The Fixed-Price Contracts EPA - Term Paper Example

The fixed-price contracts EPA allow for pre-determined adjustments to contract rates or terms, which are reliable and standardized indices based on e.g. labor and materials. Therefore, by using these indices the profitability and going concern of small businesses is a shield from fluctuating economic conditions. Thus, when there are serious doubts about the economic environment’s stability for prices of labor and materials used by small contracting firms during the period of performance of a contract, it is eminent all pre-defined contingencies subject to fluctuations are measured and determined (Stanberry, 2012).

Therefore, the fixed-price contracts EPA are the most appropriate type of contacts for small businesses not enjoying any economies of scale and having the desire to grow and expand in a hostile environment where the rivalry between firms for the limited market share is intense. Thus, small business owners can take advantage of favorable economic conditions to make supernormal profits when price adjusts upward by negotiating high terms for the ceiling of the contract price and negotiating low base level prices during adverse economic conditions.