RGCI - Inflation & GSA Contracts—Balancing Risk with New GSA Guidelines

As inflation continues to rise, you are likely wondering what the General Services Administration (GSA) guidance to contractors will impact you. The issue of inflation has many companies looking for answers, and although GSA has taken steps to address inflation, there is still a lot to be discussed. In this article, we will look at what types of relief and guidance GSA is providing.

New GSA Guidance

On September 12th 2022 GSA issued a new memorandum on the “Guidance on Inflation in GSA Contracts,” this alert issued way the contract community will need to address the impact that inflation is having on the GSA contracts.

Advice provided by GSA is divided into three types of actions:

  • EPA clauses and how you can use the clause,
  • Influencing the streamline GSA BPA procurement vehicles to reduce the procurement lead times, and
  • Awarding shorter duration contracts.

EPA Clauses

GSA has detailed the process of the EPA clause and provided sample language for the contractor. The EPA clause should be monitored through the life of the contract and if the cost or market conditions are hurting the contract, the contracting officer should make appropriate adjustments in order to reduce impact and minimize risk of expense instability. By providing closer monitoring, price revisions can be undertaken, except in fixed-price contracts (unless there are government-caused issues which result in inflated costs).

Streamlining the Acquisition Process

For streamlining acquisitions, GSA touted the importance of speed in acquisition and noted that existing GSA purchasing program vehicles make it easier than ever to streamline procurement actions. In doing so, GSA highlighted:

  • GSA Multiple Award Schedule (to reduce time of the award process),
  • OASIS Small Business and OASIS 8(a), (services-focused contracts),
  • 8(a) STARS, VETS 2 and Polaris (technology focused GWACs).

To maximize time savings, contracting officers are encouraged not to apply FAR Part 15 procedures to buys against these vehicles, nor to impose unnecessarily complicated evaluation considerations. Instead, contracting officers should use oral presentations to address contractor capabilities.

Shorter Contracts

Typically, GSA contracts are awarded for relatively long periods of time, but in uncertain economic times, longer contracts can come with the risk (to the contractor) of increasing prices. For shorter contract duration, contracting officers are encouraged to consider reducing the total period of performance “to help contractors more reasonably predict costs” and minimize the amount of risk.

GSA Minimizing Inflation Impacts

As we have previously reported, this guidance supplements prior GSA efforts to minimize the impact of inflation. In March, GSA temporarily suspended the enforcement of many limitations contained in several EPA contract clauses. This suspension allowed contractors to increase their GSA schedule prices more frequently than otherwise permitted. However, it is essential to analyze the risks and benefits before making significant modifications to your contracts. For additional support, reach out to the GSA Acquisition Policy Division. In addition, the Redstone GCI team can provide streamlined language and samples, review your existing procedures, and connect you with the GSA Acquisition Policy Division at GSARPolicy@gsa.gov who can connect you with your Acquisition Innovation Advocate this will increase the speed of the acquisition.

Written by John David Baugher

John David Baugher Senior Managing Consultant JD is a senior managing consultant with Redstone Government Consulting. In his role, he routinely assists clients with matters of contract interpretation, management, and pricing. Professional Experience For almost 40-years, JD has supported a wide-range of government contractors providing services and products to the Federal Government. JD’s tenure in industry included the support of large electronics manufacturers and service providers to NASA, DOD and other agencies. His practical experience with contract law, interpretation of regulations and understanding of small business programs such as mentor-protégé, socio-economic designations and size standards, as well as GSA Schedule administration and maintenance provides a diverse range of knowledge for our clients to draw on. JD has supported both the contracts and procurement areas during his time in industry including the development of contracts and procurement teams as part of growing government contractors where he was responsible for developing policies, practices and training to ensure compliance with federal contracts. He has supported contracts in environments subject to Contractor Purchasing System Reviews, ISO, and other professional certifications. Additionally, JD has supported pricing throughout his career and is a rare contracts professional with a deep understanding of pricing, indirect rates, development of escalation factors, as well as proposal management and compliance reviews. In his role in industry, he was frequently called upon to develop subcontract agreements, OCI mitigation plans, small business subcontracting plans, model contracts and other requirements in support of RFP pursuits. JD has worked contracts all over the U.S., as well as working contracts and subcontracts based in the Middle East, and Europe. His diverse range of experience provides our clients with an excellent resource for not only day-to-day matters of contract management, but also in-depth knowledge of pricing large proposals across government agencies. He has experience with working for 8(a), SDVOSB, and tribally owned companies supporting a wide-range of U.S. Government programs.

About Redstone GCI

Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals.

Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs.

One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle.

Topics: Contracts & Subcontracts Administration