Tuesday Insight – November 21st, 2023: GSA Issues a Proposed Rule to Permanently Maintain the Pandemic-Era Changes to the Economic Price Adjustment Clause

Nov 21, 2023

The General Services Administration (GSA) conducts routine reviews of its acquisition regulations and acquisition policies and procedures. The review indicated a need to standardize and simplify the Schedule clause for economic price adjustments.

The Schedule program, also known as the Federal Supply Schedule (FSS) program, establishes long-term governmentwide contracts with commercial companies. Schedule contracts routinely last up to 20 years and are issued as fixed price with economic price adjustment (EPA) Indefinite Delivery Indefinite Quantity (IDIQ) contracts. Schedule contracts provide access to commercial products, services, and solutions at fair and reasonable pricing to the Federal Government and other authorized customers ( e.g., state and local governments).

The use of EPA provides for upward and downward revision of contract pricing upon the occurrence of specified conditions over the anticipated 20 year contract period of performance. The Schedule program has a long history of providing the ability for Schedule contractors to submit EPA requests ( e.g., see 47 FR 50242 dated November 5, 1982).

Currently, Schedule contracts contain at least one of the following EPA clauses ( i.e., a Schedule contract may include more than one EPA clause based on their offering and participation in Transactional Data Reporting (TDR)): (1) Alternate I of GSAR clause 552.216–70, Economic Price Adjustment-FSS Multiple Award Schedule Contracts; (2) an authorized deviation of GSAR clause 552.216–70; (3) clause I–FSS–969, Economic Price Adjustment-FSS Multiple Award Schedule; or (4) an Alternate to clause I–FSS–969. The primary focus of these EPA clauses is the establishment of the procedures, including, but not limited to specific procedural limits ( e.g., timing and frequency) around the submission of EPA price increase requests. In terms of price decrease requests, all four clauses require such requests to be handled in accordance with GSAR clause 552.238–81, Price Reductions. Altogether, for the most part these four Schedule EPA clauses are very similar, with only minor differences, most of which are related to the EPA mechanism(s) proposed by the contractor ( e.g., annual fixed increases or increases based on their published or publicly available commercial price list) and the applicability of TDR.

In March 2022, in response to the highest level of inflation in over 40 years as well as other factors ( e.g., supply chain disruptions), GSA issued Acquisition Letter MV–22–02 to provide a temporary moratorium on the enforcement of certain procedural limits contained in the Schedule EPA clauses. The moratorium relaxes the limits on the frequency, timing, and number of EPA price increase requests.

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