As prescribed in 16.203-4-90, FAR 16.203-1(a)(1), & DLAD 16.203-1(a)(90) : insert the following provision
(a) WARRANTIES. For the portion of the schedule that is covered by this EPA clause, the Contractor warrants that the unit prices included in the Schedule do not include allowances for any portion of the contingency covered by this clause. Refer to clause DLAD 52.217-9001, OPTION TO EXTEND THE TERM OF THE CONTRACT - SEPARATE FIRM FIXED PRICE & FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT PORTIONS, contained elsewhere in the solicitation.
(b) An established market price is a price that is established in the course of ordinary and usual trade between buyers and sellers free to bargain and that can be substantiated by data from sources independent of the offeror(s); and the net price after applying any standard trade discounts offered by the Contractor. The established market price shall be used for adjustment(s) to contract price(s) under this clause. The established market price shall be the average price for [buyer Fill in with grade of wool] Australian Wool, clean delivered price in U.S Dollars, published during a specified period by the U. S. Department of Agriculture, in the "USDA WEEKLY NATIONAL LAMB MARKET SUMMARY (WNLMS)”.
(1) BASE UNIT PRICE. The base unit price for the purpose of calculating the adjustment(s) under this clause shall be the arithmetic average price for Australian Wool clean delivered [buyer fill-in] published during the latest four week period immediately preceding the closing date for proposals (if no discussions are held), the due date of final proposal revision (if discussions are held), or the solicitation opening date (if sealed bidding is used.)
(2) ADJUSTING UNIT PRICE. The adjusting unit price shall be the arithmetic average price for Australian Wool clean delivered [buyer Fill in with grade of wool] buyer fill-in grade of wool] published during the four week period immediately preceding the effective date the option term is exercised.
(c) With respect to increases or decreases under this clause, no adjustment shall be made to the base term contract unit prices. One adjustment calculation shall be made annually to determine the unit price applicable to the forthcoming option term (if exercised).
(d) Allowance Factor: For the purpose of the price adjustment pursuant to this clause, it shall be conclusively presumed that [Fill in with pounds of Wool/Yd] will be required to produce one linear yard of finished cloth. This allowance factor remains fixed throughout the life of the contract unless a Government authorized change is made to the contract which affects this allowance. The price adjustment under this EPA clause shall apply only to the cost of wool and shall not apply to any other direct or indirect cost or profit.
(e) Adjustments shall be calculated as follows: (Round to four decimal places).
(1) Compute the Adjusting Unit Price and the Base Unit Price.
(2) (Adjusting Unit Price - Base Price = Market Price Change (+ or -).
(3) Market Price Change x Allowance Factor = Contract Unit Price Adjustment, (+/-).
(4) The adjusted unit price(s) for each option period exercised shall be determined by increasing or decreasing (as appropriate) the original option unit price(s) by the Contract Unit Price Adjustment. The original option unit prices are those unit prices agreed to at time of award for the option (i.e.; 1, 2, 3, or 4) being adjusted.
The following example is provided:
EXAMPLE OF ADJUSTMENT CALCULATION
Base Unit Price Calculation
Final Proposal Revision due date: 24 October 2006
The average mean of the prices for 22 micron, USDA grade 64’s Australian Wool, clean delivered price in U.S Dollars published during the 4 week period immediately preceding the due date for Final Proposal Revisions will be used to calculate the Base Unit Price for the wool component as follows (i.e.; the four weeks immediately preceding the due date for Final Proposal Revisions covers the 28 day period 26 September 2006 - 23 October 2006):
BASE UNIT PRICE CALCULATION
USDA WEEKLY NATIONAL LAMB MARKET SUMMARY: USDA Grade 64’s (22 Micron) Australian Wool clean, delivered price in US dollars
Date
|
Price in $ (64’s) (22 Micron)
|
20 October 2006
|
2.6100
|
13 October 2006
|
2.4900
|
06 October 2006
|
2.4500
|
29 September 2006
Total Four Weeks
|
2.4900
10.0400
|
Total /4 = Average mean price
|
2.5100
|
Note: For some four week periods, the USDA may publish fewer than 4 issues of the summary due to events such as Federal Holidays. In all such cases, only those issues published for the relevant four week period will be used in calculations.
Base Award Date: 18 December 2006
ADJUSTING UNIT PRICE CALCULATION
Option No 1 exercised: 12 September 2007
The average mean of the prices for clean delivered 64’s (22 Micron) Australian Wool in US Dollars published during the four week period immediately preceding the effective date of option invocation will be used to calculate the Adjusting Unit Price (11 September 2007 - 15 August 2007):
Date
|
Price in $ 64’s) (22 Micron)
|
07 Sep 2007
|
3.6100
|
31 Aug 2007
|
3.4700
|
24 Aug 2007
|
3.5800
|
17 Aug 2007
|
3.6900
|
Total Four Weeks
Total /4 = Average Mean Price
|
14.3500
3.5875
|
1. Calculate the Base and Adjusting Unit Price: From above, Base U/P = $2.5100
and Adjusting Unit Price = $3.5875 (Round to 4 decimal places)
2. Calculate Market Price Change (+/-): Adjusting U/P - Base U/P = $3.5875 - $2.5100 = $1.0775. (Round to 4 decimal places).
3. Calculate Contract Unit Price Adjustment (+/-): Market Price Change x Allowance Factor
$1.0775/lb x 0.2714 lb/yd = $0.2924/yd
Net Adjustment Per linear yard = $0.29 (Round to nearest cent).
4. Calculate adjusted U/P for Option No 1 (+/-): Original Option No 1 U/P (+/-) contract U/P adjustment. (Option No 1 original option price = $10.05) $10.05 + $0.29 = $10.34.
Note: The above is a hypothetical example of an upward adjustment in the Option No 1 unit price. The dates used above are not representative of those dates anticipated to be experienced during actual contract performance.
(f) Price adjustments pursuant to this clause shall be made by contract modification showing the calculations used to derive the adjusted contract unit prices.
(g) PAYMENTS: Payment for an adjustment under this clause shall be at the current contract price until an adjustment modification has been effected. The Government shall pay the Contractor, upon the submission of proper invoices or vouchers, the unit price stipulated in the contract modification for the applicable option period. The contractor also represent by submitting its final invoice that the total amount billed under this contract reflects all increases or decreases required or authorized by this clause.
(h) Any pricing actions pursuant to the “CHANGES” clause or other provisions of the contract will be priced as though there were no provision for economic price adjustment.
(i) No adjustment will be made under this clause unless the total change in the contract amount is $500.00 or more.
(j) UPWARD CEILING ON ECONOMIC PRICE ADJUSTMENT: The total increase in any contract unit price shall not exceed 10% per year of the original option unit prices agreed to at time of award. There is no percentage limit on downward adjustment under this clause.
(k) REVISION OF MARKET PRICE INDICATOR: In the event that (i) any applicable market price indicator is discontinued or its method of derivation is altered substantially or; (ii) the Contracting Officer determines that the market price indicator consistently and substantially fails to reflect market conditions, - the parties shall mutually agree upon an appropriate and comparable substitute and the contract shall be modified to reflect such substitute effective on the date the indicator was discontinued, altered, or began to consistently and substantially fail to reflect market conditions
(l) DISPUTES: If the parties fail to agree on an appropriate substitute market price indicator, or implementation of other matters addressed by this EPA clause then the matter shall be resolved in accordance with the DISPUTES clause of the contract.
(m) EXAMINATION OF RECORDS: The Contractor agrees that the Contracting Officer or designated representative shall have the right to examine the Contractor’s books, records, documents, or other data the Contracting Officer deems necessary to verify Contractor adherence to the provisions of the clause.
(End of clause)
