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DoD and GSA Issue Differing Guidance on Inflation

AGC continues to press public owners for reasonable price adjustments and makes some headway.

On May 25, The Department of Defense (DoD) issued Guidance on Inflation and Economic Price Adjustments (EPAs) on existing and future DoD contracts due to the ongoing inflation. Disappointingly, the DoD excluded EPAs on Firm Fixed Price Contracts.

Then, following input from AGC, on September 9, DoD issued an additional memo, Managing the Effects of Inflation with Existing Contracts, that clarifies that existing firm fixed price contracts may seek EPAs for “extraordinary circumstances” that must be approved by DoD’s Defense Pricing and Contract division, a high bar.

Just days afterwards, on September 12, GSA issued its guidance, Addressing Inflation in GSA Contracts, that allows for EPAs on fixed price contracts “if inflated costs are the direct result of Government action (for example, when Government delays the work into a period when higher costs are encountered), compensation is appropriate.”

AGC of America continues to share its Construction Inflation Alert, a guide to inform owners, officials, and others about the cost and supply-chain challenges, with DoD and other federal decision makers.

For more information, contact [email protected] or (703) 837-5368.


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