(a) A reopener clause is a special contract provision which creates a right for an equitable adjustment in the contract price at a specified time or due to the occurrence or non-occurrence of an event or contingency of the type specified in FAR/DLAD 31.205-7(c)(2).
(b) A reopener clause provides a means of achieving an equitable resolution of the treatment of a significant contingent cost during both the initial pricing of a contract as well as at any time an equitable adjustment to such price is called for under the provisions of the clause. However, its use requires deliberate care to avoid a shift in risk from the contractor to the Government. Consequently, it should be used only in extraordinary circumstances involving high dollar value procurements (i.e., rarely less than $500,000) where the uncertainty associated with particular cost element(s) substantially impacts the contract price.
(c) Circumstances in which its use may be appropriate include, but are not limited to, the following:
(1) The price reasonableness of one or more subcontracts representing a substantial portion of the prime contractor's proposed price cannot be determined prior to award of the prime contract for such reasons as:
(i) The prime contractor's inability to obtain subcontractor cost or pricing data timely
(ii) An adequate cost/price analysis was not performed by the prime contractor; or,
(iii) Adequate field report(s) were not received prior to conclusion of negotiations.
(2) A Forward Pricing Rate Agreement (FPRA) or Recommendation (FPRR) is not achievable because of uncertainties having a significant impact such as:
(i) Supporting contractor budgetary data was not submitted;
(ii) A substantial portion of the business base has not yet materialized; or,
(iii) A potential for purchase, merger, or sale of part of a contractor's operations exists.
(3) The price impact of a change in a contract requirement, term, or condition made during negotiations is significant but cannot be reasonably quantified and resolved prior to award.
(4) The offeror's estimating system contains significant deficiencies (DFARS 215.811-70(g)(2)(vi) and (3)).
