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FAR and DFARS › FAR Part 14: Sealed Bidding › Subpart 14.4

FAR 14.408-4 Economic price adjustment.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section explains how contracting officers handle economic price adjustments in sealed bidding. It covers situations where a bidder proposes an adjustment and where the government includes one in the solicitation. The rules ensure fair evaluation and responsiveness of bids.

Applies to: Contractors bidding on sealed solicitations that involve economic price adjustments.

What it requires

  • If a bidder proposes an economic price adjustment with a ceiling and the bid is eligible for award, the contracting officer must request the bidder to agree to an approved clause with the same ceiling.
  • Bids with economic price adjustments and no ceiling must be rejected unless a clear basis for evaluation exists.
  • If a bidder increases the maximum percentage of economic price adjustment or limits downward adjustments, the bid must be rejected as nonresponsive.
  • If a bid indicates deletion of the economic price adjustment clause, the bid must be rejected as nonresponsive.

Key terms: economic price adjustment · ceiling · solicitation · bid · nonresponsive

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) Bidder proposes economic price adjustment. (1) When a solicitation does not contain an economic price adjustment clause but a bidder proposes one with a ceiling that the price will not exceed, the bid shall be evaluated on the basis of the maximum possible economic price adjustment of the quoted base price.

(2) If the bid is eligible for award, the contracting officer shall request the bidder to agree to the inclusion in the award of an approved economic price adjustment clause (see 16.203) that is subject to the same ceiling. If the bidder will not agree to an approved clause, the award may be made on the basis of the bid as originally submitted.

(3) Bids that contain economic price adjustments with no ceiling shall be rejected unless a clear basis for evaluation exists.

(b) Government proposes economic price adjustment. (1) When an invitation contains an economic price adjustment clause and no bidder takes exception to the provisions, bids shall be evaluated on the basis of the quoted prices without the allowable economic price adjustment being added.

(2) When a bidder increases the maximum percentage of economic price adjustment stipulated in the invitation or limits the downward economic price adjustment provisions of the invitation, the bid shall be rejected as nonresponsive.

(3) When a bid indicates deletion of the economic price adjustment clause, the bid shall be rejected as nonresponsive since the downward economic price adjustment provisions are thereby limited.

(4) When a bidder decreases the maximum percentage of economic price adjustment stipulated in the invitation, the bid shall be evaluated at the base price on an equal basis with bids that do not reduce the stipulated ceiling. However, after evaluation, if the bidder offering the lower ceiling is in a position to receive the award, the award shall reflect the lower ceiling.

Sections it refers to

  • 16.203 Fixed-price contracts with economic price adjustment.

Sections that refer to it

← 14.408-3 Prompt payment discounts. · 14.408-5 [Reserved] →

Rule changes for FAR Part 14

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 14.408-4 Economic price adjustment · SpendQuery