52.216-4_--_ECONOMIC_PRICE_ADJUSTMENT.docx

52.216-4 ECONOMIC PRICE ADJUSTMENT--LABOR AND MATERIAL (JAN 2017)

(a) The Contractor shall notify the Contracting Officer if, at any time during contract performance, the unit prices for diesel fuel shown in the Schedule either increase or decrease. The Contractor shall furnish this notice within 60 days after the increase or decrease, or within any additional period that the Contracting Officer may approve in writing, but not later than the date of final payment under this contract. The notice shall include the Contractor's proposal for an adjustment in the contract unit prices to be negotiated under paragraph (b) of this clause, and shall include, in the form required by the Contracting Officer, supporting data explaining the cause, effective date, and amount of the increase or decrease and the amount of the Contractor's adjustment proposal.

(b) Promptly after the Contracting Officer receives the notice and data under paragraph (a) of this clause, the Contracting Officer and the Contractor shall negotiate a price adjustment in the contract unit prices and its effective date. However, the Contracting Officer may postpone the negotiations until an accumulation of increases and decreases in the unit prices of diesel fuel shown in the Schedule results in an adjustment allowable under subparagraph (c)(3) of this clause. The Contracting Officer shall modify this contract (1) to include the price adjustment and its effective date and (2) to revise the unit prices of diesel fuel as shown in the Schedule to reflect the increases or decreases resulting from the adjustment. The Contractor shall continue performance pending agreement on, or determination of, any adjustment and its effective date.

(c) Any price adjustment under this clause is subject to the following limitations:

(1) Any adjustment shall be limited to the effect on unit prices of the increases or decreases in the unit prices for diesel fuel shown in the Schedule. There shall be no adjustment for (i) supplies or services for which the production cost is not affected by such changes, (ii) changes in rates or unit prices other than those shown in the Schedule, or (iii) changes in the quantities of labor or material used from those shown in the Schedule for each item.

(2) No upward adjustment shall apply to supplies or services that are required to be delivered or performed before the effective date of the adjustment, unless the Contractor's failure to deliver or perform according to the delivery schedule results from causes beyond the Contractor's control and without its fault or negligence, within the meaning of the Default clause.

(3) There shall be no adjustment for any change in unit prices for diesel fuel which would not result in a net change of at least 3 percent of the then-current total contract price. This limitation shall not apply, however, if, after final delivery of all line items, either party requests an adjustment under paragraph (b) of this clause.

(4) The aggregate of the increases in any contract unit price made under this clause shall not exceed 111 percent of the original unit price. There is no percentage limitation on the amount of decreases that may be made under this clause.

(d) The Contracting Officer may examine the Contractor's books, records, and other supporting data relevant to the cost of labor (including fringe benefits) and material during all reasonable times until the end of 3 years after the date of final payment under this contract or the time periods specified in Subpart 4.7 of the Federal Acquisition Regulation (FAR), whichever is earlier.

EPA Clause Description (FAR 16.203-4(c)(3)): Fixed-Price with Economic Price Adjustment (EPA) – Fuel Cost Only This is an Indefinite Delivery Indefinite Quantity contract type, Fixed Price - Economic Price Adjustment (FP-EPA) in accordance with FAR 16.203-1(a)(2) – Adjustment based on actual cost of material – i.e. fuel only. No labor or other cost elements will be affected by the EPA Clause.

1. Definitions:

2. Solicitation period: Offeror shall provide a market fuel price and amount of fuel for each ELIN as directed in ADD’L INSTRUCTION TO OFFEROR. Offeror shall use current fuel price in effect no older than 30 days from solicitation closed date in its price proposal.

2.1 Source of Fuel Pricing: The offeror shall specify the Fuel Price Report data as required in Additional Instructions to Offeror – e.g. 5-day average No. 2 Portland, OR **OPIS GROSS ULTRA LOW SULFUR RED DYE DISTILLATE PRICES** provided by OPIS (Oil Price Information Service). The offeror shall record the fuel data in this table. This fuel price will be used as the Base Fuel Price for calculating any economic price adjustment under this contract. The Base Fuel Price in the offer shall be the same price throughout all the option years and will not be subject to escalation.

FUEL PRICE

(dollars per gallon)

REPORT DATE

2.2 Amount of Fuel Required: The offeror shall specify the quantity of fuel required for single tow, dual tow, and demurrage in the table below. These quantities will be subject to fair and reasonable determination by the Contracting Officer. They will be used for calculating any economic price adjustment under this contract. The quantities will remain the same for the ordering period of the contract.

(U.S. GALLONS)

RCD TOWING AND ASSOC SERVICES – SINGLE TOW; PER TOW

RCD TOWING AND ASSOC SERVICES – DUAL TOW; PER TOW

IN TRANSIT DEMURRAGE; PER HOUR

PORT OF BENTON DEMURRAGE; PER HOUR

3. EPA clause trigger. The Base Fuel Price will be used for the EPA clause trigger. The Base Fuel Price will be compared to the Current Fuel Price during the contract performance to determine whether the EPA clause is triggered or not triggered. When the Current Fuel Price differs from the Base Fuel Price by ±10% or more, the EPA clause is triggered. Use this formula to determine the EPA trigger:

Examples:

Base Fuel Price (per gal.)

Current Fuel Price (per gal.)

Percent change

Result

Example 1: fuel price increases by more than 10%

Example 2: fuel price decreases by more than 10%

Example 3: fuel price increases by less than 10%

Example 1 is a decrease in fuel price, hence a decrease in ELIN contract price.

Example 2 is an increase in fuel price, hence an increase in ELIN contract price.

Example 3 does not trigger the clause.

4. Current Fuel Price determination. Within 30 calendar days before any contract ELIN performance date, the contractor shall determine the current fuel pricing using the data from paragraph 1 above. The contractor shall then submit a report of Current Fuel Price determination to the Contracting Officer via the Contracting Officer Representative (COR) reporting whether:

1. the clause is NOT triggered and no ELIN price adjustment is necessary; or

1. the clause is triggered and ELIN price adjustment is required.

This report shall include a copy/snapshot/picture of the fuel price report used to make the determination. This report shall utilize the same Fuel Price Report data source as was identified in the original offer.

5. Fuel price increase cap. FAR Clause 52.216-4 caps the increase in fuel price under this contract. For this contract the cap (maximum adjustment) is 111% above the Base Fuel Price. The 111% cap is based on the maximum variability in fuel prices over the past ten years. The variability was calculated from the historical Weekly West Coast No 2 Diesel Ultra Low Sulfur Retail Prices published by the U.S. Energy Information Administration at https://www.eia.gov. The following formula was used.

6. Adjustment. Price adjustment will be made if the EPA Clause is triggered, per section 3 of this description. The ELIN adjustment shall follow this formula:

Unit Price Adjustment x Total Quantity of Fuel = Adjustment The Unit Price Adjustment is either the difference between the Current Fuel Price and Base Fuel Price, or the Maximum Unit Price Adjustment, whichever is less. In accordance with the incorporated FAR Clause 52.216-4, the increase in the unit price of the fuel shall not exceed 111% of the Base Fuel Price. This formula applies:

Base Fuel Price x 111% = Maximum Unit Price Adjustment Examples:

Base Fuel Price (per gal.)

Current Fuel Price (per gal.)

Price difference (B – A) Price difference cap (A x 111%)

(E x F)

Example 1 fuel price increases

Example 2 fuel price decreases

Example 1 shows the ELIN will be increased by $9,900 due to a fuel price increase.

Example 2 shows the ELIN will be decreased by $27,000 due to a fuel price decrease.

This fuel price adjustment applies to all ordered ELINS that have fuel as part of the cost.

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