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    FAR 52.216-4(c)(4) states, "The aggregate of the increases in any contract unit price made under this clause shall not exceed 10 percent of the original unit price. There is no percentage limitation on the amount of decreases that may be made under this clause." However, since the clause has been deemed inappropriate for this contract effort and an agency approved clause is being pursued instead IAW FAR 16.203-4(c)(2), does the 10% limitation on the aggregate adjustment still apply? Reference? I did not see any text in the FAR, DFARS, AFFARs, MPs/IGs, CDs, or Policy Letters mandating this limitation.


    Answer

    Great question!

    Since there is no percentage limitation on the amount of decrease that may be made under clause FAR 52.216-4(c)(4), I assume your question is one of the following two: First, whether you can go above the 10% limitation. Or second, if you must provide a limitation at all (10% or otherwise) when using an agency approved clause as opposed to FAR 52.216-4. I will answer both below:

    Question #1: Can you go above the 10% limitation set forth in FAR 52.216-4? The short answer is Yes, the clause itself states "The clause may be modified by increasing the 10-percent limit on aggregate increases specified in paragraph (c)(4), upon approval by the chief of the contracting office."

    Question #2: Do you have to provide a limitation at all (10% or otherwise) when using an agency approved clause as opposed to FAR 52.216-4? The short answer is yes, however there's no clear cut answer on what that limitation should be.  The intent of the clause FAR 52.216-4 is the share the risk of future price fluctuations, limiting the risk to both parties. Knowing that a limitation above 10% is allowed (see answer above) I recommend determining an appropriate (fair and reasonable) limitation cap percentage that does not over burden either party.   

     

     

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