Economic Price Adjustment EPA (1).docx

ECONOMIC PRICE ADJUSTMENT (IAW FAR 16.203-4(d))

'Pricing' of base/option periods, to include consideration of any adjustments shall be performed by an economic price adjustment for those periods, as follows:

An economic adjustment will be applied to the Overhead Price Per Gallon provided at time of award. This allows for economic increase or decrease of the prices of propane and serves to adjust line item prices by the increase or decrease of the economic trend in the wholesale market. The economic price adjustment will be based on the Weekly Heating and Oil Propane Prices (Wholesale Propane) found in the U.S Energy and Information Administration (EIA) website located at the following weblink https://www.eia.gov/dnav/pet/pet_pri_wfr_dcus_nus_w.htm

The adjustment will be made in accordance with the following equation. The resulting revised Price Per Gallon shall be applied.

P = OHR + WP

OHR = Overhead Rate Per Gallon (Quote at Time of Award)

WP = Wholesale Propane Cost at time of Award/Option Renewal Execution

Contract Price Per Gallon (P) is the contracted amount of the price per gallon the Government will pay for the propane ordered during the period.

Overhead Rate Per Gallon (OHR) is the rate of overhead per gallon that is quoted by the Contractor at time of award. This rate shall not change, it will be the same rate utilized throughout the life of this contract.

Wholesale Propane (WP) is the weekly wholesale price per gallon listed at the EIA website. The price per gallon listed on the EIA website “at time of award” and “exercising the options” will be used to determine the Wholesale Price Per Gallon.

If the EIA Wholesale Propane Price website ceases to be published, the parties shall agree on substitute indices.

EXAMPLE:

At time of award the wholesale price per gallon is $0.82 from the EIA website, the Contractor’s quote for Overhead Rate Per Gallon was $0.25.

For the base year, the Contract Price Per Gallon CLIN 0001 would be $0.82 + $0.25 = $1.07 multiplied by the estimated number of gallons for the total price of the base period

EXAMPLE:

For an option year the Contract Price Per Gallon will be adjusted as follows:

At time of exercising the option year the wholesale price per gallon is $0.87 from the EIA website, the Contractor’s quote for Overhead Rate Per Gallon was $0.25.

For the option year, the Contract Price Per Gallon CLIN 1001 would be $0.87 + $0.25 = $1.12 multiplied by the estimated number of gallons for the total price of the option year.

Note 1. Round calculations to the nearest cent.