PART 16 – TYPES OF CONTRACTS

SUBPART 16.1 – SELECTING CONTRACT TYPES

16.190 Long–term contracting.

16.191 Bridge contracts.

SUBPART 16.2 – FIXED–PRICE CONTRACTS

16.203 Fixed–price contracts with economic price adjustment.

16.203-1 Description.

16.203-2 Application.

16.203-3 Limitations.

16.203-4 Contract clauses.

16.290 Procurement notes.

SUBPART 16.5 – INDEFINITE DELIVERY CONTRACTS

16.501-2 General.

16.503 Requirements contracts.

16.504 Indefinite–quantity contracts.

16.505 Ordering.

16.590 Procurement notes.

SUBPART 16.6 – TIME–AND–MATERIALS, LABOR–HOUR, AND LETTER CONTRACTS

16.601 Time–and–materials contracts.

SUBPART 16.1 – SELECTING CONTRACT TYPES

(Revised October 13, 2020 through PROCLTR 20 21-01 )

16.190 Long–term contracting.

Contracting officers shall establish and process LTCs in accordance with the following:

Use LTCs for stock replenishment consumable items that have frequent, consistent, and predictable

demands, as well as non-replenishment items having at least 12 demands per year. Renew items

currently on LTC, provided they have had at least 4 demands in the previous year. Exclude items if
they have 2 years DLA stock on hand, unless the PLT is 18 months or greater or there is no planned

buy within 2 years. The DLR sites will follow the Military Service procedures for managing items on

LTCs.

16.191 Bridge contracts.

(a) For purposes of this section, the terms “contract” and “contracts” include contract actions with a

total estimated value above the SAT, including task or delivery orders, and orders against GSA

Schedule contracts. When determining if the acquisition meets the bridge contract definition in

2.101, contracting officers shall ensure compliance with FAR 13.003(c)(2) regarding splitting

requirements.

(b) Bridge contracts impede competitive awards, and contracting officers shall limit their use in

accordance with this paragraph. Contracting officers shall only use a bridge contract when it is not

possible to award the planned follow-on contract in sufficient time to meet the Government’s

requirements. A bridge contract may be appropriate when—

(1) The competitive follow-on contract or solicitation has been protested;

(2) The approved acquisition strategy requires a necessary change that the HCA endorses;

(3) A statutory or regulatory change necessitates a change prior to award; or

(4) Other circumstances that the contracting officer can demonstrate are not due to lack of advance

planning or inadequate procurement execution result in delay of a solicitation or award.

(c) The contracting officer shall—

(1) Coordinate with the requiring activity to prepare the appropriate justifications for a noncompetitive action to support solicitation and award of a bridge contract. Justifications include a

formal justification and approval (FAR Part 6 or Subpart 13.5), limited sources justification (FAR

Subpart 8.4), and exception to fair opportunity (FAR Subpart 16.5). The clearance levels are based

on the type of justification and the total estimated value of the bridge contract action. Include the

following in the justification:

(i) A clear statement that the action is a bridge contract in accordance with the definition at 2.101:

(ii) A detailed rationale for use of a bridge contract, including documentation that demonstrates the

need for a bridge contract is not due to lack of advance planning or inadequate procurement

execution;

(iii) A justification for the length of the bridge contract; and

(iv) A discussion of actions to be taken to avoid this bridge request and additional bridge contracts.

(2) Prepare a Decision Memorandum requesting approval to proceed with awarding a bridge

contract. The approval authorities listed in 16.191(c)(3) must sign and approve the request before

the contracting officer issues a solicitation or otherwise commences negotiations for award of the

bridge. Contracting officers shall include the following in all bridge contract approvals:

(i) Supporting documentation in accordance with FAR 4.801(b);
(ii) Signatures meeting the FAR 2.101 definition; and

(iii) The justification in accordance with 16.191(c)(1), unless FAR 6.302-2 or other provision of FAR

Subpart 6.3 not requiring preparation of a J&A prior to commencing negotiations applies.

(3) Subparagraphs (i)-(iii) identify the authorities for recommendation and approval of bridge

contracts. The recommending and approval authorities shall not be the same person.

(i) The contracting officer recommends and the HCA approves initial bridge contracts. The HCA may

delegate approval authority to the CCO for actions up to $1M.

(ii) The HCA recommends, and the DLA Competition Advocate approves the second bridge contract,

except for actions where the DLA Acquisition Deputy Director is also the HCA. For actions where the

DLA Acquisition Deputy Director is also the HCA, the DLA Acquisition Operations Division Chief

makes the recommendation for a second bridge contract to the DLA Competition Advocate who

remains the approval authority. The recommendation and approval authorities in this subparagraph

are nondelegable.

(iii) The HCA and the DLA Competition Advocate recommend for SPE approval any additional bridge

contracts beyond the second bridge, except for actions where the DLA Acquisition Deputy Director is

also the HCA. For actions where the DLA Acquisition Deputy Director is the HCA, the DLA

Acquisition Operations Division Chief makes the recommendation for any additional bridge contract

through the DLA Competition Advocate. After receiving an authorized recommendation from the

DLA Acquisition Operations Division Chief, the DLA Competition Advocate will include their

recommendation for SPE approval. The recommendation authority in this subparagraph is

nondelegable.

(d) Approval to award a bridge contract does not relieve the contracting officer from any other

regulatory requirements that the contracting officer must fulfill before making an award. For

example, contracting officers must comply with requirements for acquisition plans in accordance

with 7.102, synopsizing in accordance with FAR Subpart 5.2, and solicitation. The contracting officer

must determine the contractor is responsible and ensure the contractor agrees to all terms and

conditions currently required by the FAR and subordinate guidance. If required, the contracting

officer shall document the Price Negotiation Objective Memorandum and Price Negotiation

Memorandum or provide the Simplified Acquisition Award Documentation. These examples are not a

comprehensive list of contract documentation requirements. Contracting officers shall not use

documents from an existing contract as substitutes for documents required in the bridge contract or

incorporate terms and conditions from an existing contract into the new bridge contract by

reference.

(e) Bridge contracts are independent acquisitions; therefore, contracting officers shall issue a

separate contract when awarding a bridge. Contracting officers shall not award bridge contracts by

modifying an existing contract.

(f) The contracting officer shall complete recording requirements in accordance with DFARS PGI

204.606, Reporting Data, and ensure appropriate coding of sole source awards.

(g) The contracting officer shall include the request, the approval, and all supporting documentation

in the contract file.

(h) Reporting. Procuring organizations shall provide—
(1) A copy of the approval and relevant supporting documentation (e.g., J&A, and acquisition plan) to

the DLA Acquisition Operations Division within thirty (30) days after awarding a bridge contract;

and

(2) The DLA Acquisition Bridge Contracts Report to the DLA Acquisition Operations Division by the

10th of each month and include the status of all bridge contracts with a period of performance that

has not expired.

SUBPART 16.2 – FIXED–PRICE CONTRACTS

(Revised June 1 2 , 20 20 through PROCLTR 20 20-13 )

16.203 Fixed–price contracts with economic price adjustment.

16.203-1 Description.

(a)(S-90) Adjustment based on established prices. Established prices may reflect industry-wide

and/or geographically based market price fluctuations for commodity groups, specific supplies or

services, or contract end items. (See DoD Class Deviation 1995-D0003, Economic Price Adjustment

Clauses, issued October 5, 1995 .)

(c)(S-90) Adjustments based on cost indexes of labor or material. These price adjustments may also

be based on increases or decreases in indexes for commodity groups, specific supplies or services, or

contract end items. (See DoD Class Deviation 1995-D0003, Economic Price Adjustment Clauses,

issued October 5, 1995 .)

(S-90) Although a specific item or element of cost may require EPA coverage, the contracting officer

shall also determine whether an EPA clause should cover the entire end item in order to take

advantage of competitive market forces or moderate price fluctuations. Base this decision, which

may be an appropriate element of tradeoff in negotiations, on risk and price analyses of the

alternatives.

(S-91) All FAR and DFARS EPA clauses and DLAD and procuring organization EPA procurement

notes shall contain the contractor’s warranty that the contract prices do not include allowance for

any contingency to cover increased costs also considered by the EPA clause or procurement note.

The contracting officer shall ensure that contractors comply with this warranty.

16.203-2 Application.

(S-92) If it becomes apparent that an EPA clause is clearly justified in a solicitation or contract but

was not included, the contracting officer may include a FAR or DFARS EPA clause or DLAD or

procuring organization EPA procurement note by solicitation amendment or bilateral contract

modification.

(S-93) Send proposed DLAD and procuring organization EPA procurement notes to the DLA
Acquisition Compliance, Policy and Pricing Division for approval. General Counsel shall review

proposed DLAD and procuring organization EPA procurement notes.

16.203-3 Limitations.

(S-90) A fixed-price contract with economic price adjustment may also be used to provide for price

adjustments as authorized in this section. (See DoD Class Deviation 1995-D0003, Economic Price

Adjustment Clauses, issued October 5, 1995 .)

16.203-4 Contract clauses.

(S-90) When the contracting officer determines an existing EPA clause is not appropriate, the

contracting officer may develop and use another EPA clause in accordance with 16.203-1(a)(S-90) or

(c)(S-90). Established prices and cost indexes need not reflect changes in the costs or established

prices of a specific contractor. The established price or cost index may be derived from sales prices

in the marketplace, quotes, or assessments as reported or made available in a consistent manner in

a publication, electronic database, or other form, by an independent trade association,

Governmental body, or other third party independent of the contractor. More than one established

price or cost index may be combined in a formula for economic price adjustment purposes in the

absence of an appropriate single price or cost index. (See DoD Class Deviation 1995-D0003,

Economic Price Adjustment Clauses, issued October 5, 1995 .)

16.290 Procurement notes.

(a) Adjustments based on established prices – standard supplies. If the contracting officer

determines that no existing FAR or DFARS EPA clause, or DLAD or procuring organization EPA

procurement note, is appropriate, the contracting officer may develop a procurement note for onetime use, subject to CCO approval in accordance with 1.301(a)(1)(S-92)(A).

(1) Contracting officers may use procurement note C13 in solicitations and contracts, when the

contracting officer determines that the use of the clause at FAR 52.216-2 is inappropriate (reference

FAR Deviation #2008-02).)

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C13 Economic Price Adjustment – Standard Supplies (AUG 2017)

(a) The contractor warrants that the unit price stated in the schedule for [ offeror insert schedule

line item number ] is not in excess of the contractor’s applicable established price in effect on the

contract date for like quantities of the same item. The term “unit price” excludes any part of the

price directly resulting from requirements for preservation, packaging, or packing beyond standard

commercial practice. The term “established price” means a price that –

(1) Is an established catalog or market price for a commercial item sold in substantial quantities to

the general public; and

(2) Is the net price after applying any standard trade discounts offered by the contractor.
(b) The contractor shall promptly notify the contracting officer of the amount and effective date of

each decrease in any applicable established price. Each corresponding contract unit price shall be

decreased by the same percentage that the established price is decreased. The decrease shall apply

to those items ordered on and after the effective date of the decrease in the contractor’s established

price, and this contract shall be modified accordingly.

(c) If the contractor’s applicable established price is increased after the contract date, the

corresponding contract unit price shall be increased, upon the contractor’s written request to the

contracting officer, by the same percentage that the established price is increased, and the contract

shall be modified accordingly, subject to the following limitations:

(1) The aggregate of the increases in any contract unit price under this procurement note shall not

exceed 10 percent of the contract unit price [at the outset of each performance/ordering period].

(2) The increased contract unit price shall be effective –

(i) On the effective date of the increase in the applicable established price if the contracting officer

receives the contractor’s written request within 10 days thereafter; or

(ii) If the written request is received later, on the date the contracting officer receives the request.

(3) The increased contract unit price shall not apply to quantities ordered under the contract before

the effective date of the increased contract unit price.

(4) No modification increasing a contract unit price shall be executed under this paragraph (c) until

the contracting officer verifies the increase in the applicable established price.

(5) Within 30 days after receipt of the contractor’s written request, the contracting officer may

cancel, without liability to either party, any undelivered portion of the contract items affected by the

requested increase.

(d) During the time allowed for the cancellation provided for in subparagraph (c)(5) of this

procurement note, and thereafter if there is no cancellation, the contractor shall continue deliveries

according to the contract delivery schedule, and the Government shall pay for such deliveries at the

contract unit price, increased to the extent provided by paragraph (c) of this clause.

*****

(2) Contracting officers may use procurement note M09 for fresh fruits and vegetables under the

DLA Troop Support subsistence supply chain for long term contracts (reference FAR Deviation

#2008-02).

(3) Contracting officers may use a procuring organization EPA procurement note in any DLA

Multiple Award Schedule solicitation or contract instead of FAR 52.216-2.

(b) Adjustments based on established prices – semi-standard supplies. The contracting officer may

use a procuring organization EPA procurement note with FAR clause 52.216-3.

(c) Adjustments based on cost indexes of labor or material.

(1) The contracting officer may include an index clause in solicitations and resulting contracts only if

the contracting officer documents in the acquisition plan that the acquisition satisfies the

requirements of FAR 16.203-4(d) and DFARS 216.203-4(d). The contracting officer shall select the
most appropriate index published by the Bureau of Labor Statistics (BLS). The contracting officer

may use another index if the contracting officer determines that no BLS index is suitable and

documents in the acquisition plan the specific BLS indexes considered, why they were unsuitable,

and rationale demonstrating the suitability of the index selected.

(2) If any applicable index is discontinued or its method of derivation is altered substantially, or the

contracting officer determines that the index consistently and substantially fails to reflect market

conditions, the parties shall agree upon an appropriate substitute index for determining price

adjustments. The contracting officer shall modify the contract to reflect such substitute index,

effective on the date the index specified in the contract is no longer published or began to

consistently and substantially fail to reflect market conditions.

(d) Price adjustment for Department of Labor Index.

(1) The contracting officer may use procurement note C09 in solicitations and contract awards

when—

(i) Unpredictable increases or decreases in the cost of producing the items are expected or pricing

uncertainties exist for a component or components of the end item, and the change in cost of

production or component prices can be tracked via the Producers Price Index (PPI) published by the

BLS; or unpredictable increases or decreases in the cost of producing the items are expected or

pricing uncertainties exist for labor, and the change in cost of production can be tracked via the

Employment Cost Index (ECI) published by the BLS.

(ii) The circumstances in FAR 16.203-4(d)(1) exist;

(iii) The contracting officer considers the use of this procurement note appropriate; and

(iv) The requirements of FAR 16.203-3 and DLAD Subpart 16.2 are met.

(2) The contracting officer shall coordinate with the procuring organization pricing office before

selecting the index. For procuring organizations with no pricing office, the contracting officer shall

coordinate the fill-in sections with the DLA Acquisition Contract & Pricing Compliance Division.

(3) Notes for fill-in text:

(i) Paragraph (b)(1): Enter the appropriate Price Index (ECI, PPI, etc.) code number identification

and title in the fill-in. Normally, unadjusted indexes should be used (as opposed to seasonally

adjusted indexes). Note: If it is determined that the index to be used will only measure part of the

cost of production or material, then that percentage which is measured can be specified. For

example, if the component is cotton and the Bureau of Labor Statistics (BLS) index is only judged to

measure 50% of the contract price, then this should be specified such as 50% times the base price.

(ii) Paragraph (b)(2): Enter the number of months, or quarters for ECI, for the adjusting price index.

(iii) Paragraph (b)(3): One box must be selected. Enter the number of months, or quarters for ECI, in

each fill-in. Note: If final indexes are used, adjust the number of months, or quarters, in the second

fill-in to account for first published indexes.

(iv) Paragraph (c)(1): Enter the number of price adjustments per contract year.

(v) Paragraph (d): Enter the appropriate percentage price increase ceiling, considering the length of

contract performance, index volatility, and ratio of the cost covered by this clause to the total
contract price. Any percentage over 10 percent requires approval by the chief of the contracting

office.

(vi) Paragraph (f)(2): Enter the minimal dollar amount for an adjustment to be made for retroactive

price changes. The default is $500.

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C09 Economic Price Adjustment – Department of Labor Index (JUN2020)

(a) Warranties. The contractor warrants that—

(1) The base unit prices set forth in the Schedule do not include allowances for any portion of the

contingency covered by this procurement note; and

(2) Prices invoiced shall be computed in accordance with the terms of this procurement note.

(b) Definitions. As used throughout this procurement note—

(1) "Index", for the purpose of price adjustment under this procurement note, means the Producer

Price Index(es) reported in the monthly publication entitled, “Producer Price Indexes”, published by

the United States (U.S.) Department of Labor (DOL), Bureau of Labor Statistics (BLS) for the

following code number(s) and title(s):________________________(contracting officer fillin)_________________________; or the Employment Cost Index(es) reported in the quarterly publication

entitled, “Employment Cost Indexes,” published by the United States (U.S.) Department of Labor

(DOL), Bureau of Labor Statistics (BLS) for the following code number(s) and title(s):

_______________________(contracting officer fill-in)______________________.

(2) "Base index" means the arithmetic average of the final version of the indexes published for the

____ months, or ____ quarters for ECI, preceding the closing date for receipt of proposals or the date

required for receipt of final proposal revisions, if discussions were held.

(3) "Adjusting index" means the ____ arithmetic average of the [ ] first published or [ ] final version of

the index for the ____ months, or ____ quarters for ECI, prior to the month in which the adjusting

contract modification is effective.

(4) "Base unit price" means the unit price applicable to a quantity of a contract line item established

at contract award, exclusive of any price adjustment pursuant to this procurement note.

(5) “Adjustment period” means the period during which a particular adjustment to the unit price

under this procurement note (calculated at the beginning of the adjustment period) will apply. The

length of each adjustment period in months is the number of adjustments allowed per year in (c)(1)

below divided by 12.

(c) Adjustments. Prior to the end of each adjustment period, the contracting officer will calculate the

adjusting index and any adjusted contract unit price(s) for the new adjustment period, and modify

the contract accordingly. The contracting officer will make price adjustments in accordance with this

procurement note by issuing a contract modification showing the base index, the adjusting index,

the base unit price, the mathematical calculations, and the changed unit price(s). The price

adjustment shall apply to orders issued after the effective date of the contract modification

establishing the unit price for the adjustment period. The contracting officer will base the price

adjustment(s) for each adjustment period on the percentage change between the base index and the

adjusting index for the adjustment period, as applied to the base unit price.
(1) The contractor shall decrease its price in any particular adjustment period if the adjusting index

is less than the base index. This contract allows _______ price adjustments per contract year.

(2) Example of adjustment calculation:

Base Index=109.88*

Adjusting Index =112.72*

Less base index =109.88

Change to index =2.84

Divide change to index by base index =2.84 / 109.88 = .02585 (2.585%)**

Multiply by the base unit price =$50.00 x .02585 = $1.29***

= Unit Price Adjustment

Adjusted unit price =$51.29

*In computing the base and adjusting indexes, the contracting officer will round the resulting figure

to the second decimal place.

**The contracting officer will round this number to the fifth decimal place.

***The contracting officer will round all dollar figures to the nearest cent.

(d) Upward ceiling on economic price adjustment. No upward ceiling shall apply under this

economic price adjustment procurement note, unless the BLS series is based on indices below the

six-digit level. (An index “below the six-digit level” in BLS usage means an index with an identifier

exceeding six-digits). For any BLS series that is below the six-digit level, the following ceiling shall

apply: The contractor agrees that the aggregate of the increases in any contract unit price under the

terms of this procurement note shall not exceed ___% (percent) of the original base unit price, except

as provided hereafter.

(1) If at any time the contractor has reason to believe that within the near future a price adjustment

under the terms of this procurement note will be required that will exceed the adjustment ceiling for

any item, the contractor shall promptly notify the contracting officer in writing of the expected

increase. The notification shall include a revised ceiling the contractor believes is sufficient to

permit completion of remaining contract performance, along with appropriate explanation and

documentation as required by the contracting officer.

(2) If an increase in the index would raise a contract unit price for an item above the current ceiling,

the contracting officer may issue a contract modification to raise the ceiling. If the contracting

officer does not raise the contract ceiling, the contracting officer will promptly notify the contractor

in writing.

(e) Invoices. The basis for prices payable under this contract is the latest adjusted unit price

incorporated into the contract as of the date of order.

(f) Retroactive adjustment. This paragraph applies only if the contracting officer selected “first

published index” in paragraph (b)(3). If the Government has already paid for orders delivered during

an adjustment period, the contractor may request a retroactive adjustment. The contracting officer
will, base the retroactive adjustment on the difference between a higher final revised index

applicable to an adjustment period and the index values used in calculating the unit price for that

adjustment period, subject to the adjustment ceiling in paragraph (d) and nder] the following

conditions:

(1) The request for equitable adjustment clearly establishes that the unit price adjustment for the

adjustment period would have been higher if the final revised index had been used;, and identifies all

invoices and payments to which it applies cites the specific index differences relating to the

requested adjustment, and provides a calculation of the total net price adjustment for items

delivered during that adjustment period.

(2) The total dollar change for items delivered is $______ ($500.00 unless otherwise stated) or more

for the applicable adjustment period(s).

(3) The contracting officer received the contractor’s written request within 45 days following

publication of the final revised index.

The contractor shall adjust its prices downward based on the difference between a lower final

revised index applicable to an adjustment period and the index values used in calculating the unit

price for that adjustment period, subject to the limitation in paragraph (f)(2).

(g) Revision of index. If any applicable index is discontinued or its method of derivation is altered

substantially, or if the contracting officer determines that the index consistently and substantially

fails to reflect market conditions, the parties shall mutually agree upon an appropriate and

comparable substitute. The contracting officer will modify the contract to reflect such substitute

effective on the date the index was discontinued, altered, or began to consistently and substantially

fail to reflect market conditions.

(h) Final invoice. The contractor shall include a statement on the final invoice confirming it has

applied all decreases required by this procurement note to the amounts invoiced.

(i) Disputes. The “Disputes” clause of the contract applies to any dispute arising under this

procurement note.

*****

(e) Adjustments based on established market prices or indexes.

(1) Contracting officers shall determine the most appropriate international, national, regional, or

local area market. Contracting officers shall include in the solicitation or contract an EPA clause or

procurement note that identifies the index or established market price, the document containing

such index or price, and its effective date or period.

(2) If the contracting officer is unable to identify an established market price or index that

satisfactorily reflects economic fluctuations, the contracting officer may include fill-ins in the EPA

clause or procurement note in the solicitation for offerors to recommend the most appropriate

established market price or index. If the offeror does not propose an established market price or

index, the contracting officer will select the most appropriate established catalog price and amend

the solicitation to include the selected catalog price.

(3) Contracting officers shall consider the length of contract performance when entering the

appropriate percentage price increase ceiling in paragraph (c)(1) of procurement note C09. Any

percentage over 10 percent requires approval by the CCO or designee, or not lower than one level
above the contracting officer. Such approval may cover more than one contract and extend over a

stated definite time period not to exceed two years, at which time the contracting officer shall

review the adjustment ceiling again.

(4) Contracting officers may use procurement note L24 in solicitations and contracts if acquiring

commercial items for which manufacturers or suppliers have established published prices meeting

the definition of market price or catalog price.

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L24 Economic Price Adjustment (EPA) – Established Prices (AUG 2017)

(a) The contractor warrants that the unit price stated in the Schedule for _________ [offeror insert

Schedule line item number] is not in excess of the contractor’s applicable established price in effect

on the contract date for like quantities of the same item. The term “unit price” excludes any part of

the price directly resulting from requirements for preservation, packaging, or packing beyond

standard commercial practice. The term “established price” means a price that –

(1) Is an established catalog or market price for a commercial item sold in substantial quantities to

the general public; and

(2) Is the net price after applying any standard trade discounts offered by the contractor.

(b) The contractor shall promptly notify the contracting officer of the amount and effective date of

each decrease in any applicable established price. Each corresponding contract unit price shall be

decreased by the same percentage that the established price is decreased. The decrease shall apply

to those items delivered on and after the effective date of the decrease in the contractor’s

established price, and this contract shall be modified accordingly.

(c) If the contractor’s applicable established price is increased after the contract date, the

corresponding contract unit price shall be increased, upon the contractor’s written request to the

contracting officer, by the same percentage that the established price is increased, and the contract

shall be modified accordingly, subject to the following limitations:

(1) The aggregate of the increases in any contract unit price under this clause shall not exceed ___

percent of the original contract unit price.

(2) The increased contract unit price shall be effective –

(i) On the effective date of the increase in the applicable established price if the contracting officer

receives the contractor’s written request within 10 days thereafter; or

(ii) If the written request is received later, on the date the contracting officer receives the request.

(3) The increased contract unit price shall not apply to quantities scheduled under the contract for

delivery before the effective date of the increased contract unit price, unless failure to deliver before

that date results from causes beyond the control and without the fault or negligence of the

contractor, within the meaning of the default clause.

(4) No modification increasing a contract unit price shall be executed under this paragraph (c) until

the contracting officer verifies the increase in the applicable established price.

(5) Within 30 days after receipt of the contractor’s written request, the contracting officer may
cancel, without liability to either party, any undelivered portion of the contract items affected by the

requested increase, except as follows.

(i) The contractor may, after that time, deliver any items that were completed or in the process of

manufacture at the time of receipt of the cancellation notice, provided the contractor certifies and

notifies the contracting officer of such items within 10 days after the contractor receives the

cancellation notice.

(ii) The Government shall pay for those items at the contract unit price increased to the extent

provided by paragraph (d) of this clause.

(iii) Any standard steel supply item shall be deemed to be in the process of manufacture when the

steel for that item is in the state of processing after the beginning of the furnace melt.

(d) During the time allowed for the cancellation provided for in subparagraph (c)(5) of this clause,

and thereafter if there is no cancellation, the contractor shall continue deliveries according to the

contract delivery schedule, and the Government shall pay for such deliveries at the contract unit

price, increased to the extent provided by paragraph (c) of this clause.

(e) The contractor shall certify on each invoice that each unit price stated therein reflects all

decreases required by this clause and shall certify on the final invoice that all price decreases

required by this clause have been applied in the manner required herein.

(f) Disputes. Any dispute arising under this clause shall be determined in accordance with the

Disputes clause of the contract.

*****

(f) Adjustments based on established catalog prices. The contracting officer may include an

established catalog price-type EPA clause (FAR 52.216-2 or 52.216-3, DFARS 252.216-7000 or

252.216-7001) in solicitations and resulting contracts for an item previously bought without such

EPA clause only after the contracting officer determines that an index-type or an established marketpriced EPA is unsuitable (i.e., does not meet the requirements of FAR 16.203-4(d) and DFARS

216.203-4(d), or does not describe the supplies with specificity) and documents in the acquisition

plan the results of actions taken in reaching this determination.

(g) The contracting officer may only use these procurement notes when the requirements of FAR

16.203-2 are met, the contracting officer makes the determination required by FAR 16.203-3, and

the contracting officer determines that none of the standard FAR EPA clauses are appropriate for

use in the acquisition.

(h) The contracting officer shall include procurement note L25 in solicitations when using

negotiation procedures that include economic price adjustments.

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L25 Evaluation of Offers – Economic Price Adjustment (AUG 2017)

(a) Offers in response to solicitations will be evaluated without adding any amount for economic

price adjustment unless the economic price adjustment (EPA) clause included in the solicitation

provides for offerors to specify the portion of the contract price subject to EPA. In this case, the

offered price(s) subject to the EPA clause will be adjusted to the maximum possible extent under the

EPA using the price ceiling limitation provision of such clause for the basic contract plus all options
covered by the evaluation. The resulting price(s) will be used for evaluation of offers.

(b) If a successful offeror stipulates a lower maximum increase limitation then that included in the

solicitation, it will be incorporated into the resulting contract.

(c) Offers which (1) increase the maximum ceiling percentage specified in the solicitation, (2)

stipulate a maximum decrease limit, or (3) delete or otherwise alter the economic price adjustment

clause, will not be considered for award, unless the contracting officer determines that award on

such basis is in the best interests of the Government and all offerors are afforded an opportunity to

offer on the same basis.

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(i) Contracting officers may insert procurement note H12 in solicitations and awards, including those

subject to FAR Part 12, that meet the criteria in FAR 16.205 for fixed price prospective price

redetermination, if the contracting officer determines economic price adjustment is unsuitable and

requires contract pricing to be based on the date supplies are ordered rather than on date of

delivery (reference FARS DEV 13-07).

*****

H12 Price Redetermination – Prospective (JUN 2020) (DEVIATION - PERMANENT)

(a) The unit prices and the total price stated in this contract shall be periodically redetermined in

accordance with this procurement note, except that --

(1) The prices for supplies ordered and services performed before the first effective date of price

redetermination (see paragraph (c) of this clause) shall remain fixed; and

(2) In no event shall the total amount paid under this contract exceed any ceiling price included in

the contract.

(b) Definition. “Costs,” as used in this clause, means allowable costs in accordance with Part 31 of

the Federal Acquisition Regulation (FAR) in effect on the date of this contract.

(c) Price redetermination periods. For the purpose of price redetermination, performance of this

contract is divided into successive periods. The first period shall extend from the date of the contract

to ________, (see note (1)) and the second and each succeeding period shall extend for ______ [insert

appropriate number] months from the end of the last preceding period, except that the parties may

agree to vary the length of the final period. The first day of the second and each succeeding period

shall be the effective date of price redetermination for that period.

(d) Data submission.

(1) Not more than _______ nor less than ______ (see note (2)) days before the end of each

redetermination period, except the last, the contractor shall submit --

(i) Proposed prices for supplies that may be ordered or services that may be performed in the next

succeeding period, and –

(A) An estimate and breakdown of the costs of these supplies or services in the format of Table 15-2,

FAR 15.408, or in any other form on which the parties may agree;
(B) Sufficient data to support the accuracy and reliability of this estimate; and

(C) An explanation of the differences between this estimate and the original (or last preceding)

estimate for the same supplies or services; and

(ii) A statement of all costs incurred in performing this contract through the end of the ___ month

(see Note (3)) before the submission of proposed prices with sufficient supporting data to disclose

unit costs and cost trends for --

(A) Supplies ordered and services performed; and

(B) Inventories of work in process and undelivered contract supplies on hand (estimated to the

extent necessary).

(2) The contractor shall also submit, to the extent that it becomes available before negotiations on

redetermined prices are concluded –

(i) Supplemental statements of costs incurred after the date stated in subdivision (d)(1)(ii) of this

section for --

(A) Supplies ordered and services performed; and

(B) Inventories of work in process and undelivered contract supplies on hand (estimated to the

extent necessary); and

(C) Any other relevant data that the contracting officer may reasonably require.

(3) If the contractor fails to submit the data required by subparagraphs (d)(1) and (2) of this section,

within the time specified, the contracting officer may suspend payments under this contract until the

data are furnished. If it is later determined that the Government has overpaid the contractor, the

contractor shall repay the excess to the Government immediately. Unless repaid within 30 days after

the end of the data submittal period, the amount of the excess shall bear interest, computed from

the date the data were due to the date of repayment, at the rate established in accordance with the

interest clause.

(e) Price redetermination. Upon the contracting officer’s receipt of the data required by paragraph

(d) of this section, the contracting officer and the contractor shall promptly negotiate to redetermine

fair and reasonable prices for supplies that may be ordered or services that may be performed in the

period following the effective date of price redetermination.

(f) Contract modifications. Each negotiated redetermination of prices shall be evidenced by a

bilateral modification to this contract, stating the redetermined prices that apply during the

redetermination period.

(g) Adjusting billing prices. Pending execution of the contract modification (see paragraph (f) of this

section), the contractor shall submit invoices or vouchers in accordance with the billing prices stated

in this contract. If at any time it appears that the then-current billing prices will be substantially

greater than the estimated final prices, or if the contractor submits data showing that the

redetermined price will be substantially greater than the current billing prices, the parties shall

negotiate an appropriate decrease or increase in billing prices. Any billing price adjustment shall be

reflected in a contract modification and shall not affect the redetermination of prices under this

clause. After the contract modification for price redetermination is executed, the total amount paid

or to be paid on all invoices or vouchers shall be adjusted to reflect the agreed-upon prices, and any
requested additional payments, refunds, or credits shall be made promptly.

(h) Quarterly limitation on payments statement. This paragraph (h) applies only during periods for

which firm prices have not been established.

(1) Within 45 days after the end of the quarter of the contractor’s fiscal year in which a delivery is

first made (or services are first performed) and accepted by the Government under this contract,

and for each quarter thereafter, the contractor shall submit to the contract administration office

(with a copy to the contracting office and the cognizant contract auditor) a statement, cumulative

from the beginning of the contract, showing --

(i) The total contract price of all supplies or services ordered and accepted by the Government and

for which final prices have been established;

(ii) The total costs (estimated to the extent necessary) reasonably incurred for, and properly

allocable solely to, the supplies or services ordered and accepted by the Government and for which

final prices have not been established;

(iii) The portion of the total interim profit (used in establishing the initial contract price or agreed to

for the purpose of this paragraph (h)) that is in direct proportion to the supplies or services ordered

and accepted by the Government and for which final prices have not been established; and

(iv) The total amount of all invoices or vouchers for supplies or services ordered and accepted by the

Government (including amounts applied or to be applied to liquidate progress payments).

(2) The statement required by subparagraph (h)(1) of this section need not be submitted for any

quarter for which either no costs are to be reported under subdivision (h)(1)(ii) of this section, or

revised billing prices have been established in accordance with paragraph (g) of this section, and do

not exceed the existing contract price, the contractor’s price-redetermination proposal, or a price

based on the most recent quarterly statement, whichever is least.

(3) Notwithstanding any provision of this contract authorizing greater payments, if on any quarterly

statement the amount under subdivision (h)(1)(iv) of this section exceeds the sum due the

contractor, as computed in accordance with subdivisions (h)(1)(i), (ii), and (iii) of this section, the

contractor shall immediately refund or credit to the Government the amount of this excess. The

contractor may, when appropriate, reduce this refund or credit by the amount of any applicable tax

credits due the contractor and by the amount of previous refunds or credits affected under this

procurement note. If any portion of the excess has been applied to the liquidation of progress

payments, then that portion may, instead of being refunded, be added to the unliquidated progress

payment account, consistent with the progress payments clause. The contractor shall provide

complete details to support any claimed reductions in refunds.

(4) If the contractor fails to submit the quarterly statement within 45 days after the end of each

quarter and it is later determined that the Government has overpaid the contractor, the contractor

shall repay the excess to the Government immediately. Unless repaid within 30 days after the end of

the statement submittal period, the amount of the excess shall bear interest, computed from the date

the quarterly statement was due to the date of repayment, at the rate established in accordance with

the Interest clause.

(i) Subcontracts. No subcontract placed under this contract may provide for payment on a cost-plusa-percentage-of-cost basis.

(j) Disagreements. If the contractor and the contracting officer fail to agree upon redetermined
prices for any price redetermination period within 60 days (or within such other period as the

parties agree) after the date on which the data required by paragraph (d) of this section are to be

submitted, the contracting officer shall promptly issue a decision in accordance with the Disputes

clause. For the purpose of paragraphs (f), (g), and (h) of this section, and pending final settlement of

the disagreement on appeal, by failure to appeal, or by agreement, this decision shall be treated as

an executed contract modification. Pending final settlement, price redetermination for subsequent

periods, if any, shall continue to be negotiated as provided in this procurement note.

(k) Termination. If this contract is terminated, prices shall continue to be established in accordance

with this procurement note for:

(1) completed supplies and services accepted by the Government and;

(2) those supplies and services not terminated under a partial termination. All other elements of the

termination shall be resolved in accordance with other applicable clauses or procurement notes of

this contract.

*****

SUBPART 16.5 – INDEFINITE DELIVERY CONTRACTS

(Revised August 3, 2017 through PROCLTR 2017-17)

16.501-2 General.

(c) Indefinite-delivery contracts providing for issuance of undefinitized delivery orders (UDOs) shall

meet the requirements of DFARS Subpart 217.74 and DLAD SUBPART 17.74 – UNDEFINITIZED

CONTRACT ACTIONS .

16.503 Requirements contracts.

(a)(S-90) Guaranteed minimum (GM) purchase requirements and obligations. Contracting officers

are not required to establish a GM for requirements contracts; however, if the contracting officer

elects to include a GM in the solicitation and the award, the policies at 16.504(a)(1)(S-90 and

17.207(S-90) apply.

16.504 Indefinite–quantity contracts.

(a)(1)(S-90) Guaranteed minimum (GM) purchase requirements and obligations.

(A) Contracting officers shall establish a GM quantity or GM dollar value of supplies or services for

the base period of performance of indefinite-quantity contracts (IQCs) and record an obligation in

the amount of the GM at time of award. Recording the obligation is an internal financial action and

is separate from issuing a task or delivery order against an IQC. Contracting officers shall follow the

Guaranteed Minimum (GM) Job Aids

(https://dlamil.dps.mil/sites/InfoOps/Shared%20Documents/Forms/AllItems.aspx?FolderCTID=0x012
000D3D259D71343A94E992AA17310CB0231&viewid=bb1b25a6%2D56d8%2D4398%2Dac48%2D5f

987c946cca&id=%2Fsites%2FinfoOps%2Fshared%20Documents%2FEBS%20ONLINE%20HELP%2

FePROCUREMENT%2Fguaranteed%20Minimum%20%28GM%29). (From the EBS Home Page, see

the EBS Online Help link, navigate to the eProcurement section, and select the Guaranteed

Minimum (GM) folder.)

(1) For actions executed in ECC, see the job aid entitled “Creating and Maintaining a Guaranteed

Minimum Purchase Order”.

(2) For actions executed in SRM, see the job aid entitled “Creating and Updating a Guaranteed

Minimum (GM) on a Long Term Contract (LTC)”.

(B) Failures to establish a GM quantity or GM dollar value and/or record an obligation in the amount

of the GM purchase requirement when awarding an IQC are reflected in warrant proficiency scores

and require creation of a contracting officer corrective action plan in accordance with DLAM

5025.04, Contracting Officer (KO) Warrant Program

(https://issue-p.dla.mil/Published_Issuances/Contracting%20Officer%20(KO)%20Warrant%20Progra

m%20with%20CAP%20changes.pdf). See Monthly Review and Reporting Requirements at

mandatory PGI 16.504(a)(1)(S-90)(B).

(C) If during contract performance, the contracting officer does not expect demand during the

remaining performance period to fulfill the GM, the contracting officer should consider whether a

termination for convenience to reduce the GM is appropriate. Before executing any modification to

effect a reduction in the GM, the contracting officer should consult with Office of Counsel to

consider any legal impacts to the Agency stemming from the modification.

(a)(4)(viii) Use procurement note L26 in solicitations which will result in IDCs when it is anticipated

that the contractor will offer a price break for high quantity delivery orders. Coordinate with the

demand planner manager for establishment of the quantity most likely to be procured for each

delivery order. The highest weight should then be assigned to this quantity. State the range of order

quantities and the evaluation weight which will be placed on each quantity range in the buying

section of Optional Form 336, Continuation Sheet. The contracting officer shall also provide the

contractor with an estimate of the annual requirements.

*****

L26 Evaluation of Quantity Sensitive and Indefinite Delivery Contracts (AUG 2017)

(1) To be eligible for award for an item, the contractor shall offer prices for each quantity increment

stated in the solicitation.

(2) The Government will—

(i) Evaluate prices on a weighted basis, as identified in the solicitation.

(ii) Assign the highest weights to incremental quantities, as identified in the solicitation, within

which it anticipates orders are most likely to be issued.

(iii) Evaluate offers by multiplying the designated weight by the unit price for each order increment

and adding the results.

(iv) Make only one award for each line item.
(v) Issue each delivery order at the price offered for that increment.

*****

(c) Multiple award preference. The contracting officer shall include the determination not to make

multiple awards in the acquisition plan or otherwise document the determination in writing in the

contract file.

(1)(ii)(D)(1)(S-90) “Awarded to a single source” means the task or delivery orders will not be

competed between contract holders. “Task or delivery order contract” does not include orders

against task or delivery order contracts.

(S-91) The HCA (or CCO if the HCA delegates approval authority to the CCO) shall approve award of

task or delivery order contracts between $10 million and not exceeding the threshold at FAR

16.504(c)(1)(ii)(D)(1) to a single source. This requirement does not apply to DLA Energy’s energy

program contracts, AbilityOne, and FPI contracts when they are amandatory source in accordance

with FAR 8.602(a)(3). This requirement does apply to DLA Energy non-energy task and delivery

order contracts.

(S-92) Single awards over the threshold at FAR 16.504(c)(1)(ii)(D)(1) ); excluding those subject to

the exception in paragraph (c)(1)(ii)(D)(3)(i) at DFARS 16.504

(https://www.acq.osd.mil/dpap/dars/dfars/html/current/216_5.htm#216.504).

(A) Preferably within the early stages of the acquisition process, but no less than 21 days before

contract award, the procuring organization shall submit a D&F to the DLA Acquisition Operations

Division. If the D&F specifies the solicitation number, any resulting single award contract over the

threshold at FAR 16.504(c)(1)(ii)(D)(1) will be covered. The D&F shall include sufficient detail to

fully support the application of one or more of the exceptions at FAR 16.504(c)(1)(ii)(D)(1) to the

procurement.

(B) Fixed-price contracts utilizing an economic price adjustment or price redetermination clause

qualify for the FAR 16.504(c)(1)(ii)(D)(1)(ii) exception for contracts providing only firm-fixed price

task or delivery orders if the individual delivery or task orders under the contracts are firm-fixed

priced using prices established in the contracts.

16.505 Ordering.

(a)(S-90) The contracting officer shall issue a delivery order for any quantity ordered, including a

quantity ordered concurrently with award of a basic contract.

(b) Orders under multiple-award contracts—

(8) Task-order and delivery-order ombudsman. The competition advocate at each procuring

organization shall act as the task and delivery order contract ombudsman. The ombudsman shall

attempt to resolve contractor complaints relative to placement of individual task and delivery orders.

When the ombudsman cannot resolve complaints at the procuring organization level, the

ombudsman shall forward the complaint to the Program Manager for Competition, DLA Acquisition

Operations Division. The DLA competition advocate shall resolve the complaint. Each procuring

organization shall develop procedures for execution of ombudsman duties and responsibilities.

(c) Contracting officers may use procurement note C10 to indicate delivery order procedures in
multiple award indefinite delivery contracts pursuant to FAR 16.504. Indicate in the procurement

note whether price evaluation for the task or delivery order is significantly more, less, or

approximately equal in importance to all other evaluation factors combined.

*****

C10 Placement of Task or Delivery Orders Against Multiple Indefinite Delivery Contracts (AUG

2017)

(1) In accordance with FAR 52.216-27, Single or Multiple Awards, the Government may elect to

award multiple contracts under this solicitation. The Government will evaluate proposals in

accordance with evaluation provisions in Section M of this solicitation. In the event of multiple

awards, the Government will use the same evaluation criteria to determine which proposals

represent the best value to the Government. The contracting officer has the discretion to determine

the exact number of awards, considering the cost to the Government to administer multiple awards,

the recurring nature of the requirement, the need to increase the active production base, and the

benefits that may be achieved through continued competition.

(2) Task or delivery order placement procedure.

(a) In the event of multiple awards, the contracting officer will consider each awardee for placement

of individual task or delivery orders unless an exception at FAR 16.505(b)(2) applies. However,

awardees subject to testing and approval requirements (e.g., first article testing) are not eligible to

receive orders until testing requirements are satisfactorily completed. Failure to successfully

complete required testing will constitute grounds for contract termination for default by the

Government.

(b) Unless stated otherwise in the contract or in the request for quotes for task or delivery orders

under this contract, the following evaluation process will be used in awarding task or delivery

orders. The criteria used for evaluating offers for task or delivery orders under this contract are

price, past performance, and delivery. Price is of ______ importance than or to the other factors

combined. Past performance will include performance on orders previously placed under the

contract and may include performance under other contracts. In evaluating performance under

previous orders, the contracting officer will consider delivery, quality of supplies or services

furnished, and success in implementing any socioeconomic support programs that may be applicable

to the contract.

(3) Task and delivery order ombudsman. In accordance with FAR 16.505(b)(8), the competition

advocate will address complaints or questions regarding the placement of individual task or delivery

orders. Address correspondence to the appropriate supply chain listed below:

For DLA Aviation:

DLA Aviation

Competition Advocate, BPP

8000 Jefferson Davis Highway

Richmond, Virginia 23297-5124

For DLA Troop Support’s construction and equipment, clothing and textile, subsistence, and medical

supply chains:
DLA Troop Support

Competition Advocate, BPA

700 Robbins Avenue

Philadelphia, Pennsylvania 19111-5096

For DLA Land and Maritime:

DLA Land and Maritime

Competition Advocate

Post Office (P.O.) Box 3990

Columbus, Ohio 43218-3990

*****

16.590 Procurement notes.

(a) Contracting officers may use procurement note L27 in solicitations when a method is needed for

making additions or deletions to items covered by the contract (e.g., corporate contracts, LTCs

incorporating a manufacturer’s price list, comprehensive weapon system spare parts support, a

specific range of items).

(1) The contracting officer shall address competition requirements before new items may be added

to a contract.

(2) The contracting officer shall prepare a scope of contract statement in the solicitation and

resulting contract to clearly establish the Government’s intentions and rights under the contract.

The scope of contract statement should communicate a comprehensive objective for the acquisition

(i.e., whether it is based on a specific stock class, weapon system, product line, manufacturer, or

distributor). The contracting officer shall not include information in the scope of contract statement

that conflicts with Section B or other terms of the solicitation. Contracting officers have flexibility in

defining contract scope but must be careful to avoid ambiguities.

*****

L27 Addition and Deletion of Items (AUG 2017)

(1) The Government reserves the right to unilaterally delete items that were available from only one

manufacturer at the time of award if an alternate source of supply becomes available or the

Government’s requirements are modified to provide for full and open competition. The Government

will provide a 30-day advance notice to the contractor prior to deleting any item from the contract.

(2) The Government may add new items to the contract through bilateral modification with

negotiated prices. All new requirements are subject to synopsis prior to addition to the contract.

(3) Discontinued items:
(a) The contractor agrees to provide the Government with immediate, written notification when the

manufacturer will discontinue an item, including a recommendation for any potential substitute or

replacement items. If the Government elects to include a substitute or replacement item in the

contract, the contracting officer will modify the contract accordingly.

(b) If the manufacturer discontinues an item without replacement, the contractor shall include in the

notice a recommendation concerning the availability of items that are comparable in form, fit, and

function. The contractor shall not incur any costs related to alternate sources of supply without the

express written approval of the contracting officer. The Government has the option to make a last

time order, or series of orders, within 30 days after receiving written notification of the discontinued

item, after which the item will be deleted from the contract. The contractor shall honor any last time

order, unless it is returned to the ordering office within 10 days after issuance with written notice

stating the full quantity is not available for shipment. The parties will negotiate the terms of such

orders, including changes to the delivery schedule and maximum quantity available for shipment.

*****

(b) Contracting officers shall use procurement note C12 in solicitations and contract awards for

LTCs that provide for shipment to more than one location and include quantity range pricing; when

transportation costs will be relatively small compared to the cost of the item; and when the contract

price will be f.o.b. origin.

*****

C12 Pricing of Delivery Orders with Quantity Increments (AUG 2017)

(a) In pricing delivery orders requiring delivery of one national stock number (NSN) to multiple

destinations, the Government will determine the price for each destination as follows, depending on

the box checked:

☐ (1) The quantity range price based on the total quantity of the NSN being procured under each

delivery order regardless of destination; or

☐ (2) The total quantity being shipped to all destinations within each zone as defined elsewhere in

this contract.

(b) If this solicitation or contract contains a provision for placement of orders through an electronic

ordering system, the Government will determine unit prices for those orders as follows, depending

on the box checked:

☐ (1) The total quantity of all requirements for each NSN issued via the electronic ordering system in

a single day, regardless of the number of individual orders; or

☐ (2) The quantity of each individual order.

(c) The minimum quantity to be ordered, per destination, will be the minimum ordering range

quantity if specified in section B of the solicitation or contract for each item.

*****
SUBPART 16.6 – TIME–AND–MATERIALS, LABOR–HOUR,

AND LETTER CONTRACTS

16.601 Time–and–materials contracts.

(d) Limitations.

(S-90) The contracting officer shall include “not to exceed” price ceilings in each option and delivery

order.

(S-91) Contracting officers shall migrate time-and-material and labor-hour (T&M/LH) vehicles to

other contract types, preferably a fixed- price arrangement, when the service becomes repetitive and

more predictable in nature.

(S-92) HCAs shall annually monitor their percentage of acquisition dollars being spent on T&M/LH

contracts and orders. HCAs shall report to the CAE at the close of the calendar year any percentages

of T&M/LH contract action dollars for the preceding fiscal year exceeding 8 percent of service

dollars, including a discussion of the HCA’s strategy to decrease the use of T&M/LH contract type

and the risk mitigation measures used in administering these contract types.