By Amelia Bock, Federal Contract Specialist
Increased flexibility for supply chain and market conditions
On March 17, 2022, due to the effects of the pandemic on the market, the General Services Administration (GSA) issued Acquisition Letter MV-22-02 to provide a moratorium on the rules established in Economic Price Adjustment (EPA) clauses 552.216-70, I-FSS-969, 52.216-71, in order to maintain reasonable and competitive market conditions.
MV-22-02 temporarily allowed contract holders to increase pricing due to supply chain shortages, inflation and price volatility. It also removed the requirement for additional approvals above contracting officer level.
The moratorium was extended several times and now has an anticipated end date of September 30, 2025. This extension was meant to provide enough time to add 552.238-120, which outlines procedures by which pricing may be adjusted throughout the contract period, and other updated EPA requirements that are applicable to the Multiple Award Schedule (MAS) program. The ability to increase prices without adhering to strict limitations was released as temporary guidance for ease of price adjustment, however it will remain a permanent rule for price uplifts.
Change order 187 GSAR Case 2020-G510, was released and effective on September 4, 2024, and provided updates to EPA rules which are intended to streamline procurement processes, provide more flexibility to contractors and “align with commercial standards and practices”. It also removes a number of restrictions when it comes to increasing prices, specifically the number of price increases per year, the ceiling on percentage increases and the minimum time between each increase.
Previously, the EPA clauses allowed prices to increase no sooner than 12 months after part numbers had been approved on a contract, price increases were limited to no more than three times and an aggregate of no more than 10 percent per year.
These numbers are now controlled by, and at the discretion of, the contracting officer assigned to the GSA contract. This is great news for GSA contract holders, because with less restrictions, prices can fluctuate with market conditions. These changes will also allow for more competition and alignment with commercial practices.
There will continue to be the burden of price reasonableness. Contracting officers will request price justification based on 4P (product, price, place and promotion) analysis. It’s important to note that, despite the relief on price restrictions, the contract holder still bears the responsibility for ensuring price reasonableness. As a result, approval times may be extended due to the required review of price justification documents.
Please reach out to gsateam@immixgroup.com with any questions on how these changes could impact your GSA contract.
Amelia Bock is a federal contract specialist for immixGroup, the public sector business of Arrow Electronics. immixGroup delivers mission-driven results through innovative technology solutions for public sector IT. Visit www.immixgroup.com for more information.
