Part 516—Types of Contracts

Subpart 516.2—Fixed Price Contracts

516.203  Fixed-price contracts with economic price adjustment.

516.203-3  Limitations.

(a) For multiple award schedule contracts, you should:

(1) Include an economic price adjustment (EPA) clause only in multiyear solicitations and contracts.

(2) Document in the acquisition plan the determination required by FAR 16.203-3.

(3) Provide supporting rationale in the contract file to include an EPA clause in a 1-year solicitation or contract.

(b) The contracting director must approve any of the following actions:

(1) A determination to include an EPA clause in a 1-year solicitation or contract or to provide for price increases during the first 12 months of a multiyear contract.

(2) The use in a contract of any EPA clause that you did not include in the initial solicitation. This includes any clause that provides for price adjustment during the first 12 months of a multiyear contract.

(c) The contracting director may raise the price ceiling (the aggregate of permitted price increases during a 12-month period) during the contract period when both of the following conditions are met:

(1) A supplier or suppliers request that the ceiling be raised.

(2) Analysis of current market conditions reveals that most suppliers of similar supplies or services are affected. If the price ceiling is raised, you must amend the contract to reflect the revised ceiling.

516.203-4  Contract clauses.

(a) Multiple award schedules. Do not use FAR 52.216-2, 52.216-3, or 52.216-4 in negotiated acquisitions based on discounts from established commercial catalogs or pricelists. Instead, use:

(1) 552.216-70, Economic Price Adjustment—FSS Multiple Award Schedule Contracts, in a 1-year solicitation or contract.

(2) 552.216-70 (Alternate I) in multiyear solicitations and contracts.

(b) Stock or Special Order Program Contracts. In multiyear solicitations and contracts, after making the determination required by FAR 16.203-2, use 552.216-71, Economic Price Adjustment-Stock and Special Order Program Contracts, or a clause prepared as authorized in paragraph (a)(2)(ii) of this subsection.

(1) If the contract includes one or more options to extend the term of the contract, use the clause with its Alternate I or a clause substantially the same as 552.216-71 with its Alternate I suitably modified.

(2) In a contract requiring a minimum adjustment before the price adjustment mechanism is effectuated, use the basic clause with Alternate II or with Alternate I and Alternate II.

(3) If the Producer Price Index is not an appropriate indicator for price adjustment, modify the clause to use an alternate indicator for adjusting prices. Similarly, if other aspects of 552.216-71 are not appropriate, use an alternate clause following established procedures.

(c) Adjustments based on cost indexes of labor or material.

(1) If you decide to provide for adjustments based on cost indexes of labor or material, prepare a clause that defines each of the following elements:

(i) The type of labor and/or material subject to adjustment.

(ii) The labor rates, including any fringe benefits and/or unit prices of materials that may be increased or decreased.

(iii) The index(es) that will be used to measure changes in price levels and the base period or reference point from which changes will be measured.

(iv) The period during which the price(s) will be subject to adjustment.

(2) The contracting director must approve use of this clause.

Subpart 516.4—Incentive Contracts

516.406  Contract clauses.

The contracting director must approve any award fee clause.

Subpart 516.5—Indefinite-Delivery Contracts

516.506  Solicitation provisions and contract clauses.

(a) In solicitations and contracts for stock or special order program items, when the contract authorizes FSS and other activities to issue delivery or task orders, insert the clause at 552.216-72, Placement of Orders. If only FSS will issue delivery or task orders, insert the clause with its Alternate I.

(b) In solicitations and contracts for single or multiple award schedule program items, insert the clause at 552.216-72, Placement of Orders, with its Alternate II.

(c)  Use 552.216-72, Placement of Orders, Alternate III, instead of Alternate II. in solicitations and contracts for—

(1) Federal Supply Schedule 70;

(2)  The Consolidated Schedule containing information technology Special Item Numbers; and

(3)  Federal Supply Schedule 84.

(d) In solicitations and contracts for Federal Supply Schedules for recovery purchasing (see 538.7102), use 552.216-72, Placement of Orders, Alternate IV, instead of Alternate II.

(e) If the clause at 552.216-72 is prescribed, insert the provision at 552.216-73, Ordering Information, in solicitations for stock items and in other FSS solicitations. Use 552.216-73 Alternate II when 552.216-72 Alternate II, Alternate III, or Alternate IV are prescribed.

Subpart 516.6—Time-and-Materials, Labor-Hour, and Letter Contracts

516.603  Letter contracts.

516.603-3  Limitations.

Architect-engineer (A-E) services.

(a) Requirement for a price proposal. Before you award a letter contract, the proposed A-E must provide a price proposal for the non-design effort.

(b) Contents of each letter contract. You must include the following information in the letter contract:

(1) The scope. If you include the design effort, only authorize the A-E to perform those services that are independent of the design effort (for example, feasibility studies, existing facility surveys or site investigation, etc.). Do not authorize the A-E to begin the design effort before the letter contract is definitized.

(2) A definitization schedule. Include dates for each of the following:

(i) Submission of the design fee proposal.

(ii) Start of negotiations.

(iii) Definitization. This date must be no later than 90 days after the date of the letter contract.

(3) A limitation on the Government’s liability for the non-design effort to be performed under the contract. Insert this amount in FAR 52.216-24, Limitation of Government Liability.

(c) Unilateral price decision. If you must issue a unilateral price decision, the maximum contract amount must not exceed a reasonable price for the excludable items plus the 6 percent statutory fee limitation for the project.