In response to industry-wide questions about price adjustments for economic inflation, the Department of Defense (DoD) has released guidance about when and how contracting officers may provide financial relief to contractors working on fixed-price contracts. The guidance generally discourages contracting officers from granting adjustments under the Changes clause due solely to inflation. But it does not completely close the door to adjustments, and it offers modest options for fixed-price contracts that contain an economic price adjustment clause. Moreover, DoD encourages contracting officers to consider inserting economic price adjustment clauses in new solicitations.
This blog post summarizes DoD’s guidance, explains the mechanics of economic price adjustment clauses, and offers views about evaluating other grounds for relief.