I'm a subcontract manager and I was recently moved to manage a supplier that has been on letter contract for nearly a year. During this time, they have been billing monthly their incurred cost but with no fee. Negotiations were finalized before I came onboard (T&Cs, cost, and fee structure) and the contract is ready to definitize.
My supplier expects that they are allowed to bill for fee on their incurred costs to date at the negotiated TARGET FEE and will continue to bill their efforts monthly at the TARGET FEE. If the cost targets are not achieved at the end of the POP,