As prescribed in 5516.203-4(c), insert the following clause in solicitations and contracts when an economic price adjustment based on the Defense Energy Supply Center (DESC) established prices of fuel for airlift is anticipated.
ECONOMIC PRICE ADJUSTMENT BASED ON DESC ESTABLISHED PRICES OF FUEL - AIRLIFT (JUNE 2009)
In order to protect the contractor and the government against significant market fluctuations in the price of fuel, a monthly adjustment will be made based on the fuel price established by the Defense Energy Supply Center (DESC) for JP-8. Adjustments will be made as indicated in paragraphs (b) and (c) below and shall be taken against the CLIN titled Fuel EPA Reimbursable.
(a) Economic Price Adjustments pursuant to this clause are limited to changes in fuel.
(b) Allowable fuel adjustments will be made, upward or downward, only if the DESC price varies by more than (fillable field) % per gallon from the base price established in the contract (hereafter referred to as the “pegged price”).
(3) When the DESC price per gallon is higher than the pegged price, increased by the percentage identified above, the government will reimburse the contractor the difference.
(4) When the DESC price per gallon is lower than the pegged price, decreased by the percentage identified above, the contractor will reimburse the government the difference. Under these circumstances, the contracting officer will issue a demand letter and funds will be reimbursed as directed.
(c) Reporting requirements for adjustments are as stated in the contract.
(d) The Contractor shall promptly notify the Contracting Officer of the amount and effective date of each change from the pegged price for JP-8.
(e) For the contracting officer to consider any request for adjustment, the contractor shall submit data that clearly supports any request for adjustment. At a minimum, the contractor shall submit all required documents and follow all fuel adjustment guidelines indicated in the contract.
(f) The following steps are taken to determine an adjustment (if applicable in accordance with (b)(above):
(1) The contractor’s established fuel burn rate is multiplied by the total mileage flown in performance of the contract. In the case of a substitute aircraft, compensation will not be made to the prime or subservicing carrier for substitute service or subcontracted miles.
(2) The product is then multiplied by the difference between the DESC price and the pegged price.
Example 1 (Adjustment due):
Miles flown in support of the USTRANSCOM contract = 23,654
Burn Rate for Aircraft type = 4.21 gallons per mile
Pegged price of fuel established in the contract = $2.50
Variance identified in contract = 10%
Revised DESC price = $2.80
Calculation:
Miles * Burn Rate * EPA Price Variance = Adjustment
23,654 * 4.21 = 99,583.34* $0.30 = $29,875.00
Example 2 (No adjustment due):
Miles flown in support of the USTRANSCOM contract = 23,654
Burn Rate for Aircraft type = 4.21 gallons per mile
Pegged price of fuel established in the contract = $2.50
Variance identified in contract = 10%
Revised DESC price = $2.60
Calculation:
Miles * Burn Rate * EPA Price Variance = Adjustment
EPA Price variance is 4%, no adjustment is due
(End of clause)
