Jump to content

Fixed Price CLINs


Dormer30

Recommended Posts

I am fairly new to the fixed price world and I have a conundrum. I have a requirement for IT services being done via GSA. The CLIN structure is 47 CLINs for the different tasks required with an estimate as to how many will be done in each year of the contract (1 base plus 2 options). The estimates are the same for each year. It will be funded on a bottom line basis and not per CLIN. My questions - What if we do not meet the estimates (which we are sure not to). If the actual numbers are smaller what do I do with the remaining money? Isn't it already promised to the contractor since this is fixed price? On the other hand, what if the estimates prove to be less than what is actually required - can I add money? That seems like incremental funding which is generally not allowed on a fixed price contract. I apologize if this is a rudimentary question, but like I said I am new to fixed price contracts and would appreciate any advice. Thanks.

Link to comment
Share on other sites

Guest Vern Edwards

Would it be correct to say that each CLIN describes a type of task, that the unit of pricing is an hour, and that each CLIN stipulates one or more labor categories and an estimated number of hours? And are the offerors/quoters supposed to propose one or more hourly labor rates?

Link to comment
Share on other sites

Would it be correct to say that each CLIN describes a type of task, that the unit of pricing is an hour, and that each CLIN stipulates one or more labor categories and an estimated number of hours? And are the offerors/quoters supposed to propose one or more hourly labor rates?

Actually the structure is simply by tasks - for example the estimate for CLIN 0001 is for 2,300 PDAs. So in that year the contractor invoices (monthly) how many times they worked on that PDA. So after a year they should have worked on 2,300 if the estimate is exact. The contractor is expected to price each CLIN using whatever fully burdened labor category(ies) they choose from their GSA Schedule. The contract CLIN will just be a price for what it will take the contractor to do the job. CLIN 0001 PDAs 2,300 ea $32.25(U/P) $whatever 2,300 x $32.25 is.

Link to comment
Share on other sites

Guest Vern Edwards

Hmmm. So each CLIN appears to be priced on a lump sum basis, but only for an estimated quantity. I don't know how that would work. There may be something else in the contract that explains, but it sounds unorthodox to me. If IDIQ there could be a minimum quantity and an estimated quantity, but not just an estimated quantity.

You asked:

What if we do not meet the estimates (which we are sure not to). If the actual numbers are smaller what do I do with the remaining money? Isn't it already promised to the contractor since this is fixed price? On the other hand, what if the estimates prove to be less than what is actually required - can I add money?

I don't have answers to those questions.

Link to comment
Share on other sites

While I agree that in principle that a contract like this sounds like it would be an ID/IQ, I know in our office we do many FFPs like this. We have a contract that may call for 100 of something @ $10.00/each. But in the CLIN we state that we will only pay for items that have been ordered and received. Many times we might only order 90 for the year.

Now in this case, where we have leftover money, the activity has to initiate a modification to de-obligate the excess funds to bring it down to zero. It is a bilateral modification. I have not had any problems doing this in the past.

Now if your estimate is low and you will need more funds (for more items) then again the activity will have to initate a PR to increase the amounts and add finding to the contract. This would also be done through a bilateral mod. The change has to be considered within scope of the contract. We typically sent a limit of 20-25% change from the original contract to determine whether it is in scope of the original. If it is above that amount a new contract would have to be created. Now some KOs will base that "in scope' on the CLIN and some will base it upon the total amount of the contract. Not sure if there is a definate guide on that.

Final note, I am assuming this is a commercial item. My understanding on non-commercial would be that a new contract would be required for the change.

Link to comment
Share on other sites

  • 1 month later...

I have a question which is similar to the above topic. Is it possible to establish a FFP contract with Firm Fixed Price Unite Cost for a certain service and still have variability in the amount of units expended and paid for during each month and at the end of each contract year? For example, the Government contracts with company X to process images. A contract is created establishing a firm fixed price unit cost. Each image processed will be $.03. The contract is for 10,000 units but if the contractor only processes 9,500 the Government only intends to pay for those units.

Is this a type of labor hour contract? or is it a case that the contract would just have to modified each year to represent the actual amount of units purchased so the contract can remain FFP? It was my understanding of Firm Fixed Price is that the total price is negotiated and the price is the price. If we put in 10,000 units and the government only requires 9,500 without a mod the contractor is entitled to be paid for all 10,000. Is that a correct assertion?

Link to comment
Share on other sites

This sounds to be that you should just avoid using GSA and go with a ID/IQ contract on your own. You can order minimum quantities, and when those quantities are exhausted cut another order for additional quantities. You can always bilaterally modify the order later to reduce quantities on said task order. It is a commercial service after-all, so your competition would end up pretty streamlined as it is. You have a fixed price item with an uncertain quantity, so that seems the best way to approach your particular scenario.

Link to comment
Share on other sites

Guest Vern Edwards

The contract deescribed by ndean is FFP if (1) there is a specification for image processing and (2) the contractor is paid $0.03 only for acceptably processed images. The fact that the number of images to be processed is variable and that the government pays for only the actual number of images processed does not affect the nature of the pricing arrangement. As part of contract closeout the contract should be modified to state the actual number of images processed and to deobligate any unused funfs.

A labor-hour contract would not require acceptable image processing as a condition of payment. That is what differentiates T&M and L-H from FFP.

Link to comment
Share on other sites

Is this just for 10,000 units at .03? I assume those numbers are just examples or I would just say to have the activity use their GPC is that would be only $300. But if it were more, my choice would be an ID/IQ. You set a minimum and maximum and issue task orders off of them. So I would agree with dcarver's assessment as well. With the ID/IQ you can still have a fixed price.

As I mentioned in a previous post, I have had many contracts though where we issued an FFP for 100 items. We might, for whatever reason, have only ordered 90. Technically we would still owe the vendor the money for the other ten items, but we have usually just completed a bilateral mod to lower the total to match what we ordered.

Another option depending upon your needs might be a BPA.

Link to comment
Share on other sites

Guest Vern Edwards

Voxx:

You are 25 posts into Wifcon Forum. Your posts will be better received if you answer the question asked and avoid the temptation to give unsolicited advice about unrelated matters.

Just a thought. No offense intended. Same applies to dcarver.

Link to comment
Share on other sites

Voxx:

You are 25 posts into Wifcon Forum. Your posts will be better received if you answer the question asked and avoid the temptation to give unsolicited advice about unrelated matters.

Just a thought. No offense intended. Same applies to dcarver.

No offense Vern, but of all people I would of thought you would know that the number of posts does not dictate the knowledge of the user. However, I'll take your advice and strictly answer the question at hand.

Link to comment
Share on other sites

Guest Vern Edwards

Knowledge is not the issue. I didn't say that you didn't know the answer. I said that you didn't give it. ndean didn't say anything about GSA, which makes your post off point. But write what you like. We have plenty of pointless posters here. I have no objection to another. It makes the truly helpful posters stand out better.

Link to comment
Share on other sites

Knowledge is not the issue. I didn't say that you didn't know the answer. I said that you didn't give it. ndean didn't say anything about GSA, which makes your post off point. But write what you like. We have plenty of pointless posters here. I have no objection to another. It makes the truly helpful posters stand out better.

My reply wasn't to ndean, it was to the original poster who did post that they were using GSA, although I can see how you would think my response was to ndean since it was posted directly after his. Either way, I can admit when I am wrong, but I at least like to see why I am wrong when someone points it out. Perhaps next time I'll quote the poster I am replying to.

Link to comment
Share on other sites

Sorry Vern but I saw four questions and wanted to give more than a yes, no, maybe, yes to respond. I personally appreciate other's thoughts on a question that may offer another way or idea. The same goes that if I mentioned an incorrect thought, I appreciate it if someone points that out since it is possible my office is doing something incorrectly or I have misunderstood something.

Link to comment
Share on other sites

It appears that what you actually propose is to place an order against a GSA schedule contract, rather than issue a purchase order or new contract, but I'm not quite clear on that point. If what you are trying to accomplish is to get better pricing for a GSA order by grouping your annual purchases of a service, you might consider issuing a BPA against the schedule contract and either funding each individual BPA call (in which case you wouldn't end up with excess funds) or issuing a funded BPA, and then deobligating excess funding when you get to the end of the year. Reading into your question, if there is a possibility that the estimated services won't actually be required, then there must be some mechanism in place to specify when each individual service instance will occur - maybe similar to placing an order so maybe actually issuing BPA calls wouldn't be a significant departure from your current way of doing business? If you do place one funded lump-sum order, you would need to negotiate a bilateral modification to the order should the Government not need the ordered quantity.

Link to comment
Share on other sites

You might consider issuing a BPA against the schedule contract and either funding each individual BPA call (in which case you wouldn't end up with excess funds) or issuing a funded BPA, and then deobligating excess funding when you get to the end of the year.

The "funded BPA" sounds fishy. When you fund the BPA, is the contractor ordered to do any work? Or are they only required to perform work when subsequent orders are issued against the BPA? If it's the latter, then it sounds like you've recorded an obligation prior to creating the obligation.

Link to comment
Share on other sites

I am now with a non-FAR activity, so I should be more careful when I respond so as not to mislead folks. Our regulations allow for a a funded "Blanket Delivery Order" to be issued against a BPA. That is what I was thinking of, but it is not really a "funded BPA" so it was misleading for me to say that. And I don't even know if FAR contemplates issuance of these type of "Blanket Delivery Orders" so I withdraw that part of my suggestion. Thanks Don!

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
×
×
  • Create New...