The DOL has two ways it can determine the wages and benefits payable under a given contract. One is by surveying prevailing wages in applicable trades in the contract’s geographic market. Alternatively, a contractor replacing an incumbent that was subject to a collective bargaining agreement (CBA) is required to pay employees at least the same wage rates and fringe benefits that the predecessor would have had to pay. This includes the obligation to pay any prospective increases called for by the agreement. Even if a contractor is its own successor, the CBA negotiated during one year is the basis for SCA obligations the next year since the DOL considers each option year a new contract for SCA purposes.

The successor contractor rule is limited to wages and benefits. Successor contractors are not required to adopt the seniority systems, grievance procedures, expense reimbursement or work rules of the predecessor. It makes sense to examine CBA’s of your competitors before bidding to determine what parts of their agreements are binding on you and which ones are work rules or other nonbinding requirements.

If a new CBA is entered into after a negotiated procurement is awarded or either a contract option is executed or a contract period is extended, its terms will not be recognized if work begins within 30 days of the award, option period or extension. Also, new changes to a CBA will not be effective under the successor’s contract if notice of the agreement is not communicated to the agency within 10 days of opening formally advertised bids.

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