SCA regulations require the labor department issue a new WD prior to exercising a contract option on the yearly anniversary date of a multi-year contract subject to annual appropriated funds and every two years for multi-year contracts not subject to annual appropriated funds. When a new WD is incorporated into a contract, the contractor is entitled to a price adjustment by the new WD (FAR 52.222-43 and 52.222-44).

When a price adjustment is justified and what costs are to be included is a case of controversy at this time and has been a source of frequent litigation. Under the clauses mentioned above, a price adjustment includes only increased wages and fringe benefits, not applicable overhead, general and administrative cost or profit. So, the contractor can recover only wages and fringe benefits and not overhead, G&A or profit applied to the increases. When these clauses are absent from the contract, however, a contractor might be entitled to an equitable adjustment on the basis of a "constructive change" to the contract and as such, entitled to overhead and profit (See Geribuni Services Co. ASBCA No 14686). At this time, it is unclear whether the "Christian Doctrine" applies to these clauses. (Editor’s Note. The "Christian Doctrine" provides that mandatory government contract clauses required by law or regulation are deemed to be a part of the contract even if they were not incorporated into the contract. In recent years, Boards and Courts have been determining which clauses are and are not covered by the Christian Doctrine and it has not yet been determined whether the SCA clauses are included under the Doctrine.)

Since overhead, G&A and profit are not recoverable on new WDs the authors recommend contractors include in their offers for option years an estimate for these applicable items. If a WD is added to a contract for the first time in the middle of a contract year, the resulting price adjustment should include overhead, G&A and profit (see Lockheed Support systems, Fed. Cl. 1996). If the contract always included a WD but the contractor is not in compliance, no price adjustment is allowed for coming into compliance.

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