• 52.216-9066 ECONOMIC PRICE ADJUSTMENT - MARKET PRICES - FIBERBOARD BOXES & LINERS (MAR 2010)  

b

(a)  Warranties. The Contractor warrants that:

(1)  The unit prices set forth in the Schedule do not include allowances for any portion of the contingencies covered by this clause.

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

(b)  Definitions. The terms used in this clause are defined below.

(1)  The "market prices" specified hereunder are, as a satisfactory measure of price changes in the marketplace, used for price adjustments under this clause. The prices appear in _________________(Note 1)_______________________________:

______________(Note 2)____________

_________________________________

_________________________________

_________________________________

(i)  The above applicable "East" market prices shall be used to adjust prices under this clause for items delivered to Defense Distribution Center Anniston, AL; Defense Distribution Depot Europe; Defense Distribution Center Susquehanna, PA; Defense Distribution Center Norfolk, VA; Defense Distribution Center New Cumberland, PA; and any other required delivery points east of the Mississippi River.

(ii)  The above applicable 'West" market prices shall be used to adjust prices under this clause for items delivered to Defense Distribution Center Hill, UT, Defense Distribution Center San Joaquin, CA; Defense Distribution Center Pearl Harbor, HI; Defense Distribution Center Red River, Texarkana, TX; and any other required delivery points west of the Mississippi River.

(2)  Base market price - The average of the minimum and maximum list prices in U.S. dollar prices published the week of the contract effective date. If the contract effective date falls in a week when the prices are not published, then the average of the applicable minimum and maximum prices from the preceding week of publication shall be used.

(3)  Adjusting market price - The average of the list price ranges specified above for the week in which the unit price(s) are being adjusted. Note: The adjusting market price becomes the base market price for the subsequent adjustment period, if any.

(4)  Contract Unit Price - The contract unit price(s) to be invoiced for product(s) delivered to East and West locations is the sum of the "ordered price" and the "distribution price":

(i)  Ordered Price- The contractor's purchase cost for materials delivered to East or West locations. No amount shall be included in the ordered price(s) for any other element of cost or for profit. The ordered price component is subject to increases or decreases in accordance with this clause.

(ii)  Distribution Price- The price that represents all the elements of the contract unit price other than the "ordered price". The distribution price typically consists of the contractor's projected labor, general and administrative overhead, packaging costs, transportation costs from the prime vendor's distribution point to destination, any other projected expenses or overhead associated with prime vendor function, and profit. Profit includes all profit relevant to both the materials costs and distribution costs. The Distribution Price reflects the difference between the Ordered Price and the Contract Unit Price.

(5)  Base Price - The unit price(s) offered for the item(s) included in the contract award schedule.

(6)  Contract Price - Means:

(i)  The base year total prices and all option year prices shown on the contract schedule page(s) at time of award, or:

(ii)  The base year total prices and all option year prices adjusted pursuant to this clause. (Note: price adjustments made to each ordered price component will be applied concurrently to any remaining option year prices.)

(7)  Contract Effective Date - Means the effective date of award of the contract resulting from this solicitation.

(8)  Option Year - A one (1) calendar year period consisting of twelve (12)  calendar months. The first contract calendar year (base year) shall commence on the contract effective date and shall end 365 days (366 days for a leap year) thereafter. Each succeeding contract calendar year shall commence on the day immediately following the last day of the preceding contract calendar year.

(c)  Price Change Notification. Within five calendar days following publication of a market price sufficient to require a price change under this clause, the contractor shall notify the Contracting Officer in writing of the change and market price upon which the current contract price is based and attach a copy of the market pricepublication containing such price change.

(d)  Limitations. All price adjustments are subject to the limitations set forth in this clause including:

(1)  Price adjustments shall be applied only to the ordered price component, which is deemed to represent (Note 3) percent of the contract unit price for each item.

(2)  Contract prices shall be adjusted by the same percentage that the Adjusting market price bears to the Base market price.

(3)  When any unit price adjustments under this clause coincide with the exercise of an option period, such adjustments will be authorized separately from the exercise of the option.

(4)  Price adjustments under this clause will be made only if the change to the price of a contract item would increase or decrease by (Note 4) percent or more of the current price of a contract line item.

(5)  Increased contract unit prices shall not apply to quantities scheduled for delivery prior to the effective date of the increased unit price. The effective date of the increased unit price is the effective date on the contract modification (SF30, block 3).

(6)  All price adjustments shall be calculated as shown in the following example:

Sample Increase Sample Decrease

Latest Market Price: 151.7 Latest Market Price: 124.6

Previous Market Price: 140.2 Previous Market Price: 140.2

(+)  11.5 (-)  15.60

% Change: 11.5 / 140.2 = (+)  8.2% % Change: 15.6 / 140.2 = (-)  11.13%

(e)  Upward Ceiling On Economic Price Adjustment.

(1)  The Contractor agrees that the total increase in any contract item's unit price pursuant to the provisions of this clause shall not exceed (Note 5)  percent per annum of the item's unit price at the inception of each contract year, except as provided under paragraph (e)(3).

(2)  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 current contract ceiling price 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.

(3)  If an actual increase in a market price 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.

(4)  There is no percentage limit on downward adjustments under this clause.

(f)  Revision of the Market Price. In the event---

(1)  any applicable market price indicator is discontinued or its method of derivation is altered substantially, or

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

(g)  Contract Modifications. Price adjustment(s) pursuant to this clause shall be incorporated by a modification signed by the Contractor and the Contracting Officer. The Modification shall be issued:

(1)  within thirty (30)  calendar days of the date of request by the contractor and shall set forth the unit price(s) as adjusted in accordance with this clause to establish the new contract price(s),

(2)  shall adjust the unit prices of any delivery orders issued during and following this 30 day period, and

(3)  if the adjustment results in a decrease to the unit price(s) of any delivery orders issued during this 30 day period, the Contractor shall submit a credit memorandum in the amount of the decrease within 30 days of the date of the Modification. The credit will be applied to subsequent invoices.

(h)  FINAL INVOICE. The Contractor shall include a statement on the final invoice for each contract year that amounts invoiced under this contract reflect all decreases required by this clause.

(i)  Disputes. Any disagreement arising under this clause shall be resolved in accordance with the "Disputes" clause of the contract.

(End of Clause)