21-Attachment II - CPI-W Based Price Adjustment Calculations.pdf
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- Solicitation number
- 25/0290
- Issued by
- Harris County, Texas
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This document details a CPI-W (Consumer Price Index of Urban Wage Earners and Clerical Workers) based price adjustment calculation methodology for contract renewals, specifically referencing Houston, Texas. The pricing adjustment mechanism uses the U.S. Bureau of Labor Statistics' inflation data to determine contract renewal pricing by analyzing six consecutive twelve-month periods prior to contract expiration.
The calculation method involves totaling and averaging the inflationary/deflationary effects across six specific time periods, with the most recent twelve-month period ending in June of the contract year. The document provides a detailed example for a contract expiring in November or December 2008, illustrating how the six periods are selected and calculated. The purpose is to create a systematic, data-driven approach to adjusting contract pricing that reflects changes in urban wage earners' compensation over time, ensuring fair and transparent pricing mechanisms for contract renewals.
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CPI-W Based Price Adjustment Calculations
For any year in which a current contract is renewed, the renewal year pricing will be determined by adjusting the current year pricing by the average inflationary/deflationary effect, as reported in the Consumer Price Index of Urban Wage Earners and Clerical Workers (CPI-W) for Houston, Texas, between the current or prior year as compared to the year preceding the current or prior year of the contract. The CPI-W, as published by the U.S.
Bureau of Labor Statistics (BLS), is a measure, over time, of the average change in the compensation of urban wage earners and clerical workers.
The average inflationary/deflationary effect will be determined by totaling, and dividing by six (6), the inflationary/deflationary effects of six (6) twelve (12) month periods occurring prior to expiration of the current contract. Since the inflationary/deflationary effect for the Houston area is calculated by the BLS every other month beginning in February, and since the intention to renew a contract should be determined in the eighth month of the contract, all required data for calculating the average adjustment rate need be current only five (5) or six (6) months prior to the scheduled expiration of the current contract.
For example, assuming a contract expires in November or December, the end of the most recent twelve (12) month period will be June of the year of the current contract. The end of each of the other five (5) twelve (12) month periods will be the second month before the end of the immediately preceding twelve (12) month period.
Therefore, the six (6) twelve (12) month periods applicable to a contract expiring in November or December, 2008, are:
Period #: 1 2 3 4 5 6
From: 6/17 4/17 2/17 12/16 10/16 8/16 To: 6/18 4/18 2/18 12/17 10/17 8/17
Period #1 is from June of the first year before the contract period to June of the year of the contract period, Period #2 is from April of the first year before the contract period to April of the year of the contract period, Period #3 is from February of the first year before the contract period to February of the year of the contract period, Period #4 is from December of the second year before the contract period to December of the first year before the contract period, Period #5 is from October of the second year before the contract period to October of the first year before the contract period, Period #6 is from August of the second year before the contract period to December of the first year before the contract period.
CPI-W Based Price Adjustment Calculations
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