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Showing results for tags 'profit/fee'.
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Hi all, I'm being asked to determine whether or not a proposed profit of 10% is fair and reasonable on a sole source T&M contract we're planning on awarding. We haven't done this type of work before and I don't really have anything to base our decision off. I've read through FAR 15.404-4, The Time-and-Materials Contract: The Time Has Come for A Long, Hard Look, the DoD's weighted guidelines, and GSA's structured profit/fee approach and it doesn't seem like 10% is even close to something that should be fair and reasonable considering the contract type and risk involved, though I understand there's other factors to consider. GSA's GSAM says that only fixed price contract should be towards the high end of the profit range which they max out at 7%. I was also looking at the link below (table starting on page 18) where it appears to recommend a profit of 0% to 1% for a T&M contract. https://www.acq.osd.mil/dpap/cpf/docs/contract_pricing_finance_guide/vol3_ch11.pdf Am I off base in my thinking that 10% doesn't appear to be fair and reasonable at first glance for this type of contract? I was thinking, considering the factors in the GSAM, that a high profit objective for us should be closer to 3% which is leagues away from their proposed 10%. Appreciate any insight anyone can provide, thanks!
Here is a scenario. A contracting activity releases a competitive solicitation for a requirements / firm-fixed price, materials reimbursement type contract. The solicitation also includes a performance incentive in which the winning contractor has the ability to receive a quarterly fixed amount if the contractor meets specific performance goals in that quarter. The contractors proceed to bid on the effort with either no or negative profit/fee. This is based on the intent that they will pass the performance goals and receive the performance incentive. In the follow-on competitive solicitation, the contracting activity decides to remove the performance incentive. Is there a process in place, either policy or regulation, or some instance in which a minimum profit/fee was included in the solicitation to prevent a contractor from bidding either no or negative profit/fee? Is it possible to establish a minimum or is it the contractor's business decision to bid that particular way?