The Civilian Board of Contract Appeals recently held that a federal contractor must be compensated for having to pay the federal contractor minimum wage implemented pursuant to Executive Order 14026 as well as having to provide Paid Sick Leave pursuant to Executive Order 13706. The ruling was based on the contract containing a clause which required the government to make an “equitable adjustment” in the contract price if the government required the contractor to pay higher labor wages, including fringe benefits. While the Board noted that fixed-price contracts generally shift the risk of cost increases to contractors, the contracts at issue contained clauses which shifted that risk back to the government in certain circumstances which included a federal requirement to pay higher wages.
Notably, National Park Service concession contracts do not contain the same clause as set out in procurement contracts but do provide for a change in the franchise fee for “extraordinary, unanticipated changes” and for a contract lengthening when warranted for changes in operations. And Forest Service campground permits require the fee charged by the agency to reflect “market value of the use and occupancy” authorized by the permit, which is impacted by the wages paid.