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    Where can I find the regulation to support the percentage of change to performance? All I can find is the -then current performance envelope- which does not define the percentage. Regulations/FMR, states the -then current performance envelope-. Would the percentage be tied to the KPP's and the trade space thresholds? If the demonstrated performance (tested/fielded) is X, and the change to performance is 5% above X and does not require DT/OT, then it is within the current performance envelope? My conclusion is based upon the following: 1. DoD 7000.14-R Volume 2A Chapter 1 Definition of Performance Envelop: The demonstrated capability of a system, system components, and special purpose software to perform its mission in relation to essential characteristics such as: speed, range, payload, altitude, rate of fire, etc. 2. 2BDoD 7000.14-R Financial Management Regulation Volume 2A, Chapter 1 -the determination that the improvement is -within the current performance envelope- and that -no development testing (DT) or operational test and evaluation (OTE) by an independent operational test and evaluation agency is required- should be determined after formal coordination with the Director, Operational Test and Evaluation.-


    In your question, you are referencing the correct FMR paragraphs in your determination of funding.  However, the FMR does not state a specific amount or percentage of increase in the 'performance envelope' of a system, when determining funding for a product improvement.  In my 26 years in acquisition experience, working with ACAT ID programs and many others, I've never heard of a 25% benchmark (or any other amount) for improving the Performance Envelope as a criteria for funding.
    The term performance envelope includes multiple system parameters, including Key Performance Parameters (KPPs).
    Per Wikipedia:  In aerodynamics, the flight envelope, service envelope, or "performance envelope" of an aircraft refers to the capabilities of a design in terms of airspeed and load factor or altitude.[1][2] The term is somewhat loosely applied, and can also refer to other measurements such as maneuverability. When a plane is pushed, for instance by diving it at high speeds, it is said to be flown "outside the envelope", something considered rather dangerous.
    Per another DAU "ask a professor" response:
    The performance envelope of a system refers to its expected capabilities in the operational environment.  The design envelope of a system refers to its specified requirements that, if satisfied, would enable the system to perform as intended in the operational environment. Basically, the design envelope should exceed the performance envelope to allow for sufficient margins as necessary; however, it must, at least, equal the performance envelope.  I know of no standard relative to these. 
    Therefore, the determination of the change in performance envelope, and also the determination of the need for DT/OT&E testing is a subjective determination, not an objective/measureable decision.  The FMR uses terms like "significantly changes" or "major upgrades" as subjective descriptions of a product improvement, and not a specific percentage increase. 
    The determination of whether the product improvement increases the performance envelope and/or requires DT/OT&E testing is a system engineering and DOT&E determination, based on the extent of the upgrade to the system.
    When determining how to fund a product improvement, it is important to look at the intent of the upgrade.  What is specifically made to increase the system's performance, or was it made to address obsolescence or maintainability issues?  Funding determinations should address the purpose of the product improvement, when building the budget.
    Recommend that any funding decisions be discussed with your comptroller, in conjunction with a technical evaluation of any performance changes or testing requirements.
    FMR, Vol 2A, #010201, D.3.c., states technology refreshment that “significantly changes” the performance envelope of the end item is considered a modification and, therefore, an investment.
    FMR, Vol 2A, #010212, B.3.  states RDT&E funds should be used to develop “major upgrades” increasing the performance envelope of existing systems, purchase test articles, and conduct DT and/or IOT&E prior to system acceptance.
    FMR, Vol 2A, #010213, covers RDT&E Definitions and Criteria.  Paragraph C.7 provides the policy for funding product improvements.  There is no percentage specified for the increase in the performance envelope.
    Paragraph (4) also states “the determination that the improvement is within the current performance envelope and that no DT or OT&E by an independent OT&E agency is required should be determined after formal coordination with the Director, Operational Test and Evaluation.

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