I’m embarrassed to be such a fundamental question, and I’m sure I could find the answer if I could phrase my query in the right terms, but I’m getting frustrated.
I’m a contractor who has been awarded a FFP FMS replenishment contract and I don’t understand whether the government or I get the benefit of my buying in quantity. For instance: the government orders one widget. I get three quotes for that single widget and the best is $5 each. I then go out and get a quote for 10 widgets, and the price drops to $2 each. I still can only sell one to the government under this order, so I’m going out on risk with the other nine. May I charge the government based upon the $5 price or must my basis be no more than $2? The question arises because, as this is a replenishment contract, the government may well come back and order the other nine of these widgets from me at a later date, and at that point I’ll have sold the government 10 widgets for $50, but for which I paid only $20. My procurement department believes that the government should get the benefit of the price break. Given that we’ve gone out on most of that $20 at our risk, I’m not feeling the love.