The following clause, or as modified, may be used as prescribed in 17.9205:
REOPENER CLAUSE - COST [Note 1] - SPECIFIED [Note 2] ITEM (JAN 1995) - DLAD
(a) At the time the price for this contract was established, the amount of costs anticipated in the performance of this contract could not be established with any reasonable certainty, due to [Note 3] .
(b) To achieve an award in the face of this uncertainty, it was agreed that:
(1) The contract prices for the contract line item numbers (CLINs) designated in (4) below were based in part on [Note 4] ,
(2) The direct cost shown in (1) above was used in determining the amounts identified in (4) below attributable to this contingency, which were included in the contract prices for such CLINs, and which amounts serve as the basis for any price adjustments under this clause.
(3) Within 30 days from [Note 5] , the Contractor shall submit, using SF form 1411, its calculations of the revised CLIN prices identified in (4) below,
(4) Pending such submission, the following contingent amounts for direct costs plus associated indirect costs and profit for the item identified in paragraph (a) were incorporated into the contract unit prices at time of award (basic and any options) for this item:
Amount for Item in
CLIN # CLIN Unit Prices
__________ $ [Note 6]
__________ $ [Note 6]
__________ $ [Note 6]
(c) The Contractor warrants that the CLIN unit prices do not include any other allowance applicable to the cost of the item except as stated in subparagraph (b)(4) above.
(d) Subject to any restrictions of this clause, the price of this contract is subject to adjustment, calculated as exemplified below, at any time during contract performance that the weighted average unit price the Contractor will pay/has paid for the total amount of the item required in the performance of this contract differs from the amount identified in subparagraph (b)(1) above:
(1) Assume:
Weighted average item price/unit
included in contract award
prices (basic + any options) = $1.450000
Actual average item price/unit = $1.305000
Item total amount in CLIN 0001A = $0.200000
Item total amount in CLIN 0001B = $0.210000
(2) Calculate actual item unit price reduction:
($1.450000 - $1.305000) = $0.145000
(3) Calculate percent reduction:
($0.145000/$1.450000) = 10.000000%
(4) Calculate reduction in CLIN unit prices:
CLIN 0001A (10.000000% x $0.200000) = $0.020000
CLIN 0001B (10.000000% x $0.210000) = $0.021000
Note: Numbers in all calculations and results shall be rounded off (if 4 or less) or up (if 5 or more) after the sixth decimal place as shown above.
(e) The Contractor shall obtain the Contracting Officer's approval in writing prior to the award on other than a competitive basis of any subcontract or purchase order for any portion of the contract requirements for the item, based on its submission to the Contracting Officer of:
(1) Cost or pricing data (FAR 15.401), and a Certificate of Current Cost or Pricing Data (FAR 15.406-2) submitted by the prospective Subcontractor and Contractor, unless excepted pursuant to FAR 15.403-1.
(2) The Contractor's analysis of the Subcontractor's proposal,
(3) A memorandum detailing the principal elements, considerations, and results of negotiations of a tentative price with the prospective Subcontractor,
(4) A request for approval of the planned subcontract award.
(f) Promptly upon initial placement and any subsequent revision of subcontracts/purchase orders for the item requirements of this contract, the Contractor shall furnish a copy of such documents to the Contracting Officer, along with its calculation of any initial (downward only) or subsequent (upward or downward) price adjustment required by this clause and any other data required by the Contracting Officer to verify the item cost.
(g) Any initial price adjustment (downward only) is subject to further adjustment (upward or downward) pursuant to paragraph (f) in the event of changes in the total weighted average price actually paid by the Contractor for the quantity of the item required in the performance of this contract, except that in no event shall a weighted average item unit cost exceeding that cited in paragraph (a) be utilized in adjustments pursuant to this clause.
(h) Promptly upon contract completion, the Contractor shall furnish the Contracting Officer a copy of vendor invoices covering the total amount of the item utilized in the performance of this contract, any contract price recalculation required by this clause, and any other data required by the Contracting Officer to verify the final weighted average actual item cost under this contract.
(i) Should the Contractor fail to submit any information required by this clause or if there is no agreement on any adjustment hereunder, the Contracting Officer may make a unilateral determination and modify the contract accordingly. Failure to agree with such change in the contract price shall be resolved in accordance with the Disputes clause of this contract.
(j) The Contractor shall include a statement on the final invoice that all price reductions required by this clause are reflected in the cumulative amount invoiced under this contract.
(End of Clause)
Note 1: The clause as shown is designed to ultimately allow for a downward only adjustment, normally from the Contractor's proposed cost. As such, the word "DECREASE" would be in the clause title. In the event no restriction is to be placed on the direction of the ultimate adjustment, the following changes are required to the clause:
(1) Title-insert "ADJUSTMENT" vice "DECREASE"
(2) Paragraph (f)-delete "(downward only)"
(3) Paragraph (g)-delete "(downward only)" and balance of sentence beginning with "except that."
Note 2: Complete the title with "DIRECT MATERIALS" or "OTHER DIRECT COST" as applicable.
Note 3: Describe the contingency which caused use of the reopener clause, explain why it occurred, and why it can't be resolved before contract award. For example:
(1) The anticipated delay until November 200_ in the Contractor's submission of cost data proposal and evaluation of a planned noncompetitive subcontract for the injector assembly;
(2) The unwillingness of the peanut butter suppliers to furnish firm quotes for deliveries beyond the current 90 day period due to uncertainties in the cost of peanuts arising from the unprecedented drought conditions and resulting shortfall in the peanut crop experienced last year; or,
(3) The potential for a substantial change in the Government's total requirements under this indefinite delivery contract, which determines the incremental premium amount the Contractor must pay for product liability insurance.
Note 4: Enter a description of the item or service to be provided, its unit price and terms, define it for purposes of this clause as "the item," and include a reference as appropriate to allow identification of the source of the price (e.g., the Contractor's request for quote number or purchase order number and date). Sample wording corresponding to the examples in Note 3 are:
(1) A $4.2 million "not to exceed" budgetary estimate, F.O.B. origin, provided in a 14 March 199 response (reference RFQ 1475885) from the sole source supplier of the injector assembly (hereafter referred to as "the item");
(2) An estimated $1.75 per lb cost based on firm 90-day only quotes averaging $1.4500 per lb, F.O.B. origin, submitted in January 200_ by three suppliers RFQ #7979-9101) of peanut butter in 55 gallon drums (hereafter referred to as "the item");
(3) An annual premium of $5.00 per unit for product liability insurance (hereafter referred to as "the Item") from the Contractor's current insurance policy (#895545-501), which is subject to a reduction to $4.75 per unit after the first two million deliveries, and $4.25 after sales of four million units.
(Since a vendor name may be considered to be confidential by the Contractor, it should not be incorporated into a reopener clause or otherwise included in the contract.)
Note 5: Insert an appropriate description of the date for determining when submission of the reopener proposal is required, such as "contract award."
Note 6: Enter the total dollar value/CLIN unit price subject to downward adjustment. These amounts should be reached through preaward discussions/negotiations and agreement with the contractor on how this amount was calculated. It is suggested a schedule of calculations as exemplified below be prepared for each affected CLIN, signed by both parties, and included as an attachment to the price negotiation memorandum. Absent such agreement, calculations supporting the Contracting Officer's interpretation of negotiations should be incorporated. Since such information may be considered confidential by the Contractor, the details should not be incorporated into a reopener clause or otherwise included in the contract:
Contract Price Calculations (CLIN # ):
FY 200 FY 200
Purchase Cost/Unit of the Item (a) $ _____________ $ _____________
Quantity of Item/Unit of CLIN (b) _____________ _____________
Item Cost/Unit of CLIN (a x b) $ _____________ $ _____________
Material Overhead ( % / %) _____________ _____________
Subtotals $ _____________ $ _____________
G & A ( % / %) _____________ _____________
Subtotals $ _____________ $ _____________
Subtotals $ _____________ $ _____________
Profit ( % / %) _____________ _____________
Cost of Money - Material ( % / %) _____________ _____________
Cost of Money - G & A ( % / %) _____________ _____________
Subtotals $ _____________ $ _____________
(each contractor FY)
Total Price/Unit of CLIN $ ________________
(Assumes CLIN overlaps two Fys)
