Did the government just negotiate itself out of access to key products and services through GSA policy?

In the past year, a collision between rising tariffs and rigid federal pricing policy has put immense pressure on GSA contractors. The Trump administration’s renewed tariff push—hiking duties on many Chinese imports to as high as 145%—has created a significant cost burden for suppliers. But while costs have surged, the General Services Administration (GSA) has only gradually loosened the reins on how and when vendors can raise prices on Schedule contracts.

The result? A growing list of unintended consequences for the federal supply chain.

A Year of Price Shock and Policy Flex

In response to supplier outcry, GSA extended its temporary moratorium on Economic Price Adjustment (EPA) restrictions through September 30, 2025. This move lifted prior limits, including:

• Capping annual price increases (historically at ~10%),
• Limiting adjustments to three per year,
• Forbidding increases in the first 12 months or final 60 days of a contract.

Under the moratorium, suppliers may now submit frequent increases—even above 10%—without escalation, provided they show market justification.

This shift has helped many vendors implement gradual 5–10% increases every few weeks to keep up with tariffs and input costs. But even with these improvements, navigating the system is far from frictionless.

Unintended Consequences for the Supply Chain

Despite the flexibility, suppliers—especially small and mid-sized businesses—are still struggling. Many contracting officers interpret the moratorium differently, leading to inconsistent approval timelines and documentation demands. While some requests move quickly, others stall for weeks or months.

And while costs have jumped 40–100% for some goods, delayed approvals or partial adjustments mean some contractors are still selling at a loss.

This has led to a cascade of second-order effects:

• Product removals from GSA contracts to avoid unprofitable sales.
• Contract withdrawals, particularly among smaller firms who lack the margin to float delayed increases.
• Reduced competition and product availability across categories—limiting federal buyers' choices just as demand rebounds post-pandemic.

The impact reaches beyond the suppliers. Federal agencies are feeling the squeeze, reporting delayed deliveries and shortages in critical categories due to vanishing GSA options. In effect, the federal government is inadvertently undermining its own procurement system by capping prices while simultaneously raising costs through tariffs!

What Suppliers Are Asking For

Most suppliers aren’t asking for a blank check. They’re asking for a clear, timely, and scalable path to price relief. That means:

• Finalizing a permanent, flexible EPA policy,
• Setting reasonable review deadlines (e.g., 30 days),
• Recognizing extraordinary cases—like government-imposed tariffs—as triggers for expedited adjustment.

Until then, the current structure continues to ask suppliers to bear the brunt of a policy mismatch—forced to absorb price hikes from one hand of government while the other limits their ability to respond.

Bottom line: Without swift, permanent reform, we risk driving vendors out of federal contracting—and eroding the competitive supply base the government depends on.