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  • Question

    What is the appropriate way to handle a cost impact in a situation where the FPI contracts have an overrun split of 0/100?


    Answer

    An FPI contract can not be treated as a "fixed type" contract since it still contains a "flexibly priced" element when the contractor is in an underrun position. If a contractor continually finds themselves in an overrun position and losing their profits due to the 0/100 split, this is more a function of their proposal determinations or their contract performance and not indicative of a necessity to change how the cost impact is treated.

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