A Quick Dive into GSA’s Game-Changing Proposed Economic Price Adjustment Clause

The General Services Administration’s (GSA) recently proposed to revise the General Services Acquisition Regulation (GSAR) Federal Supply Schedule Economic Price Adjustment (EPA) clauses. Issued on November 16, 2023, the rule aims to align with commercial standards and practices by eliminating specific EPA requirements and introducing a standardized clause: 552.238-118, Economic Price Adjustment, Federal Supply Schedule Contracts. (Federal News Network, January 12, 2024)

This new clause mirrors the principles outlined in GSA Acquisition Letter MV-22-02 from March 2022, which temporarily suspended certain procedural limits within FSS clauses. This move provided contractors with increased flexibility in processing EPAs, responding more effectively to shifts in the commercial market. The proposed rule extends this market-driven flexibility into the GSAR. (ibid)

The EPA proposed rule is defined as the “agreed-upon procedure” for adjusting pricing throughout a contract period.” The proposed clause empowers contracting officers and contractors to negotiate the mechanism, timing, and frequency of price adjustments. This streamlined, flexible approach is poised to enhance responsiveness to market changes. (ibid)

When contract prices are based on commercial catalog pricing, adjustments can align with changes in the catalog price. Similarly, if an index determines adjustments, changes in the index can dictate price adjustments. These mechanisms, being part of the contract, underscore the proposal’s pragmatic approach. (ibid)

For the success of this flexible EPA, implementation across the FSS program is crucial. Proper training for the acquisition workforce, focusing on pricing context and accurate data usage, is paramount. The proposed rule’s success depends on aligning the FSS program with the commercial market, necessitating revisions to current policies such as Federal Acquisition Service (FAS) Policy and Procedure (PAP) 2021-05. (ibid)

The PAP, as it stands, contains contradictory guidance inconsistent with the Federal Acquisition Regulation, escalating data submission burdens on FSS contractors. To streamline the EPA process effectively, reforming, revising, and reissuing the PAP in accordance with legal and operational goals is a logical starting point. (ibid)

Beyond reducing regulatory burdens, success hinges on comprehensive training, clear guidance, and accountability. Stakeholders, including coalition members, stand ready to assist the agency in operationalizing the rule successfully. (ibid)

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