Defense Federal Acquisition Regulation Suuplement (DFARS) Part 216, Types of Contracts, and related clauses in Part 252.216

Defense Federal Acquisition Regulation Supplement
Part 252—Solicitation Provisions and Contract Clauses

(Revised February 12, 2007)
252.216-7000 Economic Price Adjustment--Basic Steel, Aluminum, Brass,
Bronze, or Copper Mill Products.
As prescribed in 216.203-4-70(a), use the following clause:
ECONOMIC PRICE ADJUSTMENT--BASIC STEEL, ALUMINUM, BRASS,
BRONZE, OR COPPER MILL PRODUCTS (JUL 1997)
(a) Definitions. As used in this clause⎯
“Established price” means a price which is an established catalog or market
price for a commercial item sold in substantial quantities to the general public.
“Unit price” excludes any part of the price which reflects requirements for
preservation, packaging, and packing beyond standard commercial practice.
(b) The Contractor warrants that the unit price stated for (Identify the item) is not
in excess of the Contractor's established price in effect on the date set for opening of
bids (or the contract date if this is a negotiated contract) for like quantities of the same
item. This price is the net price after applying any applicable standard trade discounts
offered by the Contractor from its catalog, list, or schedule price.
(c) The Contractor shall promptly notify the Contracting Officer of the amount and
effective date of each decrease in any established price.
(1) Each corresponding contract unit price shall be decreased by the same
percentage that the established price is decreased.
(2) This decrease shall apply to items delivered on or after the effective date of
the decrease in the Contractor's established price.
(3) This contract shall be modified accordingly.
(d) If the Contractor's established price is increased after the date set for opening of
bids (or the contract date if this is a negotiated contract), upon the Contractor's written
request to the Contracting Officer, the corresponding contract unit price shall be
increased by the same percentage that the established price is increased, and this
contract shall be modified accordingly, provided—
(1) The aggregate of the increases in any contract unit price under this contract
shall not exceed 10 percent of the original contract unit price;
(2) The increased contract unit price shall be effective on the effective date of
the increase in the applicable established price if the Contractor's written request is
received by the Contracting Officer within ten days of the change. If it is not, the
effective date of the increased unit price shall be the date of receipt of the request by the
Contracting Officer; and
(3) The increased contract unit price shall not apply to quantities scheduled for
delivery before the effective date of the increased contract unit price unless the
1998 EDITION

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Defense Federal Acquisition Regulation Supplement
Part 252—Solicitation Provisions and Contract Clauses

Contractor's 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 of this contract.
(4) The Contracting Officer shall not execute a modification incorporating an
increase in a contract unit price under this clause until the increase is verified.
(e) Within 30 days after receipt of the Contractor's written request, the Contracting
Officer may cancel, without liability to either party, any portion of the contract affected
by the requested increase and not delivered at the time of such cancellation, except as
follows—
(1) 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 notifies the Contracting Officer of such items within 10 days
after the Contractor receives the cancellation notice.
(2) The Government shall pay for those items at the contract unit price
increased to the extent provided by paragraph (d) of this clause.
(3) 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.
(f) Pending any cancellation of this contract under paragraph (e) of this clause, or if
there is no cancellation, the Contractor shall continue deliveries according to the
delivery schedule of the contract. The Contractor shall be paid for those deliveries at
the contract unit price increased to the extent provided by paragraph (d) of this clause.
(End of clause)
252.216-7001 Economic Price Adjustment--Nonstandard Steel Items.
As prescribed in 216.203-4-70(b), use the following clause:
ECONOMIC PRICE ADJUSTMENT--NONSTANDARD STEEL ITEMS (JUL 1997)
(a) Definitions. As used in this clause—
“Base labor index” means the average of the labor indices for the three months
which consist of the month of bid opening (or offer submission) and the months
immediately preceding and following that month.
“Base steel index” means the Contractor's established price (see Note 6)
including all applicable extras of $________ per ____________ (see Note 1) for
_______________ (see Note 2) on the date set for bid opening (or the date of submission
of the offer).
“Current labor index” means the average of the labor indices for the month in
which delivery of supplies is required to be made and the month preceding.

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Defense Federal Acquisition Regulation Supplement
Part 252—Solicitation Provisions and Contract Clauses

“Current steel index” means the Contractor's established price (see Note 6) for
that item, including all applicable extras in effect ___ days (see Note 3) prior to the first
day of the month in which delivery is required.
“Established price” is—
(1) A price which is an established catalog or market price of a commercial
item sold in substantial quantities to the general public; and
(2) The net price after applying any applicable standard trade discounts
offered by the Contractor from its catalog, list, or schedule price. (But see Note 6.)
“Labor index” means the average straight time hourly earnings of the
Contractor's employees in the ____________ shop of the Contractor's ________________
plant (see Note 4) for any particular month.
“Month” means calendar month. However, if the Contractor's accounting period
does not coincide with the calendar month, then that accounting period shall be used in
lieu of “month.”
(b) Each contract unit price shall be subject to revision, under the terms of this
clause, to reflect changes in the cost of labor and steel. For purpose of this price
revision, the proportion of the contract unit price attributable to costs of labor not
otherwise included in the price of the steel item identified under the “base steel index”
definition in paragraph (a) shall be _____ percent, and the proportion of the contract
unit price attributable to the cost of steel shall be _____ percent. (See Note 5.)
(c)(1) Unless otherwise specified in this contract, the labor index shall be computed
by dividing the total straight time earnings of the Contractor's employees in the shop
identified in paragraph (a) for any given month by the total number of straight time
hours worked by those employees in that month.
(2) Any revision in a contract unit price to reflect changes in the cost of labor
shall be computed solely by reference to the “base labor index” and the “current labor
index.”
(d) Any revision in a contract unit price to reflect changes in the cost of steel shall
be computed solely by reference to the “base steel index” and the “current steel index.”
(e)(1) Each contract unit price shall be revised for each month in which delivery of
supplies is required to be made.
(2) The revised contract unit price shall apply to the deliveries of those
quantities required to be made in that month regardless of when actual delivery is
made.
(3) Each revised contract unit price shall be computed by adding—
(i) The adjusted cost of labor (obtained by multiplying ____ percent of the
contract unit price by a fraction, of which the numerator shall be the current labor
index and the denominator shall be the base labor index);

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Defense Federal Acquisition Regulation Supplement
Part 252—Solicitation Provisions and Contract Clauses

(ii) The adjusted cost of steel (obtained by multiplying ____ percent of the
contract unit price by a fraction, of which the numerator shall be the current steel index
and the denominator shall be the base steel index); and
(iii) The amount equal to ____ percent of the original contract unit price
(representing that portion of the unit price which relates neither to the cost of labor nor
the cost of steel, and which is therefore not subject to revision (see Note 5)).
(4) The aggregate of the increases in any contract unit price under this contract
shall not exceed ten percent of the original contract unit price.
(5) Computations shall be made to the nearest one-hundredth of one cent.
(f)(1) Pending any revisions of the contract unit prices, the Contractor shall be paid
the contract unit price for deliveries made.
(2) Within 30 days after final delivery (or such other period as may be
authorized by the Contracting Officer), the Contractor shall furnish a statement
identifying the correctness of—
(i) The average straight time hourly earnings of the Contractor's employees
in the shop identified in paragraph (a) that are relevant to the computations of the
“base labor index” and the “current labor index;” and
(ii) The Contractor's established prices (see Note 6), including all applicable
extras for like quantities of the item that are relevant to the computation of the “base
steel index” and the “current steel index.”
(3) Upon request of the Contracting Officer, the Contractor shall make
available all records used in the computation of the labor indices.
(4) Upon receipt of the statement, the Contracting Officer will compute the
revised contract unit prices and modify the contract accordingly. No modification to
this contract will be made pursuant to this clause until the Contracting Officer has
verified the revised established price (see Note 6).
(g)(1) In the event any item of this contract is subject to a total or partial
termination for convenience, the month in which the Contractor receives notice of the
termination, if prior to the month in which delivery is required, shall be considered the
month in which delivery of the terminated item is required for the purposes of
determining the current labor and steel indices under paragraphs (c) and (d).
(2) For any item which is not terminated for convenience, the month in which
delivery is required under the contract shall continue to apply for determining those
indices with respect to the quantity of the non-terminated item.
(3) If this contract is terminated for default, any price revision shall be limited
to the quantity of the item which has been delivered by the Contractor and accepted by
the Government prior to receipt by the Contractor of the notice of termination.
(h) If the Contractor's failure to make delivery of any required quantity arises out of
causes beyond the control and without the fault or negligence of the Contractor, within
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Defense Federal Acquisition Regulation Supplement
Part 252—Solicitation Provisions and Contract Clauses

the meaning of the clause of this contract entitled “Default,” the quantity not delivered
shall be delivered as promptly as possible after the cessation of the cause of the failure,
and the delivery schedule set forth in this contract shall be amended accordingly.
NOTES:
1 Offeror insert the unit price and unit measure of the standard steel mill item to be
used in the manufacture of the contract item.
2 Offeror identify the standard steel mill item to be used in the manufacture of the
contract item.
3 Offeror insert best estimate of the number of days required for processing the
standard steel mill item in the shop identified under the “labor index” definition.
4 Offeror identify the shop and plant in which the standard steel mill item identified
under the “base steel index” definition will be finally fabricated or processed into the
contract item.
5 Offeror insert the same percentage figures for the corresponding blanks in
paragraphs (b), (e)(3)(i), and (e)(3)(ii). In paragraph (e)(3)(iii), insert the percentage
representing the difference between the sum of the percentages inserted in paragraph
(b) and 100 percent.
6 In negotiated acquisitions of nonstandard steel items, when there is no “established
price” or when it is not desirable to use this price, this paragraph may refer to another
appropriate price basis, e.g., an established interplant price.
(End of clause)
252.216-7002 Alternate A, Time-and-Materials/Labor-Hour Proposal
Requirements – Non-Commercial Item Acquisition with Adequate Price
Competition.
As prescribed in 216.601(e), substitute the following paragraph (c) for paragraph (c)
of the provision at FAR 52.216-29:
ALTERNATE A, TIME-AND-MATERIALS/LABOR-HOUR
PROPOSAL REQUIREMENTS – NON-COMMERCIAL ITEM ACQUISITION
WITH ADEQUATE PRICE COMPETITION (FEB 2007)
(c) The offeror must establish fixed hourly rates using separate rates for each
category of labor to be performed by each subcontractor and for each category of
labor to be performed by the offeror, and for each category of labor to be transferred
between divisions, subsidiaries, or affiliates of the offeror under a common control.
252.216-7003 Economic Price Adjustment--Wage Rates or Material Prices
Controlled by a Foreign Government.
As prescribed in 216.203-4-70(c), use the following clause:
ECONOMIC PRICE ADJUSTMENT--WAGE RATES OR MATERIAL PRICES
CONTROLLED BY A FOREIGN GOVERNMENT (JUN 1997)

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Defense Federal Acquisition Regulation Supplement
Part 252—Solicitation Provisions and Contract Clauses

(a) The Contractor represents that the prices set forth in this contract⎯
(1) Are based on the wage rate(s) or material price(s) established and controlled
by the Government of _______________________ (Offeror insert name of host country);
and
(2) Do not include contingency allowances to pay for possible increases in wage
rates or material prices.
(b) If wage rates or material prices are revised by the government named in
paragraph (a) of this clause, the Contracting Officer shall make an equitable
adjustment in the contract price and shall modify the contract to the extent that the
Contractor’s actual costs of performing this contract are increased or decreased, as a
direct result of the revision, subject to the following:
(1) For increases in established wage rates or material prices, the increase in
contract unit price(s) shall be effective on the same date that the government named in
paragraph (a) of this clause increased the applicable wage rate(s) or material price(s),
but only if the Contracting Officer receives the Contractor’s written request for contract
adjustment within 10 days of the change. If the Contractor’s request is received later,
the effective date shall be the date that the Contracting Officer received the
Contractor’s request.
(2) For decreases in established wage rates or material prices, the decrease in
contract unit price(s) shall be effective on the same date that the government named in
paragraph (a) of this clause decreased the applicable wage rate(s) or material price(s).
The decrease in contract unit price(s) shall apply to all items delivered on and after the
effective date of the government’s rate or price decrease.
(c) No modification changing the contract unit price(s) shall be executed until the
Contracting Officer has verified the applicable change in the rates or prices set by the
government named in paragraph (a) of this clause. The Contractor shall make
available its books and records that support a requested change in contract price.
(d) Failure to agree to any adjustment shall be a dispute under the Disputes clause
of this contract.
(End of clause)

1998 EDITION

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