Option year on our SCA guard contract is exercising. Does the CO have to pull a new wage determination?

The contracting officer must obtain a new wage determination for each option year on your Service Contract Act contract. The Service Contract Act clause at FAR 52.222-41 requires the contracting officer to obtain an updated wage determination from the Department of Labor for each option period. If a new wage determination is issued after the option effective date, the contracting officer will modify the contract to incorporate the new rates. You are then required to pay the new rates from the effective date of the option period, meaning back pay would be owed if the modification comes later. This is why it is critical for firms like mine to factor in potential increases when pricing options, because the government expects the contractor to bear that risk. For federal contracts, it's all laid out in the FAR. For state and local work, you have to check the state procurement portal or county purchasing department's vendor guide for their specific rules on option year wage determinations.

The contracting officer does not always have to pull a new wage determination for an option year. On DLA contracts, the contracting officer will check the Wage Determination Online (WDOL) website for updates. If the Department of Labor has not issued a new wage determination for the locality and class of work, the original wage determination remains in effect. Marcus is right that if a new WD is issued after the option starts, you owe back pay to the option effective date. We always build in a buffer for potential wage increases when we bid option years, even for parts contracts with service components, because the risk of a new WD is on the contractor.