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  • Question

    Does the value of the CPIF CLIN have to be increased to provide the incremental funding? If not, can the incremental funding be added to the contract without increasing the contract value?


    Answer

    The estimated cost in the contract Schedule should be increased in accordance with the Limitation of Cost clause (FAR 52.232-20) or the Limitation of Funds clause (FAR 52.232-22) in your contract.  Otherwise, in accordance with these clauses, the Government is not obligated to reimburse the Contractor for costs incurred in excess of the estimated costs specified in the schedule, and the contractor is not obligated to continue performance under the contract or otherwise incur costs in excess of the estimated cost specified in the contract Schedule.
     
    However, in accordance with the FAR 52.216-10, Incentive Fee, the target cost in the contract Schedule should not be increased unless the contract overrun is the result of an equitable adjustment.  In accordance with this clause, the contractor's final fee will be reduced by the contractor share ratio for every dollar that the total allowable cost exceeds the target cost but cannot be less than the minimum fee specified. 
     

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