GWG DRAFT EPA Clause .docx

Addendum to FAR 52.212-4(t)

Economic Price Adjustment (EPA)

(a) The prices of the EPA CLINs will be adjusted prior to EPA CLINs taking affect by a bilateral modification to the contract; adjusting the applicable CLINs’ ELINs annotated in the spreadsheet (Attachment ## Price Matrix). Adjustments will be accomplished using the formulas specified in paragraph (e) of this clause.

(b) The price adjustment as a result of operation of this clause applies only to the labor portions of the monthly ACP price of the ELINs annotated in the spreadsheet (Attachment ## Price Matrix). The pricing is subject to upward and downward adjustment for each EPA ELIN, by year in which the orders are placed.

(c) For the purposes of this EPA clause, no adjustments shall be made to the following components of ELIN price. These costs are to be excluded from the amounts shown in EPA ELINs.

(1) Depreciation of fixed capital equipment and buildings

(2) Royalties

(3) Leases

(4) Fixed Price subcontracts which do not include Economic Price Adjustment clauses

(5) Cost of Money

(6) Profit

(7) Overhead

(d) For the purpose of calculating the price adjustments as required under this clause, the base index values are as shown in the Base Wage tab within the pricing matrix. These annual forecast values are as published by BDSW Military Installations (Bundeswehr) table (index category – e.g. guard level 1 Security Guards in Military Installations), the applicable and comparable guard rate. The parties will adopt the forecast values in the negotiation of the contract price.

(e) The economic price adjustment will be calculated as follows, using the most current BDSW Bundeswehr table's index cited in paragraph (d) as of 60 days prior to the applicable EPA ELIN as specified in the contract.

For purposes of the calculations described in this paragraph (e), round to two decimal places, rounding up numbers ≥5 and rounding down numbers ≤4. Round dollars to the nearest whole dollar.

Step 1: Accomplish a separate calculation for each year for which paragraph (b) shows pricing subject to adjustment for the EPA ELIN in question.

(i) Calculate the difference between the most current BDSW Bundeswehr index by region, and the baseline forecast index rate from paragraph (d)(1) (Labor).

(ii) Calculate the quotient of the result of paragraph (e)(1)(i) divided by the baseline forecast index rate from paragraph (d)(1); rounded to two decimal places.

(iii) Multiply the quotient from paragraph (e)(1)(ii) by the labor subject to adjustment for the given year as shown in paragraph (b). This result is the adjustment to the base Labor for the EPA ELIN for that year.

Illustration of 1st EPA adjustment year calculation: [(BDSW Index – Baseline rate) / Baseline rate] x ACP price = ACP adjusted price Illustration of 2nd thru 4th EPA adjustment year calculation: [(BDSW Index – Prior Year BDSW rate) / Prior BDSW rate] x ACP price = ACP adjusted price

SAMPLE CALCULATION 1st EPA Adjustment RP Illustration of 1st EPA adjustment year calculation: [(21.60 – 20) / 20] x 1,100 = ACP adjusted price Illustration of 1st EPA adjustment year calculation: [1.60 / 20] x 1,100 = ACP adjusted price Illustration of 1st EPA adjustment year calculation: .08 x 1,100 = 88 1st year of EPA for base labor will be 1,188.00

SAMPLE CALCULATION 2nd EPA Adjustment RP BDSW Index (Baseline rate * 1.03) (21.60*1.03) = 22.25 (In case the index posts % increase) Illustration of 2nd EPA adjustment year calculation: [(22.25 – 21.60) / 20.60] x 1,188 = ACP adjusted price Illustration of 2nd EPA adjustment year calculation: [.65 / 21.60] x 1,188 = ACP adjusted price Illustration of 2nd EPA adjustment year calculation: 0.03 x 1,188 = 35.64 2nd year of EPA for base labor will be 1223.64

Step 2: Propose required economic price adjustments. Not later than 60 days before the EPA ELIN’s ordering period start date, the contractor shall provide the contracting officer with a copy of the most current BDSW Bundeswehr collective agreements’ tariff rates as of 60 days prior to the ordering period start date. Upon validation of the contractor’s calculations, if the Government elects to accept, the contracting officer shall issue a modification incorporating the adjustments as a result of this EPA clause.

(f) If BDSW Bundeswehr discontinues or suspends publication of the index cited in paragraph (d) of this clause, the parties shall agree upon an appropriate substitute for the discontinued index for purposes of the price adjustment under this clause. In the event that BDSW significantly alters the method of calculating the index, appropriate adjustment shall be made by the parties to put the contract on a comparable basis with the index calculated before the change via an agreed to appropriate substitute index. If the parties cannot agree to a substitute or comparable index, the contracting officer shall unilaterally determine an appropriate index within 120 days after an index has been discontinued or altered in method of calculation. The possible substitute index for the purpose of adjusting base labor rates for the EPA years is (to be determined) percentage increase year over year.

(g) For the purpose of computing adjustments required by this EPA clause, there will be no changes to the CLIN/ELIN amounts shown as a result of non EPA modifications to the contract. If this contract is terminated in whole, prior to termination, the contracting officer shall make a price adjustment under this clause for any partial computation period. If the contract is terminated in part, the parties shall agree to equitable adjustments to the costs specified in paragraph (b).

(h) Any dispute arising under this clause shall be resolved subject to the “Disputes” clause of this contract.

(i) FAR 52.217-8 - Option to Extend Services. To account for the option period(s) possible under Clause 52.217-8, the Government will take the price for all CLINs of Year 7, prorate it to a six-month value, and add it to the sum of all CLINs. No EPA Adjustments for the use of this option will be made.