Gsar 516-203-4

PART 516—TYPES OF CONTRACTS

516.406

PART 516—TYPES OF CONTRACTS
Subpart 516.2—Fixed Price Contracts
516.203 Fixed-price contracts with economic price
adjustment.
516.203-3 Limitations.
(a) For multiple award schedule contracts, you should:
(1) Include an economic price adjustment (EPA) clause
only in multiyear solicitations and contracts.
(2) Document in the acquisition plan the determination
required by FAR 16.203-3.
(3) Provide supporting rationale in the contract file to
include an EPA clause in a 1-year solicitation or contract.
(b) The contracting director must approve any of the following actions:
(1) A determination to include an EPA clause in a
1-year solicitation or contract or to provide for price increases
during the first 12 months of a multiyear contract.
(2) The use in a contract of any EPA clause that you did
not include in the initial solicitation. This includes any clause
that provides for price adjustment during the first 12 months
of a multiyear contract.
(c) The contracting director may raise the price ceiling (the
aggregate of permitted price increases during a 12-month
period) during the contract period when both of the following
conditions are met:
(1) A supplier or suppliers request that the ceiling be
raised.
(2) Analysis of current market conditions reveals that
most suppliers of similar supplies or services are affected. If
the price ceiling is raised, you must amend the contract to
reflect the revised ceiling.
516.203-4 Contract clauses.
(a) Multiple award schedules. Do not use FAR 52.216-2,
52.216-3, or 52.216-4 in negotiated acquisitions based on discounts from established commercial catalogs or pricelists.
Instead, use:
(1) 552.216-70, Economic Price Adjustment—FSS
Multiple Award Schedule Contracts, in a 1-year solicitation or
contract.
(2) 552.216-70 (Alternate I) in multiyear solicitations
and contracts.

(b) Stock or Special Order Program Contracts. In multiyear solicitations and contracts, after making the determination required by FAR 16.203-2, use 552.216-71, Economic
Price Adjustment-Stock and Special Order Program Contracts, or a clause prepared as authorized in paragraph
(a)(2)(ii) of this subsection.
(1) If the contract includes one or more options to
extend the term of the contract, use the clause with its
Alternate I or a clause substantially the same as 552.216-71
with its Alternate I suitably modified.
(2) In a contract requiring a minimum adjustment
before the price adjustment mechanism is effectuated, use the
basic clause with Alternate II or with Alternate I and
Alternate II.
(3) If the Producer Price Index is not an appropriate
indicator for price adjustment, modify the clause to use an
alternate indicator for adjusting prices. Similarly, if other
aspects of 552.216-71 are not appropriate, use an alternate
clause following established procedures.
(c) Adjustments based on cost indexes of labor or material.
(1) If you decide to provide for adjustments based on
cost indexes of labor or material, prepare a clause that defines
each of the following elements:
(i) The type of labor and/or material subject to
adjustment.
(ii) The labor rates, including any fringe benefits
and/or unit prices of materials that may be increased or
decreased.
(iii) The index(es) that will be used to measure
changes in price levels and the base period or reference point
from which changes will be measured.
(iv) The period during which the price(s) will be subject to adjustment.
(2) The contracting director must approve use of this
clause.

Subpart 516.4—Incentive Contracts
516.406 Contract clauses.
The contracting director must approve any award fee
clause.

(Amendment 2007-01)

516-1