Add'l LOE on CPFF Term Contract. Is it Fee-Bearing?

[LM_ABITWT]

I'm preparing a proposal in response to a CPFF-Term Form RFP and we want to include language in our proposal response which proctects us in the event we expend the entire LOE (and dollars) prior to the end of the PoP. We want to make sure the Gov't understands that the contractor is entitled to add'l LOE/cos$$ and an updward adjustment to our fee pool. In other words, we don't want a request for add'l hours/$ to be miscontstrued as a cost overrun.

Are we are on solid with this assumption? Does it even need to be caveated in our bid or can we rely on FAR clauses as a basis for this price adjustment?

Thanks!

[ji20874]

Which does your solicitation specify?

(1) a LOE (in terms of hours, for example); or

(2) a period of performance, with mandatory start and end dates?

Maybe there is a third possibility -- (3) both?

If you are responsible for making the LOE spread across the entire period of performance, then you need to manage that and make it happen. When a Government program/contracting office buys something like you're describing using CPFF term and other similar arrangements, it usually wants a partner who will MANAGE the effort rather than quickly spending and running out. If I were evaluating proposals, and based solely on my past history and what you write in your original posting, I would be much better impressed by an offeror who promised to MANAGE the effort and make the LOE last the entire period of performance rather than one who said up-front that it will want more money as soon as it runs out.

That said, you shouldn't need a caveat in your proposal. You're proposing a LOE. When the LOE is expended, the contract is over. A purchase of additional effort is a new action that might be done by sole-source modification to your contract, but you will be able to negotiate it at the time.

Perhaps you're asking the question because of some prior experience with the Government program/contracting office?

For the benefit of readers (found using a google search)--

From http://www.onvia.com/b2g-resources/article/the-basics-of-cost-reimbursement-contracts:

Cost-Plus-Fixed-Fee (CPFF) Contracts

The contractor receives reimbursement plus a predetermined fee that is negotiated when the contract is finalized and will not change based on the actual contract cost. However, the fee may be revised if the work required to complete the contract also changes. This type of contract is useful in situations where the risk to the contractor might otherwise outweigh any non-financial benefits. There are two types of CPFF contracts:

• Completion: A goal or product is identified and the contractor must deliver the product in order to receive the fee. If the costs exceed the original estimate, the government will continue to reimburse for cost but won't increase the fixed fee.
  
• Term: The scope of work is less specific, but the contract states a time period and level of effort expected of the contractor. When that time period expires, the fee is paid after the agency approves the work completed and level of effort. Any further work that's necessary will require a new agreement.
  

[Chris M]

_{I assume the RFP contains provision 52.216-1? Does this provision state the Government anticipates the award of a CPFF term type contract? Or where are you getting that it is a term form?}

_{FAR 16.306(d) defines both completion and term form CPFF contracts. Under completion, FAR 16.306(d)(1), it describes the situation in which the Government may require more effort without additional fee. This is a "cost-overrun" situation; allowable costs in excess of the orignal cost estimate to complete the original end result. Under FAR 16.306(d)(2) it defines a term CPFF as a number of hours to be perfromed in a definite time period. The FAR goes on to state, " Renewal for further periods of performance is a new acquisition that involves new cost and fee arrangements."}

_{The Government has the requirement for X LOE during Y PoP. The request for additional LOE during the Y PoP that you don't want to miscosntrued is originating from where? You or the Government?}

[LM_ABITWT]

The RFP clearly states that the task order will be a CPFF-Term Form. The concern regarding the need for add'l LOE to cover the PoP is originating from within (the Contractor), not the Gov't.

[Retreadfed]

Does the RFP specify the LOE or are you free to propose what you consider to be an adequate LOE to accomplish what needs to be done?

[LM_ABITWT]

Free to propose the LOE we see fit. However, the USG did provide an LOE but it was caveated as being for "informational purposes".

[Guest Vern Edwards]

Does the contract require delivery of a stipulated LOE within the contract term? Or does it require maintenance of an LOE throughout the contract term?

[LM_ABITWT]

The RFP does not specify either. It simply states the Gov't "intends to place a task order under a Cost Plus Fixed Fee (CPFF) Term arrangement for.....".

[Guest Vern Edwards]

Ordinarily, a CPFF Level of Effort Term contract requires the contractor to perform a task within a specified period of time expending a specified level of effort. The contractor's obligation ends when the level of effort has been expended. Sometimes such a contract will require the contractor to perform an ongoing service and maintain a specified level of effort (FTEs) throughout the specified performance period. Either way, if the government wants to increase the specified level of effort it would have to negotiate a "new work" supplemental agreement with you, and you could demand additional fee.