SPE4A520R0150 Section H Special Contract Requirements.pdf

Source Selection Information – See FAR 2.101 and FAR 3.104 For Official Use Only

Section H – Special Contract Requirements

1.0 ANNUAL ECONOMIC PRICE ADJUSTMENTS

The contract shall be an Indefinite Delivery Indefinite Quantity Commercial Fixed Price Contract with Economic Price Adjustments (EPA). The contract length will be nine and one-half (9 ½) years with a 180-day transition period, a base period of three years with two three-year option periods. Each year will be referred to as a performance period.

Section L.11 details how the Contractor shall submit a proposal of unit prices for each basket through the first year (performance period), of the contract. This Section details how the Government will calculate unit prices beyond the first performance period by EPAs in accordance with this clause.

Appendix H, EPA Index Calculation Example, is an Excel tool the Government will utilize to calculate unit prices for future performance periods based on the following information. And includes examples of each calculation.

EPA Indices: The indices to be utilized for all items, with the exception of items with the nomenclature of “O-Ring”, shall be a 50-50 weighted average of the New York Stock Exchange American (NYSE) Steel Index and the Standard & Poors (S&P) GSCI (formerly the Goldman Sachs Commodity Index) Industrial Metals Index. The index to be utilized for all O-Rings will be the Producer Price Index (PPI) for Rubber and Rubber Products.

Indices for 50-50 Weighted Average:

NYSE Steel Index: https://quotes.wsj.com/index/XX/STEEL

S&P GSCI Index:

https://us.spindices.com/indices/commodities/sp-gsci-industrial-metals

O-Ring Index:

Rubber PPI: https://fred.stlouisfed.org/series/WPU071#0

Determination of EPA Index Value and Baseline: On the date of the contract award, the Government will calculate the average closing dollar value of each index in the last 12 months to establish the starting value and the first baseline for the index.

At the end of each contract year, the Government will calculate the average closing dollar value over the 12 months that have transpired for each index. Year 1 will be calculated at Month 18 to accommodate the 180-day Transition Period.

Establishment and Application of Index Increase or Decrease: To establish the percentage increase or decrease that shall be applied to next year’s unit price for each NIIN, the Government will calculate the percentage of difference between the average closing dollar value over the last 12 months and the baseline value for each index. To calculate the 50-50 weighted average, the percentage of difference for each index shall be added together, https://quotes.wsj.com/index/XX/STEEL https://us.spindices.com/indices/commodities/sp-gsci-industrial-metals https://fred.stlouisfed.org/series/WPU071#0

Source Selection Information – See FAR 2.101 and FAR 3.104 For Official Use Only then divided in half. The ending value shall represent the percentage of increase or decrease that shall be utilized by the Government to adjust next year’s unit price for each NIIN.

Application of Discounts and Rebates: After the unit price for each NIIN is adjusted by the percentage increase or decrease from indexes’ performance, any discounts or rebates offered by the Contractor applicable at the NIIN level shall then be deducted to establish next year’s final unit price for each NIIN.

The baseline unit price for each NIIN and index value will be refreshed each year of the contract with the previous year’s final unit price for each NIIN and index value.

EPA Calculation Time Frame: Fourteen (14) days prior to the end of each annual performance period, the EPA calculation process shall commence to determine the percentage of change that shall be utilized to change pricing for the next performance period.

The same process shall continue every annual performance period throughout the life of the contract.

In the event that the end of a performance period falls on a weekend, or if a catastrophic event causes no index to be posted, the Government shall utilize the last day an index price was posted.

Contractual Price Change Time Frame: Within fourteen (14) working days after the start of each annual performance period, the Government shall amend the contract prices for the Core, Extended, and Alternate Baskets via a Government-issued, unilateral modification.

The new contract prices shall be in effect for delivery orders issued in the 12-month period following the date of the modification.

Volume-Based Tier Rebates: Volume-based tier rebates will be provided to DLA in the form of a line of credit, and will not be reflected in an adjustment to unit prices. Any similar rebates provided as a line of credit will also not be reflected in an adjustment to unit prices.

The Contractor will be responsible for tracking and reporting this data, subject to DLA audit.

DLA may utilize the line of credit by applying a discount to existing or future orders, or request repayment via other means for the value of the line of credit.