---
kind: "section"
citation: "48 C.F.R. § 516.203-4"
title: "48"
number: "516.203-4"
heading: "Contract clauses."
url: "https://uscodex.org/cfr/48/516.203-4"
---

# §516.203-4. Contract clauses.

- (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)](#a-3) of this subsection.
  - (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.
  - (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.
  - (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.
- (b) **Adjustments based on cost indexes of labor or material.**
  - (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:
    - (i) The type of labor and/or material subject to adjustment;
    - (ii) The labor rates, including any fringe benefits and/or unit prices of materials that may be increased or decreased;
    - (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
    - (iv) The period during which the price(s) will be subject to adjustment.
  - (2) The contracting director must approve use of this clause.

## Notes

### Amendments

[75 FR 41095, July 15, 2010]

### Authority

Authority: 40 U.S.C. 121(c).

### Source

Source: 64 FR 37218, July 9, 1999, unless otherwise noted.

### Amendments

[75 FR 41095, July 15, 2010]