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We have a large CPFF LOE contract with a base year and four option years. The contract calls out the required LOE per contract year. Does the final LOE calculation need to performed at the end of each contract year, or can it be done at the end of the contract as a whole? As an fyi, we bill fee at a % of monthly cost, knowing the final fee will be adjusted. Regardless of the timing, we will most certainly not meet the required level of effort. Since LOE is not performed at the CLIN level, how do you know what CLIN to return fee to after the final calulation is performed? For example, let's say the LOE calculation determines we owe $5K back in fee over the entire contract. It is not feasible to credit back a certain amount to each CLIN since the calculation was not done at the CLIN level.
Example: CPFF Term/LOE Navy Contract which ended December 2007. Standard Navy LOE clause in contract states; "If the total level of effort specified in paragraph (a) above is not provided by the Contractor during the period of this contract, the Contracting Officer, at its sole discretion, shall either (i) reduce the fee of this contract as follows Fee Reduction = Fee (Required LOE - Expended LOE)/Required LOE or (ii) subject to the provisions of the clause of this contract entitled "LIMITATION OF COST" (FAR 52.232-20) or "LIMITATION OF COST (FACILITIES)" (FAR 52.232-21), as applicable, require the Contractor to continue to perform the work until the total number of man-hours of direct labor specified in paragraph (a) above shall have been expended, at no increase in the fee of this contract. The payment clause has allowed the billing to be % of allowable cost of each invoice. Indirect rates have been audited and now it is time for final invoice. LOE has not been met and a significant refund is due for the variance between % of cost and LOE incurred. Questions? 1) Is it up to the Contractor to automatically refund the fee billed in excess of the LOE calculation at close out or wait until the CO reduces the fee? 2) Is there any recourse penalites on the Contractor for not refunding the fee earlier at contract end when it was known the LOE was not met?
The AF recently published a new guide that I am having trouble understanding. https://cs.eis.af.mil/airforcecontracting/knowledge_center/Documents/Other_Pubs/Other_Guides/cpff_loe_guide.pdf#zoom=100% It seems that the guide is in direct conflict with the FAR 16.306(a) which states that the fee is "fixed at the inception of the contract" however page 5 paragraph (h) of the guide states that the fee can be reduced if the contractor works less hours than the stated LOE. (To be clear, this is not an adjustment based on change in the work to be performed, but an adjustment based on the number of hours actually worked to achieve the LOE). According to the guide, the fee is tied directly to the actual hours incurred and gets proportionally adjusted when the contractor expenses hours which is less than the identified LOE. Additionally, the guide specifies that the Fee is paid based upon hours expended. So my question for the WIFCON community is: If the guide were utilized, how exactly would the fee be considered fixed? ------------------------------------------------------------------------ Note: I have been directed to utilize this contract type for emergency repair services as opposed to T&M. In my situation the LOE is unknown, definite goals as well as how long it will take components to be repaired are unknown, and the end products are also unknown as I cannot predict what component or product will need to be repaired. I had some creative solutions but after reading the guide, I am lost as to how a fixed fee is able to fluctuate. If the guide is accurate, my revised solution would be to set the LOE so high that it would be improbable that the contractor could ever attain it then simply be adjust the fee each period relative to actual hours expensed.
On a CPFF completion type of a contact is there any concern about holding positions to LOE? Do I as the contractor need to keep track of LOE and do I (contractor) need to state that number to USAID (assuming it is not specifically stated in the contract). If I receive approval from USAID and have stated LOE - Are we the contracrot - held to that amount of LOE in the approval given by USAID (even though it isn't a CPFF Term contract) - If we the contractor exceed the LOE, do we need to seek USAID approval and if so, do we get an allowable overage percentage ?