FAR 52.222-43 and option-year price adjustments
The clause that lets you recover wage determination increases when an option year starts — and, just as importantly, the part it will not reimburse.
What the clause does
FAR 52.222-43 — Fair Labor Standards Act and Service Contract Labor Standards — Price Adjustment (Multiple Year and Option Contracts)— handles a problem specific to contracts that run past a single year: wage determinations get revised, but your contract price was fixed before that happened.
It appears in fixed-price, time-and-materials and labor-hour service contracts that carry the Service Contract Labor Standards clause and either run multiple years or contain options to renew, above the simplified acquisition threshold.
Which determination applies
The determination current on the anniversary date of a multiple-year contract, or at the start of each renewal option period, is the one that governs. Not the one you bid against. Not the one in force when you signed.
So the rates you must pay in option year three are whatever DOL has published by the time option year three begins — a number that did not exist when you priced the work.
What it will and will not reimburse
This is the part contractors get wrong, and it is worth being precise. The adjustment covers only the change in the minimum required amounts. It does not cover what you chose to pay above them.
Worked example, adapted from the clause itself: the old determination required $4.00. You actually paid $4.10. The new determination requires $4.50, and you raise the wage to $4.75. Your allowable adjustment is $0.40 — the movement in the minimum, $4.00 to $4.50. The extra $0.35 you pay above the floor is yours to absorb.
The practical consequence: paying above the determination is a legitimate retention decision, but understand you are funding that premium out of margin for the life of the contract, and it will not come back through this clause.
The 30-day notice
You must notify the contracting officer of any increase claimed under the clause within 30 days of receiving a new wage determination, unless the CO extends that in writing.
Which raises an obvious question: how do you know a new determination has been issued? DOL does not write to you. If the first you hear of it is a modification landing on your desk, your 30 days may already be running.
Why this makes forecasting matter
A typical SCA contract is one base year plus four option years. You are effectively asked to price labor five years out, against rates that will be revised annually by someone else, with only the movement in the minimum recoverable.
Underestimate the escalation and you carry the difference for four years. Overestimate it and you lose the award to someone who guessed lower. There is no way to make that risk disappear, but you can make it an informed estimate rather than a guess, by looking at how rates for your occupations and locality have actually moved.
What to do about it
- Know which determination governs each option year, and check it at each anniversary.
- Diarise the 30-day notice window the moment a revision appears.
- Price option years from evidence of past movement, not a flat percentage — historical escalation data is the input for that.
- Track the determinations you are bidding against so a revision reaches you when it happens rather than months later.
The pricer is free and always will be. Rates here are refreshed weekly from SAM.gov, so the determination you check is the one currently in force.
Informational only, and not legal advice. The wage determination incorporated into your solicitation governs, and coverage turns on the facts of your particular contract. When real money rides on the answer, confirm it with the contracting officer or counsel.