What is an economic price adjustment?

Economic price adjustments are of three general types: (1) Adjustments based on established prices. These price adjustments are based on increases or decreases from an agreed-upon level in published or otherwise established prices of specific items or the contract end items.

What are the three types of fixed-price contracts?

There are three main types of fixed-price contracts:

  • Firm fixed-price.
  • Fixed-price incentive fee.
  • Fixed-price with economic price adjustment.

Can you modify a fixed-price contract?

If specifically noted in the contract, some things can be changed even in a firm fixed-price contract, such as: Contract changes. Economic pricing. Defective pricing.

What is EPA clause?

Economic Price Adjustment-Labor and Material (Jan 2017) (a) The Contractor shall notify the Contracting Officer if, at any time during contract performance, the rate of pay for labor (including fringe benefits) or the unit prices for material shown in the Schedule either increase or decrease.

How do you calculate a price adjustment?

The price adjustment equation is as follows: inflation rate = autonomous inflation − inflation sensitivity × output gap. The equation tells us that there are two reasons for rising prices.

What are the two types of contract modifications?

There are two types of contract modifications: unilateral and bilateral.

What are the advantages of fixed-price contracts?

The benefits of fixed-price contracts are that they come with a pricing guarantee. So long as the project doesn’t go beyond the defined scope of tasks and responsibilities, the price won’t change. These contracts typically provide a well-defined process complete with specific phases and deadlines.

What is a fixed-price contract type?

A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.