Help! My Costs Have Increased
Are you feeling the pain of increased costs to your business? If you are like most of our government customers, your business is feeling the brunt of the rising costs of goods and services, and so too are agencies and their ability to meet their missions.
GSA Tackling Challenge to Reduce Heavy Burden on Contractors
Not since the mid-1970s have we experienced such an inflationary crunch placing a heavy burden on contractors and their supply chains, especially small business contractors.
The good news is that GSA has recognized the inflation challenge and is trying to do something about it to keep contractors from leaving the government market altogether, in part, because they are losing money.
GSA released Memorandum Acquisition Letter MV-22-02 on 3/17/2022 to provide a temporary moratorium on the enforcement of several limitations contained in certain GSA Economic Price Adjustment (EPA) clauses.
Effectively, the Acquisition Letter from Jeff Koses, Senior Procurement Executive:
1. Lowers the approval for price increases above the EPA clause ceiling in 552.216-70, from the contracting director to one level above the contracting officer.
2. Relaxes time limitations on EPA increases.
3. Relaxes limitations on the number of EPA increases a contractor may request.
4. Clarifies that if a contractor has removed an item from their Schedule contract, GSA will not enforce the limitation on adding the same item back at a higher price.
What does this mean for you as a GSA Contract holder? If your costs have increased as a channel partner in which the manufacturer has increased your pricing or you are a business reliant on maintaining a highly qualified labor market and your costs have skyrocketed, you can seek to increase your pricing. Typically, EPA requests could not exceed the allowable ceiling limits of 10% for products and 5% for services per GSA clauses GSAR 552.216-70 – Economic Price Adjustment and I-FSS-969, Economic Price Adjustment.
Come Prepared to Justify Price Increases
At ClearCoast, we have prepared dozens of EPA requests over the last 3 months for customers. From manufacturers and their channel partners to businesses offering professional services, software, or other tools, we have guided customers in providing the proper documentation for consideration of an EPA by their contract officer.
For example, documentation from manufacturers could include the freight and fuel charges of raw materials and how it effects your supply chain. National industry resources publish statistics or cost indexes of what is happening based on the economy. GSA contractors should gather that data and any other supporting information to justify what is happening and tell the whole story.
Many companies have experience increased costs to their labor categories as employees return to work. These costs funnel down to a business’ bottom line, so it is important that you show the contract officer the data to enable evaluation of an EPA.
GSA is Stepping Up to Help Contractors
Acquisition Letter MV-22-02 outlines the actions as deemed necessary for GSA Contracting Officers to take in support of EPA requests from contractors including:
- Conducting a thorough evaluation, according to applicable policies and procedures.
- Approving EPA requests for increases that exceed the ceiling established in the solicitation with approval one level above the Contracting Officer.
- Taking into consideration all supporting data provided to show the impact to a GSA contractor’s bottom line.
This Letter and the actions outlined are in effect until September 30, 2022, unless otherwise extended.
ClearCoast recommends that GSA Contractors consider acting now to address the inflationary costs that have impacted their GSA Contract pricing. Don’t wait until it’s too late.
If you have any questions or would like to discuss how we can help you increase your GSA prices during these challenging economic times, please contact us at info@clearcoastusa.com
