In a rare and unprecedented move, the General Services Administration (GSA) announced a temporary suspension of certain restrictions on GSA Contract economic price increases. The new pricing flexibilities are designed to allow contractors to better adapt to changing market conditions and to continue to support federal customer demands.
GSA Contract Price Increases
In order to increase your GSA Contract pricing, you must submit an Economic Price Adjustment (EPA) modification to GSA. Under normal circumstances, GSA restricts how often and how much you can increase your GSA Contract pricing. These EPA restrictions have hindered some contractors from securing a price increase needed to keep up with inflation and pricing volatility due to current supply chain issues.
When faced with selling at a loss, contractors have been forced to remove products and services from their GSA Contract. This in turn, presents the federal agencies in need of those products and services with limited availability and decreased competition.
GSA acknowledges, in the current economy, the standard restrictions on Economic Price Adjustments are hurting contractors — small businesses in particular — as well as the federal agencies these contractors serve. To combat this growing problem, GSA is easing the restrictions on price increases.
Standard Economic Price Adjustment Restrictions
Price increase restrictions can vary slightly depending on the specific clause that applies to your GSA Contract. In general, under normal circumstances, Economic Price Adjustments:
- Are limited to three increases per line-item, per 12-month period
- Are restricted to the ceiling limitation per line-item, per 12-month period
- Cannot go into effect during the first year of your contract period, or for the first 12-months after the line-item is added to the contract
- Cannot be submitted less than 30 days since your last price increase
- Cannot be submitted within the last 60 days of your contract period
Moratorium on Economic Price Adjustment Restrictions
On March 17th, GSA issued a memorandum for the heads of GSA’s Federal Acquisition Service (FAS) Contracting Activity that places a “temporary moratorium on the enforcement of a number of limitations contained in certain GSA EPA Contract clauses”. You can read Acquisition Letter MV-22-02, Temporary Moratorium on Enforcement of Certain Limitations Contained in Certain GSA Economic Price Adjustment (EPA) Contract Clauses, in its entirety here.
What does the Moratorium mean for GSA Contractors?
Based on the memorandum, GSA contractors can submit an EPA modification at any time, including those that exceed the ceiling amount. During the moratorium, GSA Contracting Officers are not bound by the standard price increase restrictions. However, it is important to note, EPA modification approval is still at the discretion of the Contracting Officer, who may request supportive documentation for the increase.
While the moratorium is in effect GSA Contracting Officers can:
- Consider an Economic Price Adjustment modification at any point during the GSA Contract term
- Consider more than three Economic Price Adjustment modifications in a contract period
- Consider Economic Price Adjustment modifications that exceed the ceiling set in the solicitation
- Keep in mind – the Contracting Officer must still obtain additional approval for these increases; however, the level of approval has been reduced from the Contract Director to one level above the Contracting Officer.
- Consider modifications that attempt to add items that were previously removed from a company’s GSA Contract back at a higher price
- Keep in mind – the Contracting Officer can reject the modification if they determine the higher pricing is not fair and reasonable.
When Do GSA’s EPA Changes Go in Effect?
The temporary suspension of Economic Price Adjustment restrictions went into effect, March 17, 2022, and will continue through fiscal year 2022. GSA may decide to extend the effective date beyond September 30, 2022, so stay tuned.
Need Help Increasing Your GSA Pricing?
If your company would like to increase your GSA Contract pricing and can provide supportive documentation for the increase, we can help. Our team here at FEDSched has the experience and the bandwidth to help prepare and negotiate your Economic Price Adjustment modification. Contact us today to save time and reduce your risk of rejection.
