Understanding GSA’s New EPA Mechanisms

The General Services Administration’s (GSA’s) new Economic Price Adjustment (EPA) framework has now moved from implementation to business as usual. With the transition to General Services Administration Acquisition Regulation (GSAR) 552.238-120 largely behind contractors, contractors should focus on understanding what the new framework means for existing contracts, future modifications, and pricing adjustments. 

Why the Change? 

Historically, GSA Schedule contractors operated under two primary EPA clauses, 552.216-70 and I-FSS-969. These clauses established different procedures and placed limits on when, how frequently, and by how much prices could be adjusted. Those restrictions became increasingly difficult to manage during the market volatility, supply chain disruptions, and inflation that followed the COVID-19 pandemic. 

GSA temporarily relaxed many of those restrictions in 2022 through Acquisition Letter MV-22-02. The subsequent rulemaking resulted in GSAR 552.238-120, which consolidated the legacy clauses into a single framework and removed many of the former frequency and percentage limitations. Importantly, the new clause did not eliminate the available EPA mechanisms. Instead, contractors must now identify and incorporate the applicable method and mechanism into their contracts.  

What Contractors Should Know Now 

• Your EPA method matters more than the old clause number. Under the new framework, the EPA method establishes how and when a price adjustment will occur, including timing, frequency, and any applicable limitations. The mechanism establishes the basis for the adjustment, such as a fixed escalation rate, market index, or established pricing. Contractors should review their contracts and confirm exactly which method and mechanism apply. 

• Existing contractors do not automatically switch methods overnight. For current MAS contractors, the existing EPA mechanism remains in effect until a triggering event occurs. These events can include an EPA modification request, an addition modification such as adding a product, labor category, or Special Item Number (SIN), exercising an option, or proposing a new EPA method or mechanism. Before submitting a future modification or exercising an option, determine whether a Revise Terms and Conditions modification is required to implement the new EPA method and mechanism. 

• Be prepared to support your pricing. Depending on the mechanism, GSA may request supporting data. Established pricing must be dated, existing, standalone, and not prepared solely for the government. Fixed-rate and Commercial Price List mechanisms do not require a separate fair-and-reasonable pricing determination for EPA modifications. 

Final Thoughts 

The new EPA framework gives contractors greater flexibility, but it also makes it important to understand the method and mechanism governing each contract. Reviewing those terms now can help prevent complications when pricing or contract changes become necessary. Global Services is available to answer questions and help contractors navigate these new requirements.