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FAR_from_perfect

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About FAR_from_perfect

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  1. FAR_from_perfect

    Unreasonable Profit

    Vern, excellent quality advice!!!! Please know that you made a big difference today!
  2. FAR_from_perfect

    Unreasonable Profit

    The task orders issued off this IDIQ contract are basically change orders for the overall project of building a new and improved replacement vehicle (many times over) for the Military. Good point about the diversion from the main cost points by bidding a higher profit. I use this tactic myself in snowball fights...lob the one snowball high and pelt them directly in the face when they are looking up.
  3. FAR_from_perfect

    Unreasonable Profit

    Yes. FFP
  4. FAR_from_perfect

    Unreasonable Profit

    Thanks for the tough love Vern. I think I shot my last salvo across the bow yesterday at trying to get them to settle for 12% profit on all new work. Again, this would be splitting the difference between my position of 10% and their's of 14%. We'll see. I am somewhat confident that I can get them to 13.5% but I'd be really surprised to see them come all the way down to 12%.
  5. FAR_from_perfect

    Unreasonable Profit

    When I say PLEASE....I am saying that in the context of "Give me a Break". I am offended that they actually offered to drop their profit margin by a paltry .25%. I am willing to split the difference with them which is much more reasonable than I should be and they offer ridiculous counter. I just did another WGL on a different task and the profit objective came out to 8%. Claiming that they provide a great service and that they are wonderful does not justify charging a 14% profit margin. I can back up the profit objective with WGL...they just puff out their chests and say, stick it government, pay the 14% or go somewhere else. I am looking for advice because I'm not ready to terminate this contract over their stubborness to come down a couple percent on their profit. 12% is still a very respectable profit margin for anybody....especially in this economy. If I were buying R&D to develop a missile that can shoot down another missile in outer space, then maybe 14% is warranted. Not for buying the product that I'm buying (a automotive vehicle).
  6. FAR_from_perfect

    Unreasonable Profit

    The contract was competed and is valued at over $1B and is an IDIQ contract, not a requirements contract. The in-scope tasks that I need them to accomplish are in the $100K ball park and are mostly derived from Govt directed design changes or other issues that come up during product development. The bulk of the contract (competed aspect) actually has a really low profit margin. But for all new work, they want 14% profit when the reasonable amount should be around 10% (or less). I know they basically cut their original profit to ensure they won the contract but now I have a feeling they are just trying to get right by charging a much higher profit margin on change orders (not really a new concept). As a big picture perspective on this, they will never be able to re-coup the profit they left on the table at contract award, but I need to evaluate each new task on a case by case basis. Each time we argue about profit. I say 10%, they say 14%. After a month of being stubborn, we usually end up settling on 12% (split the difference). I waste too much time and energy on this recurring issue. I tried to get them to agree to an across the board settlement of 12% for profit on all new work. They said they can go from 14% to 13.75%. Please!!!!
  7. I have a major contractor that insists on charging 14% profit on new tasks on an IDIQ contract. He claims that all of the Govt contracts they have with different agencies pay them between 13.5% and 14.5 %. When I do weighted guidelines on his proposals, I keep coming up with a recommended profit margin around 10%. I am having a difficult time (morally) paying this contractor the 14% they are proposing. I know they are trying to get as much as possible and they know that I need them to do the work so they have all the leverage in this. Can anyone provide advice on what I should or can do? I don't want to roll over and pay them what they want but I'm afraid I have no other choice. I do plan to annotate this somehow in their CPARs report. They are a good contractor but they are very stubborn on this issue...understandably so. Please help!!
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