A Comparative Analysis of the Parameters of Economic Price Adjustment Clauses.
Abstract
Economic Price Adjustment (EPA) clauses are frequently used with multiyear contracts. The basic objective of these clauses is to protect the contractor or the government when changes in the prices of the factors of production are greater than anticipated. If the prices paid for the factors of production increase the contractor does not assume the total cost of this price increase. On the other hand, should prices fall below the level anticipated the government shares in the cost savings. There are many varieties of EPA clauses. They differ in the manner in which certain parameters are used in the formation of the clause. There is no standard clause and there are many differing opinions as to the affects of each parameter within the clause. Certain common parameters were selected for analysis and their impacts on the cost behavior of the EPA clause were examined. The authors conclude that while the impact of the parameters seem obvious with a cursory examination this is not always true. The impact of each parameter should be examined closely in conjunction with all of the other parameters used with the EPA clause considered.
Document Details
- Document Type
- Technical Report
- Publication Date
- Aug 01, 1975
- Accession Number
- ADA016346
Entities
People
- Joseph R. Scarlett
- Kenneth B. Faulhaber
Organizations
- Air Force Institute of Technology