blue1253

I work for a major defense prime contractor who subcontracted to another major defense prime contractor for deliverable hardware items and other tasks on a CPIF basis. The subcontractor is required to design, development, test and deliver Subsytems A, B, C. The incentive fee is earnable for cost performance, technical performance, and delivery performance. About a year into the contract, due to the subcontractor's poor performance, Subsystem A was terminated for convenience. The efforts for the other subystems continued. Since the termination, the subcontractor has proposed restructuring the contract to allow the earnable cost performance fee to be three distinguishable "buckets" of money (for Subystems A, B, C) when the contract was awarded with the cost performance fee as one "bucket" of money. Worthy of note is the subcontractor was projecting an overrun of its budget for Subsystem A at the time of termination. We're privy to their cost performance through the monthly cost reporting they provide. Any guidance on restructuring of this sort that's advantageous for the Buyer. Have lots of experience with cost reimbursement type contracts, but not with this sort of twist (the termination with restructuring I mean). Any other written guidance that can be suggested is welcomed too.