516.203-4 Contract clauses.
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(a) Special Order Program Contracts. In multiyear solicitations and contracts, after making the determination required by FAR 16.203-3, use 552.216-71, Economic Price Adjustment—Special Order Program Contracts, or a clause prepared as authorized in paragraph (a)(3) of this subsection.
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(1) If the contract includes one or more options to extend the term of the contract, use the clause with its Alternate I or a clause substantially the same as 552.216-71 with its Alternate I suitably modified.
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(2) In a contract requiring a minimum adjustment before the price adjustment mechanism is effectuated, use the basic clause with Alternate II or with Alternate I and Alternate II.
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(3) If the Producer Price Index is not an appropriate indicator for price adjustment, modify the clause to use an alternate indicator for adjusting prices. Similarly, if other aspects of 552.216-71 are not appropriate, use an alternate clause following established procedures.
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(b) Adjustments based on cost indexes of labor or material.
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(1) If the contracting officer decides to provide for adjustments based on cost indexes of labor or material, prepare a clause that defines each of the following elements:
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(i) The type of labor and/or material subject to adjustment;
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(ii) The labor rates, including any fringe benefits and/or unit prices of materials that may be increased or decreased;
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(iii) The index(es) that will be used to measure changes in price levels and the base period or reference point from which changes will be measured; and
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(iv) The period during which the price(s) will be subject to adjustment.
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(2) The contracting director must approve use of this clause.
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