52.216-4 Economic Price Adjustment-Labor

and Material.

As prescribed in 16.203-4(c), insert the following clause:

Economic Price Adjustment-Labor and Material (Jan 2017)

(a) The Contractor shall notify the Contracting Officer if, at any time during contract performance,

the rate of pay for labor (including fringe benefits) or the unit prices for material shown in the

Schedule either increase or decrease. The Contractor shall furnish this notice within 60 days after

the increase or decrease, or within any additional period that the Contracting Officer may approve in

writing, but not later than the date of final payment under this contract. The notice shall include the

Contractor’s proposal for an adjustment in the contract unit prices to be negotiated under paragraph

(b) of this clause, and shall include, in the form required by the Contracting Officer, supporting data

explaining the cause, effective date, and amount of the increase or decrease and the amount of the

Contractor’s adjustment proposal.

(b) Promptly after the Contracting Officer receives the notice and data under paragraph (a) of this

clause, the Contracting Officer and the Contractor shall negotiate a price adjustment in the contract

unit prices and its effective date. However, the Contracting Officer may postpone the negotiations

until an accumulation of increases and decreases in the labor rates (including fringe benefits) and

unit prices of material shown in the Schedule results in an adjustment allowable under paragraph

(c)(3) of this clause. The Contracting Officer shall modify this contract (1)to include the price

adjustment and its effective date and (2)to revise the labor rates (including fringe benefits) or unit

prices of material as shown in the Schedule to reflect the increases or decreases resulting from the

adjustment. The Contractor shall continue performance pending agreement on, or determination of,

any adjustment and its effective date.

(c) Any price adjustment under this clause is subject to the following limitations:

(1) Any adjustment shall be limited to the effect on unit prices of the increases or decreases in the

rates of pay for labor (including fringe benefits) or unit prices for material shown in the Schedule.

There shall be no adjustment for-

(i) Supplies or services for which the production cost is not affected by such changes;

(ii) Changes in rates or unit prices other than those shown in the Schedule; or

(iii) Changes in the quantities of labor or material used from those shown in the Schedule for each

item.

(2) No upward adjustment shall apply to supplies or services that are required to be delivered or

performed before the effective date of the adjustment, unless the Contractor’s failure to deliver or

perform according to the delivery schedule results from causes beyond the Contractor’s control and

without its fault or negligence, within the meaning of the Default clause.

(3) There shall be no adjustment for any change in rates of pay for labor (including fringe benefits)

or unit prices for material which would not result in a net change of at least 3 percent of the thencurrent total contract price. This limitation shall not apply, however, if, after final delivery of all line

items, either party requests an adjustment under paragraph (b) of this clause.
(4) The aggregate of the increases in any contract unit price made under this clause shall not exceed

10 percent of the original unit price. There is no percentage limitation on the amount of decreases

that may be made under this clause.

(d) The Contracting Officer may examine the Contractor’s books, records, and other supporting data

relevant to the cost of labor (including fringe benefits) and material during all reasonable times until

the end of 3 years after the date of final payment under this contract or the time periods specified in

subpart 4.7 of the Federal Acquisition Regulation (FAR), whichever is earlier.

(End of clause)

Parent topic: 52.216 [Reserved]