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Ask PTAC: Inflation and Federal Contracts

Question: Hey PTAC!  I’m losing my shirt on this contract due to inflation!  What can be done? 

Answer: With the highest inflation in decades, PTAC is receiving a lot of inquiries about options for contractors who are attempting to perform on existing contracts or are bidding currently.  Our Advice?  Read your existing contracts looking for Equitable Price Adjustment Clauses (EPAs) and if negotiating a new contract, ask for EPA to be included. 

Department of Defense recently came out with guidance linked here for their Contracting Officers that indicates: 

  • Cost increases as a result of economic conditions are dependent on contract type and will be addressed contract-by-contract. 
  • Fixed-price contracts often do not, but can include an Equitable Price Adjustment (EPA).  If your current Fixed Price contract does not have an EPA there is no relief, but may attempt to pursue relief through a Request for Equitable Adjustment (REA).
  • Ask for an EPA on any future contracts if it’s not already included in the solicitation.   

Prior to that DoD memo, the General Services Administration issued their own guidance that relaxes some of the restrictions on EPAs and encourages contracting officers to be flexible with contractors who are selling on their platform at a loss.  However, the burden to request the adjustment remains firmly on the contract holder who needs to negotiate successfully with their contracting officer for relief.   

Would you like to learn more? 

  • Contact your local PTAC for support.  
  • Here’s an interesting conversation about inflation in government contracts by Federal News Network. 
  • Attend PTAC’s July 28 workshop on Solicitation Reviews:  Making Go or No-Go Decisions.  Featuring former Federal Contracting Officer, Terry Homburg.  Included in that 2 hour workshop will be discussion of EPAs and their impact on how you approach the solicitation.  

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