Not to Exceed(NTE)
A ceiling or cap on the amount the government will pay under a contract, task order, or individual order.
Overview
Not to Exceed (NTE) refers to a maximum value limit placed on a contract, order, or line item. The contractor cannot bill above the NTE amount without a contract modification. NTE ceilings protect the government from cost overruns and help both parties manage budget expectations.
Why It Matters in GovCon
NTE values appear in task orders, delivery orders, time-and-materials contracts, and labor-hour arrangements. Exceeding the NTE without proper modification can lead to unallowable costs and audit issues. Contractors must track burn rate against NTE and request modifications before reaching the ceiling.
Key Details
- Common in T&M and LH: Time-and-materials and labor-hour contracts nearly always have an NTE.
- Order-Level: Individual task orders may have their own NTE separate from the base contract ceiling.
- Modification Required: To exceed NTE, the government must issue a modification increasing the ceiling.
- Funding: NTE is typically tied to obligated funds; exceeding NTE may violate the Anti-Deficiency Act.
Related Terms
- Time and Materials (T&M)
- Labor Hour (LH)
- Ceiling Price
- Contract Modification
More Contracts Terms
A simplified method of filling anticipated repetitive needs for supplies or services by establishing charge accounts with qualified vendors.
A numbered item in a contract that identifies a specific deliverable, service, or unit of work along with its quantity and price.
A contract type where the government reimburses the contractor for allowable costs plus a predetermined fixed fee representing profit.
An order placed against an existing contract for the delivery of supplies or materials.
A contract type where the price is set at award and does not change regardless of the contractor's actual costs, placing maximum risk on the contractor.
Long-term government-wide contracts with commercial firms that provide federal agencies access to products and services at pre-negotiated prices.
Ready to Win More Contracts?
Use GovCon Data to find opportunities matched to your business and generate winning proposals with AI.