Inflation: Causes and Consequences for Federal Contractors

The rate of U.S. inflation has reached levels not seen since the “Great Inflation” period from 1965 to 1982. Spurred by challenges emerging from the pandemic, businesses of all kinds are facing new operational challenges, as the cost of goods, services and employees increases. Unlike many businesses than can easily pass rising costs to customers, federal contractors face strict regulations that make the response to price increases much more complex. This brief examines the current state of inflation, implications for contractors and agency guidance to contracting officers engaging with contractors seeking relief.