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  1. Good afternoon, I have a question regarding a seeming FAR discrepancy that I've been unable to resolve. Under a cost-reimbursement contract which contains a limitation-of-funds clause, can the CO affect a change through a contract modification which he/she knows will result in an increase in funds, without increasing the contract ceiling at the time of the modification? The exact scenario is thus: Cost-reimbursement, completion type, non-severable contract. The CO will need to make a SOW revision, which the contractor has indicated may result in additional funds. However, currently the contract has not been billed against and there is in essence 100% of the funds remaining under the contract. The CO indicates that the issue of increasing the contract ceiling can be addressed when the limitation of cost ceiling is being reached (75%) and additional funds may be added at that time, to allow for any cost savings between now and then. FAR 43.105 suggests given the inclusion of the limitation of cost clause, a CO may execute a modification that will cause an increase in funds without immediately increasing the ceiling or requiring funds availability certification: a) The contracting officer shall not execute a contract modification that causes or will cause an increase in funds without having first obtained a certification of fund availability, except for modifications to contracts that -- (1) Are conditioned on availability of funds (see 32.703-2); or (2) Contain a limitation of cost or funds clause (see 32.704). Furthermore FAR 32.704(b) states that "Under a cost-reimbursement contract, the contracting officer may issue a change order, a direction to replace or repair defective items or work, or a termination notice without immediately increasing the funds available." Which again suggests that the presence of the limitation of cost clause gives the government the ability to modify the contract without increasing funds at the time of the modification. However, the next sentence in that FAR section goes on to state, "Since a contractor is not obligated to incur costs in excess of the estimated cost in the contract, the contracting officer shall ensure availability of funds for directed actions." Again, the changes clause 52.243-2, paragraph e., states, "e) Notwithstanding the terms and conditions of paragraphs (a) and (b) above, the estimated cost of this contract and, if this contract is incrementally funded, the funds allotted for the performance of this contract, shall not be increased or considered to be increased except by specific written modification of the contract indicating the new contract estimated cost and, if this contract is incrementally funded, the new amount allotted to the contract. Until this modification is made, the Contractor shall not be obligated to continue performance or incur costs beyond the point established in the Limitation of Cost or Limitation of Funds clause of this contract." This seems to provide support for the ability to not address an increase in funds until a later date. However, paragraph b., under the same clause states, "If any such change causes an increase or decrease in the estimated cost of, or the time required for, performance of any part of the work under this contract, whether or not changed by the order, or otherwise affects any other terms and conditions of this contract, the Contracting Officer shall make an equitable adjustment...". So does the fact that limitation of cost clause gives the contractor the right to halt work when the limitation of cost limit is reached and the Government the right to not fund the contract above its existing ceiling, allow the CO to increase contract ceilings at a later date than the mod itself? Can the equitable adjustment be negotiated once the contractor approaches and gives the government notice per the limitation of cost clause?
  2. Joel, It's interesting you say that. I never considered cost realism as a tool for other than a fair and reasonable price determination. Per the FAR, "Use techniques such as, but not limited to, price analysis, cost analysis, and/or cost realism analysis to establish a fair and reasonable price". I also consider cost realism, a form of cost analysis.
  3. For my own understanding, are we discussing subcontractor awards or prime awards? It is my understanding that when awarding a CPFF prime contract, even given adequate price competition, cost realism must be performed, and as such cost or pricing data must be obtained, so price analysis alone will not suffice. Therefore, in the presence of adequate price competition, other than cost or price data shall be submitted, at a minimum, when awarding a CPFF contract, is that correct? FAR 15.404-3(b)1, states that "a prime contractor shall conduct appropriate cost or price analysis to establish the reasonableness of proposed subcontractor prices". Question: Is the prime contractor's determination of a fair and reasonable price for its CPFF subcontractor, held to the same cost or price determination standards as the Government for a CPFF? For example, if the prime is contemplating a CPFF subcontract award over the threshold, but where adequate price competition is present, shall the government require the contractor to perform cost realism analysis, given the subcontract type? FAR 15.404-3(c) states, "Any contractor or subcontractor that is required to submit certified cost or pricing data also shall obtain and analyze certified cost or pricing data before awarding any subcontract, purchase order, or modification expected to exceed the certified cost or pricing data threshold, unless an exception in 15.403-1(b) applies to that action." Will adequate price competition suffice in the case of a CPFF subcontract award?
  4. Thank you kindly for your help Don. Just so I'm clear, does the CO ever need to independently analyze a subcontractor's proposal (cost/cost realism/price analysis)? FAR part 15.404-3 states, "The contracting officer is responsible for the determination of a fair and reasonable price for the prime contract, including subcontracting costs." Should this be read as the CO shall determine if only the prime contract's price (to include subcontract costs) is fair and reasonable or that the CO shall determine that both the prime contract's and subcontract's prices are fair and reasonable? FAR 15.404-3(b)1 goes on to say that the "prime or subcontractor shall conduct appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices", seeming to put the burden of the subcontract price reasonableness determination on prime contractors. If that is the case, pre-award cost realism and or cost analysis of prime contract offerors need not include a CO's cost/price analysis of contemplated subcontract awards, is that correct? Instead a CO may rely on the prime contractor's certification that it has performed cost/price analysis of subcontracts or has negotiated subcontract prices per FAR 15.404-3.
  5. Yes, the subcontract is subject to consent requirements. Yes, its about consent. Does the CO's consent involve a CO's independent determination of a fair and reasonable price for the subcontract or can he/she rely on the prime's certification? I was wondering if a cost realism analysis, in line with FAR part 15 was required of a CPFF subcontract, even if there is adequate competition and price analysis indicates that prices are fair and reasonable. Don, this is not part of a contract modification. It is for a subcontract consent decision, within the ceiling of the contract. From my reading of FAR part 15, subcontract pricing, the review and analysis of subcontracts is specifically required when pricing a prime contract award or modification. I'm trying to ascertain if a subcontract needs to be subjected to price/cost analysis after contract award and not for a contract modification. It appears from both FAR part 15 and FAR part 44 that the onus is on the prime contractor to make a determination of fair and reasonable prices for a subcontractor.
  6. During performance of an R&D contract (roughly 2 years after award), does the CO need to perform price/cost analysis for a proposed subcontract award when providing consent? Scenario: CPFF prime contract for R&D Services (non-commercial, competitive acquisition) Subcontract award also CPFF from a competitive RFP (above the SAT). 3 proposals were received and prime made its selection Prime provides advance notification to CO for the anticipated subcontract award, including prospective subcontractor cost/price information such as budget and the non-winning proposal cost information Prime provides a negotiation memo and states the technical reasons for the selection, the fact that the prices have been determined to be fair and reasonable and the offeror's past performance. Does the CO need to independently review the cost/price information and perform a price analysis and cost realism analysis? Intuitively, this seems imperative to ensure that services are acquired at a fair and reasonable price. However, FAR part 44.202, does not state that at a minimum the CO shall determine that prices are fair and reasonable, under its considerations. Instead item 8. states, "(8) Has the contractor performed adequate cost or price analysis or price comparisons and obtained certified cost or pricing data and data other than certified cost or pricing data?" To make matters more convoluted (at least to me) FAR 44.203 states, "(a) The contracting officer’s consent to a subcontract or approval of the contractor’s purchasing system does not constitute a determination of the acceptability of the subcontract terms or price..." Is the subcontractor's determination sufficient for this analysis? FAR part 15 states that "The contracting officer is responsible for the determination of a fair and reasonable price for the prime contract, including subcontracting costs." Then again a paragraph further down it states, that "The prime contractor or subcontractor shall -- (1) Conduct appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices". Is the onus on the prime contractor to determine fair and reasonable prices for its intended subcontract, if at a minimum the CO's determination is not required, under considerations, and further that a CO's consent is not an indication of acceptable subcontract prices? Can a CO's evaluation of the prices submitted in response to a competitive requirement be sufficient, for a CPFF subcontract?
  7. Hello everyone and thank your for your replies. Just to clear the air, the core of my question boiled down to this: The FAR allows a CO to issue a unilateral mod under the authority of the changes clause and as a change order, in the designated areas referenced in the applicable clause. Yet, the FAR states that in the event of a resulting equitable adjustment the mod should be issued as a bilateral supplemental agreement. Is it at that point still considered a change order under the changes clause, if the equitable adjustment is negotiated and the mod is issued bilaterally? Or is it then a supplemental agreement for work within scope issued under "mutual agreement of the parties"? Posters above seem to suggest that in fact you could have a bilateral change order (change order with an equitable adjustment). To me then, in a cost reimbursement world close to all change orders will be subject to negotiation and therefore doesn't grant me the freedom to issue the order unilaterally. Unless of course, I issue the change order unilaterally under the changes clause to notify and then separately negotiate an equitable adjustment and execute a supplemental agreement.
  8. Hello everyone, The program office is contemplating the addition of in-scope work to a non-severable R&D contract for services (cost-reimbursement). According to my understanding, the changes clause, under a cost-reimbursement contract can be used for unilateral changes, in designated areas, for work within scope. I have several questions: per FAR Part 52.243-2, Alternate I, " (a) The Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following: (1) Description of services to be performed." Would the addition of in-scope work to a contract, constitute changes to the description of services to be performed? To me the addition of work is not a change to the description, but an introduction of additional, new work and as such not covered by the authority of the changes clause. I therefore believe that this should not be issued as a unilateral mod under the changes clause. Could this mod still be issued under the authority of the changes clause, but be bi-lateral? Since the addition of new work will result in an equitable adjustment to the contract, could the mod be issued as a bi-lateral modification pursuant to 52.243-2, Alternate I? I'm a bit confused because per FAR 43.201(a), a change order is a unilateral change. Therefor a bilateral change order with an equitable adjustment is no longer a change order and rather a bilateral mod issued as a "supplemental agreement to work within scope" on the SF-30, is that correct? I have a hard time reconciling the perceived discrepancy in my mind between the FAR stating that a change order is by definition a unilateral mod and also that a change order can involve an equitable adjustment, which would need to be negotiated and is therefore bilateral. How would a bilateral change order (if even appropriate) with an equitable adjustment be addressed on the SF-30? Thanks in advance.
  9. This is a contract generated as part of a BAA and is not an SBIR.
  10. Good afternoon everyone, Does the government have unlimited data rights to technical data, submitted as a technical progress report, which is generated under an R&D contract? Based on my reading and understanding of FAR part 27.404-1, data first produced in the performance of a contract, which is the case for the technical progress reports, is unlimited rights data. If that is the case, could technical progress reports be disclosed outside of the government, for example to NGO's with similarly awarded contracts? My issue is that although the data is first produced in the performance of the contract the data also embody a trade secret or are commercial or financial and confidential or privileged (in the case of technical progress reports). Furthermore, FAR Part 35.001-Data, states that part 27 does not "require" the delivery of technical data. So is FAR part 27 relevant to the treatment of technical data as is generated under R&D contracts? FAR part 27.401 states the term "Data" also includes "technical data". Thanks for your assistance.
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