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Frequently Asked Questions

What are the two types of price adjustments that can be made under an FP-EPA contract?

Fixed Price with Economic Price Adjustment (FP-EPA) contracts are a type of fixed price contract that allows for changes in the price under certain circumstances. These changes can be either positive or negative, and are typically triggered by market fluctuations that are beyond the seller's control. However, any price increases cannot exceed the price ceiling, which must be agreed upon by both parties before work begins. There are two types of price adjustments that can be made under an FP-EPA contract. The first type of adjustment is based on an actual increase or decrease in costs associated with specific labor or materials. This means that if the cost of labor or materials changes, the price of the contract can be adjusted accordingly. The second type of adjustment is based on standard costs or indices that are specifically laid out in the service contract. This means that the price of the contract can be adjusted based on changes in certain standard costs or indices, such as the Consumer Price Index or the Producer Price Index.
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