9-CPI-U Based Price Adjustment Calculations.pdf
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- Solicitation number
- 25/0390
- Issued by
- Harris County, Texas
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This document outlines the CPI-U Based Price Adjustment Calculations methodology for Harris County Precinct 3, Texas, governing how contract renewal pricing will be adjusted annually using the Consumer Price Index for All Urban Consumers (CPI-U) as published by the U.S. Bureau of Labor Statistics. The adjustment mechanism applies to the one-year contract for Hydro-Insensitive High Density Polyurethane Foam Materials and Related Items beginning February 1, 2026 (UPIN No: 26103MF3YN01). The calculation methodology uses the Houston, Texas CPI-U data, measuring the average inflationary or deflationary effect on pricing over time for a fixed market basket of goods and services covering approximately 80 percent of the total population.
Renewal year pricing adjustments are determined by calculating the average inflationary or deflationary effect across six consecutive twelve-month periods preceding contract expiration. The BLS publishes CPI-U data for the Houston area every other month beginning in February, with sufficient data available five to six months prior to contract expiration for adjustment rate calculations. For contracts expiring in November or December, the calculation periods reference June of the current year as the most recent twelve-month period endpoint, with each preceding period ending two months prior to the previous period. This methodology ensures objective, formulaic price adjustments tied to actual market conditions in the Houston area rather than subjective negotiation.
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CPI-U Based Price Adjustment Calculations
CPI-U 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 contract year pricing by the average inflationary/deflationary effect, as reported in the Consumer Price Index of All Consumers (CPI-U) for Houston, Texas, between the current contract year as compared to the year preceding the current contract year of the contract. The CPI-U, as published by the U.S. Bureau of Labor Statistics (BLS), is a measure, over time, of the average change in prices in a fixed market basket of goods and services and covers approximately 80 percent of the total populations, including wage earners, clerical workers, as well as groups such as a professional, managerial, and technical workers, the self-employed, retirees and others not in the labor force.
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: 6/07 4/07 2/07 12/06 10/06 8/06 To: 6/08 4/08 2/08 12/07 10/07 8/07
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.
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