Great News About the Inflation Relief for DoD Contractors

Relief for DoD contractors due to inflation may be on the way. The proposed National Defense Authorization Act (NDAA) for 2023, which is Congress’ annual budget for the Department of Defense (DoD), includes a provision that would grant the DoD more discretion to allow inflation relief for DoD contractors. The NDAA would amend 50 U.S.C. § 1431 to give the DoD more discretion in allowing adjustments to contracts to account for inflation, although this allowance would only be temporary, lasting from when the NDAA is signed by the President until December 31, 2023.

Key Points

1. Amendment to 50 U.S.C. § 1431:
   • The NDAA proposes an amendment to this statute, providing the DoD with temporary authority to make contract adjustments to account for inflation.
   • This authority would be effective from the signing of the NDAA by the President until December 31, 2023.
2. Flexibility for Contract Adjustments:
   • The proposed amendment would allow the DoD to modify eligible contracts if inflation causes the cost of performance to exceed the contract price.
   • This flexibility aims to prevent prime contractors from incurring losses solely due to inflationary increases in costs, while also improving defense contract management practices.
3. Current Regulations (FAR Part 50):
   • Under the current Federal Acquisition Regulation (FAR) Part 50, the application of economic adjustments is quite stringent.
   • The NDAA seeks to ease these stringent conditions temporarily to provide relief to contractors.
4. Discretionary Authority:
   • The NDAA does not mandate the DoD to grant inflation adjustments. Instead, it gives the DoD the authority to do so at its discretion.
   • This means that even if a contractor faces a loss due to inflation, the DoD is not obligated to adjust the contract unless it chooses to do so.

It is important to note that the NDAA does not mandate the DoD to grant adjustments to contracts for inflation. It gives them the authority to do so, but the final decision will be made by the agency. Even with this new provision, the DoD does not have to grant an adjustment even if you are facing a loss on your contract due to inflation.

For Civilian Agency Contractors

For federal contractors doing work with civilian agencies, you may consider economic relief through FAR 52.243 Request for Equitable Adjustment (REA). The REA process allows contractors to request an adjustment to their contract terms based on changed conditions, such as inflation. More details on REA can be found at DFARS 252.243-7002.

Upcoming Events

If you need assistance navigating the government procurement process, consider attending one of the upcoming events organized by government associations. These events provide valuable insights and guidance on managing government contracts, including dealing with inflation and other economic challenges.

For more information and to register for events, visit: GovAssociation Events.

This overview provides a comprehensive understanding of the proposed NDAA’s provisions for inflation relief and the options available for federal contractors.