Draft EPA Clause.pdf

Silver Reclamation EPA Clause

Solicitation Section B Note:

The pricing for CLINs [to be identified with solicitation] is subject to the Economic Price

Adjustment (EPA) Text located in Section I of this solicitation.

The "Unit Price" entered by the offeror in this section shall be the proposed Base Service Price.

This Base Service Price corresponds to the Base Market Index Value for silver as defined in the

Section I EPA clause.

The final unit price for any delivery order awarded under these CLINs will be calculated at the time of order issuance in accordance with the formula and the "Adjustment Increment" proposed by the offeror in the Section I EPA text. Offerors shall not include any contingency for market fluctuation in their proposed Base Service Price.

In accordance with DFARS PGI 216.203-4(17), the Contracting Officer reserves the right to request additional data from the offeror to verify that the proposed Base Service Price constitutes a reasonable and realistic baseline from which future adjustments will be made.

Economic Price Adjustment Text (Applies to CLINS – to be identified with solicitation)

(a) General: The prices for the service CLINs identified in Section B as subject to this clause may be adjusted upward or downward in accordance with the procedures set forth herein. This clause provides for adjustment based on the economic fluctuations of the market price index for silver. By submitting an offer, the offeror certifies that the index and methodology used are an appropriate basis for adjustment for this contract.

(b) Definitions: As used throughout this text—

(1) "Base Service Price" means the firm-fixed-price per unit (troy ounce) proposed by the

Contractor in Section B for a given CLIN.

(2) "Base Market Index Value" means the established benchmark price for silver against which all adjustments will be calculated. For this contract, the Base Market Index Value is hereby established as $75.00 per troy ounce.

(3) "Actual Market Index Value" means the final afternoon London Bullion Market Association

(LBMA) Silver Price as published on the LBMA website (www.lbma.org.uk) for the date of one day before a Delivery Order is issued by the Government.

(4) "Adjustment Increment" means the fixed dollar amount, proposed by the offeror in paragraph

(c) below, used to calculate upward or downward adjustments to the Base Service Price for each full one-dollar ($1.00) change between the Base Market Index Value and the Actual Market

Index Value.

(c) Offeror's Proposed Adjustment Increment: The offeror shall complete the following. The proposed Adjustment Increment represents the marginal cost impact to the offeror for each one-dollar change in the price of silver and shall be a key element of the price evaluation.

(1) ADJUSTMENT INCREMENT: $ _(Offeror fill-in)_ per troy ounce for each $1.00 change in the Actual Market Index Value.

(2) SERVICE PRICE FLOOR: $ _(Offeror fill-in)_ per troy ounce. (This price represents the offeror's absolute minimum price to perform the service, below which no downward adjustment will be made.)

(d) Calculation of Price Adjustment: For each Delivery Order placed against a CLIN subject to this clause, the Contracting Officer shall calculate the final adjusted unit price as follows:

• Example A: Market Above Baseline

• Step 1: Determine the Market Index Delta. Subtract the Base Market Index Value from the Actual Market Index Value (the LBMA Silver Price for the day prior to order issuance).

• If the LBMA price is $77.00, the Delta is $77.00 - $75.00 = $2.00.

• Step 2: Calculate the Total Price Adjustment. Multiply the Market Index Delta from

Step 1 by the Contractor's proposed Adjustment Increment from paragraph (c).

• $2.00 x $0.001 (Offeror's proposed increment) = $0.002.

• Step 3: Calculate the Final Adjusted Unit Price. Add the Total Price Adjustment from

Step 2 to the Contractor's proposed Base Service Price from Section B.

• $0.10 (Base Service Price) + $0.002 (Adjustment) = $0.102 (Final Adjusted

Unit Price).

• Step 4: Apply Floor and Ceiling. The price from Step 3 shall be compared to the adjustment limits defined in paragraph (e). The final price for the Delivery Order shall be the Calculated Unit Price, but it shall not be higher than the Service Price

Ceiling or lower than the Service Price Floor.

• Example B: Market Below Baseline

• Step 1: Determine the Market Index Delta. Subtract the Base Market Index Value from the Actual Market Index Value (the LBMA Silver Price for the day prior to order issuance).

• If the LBMA price is $73.00, the Delta is $73.00 - $75.00 = -$2.00.

• Step 2: Calculate the Total Price Adjustment. Multiply the Market Index Delta from Step 1 by the Contractor's proposed Adjustment Increment from paragraph

(c).

• -$2.00 x $0.001(Offeror’s proposed increment) = -$0.002.

• Step 3: Calculate the Final Adjusted Unit Price. Add the Total Price Adjustment from Step 2 to the Contractor's proposed Base Service Price from Section B.

• $0.10 (Base Service Price) + (-$0.002) (Adjustment) = $0.098 9Final

Adjusted Unit Price.

• Step 4: Apply Floor and Ceiling. The price from Step 3 shall be compared to the adjustment limits defined in paragraph (e). The final price for the Delivery Order shall be the Calculated Unit Price, but it shall not be higher than the Service Price

Ceiling or lower than the Service Price Floor.

All final unit prices calculated under this formula shall be rounded to the nearest second decimal place. The resulting Final Adjusted Unit Price shall be the firm-fixed-price for the Delivery

Order. The calculation will be documented in the ordering file.

(e) Adjustment Limitations: Adjustments apply only to the portion of the price identified as the

Base Service Price and do not apply to profit. For the purposes of this clause, profit is considered an inseparable and embedded component of the offeror's proposed Base Service Price.

(1) Service Price Ceiling: The final adjusted unit price calculated under this clause shall not exceed 150% of the Contractor's proposed Base Service Price from Section B. This represents the Government's maximum price per unit for this service.

(2) Service Price Floor: The final adjusted unit price shall not fall below the Service Price Floor proposed by the Contractor in paragraph (c)(2).

(f) Index Discontinuation: In the event the LBMA ceases to publish the daily Silver Price, or if its methodology is substantially altered, the parties shall mutually agree in writing to a substitute index that is substantially equivalent. If the parties cannot agree, the Contracting Officer shall unilaterally designate a substitute index.

(g) Disputes: Any dispute arising under this clause shall be subject to the "Disputes" clause of this contract.

(End Text)