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DSCR

DSCR I84K: ECONOMIC PRICE ADJUSTMENT (EPA) - MATERIAL COST INDEX

I84K   52.216-9G25  ECONOMIC PRICE ADJUSTMENT  DSCR (JAN 1996)
AND                 MATERIAL COST INDEX 
I16F41


    (a)  The contractor warrants that--

         (1)  The amount stated in column (5) of the TABLE 
(in paragraph (k)) represents the purchase cost of the specified 
material subject to economic fluctuation, was used in computing the 
offers and, consequently, only such amount(s) is subject to 
adjustment under this clause.

         (2)  The unit price(s) set forth in the contract schedule 
does not include allowances for any portion of the contingency 
covered by this clause.

         (3)  The price(s) to be invoiced hereunder shall be computed
in accordance with the provisions of this clause.

    (b)  DEFINITIONS.  As used throughout this clause--

         (1)  "Index" is the producer price index cited in column 
(3) of the TABLE, appearing in the U.S. Department of Labor, Bureau 
of Labor Statistics (BLS) monthly publication entitled "Producer Price 
Indexes".

         (2)  "Base unit price" is the unit price applicable to a
quantity of a contract line item scheduled for delivery during the 
initial contract period, or during an option period, exclusive of any
price adjustment pursuant to this clause.

         (3)  "Base period" is the three calendar months preceding 
the month containing, as applicable, the date of bid opening under 
sealed bid procedures or the closing date for receipt of offers 
(best and final offers, if discussions were held) under negotiation 
procedures.

         (4)  "Base index" is the arithmetic average of the index 
values for the base period, initially published approximately twenty 
days following the end of each respective month.

         (5)  "Initial adjusting index" for items scheduled for 
delivery during the first three calendar months of contract 
performance is the arithmetic average of the initial index values 
applicable to the three months immediately preceding the month prior 
to the first month of contract performance.  For subsequent 
quarterly periods, the initial adjusting index is the arithmetic 
average of the three calendar months immediately preceding the month 
prior to the first month of the three month contract period for which 
a prospective adjustment is being calculated.

         (6)  "Adjusted contract unit price" is the base unit price, 
adjusted quarterly on a prospective basis and rounded to four decimal 
places.

         (7)  "Final adjusting index" is used for retroactive adjustments 
to the contract price.  For timely and for excused late shipments, 
it is the arithmetic average of the revised index values (published 
four months following initial publication of each monthly index) 
applicable to the three months immediately preceding the month of 
shipment specified in the contract schedule.  For any unexcused late 
shipment, the final adjusting index is computed by using either:
(i) the revised index values applicable to the three months 
immediately preceding the month in which shipment is specified in 
the schedule or (ii) the revised index values applicable to the three
months immediately preceding the month in which actual shipment 
was made, whichever produces the lower final adjusting 
index value.

    (c)  ADJUSTMENTS.

         (1)  Two types of price adjustments shall be used:

              (i)  PROSPECTIVE.  Promptly following initial 
publication (approximately twenty days following month end) of the 
index for the second month in each consecutive three calendar month 
period of contract performance, the Contracting Officer shall 
calculate the initial adjusting index and any adjusted contract 
unit price(s), and modify the contract accordingly.

             (ii)  RETROACTIVE.  A further adjustment to prices 
paid for shipments shall be made in the event publication of a 
revised index value would result in an increase or decrease from 
the initial adjusting index (if any, otherwise the base index),
subject to the limitations in paragraphs (4) and (5) below.  The 
Contractor shall promptly notify the Contracting Officer in writing 
upon such publication.  The notice shall include the Contractor's 
calculations of the contract price adjustment, along with proof of 
shipment dates,quantities, and any other supporting documentation 
required by the Contracting Officer.  If the contractor fails to 
notify the Contracting Officer promptly of a decrease, or agreement 
on any adjustment cannot be reached, the Contracting Officer may 
determine the applicable change and make a unilateral contract price 
adjustment.

         (2)  For any adjustment under this clause, the contract unit
price shall be the base unit price increased (or decreased in the 
event the base index value exceeds that of the adjusting index) by 
the product of the dollar value of material in the base unit price 
(column 5 of the TABLE), multiplied by the ratio of change.  The ratio
of change is the net difference of the adjusting index (initial or 
final as applicable) minus the base index, divided by the base index.

         (3)  Price adjustments under this clause shall be effected 
by contract modification showing the base index, calculation of the 
initial or final adjusting index, as applicable, the base unit price, 
and the calculations used to arrive at the adjusted contract unit 
price(s).  In addition, modifications for retroactive adjustments 
shall identify prior invoices and payments for the shipped items, 
and the total net price adjustment (increase or decrease).

         (4)  No adjustment shall be made under this clause unless 
the total change in the contract amount is $250 or more.

         (5)  UPWARD CEILING ON ECONOMIC PRICE ADJUSTMENTS.  Total 
increases in base unit price are limited to ____ percent.  This 
limitation applies separately to the basic period and each option,
if any.  The percent of increase allowed will be figured on the 
base unit price for the first year, and on the adjusted unit price 
in effect at inception of each option period.

    (d)  INVOICING:

         (1)  Initial invoices annotating the base or adjusted 
unit price shall be submitted by the Contractor for payment by 
the Government for product delivered throughout the contract period.

         (2)  Any retroactive modification issued in accordance 
with these escalation provisions shall be the basis for either the 
Contractor's supplemental invoicing or a Government credit 
deductible from invoices payable at the end of the contract period,
or, if no invoice is then payable, a Contractor's refund in the 
appropriate amount.

         (3)  Supplemental invoices shall be submitted by the 
Contractor for payment by the Government for deliveries and payments 
made at the base or the adjusted unit price, during previous months.
These supplemental invoices must identify the contract number, 
modification number authorizing the supplemental adjustment, 
original invoice number, quantities, and the amount of adjustment to 
be made.

    (e)  REVISION OF PRICE INDEX.  In the event--

         (1)  Publication of any index is discontinued or its method of 
derivation altered substantially, or

         (2)  The Contracting Officer determines that the index 
consistently and substantially fails to reflect market conditions, 
the parties shall agree upon an appropriate and comparable substitute 
for determining price adjustments hereunder.  The contract shall be 
modified to reflect such substitute, effective on the date the index 
was discontinued, altered, or began to consistently and substantially 
fail to reflect market conditions.

    (f)  Once the quantitative factors in columns (4) and (5) of 
the TABLE have been established at contract award, they remain fixed 
through the life of the contract and shall not be modified except in 
the event of significant changes in the scope of the contract.
Pricing actions pursuant to the "Changes" clause or other provisions 
of the contract shall be priced as though there were no provision 
for economic price adjustment.

    (g)  The contractor's entitlement to a price increase based on the 
final adjusting index shall be waived unless the contractor's written 
request is received by the Contracting Officer within 240 days 
following the final shipment of supplies under the contract.

    (h)  Any dispute arising under this clause shall be determined 
in accordance with and subject to the "Disputes" clause of the 
contract.

    (i)  EXAMINATION OF RECORDS.  The contractor agrees that the 
Contracting Officer or designated representatives shall have the right
to examine the contractor's books, records, documents, and other data
as may be deemed necessary to verify the contractor's warranties and 
notices of price increases and/or decreases, whether or not reported 
to the Contracting Officer, for the purpose of pricing or price 
adjustment under this contract.

    (j)  FINAL INVOICE CERTIFICATION.  The contractor shall include 
a statement on the final invoice that the amounts invoiced hereunder 
have applied all decreases required by this clause.

    (k)  TABLE.  The offeror shall complete all blank columns in 
the TABLE which follows.  The offeror shall include with its offer 
adequate data to support derivation of the dollar value of specified 
material in the base unit price subject to adjustment (column (5)).
Data supplied shall at a minimum provide an informal cost breakdown 
reflecting the current raw material cost, and the quantity of 
material per contract line item unit price.

(1)              (2)                 (3)             (4)            (5)
CONTRACT LINE    SPECIFIED           BASE INDEX      BASE INDEX     VALUE OF MATERIAL 
ITEM NO.SUBJECT  MATERIAL SUBJECT    INDEX CODE      VALUE AND      IN BASE UNIT PRICE 
TO ADJUSTMENT    TO ADJUSTMENT       NO.AND NAME     BASE PERIOD    SUBJECT TO ADJUSTMENT