52.216-9030 ECONOMIC PRICE ADJUSTMENT - DEPARTMENT OF LABOR PRICE INDEX.

As prescribed in 16.203-4-90(d), use the following clause when the contractor will propose a material index for use in the economic price adjustment clause; complete in accordance with the following guidance:

a. Paragraph (b)(1): Enter the appropriate Producer Price Index (PPI) code number identification and title. Normally, unadjusted indices should be used (as opposed to seasonally adjusted indices). Note: If it is determined that the index to be used will only measure part of the cost of production or material, then that percentage which is measured can be specified.

For example, if the component is cotton and the BLS index is only judged to measure 50% of the contract price, then this should be specified such as 50% times the base price.

b. Paragraph (c)(1): Enter the number of price adjustments per contract year.

c. Paragraph (d): Enter the appropriate percentage price increase ceiling, considering the length of contract performance, index volatility, and ratio of the cost covered by this clause to the total contract price. Any percentage over 10 percent requires approval by the Chief of the Contracting Office .

d. Paragraph (f)(2): Enter the minimal dollar amount for an adjustment to be made for retroactive price changes. The default is $500.

52.216-9030 ECONOMIC PRICE ADJUSTMENT - DEPARTMENT OF LABOR PRICE INDEX (AUG 2011)

(a)  WARRANTIES. The Contractor warrants that--

(1)  The base unit prices set forth in the Schedule do not include allowances for any portion of the contingency covered by this clause; and

(2)  The prices to be invoiced shall be computed in accordance with the provisions of this clause.

(b)  DEFINITIONS. As used throughout this clause--

(1)  "Price Index" for the purpose of price adjustment under this clause shall be the Producer Price Index(es) reported in the monthly publication entitled, "Producer Price Indexes", published by the U.S. Department of Labor, Bureau of Labor Statistics for the following code number(s) and title(s):

________________________(buyer fill in)____________________________________________

(2)  "Base price index" is the arithmetic average of the final version of the indexes published for the two months preceding the closing date for receipt of proposals or the date required for receipt of final proposal revisions, if discussions were held.

(3)  "Adjusting price index" shall be the two month arithmetic average of the index first published for the two months prior to the month in which the adjusting contract modification is effective.

(4)  "Base unit price" is the unit price applicable to a quantity of a contract line item established at contract award, exclusive of any price adjustment pursuant to this clause.

(5)  "Adjustment period" is the period during which a particular adjustment to the unit price under this clause (calculated at the beginning of the adjustment period) will be applicable. The length of each adjustment period in months shall be calculated by dividing 12 by the number of adjustments allowed per year in (c)(1) below.

(c)  ADJUSTMENTS. Prior to the end of each adjustment period, the Contracting Officer shall calculate the adjusting index and any adjusted contract unit price(s) for the new adjustment period, and modify the contract accordingly. Price adjustments pursuant to this clause shall be made by contract modification, issued by the contracting officer and will show the base price index, the adjusting price index, the base unit price, the mathematical calculations, and the changed unit price(s). The price adjustment shall be applicable to orders issued after the effective date of the contract modification establishing the unit price for the adjustment period. The price adjustment(s) for each adjustment period will be based on the percentage change between the base price index and the adjusting price index for the adjustment period, as applied to the base unit price.

(1)  The Government shall be entitled to a price decrease in any particular adjustment period if the adjusting price index is less than the base price index. There shall be _______ price adjustments per contract year.

(2)  Example of adjustment calculation:

* In computing the base and adjusting price indexes, the resulting figure shall be rounded to the second decimal place.

** This figure shall be rounded to the fourth decimal place.

*** All dollar figures shall be rounded to the nearest cent.

(d)  UPWARD CEILING ON ECONOMIC PRICE ADJUSTMENT. No upward ceiling shall apply under this economic price adjuistment clause, unless the BLS series is based on indices below the six-digit level (an index "below the six-digit level" in BLS usage means an index whose identifier exceeds six-digits).

For any BLS series that is below the six-digit level, the following ceiling shall apply: The Contractor agrees that the aggregate of the increases in any contract unit price under this clause shall not exceed ___% (percent) of the original base unit price, except as provided hereafter.

(1)  If at any time the Contractor has reason to believe that within the near future a price adjustment under the provisions of this clause will be required that will exceed the adjustment ceiling for any item, the Contractor shall promptly notify the Contracting Officer in writing of the expected increase. The notification shall include a revised ceiling the Contractor believes is sufficient to permit completion of remaining contract performance, along with appropriate explanation and documentation as required by the Contracting Officer.

(2)  If an increase in the price index would raise a contract unit price for an item above the current ceiling, the Contracting Officer may issue a contract modification to raise the ceiling. If the contract ceiling will not be raised, the Contracting Officer shall so promptly notify the Contractor in writing.

(e)  INVOICES. The prices payable under this contract will be based on the latest adjusted unit price incorporated into the contract as of the date of order.

(f)  RETROACTIVE ADJUSTMENT. The contractor may request a retroactive adjustment for orders that have been delivered during an adjustment period for which payment has already been made, based on the difference between a higher final revised index applicable to an adjustment period and the index values used in calculating the unit price for that adjustment period, and subject to the adjustment ceiling in (d) above and when the following conditions are met:

(1)  The request for equitable adjustment clearly establishes that the unit price adjustment for the adjustment period would have been higher if the final revised index had been used, and identifies all invoices and payments to which it is applicable, cites the specific index differences relating to the requested adjustment, and provides a calculation of the total net price adjustment for items delivered during that adjustment period.

(2)  No retroactive equitable adjustment shall be made under this clause unless the total dollar change for items delivered is $______ ($500.00 unless otherwise stated) or more for the applicable adjustment period(s).

(3)  The contractor's written request must be received by the Contracting Officer within 45 days following publication of the final revised index.

The Government shall be entitled to a downward adjustment based on the difference between a lower final revised index applicable to an adjustment period and the index values used in calculating the unit price for that adjustment period, subject to the limitation in paragraph (f)(2).

(g)  REVISION OF PRICE INDEX. In the event -

(1)  Any applicable price index is discontinued or its method of derivation is altered substantially; or

(2)  The Contracting Officer determines that the price index consistently and substantially fails to reflect market conditions, the parties shall mutually agree upon an appropriate and comparable substitute and the contract shall be modified to reflect such substitute effective on the date the price index was discontinued, altered, or began to consistently and substantially fail to reflect market conditions.

(h)  FINAL INVOICE. The Contractor shall include a statement on the final invoice that the amounts invoiced hereunder have applied all decreases required by this clause.

(i)  DISPUTES. Any dispute arising under this clause shall be determined in accordance with and subject to the "Disputes" clause of the contract.

(End of Clause)