Report Graduated Fixed Fee: Legal or CPPC with Cap in Contract Award Process Posted February 4, 2014 Why not create a FFP LOE and use this clause: Payment Monthly Payments: The contractor shall be paid based upon level of effort (LOE) expended for all sites, plus travel, training, and surge support costs incurred. The amount of the payment for the monthly LOE expended shall be developed by multiplying the percentage the month's LOE for all sites represents of the total annual LOE for all sites times the firm fixed price. Assuming the total firm fixed price is $5,000,000, the total annual LOE for all sites is 56,640 hours, and the monthly LOE expended for all sites is 4,700 hours, the monthly payment would be $414,901 plus any travel and training costs and surge support. Monthly payment = [(monthly LOE for all sites/ annual LOE for all sites) X firm fixed price] + travel costs+ training costs+ surge support. Monthly payment = [(4,700/56,640) X $5,000,000] + travel costs + training costs+ surge support Monthly payment = (.0083 X $5,000,000) + travel costs + training costs+ surge support Monthly payment = $414,901 + travel costs + training costs+ surge support Total Payments: The contractor shall be paid the entire firm fixed price only if the contractor expends the entire LOE for all sites. If the entire LOE for all sites is not expended, the total of monthly payments to the contractor shall be a percentage of the FFP equal to the total LOE expended for all sites divided by the total LOE for all sites set out in Section B. Assuming the contractor expends 56,000 hours, the total payments to the contractor would be $4,943,502.50 plus any travel and training costs and surge support. Total Payments = [(total LOE expended / total Section B LOE) X firm fixed price] + travel costs + training costs+ surge support Total payments = [(56,000 / 56,640) X $5,000,000] + travel costs + training costs+ surge support Total payments = (.9887 X $5,000,000) + travel costs + training costs+ surge support Total payments = $4,943,502.50 + travel costs + training costs+ surge support Answer: because senior leadership is fixed on CPFF. Yes, we've noted that contract type is up to discretion of KO -- maybe approved by others (PARC, HCA, etc). Regardless -- decision is made -- it will be CPFF. Question is: how best to mitigate and is the schedule legal. That's the question of the original post -- is the schedule arrangement legal? Leadership believes cost plus contract will result in higher numbers of contractor employees in the que, waiting for vetting. They also believe FFP resulted in lower fill because the contract type drove rates down, which impacted (negatively) the fill rate. There are problems with that logic. But in the end -- that's the decision. Only by switching to cost plus, and specifically CPFF is leadership willing to go to the CofS of the Army re: vetting process. Again, thoughts on the schedule approach? Can we do that? Or must the FIXED fee be calculated on the basis of the estimated cost for the TOTAL requirement (100) at the time of award. If we can say that the fee is fixed at the time of award for each grouping in the schedule -- we're OK. Problem is: must fee be based on total, so that we must pay the total fixed fee, and not the total fixed fee for a lower level. (Which is why some are concerned that this is a cost plus percentage of cost arrangement, but with a cap - the cap being the fixed fee for 100).