Pursuant to FAR 16.203-4(c) and DLAD 16.203-4(c)(90)(2) insert the following clause:
(a) WARRANTIES. The Contractor warrants that---
(1) distribution prices covered by this contract do not include allowances for any portion of the contingency covered by this clause; and
(2) all prices invoiced under this contract shall be computed in accordance with the provisions of this clause.
(b) DEFINITIONS. As used throughout this clause, the term:
(1) “Contract unit price” means the total fixed price per unit charged to DSCP for a product delivered to DSCP’s customers. The contract unit price consists of two parts: Total Components price and Distribution price. The sum of these two prices shall be rounded up or down as applicable, (based on the rule of 5 or over to round up) to two (2) places to the right of the decimal point to calculate the contract unit price. Only the delivered price component of the contract unit price is subject to adjustment under this clause.
(2) “Total components price” means the total cost to the Contractor for all the food and disposable component items of the ration module, which is calculated by summing the total individual costs to the Contractor of each food and disposable component item in the ration module. The total cost to the Contractor for each ration component is calculated as the net unit price charged to the Contractor for that component, multiplied by the quantity of units per ration module. The net unit price for each component is the price paid by the Contractor to its supplier(s) for delivery of the component product to its distribution/assembly location (often called the “delivered price” or “landed cost”), taking into account any product discounts or rebates offered by the suppliers. The most recent vendor’s invoice price for a ration component should usually meet this definition as the net unit price for the component. The following table gives an example of how to calculate the Total Components price:
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LUNCH/DINNER MENU 1 PERISHABLE - 8970-01-525-6813 - Chicken Parmesan
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Net
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Net Unit
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Case
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Qty/
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Units/
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Component
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Menu Item
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Unit
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Price
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Pack
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Ration
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Ration
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$ / Ration
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Chicken Parmesan
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CS
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$22.45
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50 PC
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50 PC
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50/50
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$22.45
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Sauce
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CS
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$4.25
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6 CN
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3 CN
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3/6
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$2.13
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Lemon Cake
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CS
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$5.17
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8 EA
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2 EA
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2/8
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$1.29
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Total Components Price
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$25.87
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(3) “Distribution price” means the firm fixed price portion of the contract unit price, offered as a dollar amount per unit of issue, which represents all the elements of the contract price other than the total components price. The distribution price typically covers the Contractor’s projected general and administrative expenses, overhead, packaging costs, transportation costs from the contractor’s distribution/assembly point, and any other projected expenses associated with delivery to DSCP’s customers, plus profit. This price shall remain constant for the complete term of the contract period then in effect. Distribution prices shall be formatted to two (2) places to the right of the decimal point, for example, $4.50 per semi-perishable ration module.
(4) “Ordering catalog” means the listing of contract ration modules to be delivered to Government customers, and their corresponding contract unit prices available for ordering under this contract.
(5) “Ordering week” means the 7-day week, from Sunday at 12:01 AM through the following Saturday until midnight Eastern Time (ET, standard or daylight as applicable), during which the Government place orders for UGR-A modules to the Contractor.
(c) PRICE ADJUSTMENTS.
(1) General.
(A) All ordering catalog prices shall be fixed and remain unchanged until changed pursuant to this clause or other applicable provision of the contract. If the Contractor’s applicable total components price of a ration component(s) changes (i.e. increase or decrease) after the contract date, the corresponding contract unit price may be increased, or shall be decreased, by the same amount. The price change shall be effective at the beginning of the next ordering week. All ordering catalog unit prices computed in accordance with this clause and in effect when an order is placed shall remain in effect for that order through delivery. DSCP will be charged the contract unit price at time of each order regardless of any changes in the unit price occurring in any subsequent ordering week. In the event the Contractor finds a price recorded in the ordering catalog was not computed in accordance with this clause, and the error resulted in a higher contract unit price, than would have applied if this clause had been correctly applied, the Contractor shall immediately notify the Contracting Officer in writing and promptly thereafter submit a refund proposal. The posting of updated prices in the ordering catalog, calculated in accordance with this clause, constitutes a modification to this contract. No further contract modification is required to effect the change.
(B) The Contractor shall submit a request weekly for approval of price changes and for the retention of current prices, no later than Thursday, 1:00 PM ET to be effective in the following ordering week’s ordering catalog prices. The Contractor shall notify the Contracting Officer of its request in the form of an EDI 832 transaction set or via an update to the USDA web-ordering tool, as applicable. The notice shall include the Contractor’s adjustment in the total components price component of the applicable contract unit price.
(C) The Contracting Officer may at any time require the submission of supporting data to substantiate any requested price change or the requested continuation of the pre-existing price for any item, including prices applicable to prior ordering weeks. Upon notice from the Contracting Officer that supporting data is required, the Contractor shall immediately furnish to the Government all supporting data, including but not limited to, invoices, quotes, price lists and any other substantiating information requested by the Contracting Officer.
(D) The Contracting Officer may reject any price change or request to maintain a current price for any item, to the extent such price is found not to be representative of the Contractor’s current total components price.
(E) Should the Contracting Officer determine that a price change request contained an erroneous unit price or price change, the Contracting Officer may direct that the contract unit price be set at the amount determined by the Contracting Officer to reflect the accurate Total Components price. If the accurate price is lower than the erroneous price or price change, then the contractor shall promptly thereafter submit a refund proposal.
(F) If the Contracting Officer does not notify the Contractor by Friday, 12:30 PM ET that a price or a price change request is being questioned or has been found to be erroneous, the requested contract unit price change(s) will be incorporated in the ordering catalog to be effective with the beginning of the following ordering week. Price change requests that the Contracting Officer questions or finds to be inconsistent with the requirements of this clause shall not be posted until the Contracting Officer specifically authorizes the posting.
(G) For all proposed prices that were not correctly entered in time into the ordering catalog for the following week, or were identified following the commencement of the applicable ordering week, and for any excessive prices found in prior ordering catalogs, that resulted in incorrectly higher contract unit prices, the Contractor shall promptly refund the difference between the correct amount and the incorrect amount to the Government, whether identified by the Contractor or by the Contracting Officer.
(H) As an example, the following illustrates a request for a contract unit price change for Lunch/Dinner Perishable Menu 1:
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LUNCH/DINNER MENU 1 PERISHABLE - 8970-01-525-6813 - Chicken Parmesan
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Net
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Net Unit
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Case
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Qty/
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Units/
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Component
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Menu Item
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Unit
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Price
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Pack
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Ration
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Ration
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$ / Ration
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Chicken Parmesan
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CS
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$22.45
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50 PC
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50 PC
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50/50
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$22.45
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Sauce
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CS
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$4.25
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6 CN
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3 CN
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3/6
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$2.13
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Lemon Cake
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CS
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$5.17
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8 EA
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2 EA
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2/8
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$1.29
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Total Components Price
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$25.87
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Distribution Price
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$4.25
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Contract Unit Price
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$30.12
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On 15 Aug 2006, the Contractor has received a new delivery of Chicken Parmesan at $21.50 per case, and Lemon Cake at a delivered price of $5.30 per case. The Contractor would request a contract unit price change as follows (requested changes in bold):
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Net
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Net Unit
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Case
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Qty/
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Units/
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Component
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Menu Item
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Unit
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Price
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Pack
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Ration
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Ration
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$ / Ration
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Chicken Parmesan
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CS
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$21.50
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50 PC
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50 PC
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50/50
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$21.50
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Sauce
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CS
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$4.25
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6 CN
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3 CN
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3/6
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$2.13
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Lemon Cake
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CS
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$5.30
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8 EA
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2 EA
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2/8
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$1.33
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Total Components Price
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$24.96
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Distribution Price
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$4.25
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Contract Unit Price
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$29.21
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(2) Limitations. All adjustments under this clause shall be limited to the effect on contract unit prices of actual increases or decreases in the net unit prices for material. There shall be no upward adjustment for-
(A) Production cost increases incurred by the Contractor
(B) Changes in the quantities of material.
(d) UPWARD CEILING ON ECONOMIC PRICE ADJUSTMENT. The aggregate of contract unit price increases for each item under this clause during any single performance period (base or option period) shall not exceed 10 percent (%) of the initial contract unit price in such performance period except as provided hereafter. There is no downward limitation on the aggregated percentage of decreases that may be made under this clause.
(1) If at any time the Contractor has reason to believe that within the near future a price adjustment under the provisions of this clause will be required that will exceed the current contract ceiling price for any item, or in the event the latest actual cost for an item would exceed the allowable ceiling price under the contract, then the Contractor shall immediately notify the Contracting Officer in writing of the facts and circumstances. The notification shall include a revised ceiling the Contractor believes is sufficient to permit completion of the remaining contract performance period, along with appropriate explanation and documentation as required by the Contracting Officer.
(2) If an actual increase in the component delivered prices would raise a contract unit price for an item above the current ceiling, the Contracting Officer may issue a contract modification to establish a separate price increase limit for the item for the remainder of the current performance period. If the contract ceiling will not be raised, or raised sufficiently, to enable continued ordering of the item, the Contracting Officer shall so promptly notify the Contractor in writing.
(e) EXAMINATION OF RECORDS.
The Contracting Officer or designated representative shall have the right to examine the Contractor’s books, records, documents and other data the Contracting Officer deems necessary to verify Contractor adherence to the provisions of this clause. Such examination may occur 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 4.703 of the Federal Acquisition Regulation (FAR), whichever is earlier.
(f) FINAL INVOICE. The Contractor shall include a statement on the final invoice under the basic contract and any option period that the amounts invoiced hereunder have applied all decreases required by this clause.
(g) DISPUTES. Any dispute arising under this clause shall be determined in accordance with the “Disputes” clause of the contract.
