Which EPA Mechanism should you use?

**GSA has updated their EPA Clause as of August 2025 for new offers*

GSA has replaced the two legacy clauses for EPA Mechanisms with a new streamlined approach under GSAR 552.238-120. When applying for a GSA contract you will simply choose from one of the following methods under this new clause:

(1) Adjustments based on fixed escalation rates (e.g, a fixed annual escalation rate).

(2) Adjustments based on a market index or other basis (e.g., U.S. Bureau of Labor Statistics' Employment Cost Index).

(3) Adjustments based on established pricing (e.g., a contractor’s commercial price list, commercial catalog, or other standard market pricing).

(4) Adjustments based on unforeseeable significant changes in market conditions.

The first two methods will lend well to vendors proposing services/labor categories to the Government under their GSA Contract. Vendors will either propose a fixed percentage that aligns with how their rates currently escalate in the marketplace. For many, this is anywhere between 2-4% annually. This method is low maintenance as rates will automatically increase at the contract anniversary date so vendors don’t fall behind. The trick is to make sure your commercial, or non GSA rates also escalate at the same percentage.

Method number two will require vendors to submit a modification request annually according to a market indicator such as the BLS (https://www.bls.gov/news.release/eci.toc.htm) to increase rates based on their given industry.

The third method will fit best with vendors proposing products to the Government. This will usually require a Commercial Pricelist as well as invoices as supporting documentation to raise rates with current market conditions.

The fourth method does not seem to be in the vendor’s benefit as it could only be used in times of crisis- we will update this blog post as we learn more and see how this new clause is functioning for vendors in the coming months.

Please Note: This change will not impact the current EPA method or mechanism on existing contracts until one of the following triggering events occurs.

● Contract requires either an EPA or an add-items modification

●Exercise of an upcoming option

●Submission of a modification to propose a new EPA method/mechanism

If you’d like direct support from a GSA consultant to help with a specific project, reach out to us at info@elevategsa.com.