LM_ABITWT Posted February 22, 2012 Report Share Posted February 22, 2012 My company has recently begun to do work on a CPFF basis and my contracts are not specifying the payment schedule for our fixed fee pool. When I discussed this topic with my colleagues, I was told fee should be invoiced/paid based on a percentage of costs incurred. This method did not seem right to me as it sounded an awful lot like a CPPC arrangement which I know is illegal. I am looking for some guidance on how fee should be setup from a billing/payment perspective. Thanks! Link to comment Share on other sites More sharing options...
Guest Vern Edwards Posted February 22, 2012 Report Share Posted February 22, 2012 If the contract stipulates a fixed fee, then CPPC is not an issue. The contract should contain the clause at FAR 52.216-8, Fixed Fee, which states that the fee shall be paid as specified in the contract schedule. Does the schedule of your contract say anything about payment of fee? if not, the best procedure from the government's point of view is to pay a percentage of the fee equal to the percentage of work complete, less withholding. However, it is likely that many agencies pay a percentage of the fee equal to the percentage of estimated costs incurred, less withholding, if for no other reason than the fact that the percentage of estimated cost incurred is easier to determine than the percentage of work complete. While not ideal from the government's point of view, it is not illegal. It does not constitute CPPC, because the total fee paid cannot exceed the fixed fee. Link to comment Share on other sites More sharing options...
LM_ABITWT Posted February 22, 2012 Author Report Share Posted February 22, 2012 Vern, Thanks for the response. I've been an admirer of your work for some time now. Yes, my contract does include 52.216-8 however the contract does not mention payment of fee. In that case, I will contact my CO and request he write that into the contract to clear up any remaining uncertainty on my company's end. Also, this CPFF contract does not specify whether it is Term or Completion. The contract does not specify a level-of-effort so my initial thought was that it was intended to be Completion. But then I was reminded that our cost proposal was incorporated into the contract and that does include a level-of-effort and the Gov't may be planning on holding us to performance of our proposed LOE (which is highly unlikely to occur because we rarely perform exactly to how we proposed). Is this another conversation that I need to have with my CO or is the Completion form assumed if Term is not referenced? Thanks again! Link to comment Share on other sites More sharing options...
Guest Vern Edwards Posted February 22, 2012 Report Share Posted February 22, 2012 If you have a smart CO, it is usually a good idea to talk things over with her. If I were in your shoes I might want to get fee as a percentage of the estimated cost that has been incurred, rather than a percentage of work completed, depending on the situation. You should be thoughtful about how you approach the topic. If you have not already sought a payment of fee you might decide which way you want to go and try billing that way to see if the CO buys it. I think most agencies make interim fee payments as a percentage of costs incurred, and as a general rule that is probably best for your company if you are coming in at the estimated cost or overrunning. It is generally going to be the easiest thing to do. As for the business about term or level-of-effort, the form is not assumed. Even though the proposal mentions a level of effort the answer would depend on the exact wording. In any case, the CO's answer might be interesting. If the proposal says level-of-effort and the CO says term, then she will have set herself up for a later argument that the government is not really enforcing the proposal as part of the contract. Hmmm. Before you discuss it, decide which you want the contract to be -- completion or term, and then be prepared to argue in support of your position. Link to comment Share on other sites More sharing options...
Navy_Contracting_4 Posted February 22, 2012 Report Share Posted February 22, 2012 How is the statement of work structured? Can it be interpreted consistent with a completion form? Many statements of work I've seen don't make sense except in a level-of-effort environment. Link to comment Share on other sites More sharing options...
LM_ABITWT Posted February 23, 2012 Author Report Share Posted February 23, 2012 I think the PWS lends itself to the Completion form and that is our preference. Appreciate the feedback! I'm new to the forum and I am already hooked on it and learning from such experienced professionals. Thanks again! Link to comment Share on other sites More sharing options...
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