EPA clause since DOD's guidance combining Tolerance Bands and a NTE
Started by 504CPA · Oct 29, 2024 · 2 replies
- 5Original post
504CPA
Oct 29, 2024 · 1y ago
Have you ever seen an EPA clause for a FPIF with an annual tolerance dead band and a Not To Exceed (NTE) % change value?
EPA Payout would be based on the lesser of the NTE OR Actual % outside of the tolerance band.
For example, if an NTE of 15% above the tolerance band (dead band) was established in a year where actual inflation was 21% above the upper limit. EPA payout would be the lesser of NTE or Actual % outside of the range.
- D
Don Mansfield
Oct 29, 2024 · 1y ago
What do you mean by "dead band"? If inflation were less than 15%, then no adjustment?
- V
Vern Edwards
Oct 30, 2024 · 1y ago
Don Mansfield said:
What do you mean by "dead band"? If inflation were less than 15%, then no adjustment?
Since the contract is FPI(F), the OP may be referring to a "flat spot" within +/- a certain range on either side of the target cost. See the DOD/NASA Incentive Contracting Guide (1969) page 2-8.