JTSurfah Posted July 12, 2011 Report Share Posted July 12, 2011 Hello, I'm working on a non-commercial, communications facility O&M source selection. I've seen the reimbursable repair parts CLIN's done in a few different ways, and I'm trying to figure out which way is correct and/or a best practice. Caveat: I'm an intern, and I had nothing to do with the way these previous contracts were designed. Please don't kill the messenger. One of the contracts I'm consolidating has all CLIN's as FFP, but the FFP repair parts CLIN(s) have language like "Repair parts will be reimbursed at cost plus ____%" The soliciation had no percentage listed, and the award has a number filled, so I guess the strategy was to have the vendors compete on fee? The ACQ strategy doc doesn't speak to the issue. This doesn't make a lot of sense to me since we are already paying supply technicians, along with the associated overhead, G&A, and profit under a different CLIN. In my opinion, I see no reason - or justification - for allowing a fee for material purchases on top of the reimbursable cost....but that's the way it's being done currently. Another contract (different office) is basically the same, except that they used a cost type CLIN and the description included the exact same language. Both strategies give the contractor additional fee/profit for....? Not sure. They are already being paid for the labor used to make the purchase. I'm fairly new, so it's very possible I'm missing something. One more note: the contractor is only responsible for the first 2k in costs (per incident). Also, 75% of the initial CLIN value (on both contracts) is de-obligated after award (and at the beginning of each option period) and used to create an OPTAR which the contractor uses to order parts through the supply system. **A suggestion for a better way to do this would really be appreciated also** Anyway, my procurement analyst talked me out of using a cost type CLIN on a predominantly FFP contract. Now I'm considering a FFP CLIN with a Not to Exceed Constraint. Unit of issue = group. No profit/fee allowed. I feel more comfortable calling that CLIN what it is: Cost Reimbursement, but I'm being told that the administrative overhead involved isn't worth the trouble (total contract value between 50 & 100 million). Any thoughts? Link to comment Share on other sites More sharing options...
woops85 Posted July 12, 2011 Report Share Posted July 12, 2011 Years ago I worked on a T&M contract that had a CLIN for repair parts - we used DEC servers and had support agreement that required us to mail parts back and forth for replacement. CLIN started off as FFP for first 3 years of contract. By year 2, client had moved off DEC/VMS as environment and was in a Windows NT based server environment but CLIN remained FFP. First 2 years of the contracts, CLIN was FFP'd at 80K and because of higher cost of DEC parts, company was making about 5K in profit for the year (75K spent, 5K unspent but FFP). Year 3, we still got the 80K in parts funding but only spent about 40K because of ability to compete each parts orders and get better pricing - plus newer equipment meant less breakdowns. Year 4 Govt smartened up and changed CLIN to Cost-Reimbursible. Our costs were consistent with Year 3 and Govt got 40K back Link to comment Share on other sites More sharing options...
JTSurfah Posted July 12, 2011 Author Report Share Posted July 12, 2011 Years ago I worked on a T&M contract that had a CLIN for repair parts - we used DEC servers and had support agreement that required us to mail parts back and forth for replacement. CLIN started off as FFP for first 3 years of contract. By year 2, client had moved off DEC/VMS as environment and was in a Windows NT based server environment but CLIN remained FFP. First 2 years of the contracts, CLIN was FFP'd at 80K and because of higher cost of DEC parts, company was making about 5K in profit for the year (75K spent, 5K unspent but FFP). Year 3, we still got the 80K in parts funding but only spent about 40K because of ability to compete each parts orders and get better pricing - plus newer equipment meant less breakdowns. Year 4 Govt smartened up and changed CLIN to Cost-Reimbursible. Our costs were consistent with Year 3 and Govt got 40K back Interesting. But, if a FFP CLIN is constrained by NTE isn't a "pot of money" effectively set up? In my head, I've always thought that it meant the contractor could invoice up to, but not exceed whatever the CLIN was funded for. I also assumed that the "acceptor" or the "certifier" could reject an invoice for material that is not provided. Is this incorrect? Link to comment Share on other sites More sharing options...
woops85 Posted July 13, 2011 Report Share Posted July 13, 2011 Interesting. But, if a FFP CLIN is constrained by NTE isn't a "pot of money" effectively set up? In my head, I've always thought that it meant the contractor could invoice up to, but not exceed whatever the CLIN was funded for. I also assumed that the "acceptor" or the "certifier" could reject an invoice for material that is not provided. Is this incorrect? Ours was not set up as NTE. Was a FFP per month that totalled the $80K. As I said, Govt got smart and renegotiated CLIN terms Link to comment Share on other sites More sharing options...
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