On November 16, 2023, the Basic Providers Administration issued a proposed rule updating the Basic Providers Acquisition Regulation (GSAR) Federal Provide Schedule Financial Value Adjustment (EPA) clauses. The rule proposes to take away “sure financial value adjustment necessities inside these clauses to higher align with business requirements and practices.” The rule eliminates the present EPA clauses getting used throughout the GSA and Division of Veterans Affairs Federal Provide Schedules and replaces these clauses with a normal, streamlined clause: 552.238-118, Financial Value Adjustment, Federal Provide Schedule Contracts.
The brand new clause basically adopts the method and classes realized from GSA Acquisition Letter MV-22-02, issued in March 2022, which offered a brief moratorium on the enforcement of sure procedural limits contained within the FSS clauses (e.g., limits on the timing and variety of value changes). GSA Acquisition Letter MV-22-02 offered elevated flexibility in processing EPAs, permitting FSS contractors larger agility in responding to adjustments within the business market. The proposed rule is the subsequent logical step by incorporating this market-driven flexibility into the GSAR.
The proposed rule defines “Financial Value Adjustment (EPA) methodology” as “the agreed upon process by which pricing could also be adjusted all through the contract interval to incorporate, however not restricted to, the mechanism(s) for use to regulate pricing (e.g., changes primarily based on established pricing), the pricing topic to adjustment, and every other necessities (e.g., timing, frequency, limits on will increase).” [Emphasis added.] The proposed clause supplies the framework for the contracting officer and the contractor to barter the mechanism, timing and frequency of will increase, as applicable. It’s a streamlined, versatile method that may be extra aware of adjustments within the business market.
Concerning the mechanisms for adjusting value, the place the FSS contract costs have been negotiated primarily based on business catalog pricing, adjustments within the business catalog value is adequate to regulate the worth. Equally, if the contract supplies an index because the mechanism for figuring out the adjustment, adjustments within the index are adequate to regulate the worth. In spite of everything, in each these instances, the mechanisms are a part of the contract.
Though the proposed rule embraces a versatile, streamlined EPA, its success depends upon implementation throughout the FSS program. Coaching the acquisition workforce should be a part of implementation. Particularly, coaching that addresses pricing context shall be vitally essential. Pricing context depends on correct, related knowledge. Too typically, pricing comparisons are utilizing irrelevant knowledge (e.g. previous, outdated pricing, pricing absent phrases and circumstances). GSA and VA Contracting officers ought to be capable to acknowledge/assess the relevancy and validity of pricing knowledge utilized in figuring out truthful and cheap pricing. Additionally they ought to fairly contemplate pricing documentation suppliers present to the distributors/FSS contractors. Sound coaching and steering are elementary to reaching the proposed rule’s objective of higher aligning the FSS program with the business market.
On this regard, the present Federal Acquisition Service (FAS) Coverage and Process (PAP) 2021-05, Analysis of FSS Program Pricing, undercuts the objectives of the proposed rule. The PAP contains contradictory steering that’s inconsistent with the Federal Acquisition Regulation, and invariably will increase knowledge submission burdens on FSS contractors. A logical first step in enhancing the EPA course of and the modification course of usually can be to reform, revise and reissue the PAP in step with legislation, regulation and the operational objectives of the FSS program.
Lowering regulatory burdens is only one a part of streamlining acquisition. Coaching, steering, and accountability are in the end determinative of success. Coalition members, as stakeholders within the course of, stand prepared to help the company in its efforts to operationalize the rule efficiently.
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