EPA

An Economic Price Adjustment is a contract clause that provides for upward or downward revision of contract prices based on changes in specified economic indicators such as labor rates, material costs, or established price indices. EPA clauses allocate inflation risk between government and contractor.

EPA provisions are appropriate for multi-year contracts where cost uncertainty makes firm-fixed pricing impractical. Understanding EPA mechanisms helps contractors develop pricing strategies that account for economic fluctuations. EPA adjustments require documentation demonstrating actual cost changes tied to specified indicators.