TIP LINE – EDITION 8 – Tariffs, Duties & Cost Strategy
With growing uncertainty around new tariffs, contractors are wondering how to handle potential price shifts and regulatory protections. In this week’s Capital Edge Tip Line, CEO Chad Braley offers practical insights into how federal contractors can prepare, propose, and protect themselves when duties are imposed mid-contract.
Key Updates from This Week’s Tip Line
Understanding FAR and DFARS Clauses Related to Tariffs
What’s happening? While “tariffs” aren’t mentioned directly in key regulations, terms like “duties” are and they matter. Relevant clauses include:
- FAR 25.9
- DFARS 225.9
- FAR 52.229-3 (State and Local Taxes)
- DFARS 252.225-703
What it means for you:
- These clauses provide protection for duties imposed after contract award.
- Certain DFARS provisions outline exceptions and cost recovery paths.
- Legal and consulting guidance may be needed to quantify and structure tariff-related contingencies.
Action item: Review your active contracts and proposal templates to ensure you are accounting for potential duties. Be proactive about exemptions and document cost reasoning clearly
Tariff Cost Planning for New Proposals
What’s happening? With tariff rules evolving, contractors must consider how to price and structure bids, especially those in pre-award stages.
What it means for you:
- Reasonable estimates or contingencies may be allowable if properly quantified.
- Known but pending tariff scenarios may warrant cost modeling and contingency language.
- Supply chain planning is more critical than ever.
Action item: Evaluate where your goods and services are sourced and understand which materials may be affected. Build pricing flexibility into proposals where feasible.
Chad’s Take on the Bigger Picture
Chad doesn’t expect tariffs to be as catastrophic for government contractors as some fear. With the right preparation and contract structure, organizations can protect themselves and minimize exposure.
Claims and REAs (Requests for Equitable Adjustments) are likely to increase, but so is the opportunity to manage risk effectively.
Looking for Expert GovCon Guidance?
Stay Ahead with Capital Edge
Whether you’re managing live contracts or preparing new bids, Capital Edge can help you align your cost strategy with regulatory protections.
Have Questions? Need Help?
Reach out to Capital Edge Consulting to talk through your specific contracting concerns.
Contact us today to discuss your strategy for staying tariff-ready.
Stay informed. Stay compliant. Stay ahead.
