Economic Price Adjustment

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As St. Patrick’s Day approaches, many of us are on the lookout for four-leaf clovers, a pot of gold, or perhaps even a mischievous leprechaun guarding his treasure. But in the world of government contracting, the real tricksters aren’t wearing green coats and buckled shoes—and there is no gold at the end of the procurement rainbow. Instead, that pot is full of the recently announced tariffs. Effective March 4, 2025, the Trump administration imposed 25 percent tariffs on Mexican and Canadian imports (exclusive of Canada energy imports, where there is a 10 percent tariff) and a 20 percent tariff on Chinese products. While economists, pundits, and the stock market will all have their say on the wisdom behind these actions, such prognostication is of little help to federal contractors who are forced to deal with the very real effects right now.Continue Reading Tariffs, Leprechauns, and Contract Gold: Navigating the Hidden Costs of Trade Policies

Unless you’ve been living under a rock or on a self-sustaining deserted island, the chances are high that you have become quite familiar with the term “inflation” (i.e., the rising costs of goods and services) over the past few years. Indeed, everything (from gasoline to gumballs and milk to movie tickets) appears to be more expensive as of late. Unfortunately, government contractors are not immune from this current economic reality. As most of us know all too well, many contracts that were negotiated and priced over the past 18 to 24 months are simply more expensive to perform now than was reasonably anticipated when bids were prepared.

In recognition of these soaring prices, the Department of Defense (DoD) issued a May 25, 2022, Memorandum titled “Guidance on Inflation and Economic Price Adjustments,” the purpose of which is to assist contracting officers (COs) in (i) navigating the impacts of inflation on existing contracts and (ii) managing downstream inflation risks on prospective contracts. Here are the key takeaways and our suggested courses of action to best protect your company’s bottom line:Continue Reading DoD Braces for Inflation: Guidance for Contractors Battling Rising Costs