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!!!!