitted a request for equitable adjustment to the
contracting officer for the additional benefits that were not identified in the
CBA provided during the solicitation process.
contracting officer denied the request for equitable adjustment and CAE filed
an appeal with the ASBCA. The Board addressed two questions: (1) does the
Service Contract Act place an affirmative duty on the contracting officer to
provide a complete copy of the CBA, including attachments, to bidders; and, (2)
if so, does a bidder’s failure to advise the government of a CBA’s
incompleteness and decision to formulate a bid on its own assumptions preclude
it from recovery? The answer to both questions is yes.
held that “there can be no reasonable doubt that pursuant to FAR, it was the
responsibility of the CO to provide a complete CBA.” Without the details of the
fringe benefits included in the CBA, an offeror could not know the wage and
fringe benefits it would be required to pay if it won the follow-on contract.
However, in
this particular case, the offeror was aware that the CBA provided during the
solicitation process was incomplete. Rather than asking the government to
provide a complete copy, CAE chose to make assumptions about the fringe
benefits in its offer. While the Service Contract Act imposes requirements on
what the contractor must pay its employees, it does not dictate what an offeror
must put in its offer. The Board held that “having chosen to submit an offer on
the basis of its own assumptions, without notice to the government of the
incompleteness of the CBA or what CAE’s assumptions were, it cannot now be
heard to complain that its assumptions were not correct.
If an offeror becomes aware that an
agency has not provided a complete copy of any applicable CBAs along with the
solicitation, it should bring this to the attention of the contracting officer
during the solicitation phase. If the offeror waits until it is awarded the
contract, it will be stuck with any assumptions it made about applicable wages
and benefits when submitting its bid and put at a big disadvantage.


Stephanie Wilson is an
attorney at Berenzweig Leonard, LLP, a business law firm in the Washington
metro area. She can be reached at [email protected].

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