- Contractors may be faced with the difficulty and expense of providing negative contract price adjustments if the H&W rate decreases on contracts
- Contractors will have to compare WDs with contracts and task orders to determine which H&W rate is appropriate — an additional tracking requirement that now exists because of the AAM
- Contractor employees that move between contracts may receive two different H&W rates complicating tracking of the H&W benefit
- Benefit providers will have more difficulty providing health benefits to SCLS employees because of the lower H&W benefit forcing a difficult juxtapose with potential Affordable Care Act requirements
- Contractor profit margins may also face pressure because contractors are able to receive price adjustments when the H&W is raised. It is not clear, however, that the EO and promulgating regulations allowed for the same price adjustment for the new sick leave benefit even though it was added to existing GSA-schedule contracts. In essence, a benefit that contractors were previously able to bill back to the government was replaced by a benefit that does not have this feature.
- Contractors faced with new WDs that include the H&W amount should educate their workforce and explain why the H&W is being lowered. They should also prepare for expenses associated with negative price adjustments and if they have not already, develop compliance systems that enable tracking of which H&W benefits is appropriate.
Eric Crusius
Senior Counel
Crusius is senior counsel with Holland & Knight where his practice focuses on government contracts, including bid protests, claims and disputes, compliance issues and sub-prime issues.
