More changes are coming for GSA Schedule contractors—GSA published a final rule amending the General Services Administration Acquisition Regulation (GSAR) to simplify clauses for Economic Price Adjustments (EPAs). This means GSA plans to consolidate all the EPA clauses into one main clause to create more flexibility and less confusion for contractors and Contracting Officers. While we will not see this rule take full effect until it’s added into the Multiple Award Schedule (MAS) Solicitation by way of a Mass Modification, it’s still a significant update we should be keeping an eye on. Here’s what we know about this new rule so far.
What is an Economic Price Adjustment (EPA)?
You can have your GSA MAS contract for up to 20 years, so it’s inevitable that you’ll change your pricing. However, if you’ve gone through the GSA Schedule offer process before, you’ll remember that GSA is very particular about how you can price your products/services because they must be “fair and reasonable” and represent best value. Economic Price Adjustments (EPA) ensure there’s a calculated way to increase contract pricing and have long since governed when and how contractors can change their rates.
What is the New Economic Price Adjustment (EPA) Rule?
Back in November 2023, GSA proposed a rule to amend the GSAR to standardize the MAS clauses for EPAs. Right now, there are currently four overall EPA clauses:
- 552.216-70
- An authorized deviation of 552.216-70
- I-FSS-969(a)
- I-FSS-969(b)
Contractors have one of these 4 clauses in their GSA Schedule terms and conditions. For the most part, the current clauses are similar, and they only differ in the EPA mechanisms proposed by the contractor, such as annual fixed increases or increases based on published or publicly available price list.
GSA plans to get rid of all these separate clauses and introduce one standardized clause, 552.238-118, Economic Price Adjustment, Federal Supply Schedule Contracts. GSA also plans to revise the clause removing several procedural limits to better align with commercial standards and practices. We’ll dive into more of why GSA is making this change in the next section.
What Does the New EPA Rule Mean for GSA Schedule Contractors?
Since GSA released a letter to temporarily allow price flexibilities under EPA clauses in 2022, they have seen major benefits. The relaxing of EPA clauses allowed contractors with more flexibility to adjust their pricing to adapt to market changes and economic conditions, as well as continue to offer critical products and services to federal customers. Without these changes, contractors might have removed their items from their Schedule or chosen not to respond to certain solicitations.
GSA anticipates this new rule, which will make some of the flexibilities permanent, will help increase the number and extent of offerings available through the MAS program.
In summary, this new EPA rule will:
- Establish a single consolidated Schedule EPA clause
- Retain the Contracting Officer’s authority to reject, accept, or partially accept an EPA request
- Revise the definition “Economic Price Adjustment (EPA) method” to add greater flexibility to EPA requests, such as providing clarification on what is not covered by an EPA request
- The ability for EPA method to be revised via mutual agreement during contract performance
- Provide a connection between the MAS solicitation and resultant contracts
The hope is this new rule will increase the number of GSA Schedule offerors, customer satisfaction will be improved, and it will reduce administrative costs on Schedule contractors, especially small businesses.
OIG Audit
In their Fiscal Year (FY) 2025 audit plan, the Office of the Inspector General (OIG) intends to investigate to confirm if the Federal Acquisition Service (FAS) is obtaining enough information to approve price increase requests under MAS contracts. This is of course directly related to the EPA clause consolidation. The OIG wants to ensure GSA pricing is still fair and reasonable and best value for government customers. This may affect the parameters of the rule before it’s officially added into the solicitation.
Preparing for Future MAS Program Changes
With the most recent MAS Solicitation Refresh #23 announcement, we didn’t see any updates on the consolidated EPA clause added to the solicitation. In their response to their MAS Pricing Request for Information (RFI), GSA did mention they plan to publish a new draft FAS Policy and Procedure implementing the EPA clause update. They will post for public comment before it’s officially incorporated into the solicitation. We hope to see more updates on this in the New Year.
If you want to stay on top of the EPA clause updates and any other future changes within the MAS Program, you can subscribe to our blog and monthly government contracting insights newsletter. If you have questions about your GSA Schedule or are interested in getting one, feel free to reach out to one of our consultants.
