Should escalation be applied from the last year of long term agreement (2017 to 2018) or from the midpoint? In other words, if our long term agreement is valid from 2013 through 2017, would we escalate index from 2017 to determine the 2018 price or from 2015?
Is there a DAU course the covers the topic of escalation application?
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The Government contracting officer needs to discover the rationale for the proposed pricing. Understanding the assumptions behind the proposal is vital and can only be done by asking. Typically, escalation is tied to a logical index that can be used to reasonably predict the growth of prices over time. The rationale for the specific index proposed by the contractor needs to be analyzed for reasonableness. For DAU content on the use of price indexes (escalation), see Lesson 2 of the CON 170 student guide at https://acc.dau.mil/CommunityBrowser.aspx?id=694221