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DOD Tells GOP Lawmakers Inflation Affects New Contract Negotiations

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Department of Defense Comptroller Mike McCord and three military department secretaries explained their observations on how inflation is affecting DOD programs and contractors in a joint letter to Sen. Jim Inhofe, R-Okla., and Rep. Mike Rogers, R-Ala.

The missive from McCord and the Air Force, Navy and Army leaders was in response to the two Republican lawmakers’ March 17 request for information about projected and observed consequences of the price increase on DOD’s buying power.

They wrote that inflation uncertainty has a direct impact on new contract negotiations and the department is coordinating with acquisition personnel to establish a mutual understanding between government and industry on when to use contract clauses that allow vendors to request economic price adjustments.

“It is essential that decisions about these clauses be made early enough in the negotiation process so that they can inform subcontract negotiations throughout the supply chain,” the letter states.

Inhofe and Rogers said they believe Pentagon officials need to better understand the challenges the defense industrial base faces and urged the department to take a proactive approach to address inflation’s harmful effects.

“At the very least, they should be collecting necessary data, establishing a governance framework and conducting regular touchpoints with all stakeholders,” the two lawmakers added.