DOD Clarifies How It Will Address Inflation In Contracts

By Daniel Wilson (June 1, 2022, 5:43 PM EDT) -- The U.S. Department of Defense has issued guidance on how its contracting officers should address the effects of inflation within defense contracts, suggesting price adjustment clauses for new contracts but ruling out adjustments for existing firm fixed-price contracts.

The current economic environment, with "unusually high" inflation, has sparked increased interest from contractors and contracting officers, or COs, alike in using economic price adjustment clauses, or EPAs, to address the impact of inflation, according to a memorandum from the DOD's Defense Pricing and Contracting office, or the DPC.

The consumer price index, a commonly used measure of inflation, hit 8.5% on an...

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