Sign In
  • Question

    I know that it exists, but I want to read it for myself. Where can I find the regulation for unit prices that exceed beyond 25% within one year?


    Answer

    You can check escalation information on the Bureau of Labor Statistics that also contains the Producer Price Index.  http://www.bls.gov/.  You can also contact your DCAA point of contact or ACO.  However,  I am not aware of it being written anywhere of a 25% material escalation threshold to determine price fair and reasonableness. There are so many factors that could cause a price to double or even triple and the price still be fair and reasonable. There are two issues that drive escalation.

    -A general market condition is any factor that affects the general industry conditions under which products are bought and sold.  
    Consider changes in the contracting situation and in general economic conditions, whenever you are using historical prices as a comparison base for determining price reasonableness.
     
    The three (3) circumstances worthy of special consideration are:
     
    • Changes in the level of competition;
    • Limited competition and collusion; and
    • Different economic conditions
    -Vendor related differences that may be based on the following:  
    • Understanding the Requirements
    • Technology utilized
    • Efficiency initiatives
    • Strategy
    • Mistakes

    Open full Question Details