GSA Acknowledges Reality, Permits Additional Flexibility on Price Increases
by Brandon Graves, Partner
GSA, GSA Alerts, GSA Schedules
On March 17, 2022, GSA issued a memorandum establishing “temporary flexibility on limitations on price increases.” The memorandum is in response to current inflationary pressures and the difficulties that contractors are experiencing with staff hires.
Current GSA rules, such as GSAR clause 552.216-70, put limits on the number and amount of economic price adjustments a GSA Schedule holder can receive. These caps prevent GSA Schedule holders from pricing in a way that reflects our current supply chain, forcing many Schedule holders to remove items from the Federal Supply Schedules or fail to staff task orders. This harms the government, contractors, and especially small businesses.
To address this issue, the GSA has temporarily added flexibility to price adjustment clauses. These changes include an allowance for lower-level employees to approve price adjustments, a relaxation the time limitations on adjustments, an increase in the number of adjustments a contractor can make, and a “clarification” that a contractor may add a removed item at a higher price.
GSA Schedule holders should move quickly to take advantage of this increased flexibility. There is no sign that inflation will slow down, and GSA will not move as fast as most contractors would prefer. But Schedule holders must be aware that the rules have been relaxed, not waived. There are still requirements governing these requests, and with GSA’s current backlog, an improper submission can significantly delay a needed price increase.
The flexibility also varies based on the particular Federal Supply Schedule a contractor sells under. Schedule holders with questions on how the flexibility works for their circumstances or who would like assistance in planning and submitting an adjustment can reach out to any of our GSA Consultants.