FAR 52.222-30—Construction Wage Rate Requirements-Price Adjustment (None or Separately Specified Method).
Plain-English Summary
FAR 52.222-30 addresses how construction wage rate requirements are handled when a contract includes an option to extend the term and the contract uses the "none or separately specified method" for price adjustment. It explains that the Department of Labor wage determination in effect when the option is exercised will apply to that option period, and it limits the Government’s obligation to adjust the contract price for resulting wage or benefit changes. The clause also covers wage determinations that apply by operation of law and other wage-and-benefit increases required by the Construction Wage Rate Requirements statute. In practical terms, this clause shifts the risk of wage escalation to the contractor unless the contract contains some other specific price-adjustment provision. It is important because it affects option pricing, labor cost forecasting, and how contractors evaluate whether to continue performance into an option period. It also helps contracting officers avoid unintended price adjustments when updated Davis-Bacon/Construction Wage Rate Requirements wage determinations take effect.
Key Rules
Option period uses current wage determination
The wage determination effective when the option to extend the contract is exercised applies to that option period. Contractors must be prepared to pay the wages and benefits required by the then-current Department of Labor determination.
No automatic price adjustment
The contracting officer will make no contract price adjustment for wage or benefit increases or decreases caused by the new wage determination, unless another contract clause specifically provides for an adjustment.
Applies to wage determinations by law
The no-adjustment rule also covers wage determinations that become applicable to the contract by operation of law, not just those expressly incorporated at option exercise.
Covers other statutory wage increases
The clause also bars price adjustments for wage and benefit increases resulting from any other requirement applicable to workers subject to the Construction Wage Rate Requirements statute.
Other contract clauses may still control
If the contract includes another clause or pricing mechanism that expressly provides for wage-related adjustments, that separate provision governs. This clause only eliminates adjustments not otherwise provided for in the contract.
Responsibilities
Contracting Officer
Apply the wage determination in effect when the option is exercised and do not grant a price adjustment for wage or benefit changes unless another contract provision authorizes one. Ensure the clause is used when prescribed and that option exercise actions reflect the correct wage determination.
Contractor
Price the contract with the risk that wage determinations may change at option exercise and that no separate price increase will be paid for resulting labor cost changes unless the contract expressly allows it. Maintain compliance with the applicable wage determination for the option period.
Agency
Structure the solicitation and contract so the intended wage-adjustment method is clear, and ensure option administration aligns with the applicable wage determination and any other contract-specific adjustment provisions.
Department of Labor
Issue the wage determination that will govern the option period under the Construction Wage Rate Requirements statute.
Practical Implications
Contractors should treat option periods as carrying fresh wage-rate risk unless the contract has a separate adjustment clause.
A common mistake is assuming the Government will reimburse increased labor costs when a new wage determination is incorporated at option exercise; this clause says it will not, absent another provision.
Contracting officers should verify the correct wage determination is in place before exercising an option, because the applicable determination controls even though the price stays fixed.
Bidders should factor expected wage escalation into base and option pricing, especially on long-duration construction contracts.
This clause can materially affect whether exercising an option remains economically viable for the contractor, so both sides should review the contract’s wage-adjustment structure early and often.
Official Regulatory Text
As prescribed in 22.407 (e) , insert the following clause: Construction Wage Rate Requirements-Price Adjustment (None or Separately Specified Method) (Aug 2018) (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 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. (End of clause)