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Contracts are supposed to prevent confusion, not create it — yet sometimes two provisions written for entirely different purposes end up colliding like cars approaching the same intersection from different directions. That's essentially what happened in a dispute between the Department of Education and one of its student loan contractors, culminating in a CBCA Minimum Wage $3.3M suit win that just landed in the contractor's favor.

The Ruling in Plain Terms

A unanimous three-judge panel at the Civilian Board of Contract Appeals determined that Maximus Education LLC, operating as Aidvantage, must be compensated nearly $3.3 million for costs tied to a now-rescinded Biden-era executive order that raised the minimum wage for federal contractors. The board drew a sharp line between two very different contractual mechanisms: a minimum wage clause born from that executive order, and separate economic price adjustment provisions baked into Aidvantage's two DOE awards.

Two Clauses, Two Different Jobs

CBCA Judge Elizabeth Newsom, writing for the panel, put it bluntly: the wage clause and the price adjustment provisions were never designed to do the same work. "Not surprisingly, in light of their different purposes, the clauses operated differently and resulted in different adjustments," she wrote, dismissing the DOE contracting officer's argument that the price adjustment provisions were the sole remedy available for inflation-driven cost increases, minimum wage hikes included. The decision came down Sept. 2.

The Regulation That Started It All

As part of the executive order, federal officials revised Federal Acquisition Regulation 52.222-55, opening a door for contractors to request price adjustments tied specifically to minimum wage changes. The regulation came with a catch, though — contractors had to confirm their existing contract price didn't already include a cushion for such cost increases. Aidvantage made that attestation for one of its contracts, a deal running from 2023 through 2028. Its other agreement, covering 2009 through 2023, predated the executive order entirely.

The second Trump administration ultimately rescinded the executive order in early 2025 — but the financial fallout from its earlier existence still needed sorting out.

Déjà Vu at the Board

If this dispute sounds familiar, that's because it echoes a similar 2025 ruling from the same board in Great Lakes Educational Loan Services Inc. v. Department of Education, Judge Newsom noted. In that earlier case, the board concluded that an economic price adjustment provision in a student loan servicing contract didn't block the contractor from separately recovering a minimum wage adjustment under FAR 52.222-55 — essentially setting the precedent this new ruling would follow.

Dismantling the Government's Argument

The DOE's contracting officer had argued that the existing economic price adjustment provisions already functioned as a built-in allowance for potential minimum wage hikes — meaning, in theory, Aidvantage shouldn't get a separate adjustment on top of it. Judge Newsom rejected that reasoning outright. "That conclusion is plainly wrong for the obvious reason that the [economic price adjustment] provisions are not price allowances but rather cost-sharing provisions that are designed to compensate the contractor only partially for inflationary cost increases," she wrote, reiterating that the two mechanisms, as established in Great Lakes, simply "serve different purposes."

Breaking Down the Contracts

For the older, legacy contract, Judge Newsom pointed out that after the executive order took effect, the DOE unilaterally modified the agreement to incorporate FAR 52.222-55 — a move the board determined amounted to an actual contract change. Her conclusion followed logically from there: if the regulation drove up Aidvantage's costs, then compensating the contractor was, in her words, a "straightforward and uncontroversial" outcome.

The Newer Contract's Different Path

The second agreement, signed in 2023 under the DOE's Unified Servicing and Data Solution program, followed a slightly different logic. Aidvantage didn't argue this contract entitled it to costs from a contract change — but Judge Newsom found the contractor was still owed a price adjustment for increased labor costs under FAR 52.222-55. The existing price adjustment provisions, she noted, capped increases at a set inflation threshold, covering only "a fraction" of what the minimum wage hikes actually cost the company.

Counting the Dollars

In tallying the nearly $3.3 million owed, the panel factored in that FAR 52.222-55 allows contract pricing adjustments to sweep in associated labor costs too — things like Social Security contributions, unemployment taxes and workers' compensation insurance, not just the raw wage increases themselves.

Where the Contractor Struck Out

Not every request found favor with the board, though. Judges rejected Aidvantage's separate bid to recover costs tied to "wage compression" — a scenario where the company chose to raise pay for its more experienced employees after the wage gap between senior and junior staff had narrowed. Judge Newsom drew a clean distinction here: "[Aidvantage]'s decision to increase the wages for its higher-paid employees was its own business decision, not required by the minimum wage clause."

The Panel and the Parties

Judges Elizabeth Newsom, Patricia Sheridan and Jonathan Kang made up the panel deciding the case. Representatives for the parties did not immediately respond to a request for comment Thursday.

Maximus Education LLC is represented by Hal J. Perloff of Husch Blackwell LLP. The Department of Education is represented by its own Candice Jackson, Gary L. Charles Jr. and Daniel B. De Vito.

In the end, the ruling underscores a lesson that echoes well beyond student loan servicing — when two contract provisions are built for different purposes, courts and boards alike are increasingly unwilling to let one quietly swallow the other.