While both DOD and GSA have recently issued directives aimed at easing the impact of inflation on contractors, companies do not have a blank check to charge higher prices out of line with actual market reality.  One contractor found that out the hard way in submitting a bid that, even when inflation was factored in, was still over 80% higher than the previous years’ bid. Regal Press bid on a Government Printing Office (GPO) requirement for the Army.  Once a competitor backed out, Regal may have thought that the cost was clear to bid a higher price.  Instead, GPO cancelled the procurement based on its evaluation the price bid was too high to justify continuing the procurement.  Regal protested to GAO, but GAO found in favor of the government.  GAO essentially agreed with the contracting officer’s assessment that Regal’s bid price was “excessive”.  As such, the agency was within its rights to cancel the acquisition, notwithstanding a regulatory requirement that typically requires the government to award a contract after sealed bids are opened.  While industry may (correctly, in our view) believe that GSA moved a bit too slowly in easing the process for evaluating inflation-based price increases, it is important to note that the government retains the right to determine that offered prices are fair and reasonable after all factors have been taken into account.  The bottom line for contractors is to ensure that price increases can be thoroughly documented.  For GSA Schedule contract holders this also usually means being able to show that they have billed and been paid at the higher price on other transactions.  While this means that Schedule pricing may lag behind the market, a late price increase is better than having a contract canceled in its entirety if the government cannot determine that the prices offered were fair.