Economic Price Adjustment: 552.216-70

In June of this year, Clause 552.216-70 was changed, which may cause some headaches for GSA contractors. All economic price adjustments (EPAs) in Schedule contracts are made in accordance with clause I-FSS-969 or clause 552.216-70, depending on which clause you chose when you applied for your contract. In the past, the percentage of Economic Price Adjustment was set at a 10% increase every 12 months. As of June, this ceiling has been lowered to 4%. But what does that mean for contractors that need to increase pricing?

First, the maximum increase per 12 months has now been severely limited from what was allowed in the past. Contracting officers like to say that Contractors may ask for 4% but based on competitive research that does not mean that 4% will be granted. When increasing pricing, the most important thing is to do your research. If you are a service-based Labor Category company, take a look at the Contract-Awarded Labor Category (CALC) tool to help you determine whether your pricing falls within competitive range. CALC will allow you to narrow down your LCATs by schedule and experience levels to see at what prices other Contractors are actually winning work with similar LCATs. If you are a product based company, your best bet will eventually be the roll out of the Formatted Product Tool to your schedule. To learn more about the Formatted Product Tool, Click HERE.

The change to a 4% EPA increase under clause 552.216-70 puts pricing increase more in line with clause I-FSS-969 for escalation rates. Although the clause does not contain language specifying what the maximum allowed escalation rate is, standard practice has uncovered that more than 2.5% escalation per year isn’t being awarded at this time.

Overall, Contractors should be aware that they won’t be able to increase pricing as much year to year anymore and those of you applying for new schedules with LCATS should consider going with clause I-FSS-969 over clause 552.216-70 simply because the numbers are now so close and the escalation clause requires less work to increase (since its automatic). 

Are you registered in SAM (System for Award Management)?

SAM, or System for Award Management, is the combined U.S. Government system of CCR/FedReg, ORCA, and EPLS. SAM is completely free of charge for registrants and users. Current and potential government vendors are required to register in SAM if they wish to have a contract with the government. If your organization is applying for the GSA must be fully registered in SAM in order to be awarded

The registration can take anywhere from 15 minutes to one hour, depending on if the information requested is readily available. A vendor must provide basic information relevant to procurement and financial transactions. A SAM registration is good for one year and must be updated annually.

Before registering for SAM a company must have the following:

·         DUNS or D-U-N-S Number

o    Data Universal Numbering System

o    A proprietary system developed and regulated by Dun & Bradstreet (D&B) that assigns a unique numeric identifier to a single business entity

·         TIN

o    Taxpayer Identification Number and then name associated with that TIN

·         CAGE CODE

o    Commercial and Government Entity code is a five-character ID number that is used extensively within the federal government.

o    If the organization is migrating over from any old systems (CCR, ORCA, etc.) than it will already have this code. If not the organization will be assigned one once you are fully registered in SAM

·         EFT Information

o    Electronic Funds Transfer information such as the ABA Routing Number and bank account number

SAM also allows Government agencies and contractors to search for your organizations based on your ability, size, location, experience, and more. Since SAM incorporated the ORCA system agencies and other companies can see if a firm meets certain Federal requirements (ex: complies with equal opportunity legislation).

Government Contract Services specializes in SAM registrations and updates. Please look for the Government Contract Services SAM eBook which will contain helpful step by step instructions on how to efficiently and successfully register your company in SAM. 

Can you speak Government?

In the world of government procurement, if you don’t know the language, you’re out of the loop! Almost everything has an acronym and an abbreviation which are very important to doing business with the government. Here you’ll find a small selection of important acronyms and abbreviations.

GSA- General Services Administration; the GSA oversees and assists with all GSA schedule procurement as well as issuing the schedule contracts.

VSC- Vendor Support Center; the VSC can help contractors with just about any contract related problems. Anything from difficult SIP uploads to questions about modifications.

RFQ- Request for Quotation; this the paperwork put out by the buyer that provides information to the contractor on what the requirements of a bid are.

SIN- Special Item Number; each schedule has a list of SINs that are listed under it. They are nothing more than subcategories of a main large category.

IFF- Industrial Funding Fee; for everything a contractor sells on the GSA schedule, the IFF of .75% is added to the price to cover the cost of GSA doing their job.

FAR- Federal Acquisition Regulation; the law of land for government procurement.

SAM- System for Award Management; to do any work with the government, whether on GSA or not, contractors must be registered in this online system.

FAS- Federal Acquisition Service; as part of the GSA, the FAS has 8 program areas that assist in all parts of acquisition processes, across all types of products and services.

TAA- Trade Agreement Act; all products sold on the GSA must come from a TAA compliant country. This means they signed the Trade Agreement Act.

NAICS- North America Industry Classification System; NAICS codes help you categorize your products and services into an industry standard, making it easier for the government to find our products and services.

Some Popular Acronym Schedules

                LOGWORLD- Logistics Worldwide Schedule 874 V; provides logistics support

MOBIS- Missions Oriented Business Integrated Solutions Schedule 874; provides consulting and training services on all subjects except IT.

PES- Professional Engineering Services Schedule 871; Engineering consulting & prototype assistance. Does not allow for architectural services

TAPS- Temporary Administrative and Professional Staffing Services Schedule 736; admin and basic staffing.

TDRS- Transportation, Delivery, and Relocation Solutions Schedule 48; Air, ground, sea transportation, moving and packing services.