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    Is the government liable to pay REA for inflation if clause was not included in the award? Guidance has stated that inflation should not be paid on FFP contracts but award was not inclusive of necessary clause.


    :    This response is based on the information provided.  We suggest you discuss with your contracting team, program manager and/or legal department as appropriate. 


    Firm-fixed-price is exactly what it says, firm-fixed-price (FFP).  To make an economic price adjustment, both parties would have had to determine in advance of performance what areas would be considered for adjustment.  That contract type would be fixed-price with economic price adjustments (FP-EPA).  You will find more details in FAR 16.203.  While inflation has spiked significantly in recent months, the USAF was not the cause and does not bear the burden of helping the contractor remain whole.  If your team plans to negotiate a Request for Equitable Adjustment, it needs to receive consideration for any upward price adjustment; otherwise the increase is a gift to the contractor and not a proper contract modification.


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