FAR sections 52.216-2 thru 52.216-4

SUBPART 52.2—TEXT OF PROVISIONS AND CLAUSES
52.216-1 Type of Contract.
As prescribed in 16.105, complete and insert the following
provision:
TYPE OF CONTRACT (APR 1984)
The Government contemplates award of a _________
[Contracting Officer insert specific type of contract] contract
resulting from this solicitation.
(End of provision)
52.216-2 Economic Price Adjustment—Standard
Supplies.
As prescribed in 16.203-4(a), insert the following clause.
The clause may be modified by increasing the 10 percent limit
on aggregate increases specified in paragraph (c)(1), upon
approval by the chief of the contracting office.
ECONOMIC PRICE ADJUSTMENT—STANDARD SUPPLIES
(JAN 1997)
(a) The Contractor warrants that the unit price stated in the
Schedule for _________ [offeror insert Schedule line item
number] is not in excess of the Contractor’s applicable established price in effect on the contract date for like quantities of
the same item. The term “unit price” excludes any part of the
price directly resulting from requirements for preservation,
packaging, or packing beyond standard commercial practice.
The term “established price” means a price that—
(1) Is an established catalog or market price for a commercial item sold in substantial quantities to the general public; and
(2) Is the net price after applying any standard trade discounts offered by the Contractor.
(b) The Contractor shall promptly notify the Contracting
Officer of the amount and effective date of each decrease in
any applicable established price. Each corresponding contract
unit price shall be decreased by the same percentage that the
established price is decreased. The decrease shall apply to
those items delivered on and after the effective date of the
decrease in the Contractor’s established price, and this contract shall be modified accordingly.
(c) If the Contractor’s applicable established price is
increased after the contract date, the corresponding contract
unit price shall be increased, upon the Contractor’s written
request to the Contracting Officer, by the same percentage that
the established price is increased, and the contract shall be
modified accordingly, subject to the following limitations:
(1) The aggregate of the increases in any contract unit
price under this clause shall not exceed 10 percent of the original contract unit price.
(2) The increased contract unit price shall be effective—
(i) On the effective date of the increase in the applicable established price if the Contracting Officer receives the
Contractor’s written request within 10 days thereafter; or

52.216-3
(ii) If the written request is received later, on the date
the Contracting Officer receives the request.
(3) The increased contract unit price shall not apply to
quantities scheduled under the contract for delivery before the
effective date of the increased contract unit price, unless failure to deliver before that date results from causes beyond the
control and without the fault or negligence of the Contractor,
within the meaning of the Default clause.
(4) No modification increasing a contract unit price
shall be executed under this paragraph (c) until the Contracting Officer verifies the increase in the applicable established
price.
(5) Within 30 days after receipt of the Contractor’s written request, the Contracting Officer may cancel, without liability to either party, any undelivered portion of the contract
items affected by the requested increase.
(d) During the time allowed for the cancellation provided
for in paragraph (c)(5) of this clause, and thereafter if there is
no cancellation, the Contractor shall continue deliveries
according to the contract delivery schedule, and the Government shall pay for such deliveries at the contract unit price,
increased to the extent provided by paragraph (c) of this
clause.
(End of clause)
52.216-3 Economic Price Adjustment—Semistandard
Supplies.
As prescribed in 16.203-4(b), insert the following clause.
The clause may be modified by increasing the 10 percent limit
on aggregate increases specified in paragraph (c)(1), upon
approval by the chief of the contracting office.
ECONOMIC PRICE ADJUSTMENT—SEMISTANDARD
SUPPLIES (JAN 1997)
(a) The Contractor warrants that the supplies identified as
line items __________ [offeror insert Schedule line item number] in the Schedule are, except for modifications required by
the contract specifications, supplies for which it has an established price. The term “established price” means a price that
(1) is an established catalog or market price for a commercial
item sold in substantial quantities to the general public, and
(2) is the net price after applying any standard trade discounts
offered by the Contractor. The Contractor further warrants
that, as of the date of this contract, any difference between the
unit prices stated in the contract for these line items and the
Contractor’s established prices for like quantities of the nearest commercial equivalents are due to compliance with contract specifications and with any contract requirements for
preservation, packaging, and packing beyond standard commercial practice.
(b) The Contractor shall promptly notify the Contracting
Officer of the amount and effective date of each decrease in
any applicable established price. Each corresponding contract
52.2-65

52.216-4

FEDERAL ACQUISITION REGULATION

unit price (exclusive of any part of the unit price that reflects
modifications resulting from compliance with specifications
or with requirements for preservation, packaging, and packing
beyond standard commercial practice) shall be decreased by
the same percentage that the established price is decreased.
The decrease shall apply to those items delivered on and after
the effective date of the decrease in the Contractor’s established price, and this contract shall be modified accordingly.
(c) If the Contractor’s applicable established price is
increased after the contract date, the corresponding contract
unit price (exclusive of any part of the unit price resulting
from compliance with specifications or with requirements for
preservation, packaging, and packing beyond standard commercial practice) shall be increased, upon the Contractor’s
written request to the Contracting Officer, by the same percentage that the established price is increased, and the contract
shall be modified accordingly, subject to the following
limitations:
(1) The aggregate of the increases in any contract unit
price under this clause shall not exceed 10 percent of the original contract unit price.
(2) The increased contract unit price shall be effective—
(i) On the effective date of the increase in the applicable established price if the Contracting Officer receives the
Contractor’s written request within 10 days thereafter; or
(ii) If the written request is received later, on the date
the Contracting Officer receives the request.
(3) The increased contract unit price shall not apply to
quantities scheduled under the contract for delivery before the
effective date of the increased contract unit price, unless failure to deliver before that date results from causes beyond the
control and without the fault or negligence of the Contractor,
within the meaning of the Default clause.
(4) No modification increasing a contract unit price
shall be executed under this paragraph (c) until the Contracting Officer verifies the increase in the applicable established
price.
(5) Within 30 days after receipt of the Contractor’s written request, the Contracting Officer may cancel, without liability to either party, any undelivered portion of the contract
items affected by the requested increase.
(d) During the time allowed for the cancellation provided
for in paragraph (c)(5) of this clause, and thereafter if there is
no cancellation, the Contractor shall continue deliveries
according to the contract delivery schedule, and the Government shall pay for such deliveries at the contract unit price,
increased to the extent provided by paragraph (c) of this
clause.
(End of clause)
52.2-66

52.216-4 Economic Price Adjustment—Labor and
Material.
As prescribed in 16.203-4(c), when contracting by negotiation, insert a clause that is substantially the same as the following clause in solicitations and contracts when the
conditions specified in 16.203-4(c)(1)(i) through (iv) apply
(but see 16.203-4(c)(2)). The clause may be modified by
increasing the 10-percent limit on aggregate increases specified in paragraph (c)(4), upon approval by the chief of the contracting office.
ECONOMIC PRICE ADJUSTMENT—LABOR AND MATERIAL
(JAN 1997)
(a) The Contractor shall notify the Contracting Officer if,
at any time during contract performance, the rate of pay for
labor (including fringe benefits) or the unit prices for material
shown in the Schedule either increase or decrease. The Contractor shall furnish this notice within 60 days after the
increase or decrease, or within any additional period that the
Contracting Officer may approve in writing, but not later than
the date of final payment under this contract. The notice shall
include the Contractor’s proposal for an adjustment in the
contract unit prices to be negotiated under paragraph (b) of
this clause, and shall include, in the form required by the Contracting Officer, supporting data explaining the cause, effective date, and amount of the increase or decrease and the
amount of the Contractor’s adjustment proposal.
(b) Promptly after the Contracting Officer receives the
notice and data under paragraph (a) of this clause, the Contracting Officer and the Contractor shall negotiate a price
adjustment in the contract unit prices and its effective date.
However, the Contracting Officer may postpone the negotiations until an accumulation of increases and decreases in the
labor rates (including fringe benefits) and unit prices of material shown in the Schedule results in an adjustment allowable
under paragraph (c)(3) of this clause. The Contracting Officer
shall modify this contract (1) to include the price adjustment
and its effective date and (2) to revise the labor rates (including fringe benefits) or unit prices of material as shown in the
Schedule to reflect the increases or decreases resulting from
the adjustment. The Contractor shall continue performance
pending agreement on, or determination of, any adjustment
and its effective date.
(c) Any price adjustment under this clause is subject to the
following limitations:
(1) Any adjustment shall be limited to the effect on unit
prices of the increases or decreases in the rates of pay for labor
(including fringe benefits) or unit prices for material shown in
the Schedule. There shall be no adjustment for—
(i) Supplies or services for which the production cost
is not affected by such changes;
(ii) Changes in rates or unit prices other than those
shown in the Schedule; or

SUBPART 52.2—TEXT OF PROVISIONS AND CLAUSES
(iii) Changes in the quantities of labor or material
used from those shown in the Schedule for each item.
(2) No upward adjustment shall apply to supplies or services that are required to be delivered or performed before the
effective date of the adjustment, unless the Contractor’s failure to deliver or perform according to the delivery schedule
results from causes beyond the Contractor’s control and without its fault or negligence, within the meaning of the Default
clause.
(3) There shall be no adjustment for any change in rates
of pay for labor (including fringe benefits) or unit prices for
material which would not result in a net change of at least
3 percent of the then-current total contract price. This limitation shall not apply, however, if, after final delivery of all contract line items, either party requests an adjustment under
paragraph (b) of this clause.
(4) The aggregate of the increases in any contract unit
price made under this clause shall not exceed 10 percent of the
original unit price. There is no percentage limitation on the
amount of decreases that may be made under this clause.
(d) The Contracting Officer may examine the Contractor’s
books, records, and other supporting data relevant to the cost
of labor (including fringe benefits) and material during all reasonable times until the end of 3 years after the date of final
payment under this contract or the time periods specified in
Subpart 4.7 of the Federal Acquisition Regulation (FAR),
whichever is earlier.
(End of clause)
52.216-5 Price Redetermination—Prospective.
As prescribed in 16.205-4, insert the following clause:
PRICE REDETERMINATION—PROSPECTIVE (OCT 1997)
(a) General. The unit prices and the total price stated in this
contract shall be periodically redetermined in accordance with
this clause, except that—
(1) The prices for supplies delivered and services performed before the first effective date of price redetermination
(see paragraph (c) of this clause) shall remain fixed; and
(2) In no event shall the total amount paid under this
contract exceed any ceiling price included in the contract.
(b) Definition. “Costs,” as used in this clause, means allowable costs in accordance with Part 31 of the Federal Acquisition Regulation (FAR) in effect on the date of this contract.
(c) Price redetermination periods. For the purpose of price
redetermination, performance of this contract is divided into
successive periods. The first period shall extend from the date
of the contract to ________, (see Note (1)) and the second and
each succeeding period shall extend for ________ [insert
appropriate number] months from the end of the last preceding period, except that the parties may agree to vary the length
of the final period. The first day of the second and each suc-

52.216-5
ceeding period shall be the effective date of price redetermination for that period.
(d) Data submission. (1) Not more than _______ nor less
than ______ (see Note (2)) days before the end of each redetermination period, except the last, the Contractor shall
submit—
(i) Proposed prices for supplies that may be delivered
or services that may be performed in the next succeeding
period, and—
(A) An estimate and breakdown of the costs of
these supplies or services in the format of Table 15-2,
FAR 15.408, or in any other form on which the parties may
agree;
(B) Sufficient data to support the accuracy and
reliability of this estimate; and
(C) An explanation of the differences between
this estimate and the original (or last preceding) estimate for
the same supplies or services; and
(ii) A statement of all costs incurred in performing
this contract through the end of the _______________ month
(see Note (3)) before the submission of proposed prices in the
format of Table 15-2, FAR 15.408 (or in any other form on
which the parties may agree), with sufficient supporting data
to disclose unit costs and cost trends for—
(A) Supplies delivered and services performed;
and
(B) Inventories of work in process and undelivered contract supplies on hand (estimated to the extent
necessary).
(2) The Contractor shall also submit, to the extent that
it becomes available before negotiations on redetermined
prices are concluded—
(i) Supplemental statements of costs incurred after
the date stated in subdivision (d)(1)(ii) of this section for—
(A) Supplies delivered and services performed;
and
(B) Inventories of work in process and undelivered contract supplies on hand (estimated to the extent necessary); and
(ii) Any other relevant data that the Contracting
Officer may reasonably require.
(3) If the Contractor fails to submit the data required by
paragraphs (d)(1) and (2) of this section, within the time specified, the Contracting Officer may suspend payments under
this contract until the data are furnished. If it is later determined that the Government has overpaid the Contractor, the
Contractor shall repay the excess to the Government immediately. Unless repaid within 30 days after the end of the data
submittal period, the amount of the excess shall bear interest,
computed from the date the data were due to the date of repayment, at the rate established in accordance with the Interest
clause.
52.2-67