I've been assigned to my first CPFF subcontract and need some advice. My company is first tier sub to the prime. We have been told the government is questioning one of our cost estimates. Let's say we submitted a cost estimate for $130,000 plus $7,000 fee. We performed the SOW, the period of performance has expired. However, we didn't use as many labor hours as we proposed/anticipated, and our actuals were only about 15% of the total cost estimate. IAW the subcontract, we billed the fee at monthly fixed amounts over the course of the period of performance. So, we received the entire fixed fee amount. Now, there has been talk that the government wants to get some of the fee back since we were significantly under our cost estimate. I referenced FAR 16.306, which states ?The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract.? My colleagues and I have two perspectives on what our position should be: 1) the work has been performed, and the government can?t request for us to give part of the fee. Our Client may ask us to provide justification as to why the costs came in less; however our Client can?t remove or ask for fee back. They can ask for the cost funding back but not the fee funding; and 2) due to the significant disparity between what we proposed and what was performed, our Client could have the right to request a refund of a certain amount of the fee. My goal is to provide the appropriate advice to my team on what our position should be if this request becomes "official." Thanks for any insight.