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Economic Price Adjustment: An Acquisition Method for Inflation

As you can see from the above graphic, high rates of inflation are here, and they may be here to stay, at least for the foreseeable future. The inflation rates for January and February 2022, 7.5% and…

Economic Price Adjustment: An Acquisition Method for Inflation

John Krieger
As you can see from the above graphic, high rates of inflation are here, and they may be here to stay, at least for the foreseeable future. The inflation rates for January and February 2022, 7.5% and 7,9%, respectively, have each set record highs for the last 40 years.

Q: What’s to be done?

A: Economic Price Adjustment (EPA) ― See the article “ECONOMIC PRICE ADJUSTMENT: An Acquisition Method For An Era Of Inflation,” The Nash and Cibinic Report (N&CR), April 2022

The author was a contract specialist and contracting officer in a more drastic period, riding the rollercoaster’s downward plunge from a 14.7 % inflation rate in March and April 1980 down to a 2.4 % inflation rate in July 1983. Based on that experience, the article () provides a detailed discussion of the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Supplement (DFARS) rules concerning fixed-price contracts with economic price adjustment (EPA) contracts and EPA contract clauses, as well as a discussion of their application, including negotiation considerations.

The article offers acquisition professionals, particularly contracting officers and other members of the 1102 job series a one stop “shopping place” that discusses the various aspects of using EPA contracts and clauses, and includes information included in neither the FAR nor the DFARS. The article includes an Addendum written by Ralph C. Nash, Professor Emeritus of Law, The George Washington University.