The DoD EVM application thresholds are now in then-year dollars rather than base-year dollars. Whats the difference and why was this change made?
A. Then-year dollars are current dollars that reflect the impact of inflation over time, such as the dollars in your wallet. Base-year dollars are constant dollars that reflect the cost of the program as if inflation had not occurred (the cost to acquire a multi-year system if you paid for it in advance in one specific year). The EVM application thresholds were changed from base-year dollars to then-year dollars because then-year dollars represent a more accurate measure of the value of contracts. Contracts are awarded in then-year dollars, which represent what the government has to pay. Base-year dollars are used primarily for cost estimating purposes and are not good indicators of current contract value. The threshold dollar values will be reassessed periodically and revised as necessary to keep pace with future inflation.
Related Questions
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