GSA temporarily lifted restrictions on economic price adjustments (EPAs) in its contracts in March of this year, to fight inflation. With prices still rising, the agency this month extended the flexibilities through March 2023 and said officers can now make adjustment decisions without the need for approval from a more senior official. (Federal Times September 20, 2022)
As more and more contractors feel the crushing effects of supply chain shortages, price volatility, rising costs, and fixed income impact, a need for immediate relief for contractors couldn’t come quickly enough. The latest memo takes power that was tied up in the request and approval process and puts it into the hands of contractors and procurement officers to evaluate, make decisions and keep business uninterrupted. (ibid)
“Inflation and uncertain economic market conditions erode scarce contracting dollars, cause severe hardship on federal partners, and discourage new entrants from pursuing federal acquisition,” said GSA in the memo announcing the extension. “The acquisition workforce has both the authority and the tools to take action to mitigate the impact of inflation in federal contracts.” (ibid)
Contractors no longer have to hold their contracts for a minimum of a year before submitting price increases. The new guidance also temporarily does away with the limit of three increases per year and the 30-day waiting period between requests. (ibid)
Contractors might consider the following:
- Request adjustments to contracts if non-price changes to the terms offer some relief to the problems caused by inflation.
- Determine whether their current situation with once-in-a-generation inflation warrants contractual relief.
- File a formal request to the contracting officer even if the chances of success are low, so DOD can obtain quantitative data on the scope of the issue.
- Encourage contracting officers to amend solicitations to include EPA clauses when preparing bids. (JDSupra September 21,2023))
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