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Contractor's total allowable cost is going to exceed the target cost on our CPIF contract. How do we adjust the contract value without changing the target cost to comply with the limitation of cost and funds clauses for obligation purposes? Right now our contract value is the target cost. Target cost cannot be increased without an equitable adjustment.

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Guest Vern Edwards

The contract should include a short clause that states what the "estimated cost" is for purposes of the Limitation of Cost or Limitation of Funds clause. You can put it in Section B with the appropriate line item or you can put it in Section H. Section B is better. So for a CPIF CLIN you would have a target cost, target fee, max fee, min fee, and current estimated cost. At the time of contract award the current estimated cost will be the same as the target cost. In the case of an overrun you do not change the target cost, unless the overrun is actually a "cost growth" due to a government change and equitable adjustment. Instead, you change the current estimated cost. If the overrun ("cost growth") is caused by an equitable adjustment you change both the target cost and the current estimated cost.

You may have to do something a little different if you're using an automated contract writing/reporting system.

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Thank you very much, that was an excellent answer. Unfortunately our contract writing system will not accomodate an estimated cost in additon to the target cost. Or, I have not been able to figure it out yet. We also left out the clause that establishes the "estimated cost" for the purposes of limitation of cost/funds so we'll have to figure something out.

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Guest Vern Edwards

I'm sure that the contractor will agree to adding the necessary clause to the contract. That should not be a problem.

Your contract writing system is another matter. Good luck with that.

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If you're using SPS, just go to the clauses tab when starting a modification and add a text box to Section B and select it to appear at the bottom of the section. Then add the necessary clause. If you're using something else, then good luck. It may help if you identify which contract system you are using as other users may be able to help.

Ask around your office, most of the specialists are probably familiar with work-arounds to make things happen.

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Guest Vern Edwards

There is another possibility. Can you make a note on the contract for TC, TF, MF, and MInF, and then use the estimated cost for PD2? Or something like that. That way you get the incentive elements into the contract and work through PD2.

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Yeah sorry, I'm working on PD^2. I wish there was a box for estimated cost that I could use along with TC, TF, and min/max fee.

SPS = PD2. Go to the Clauses tab, Click add text, choose Section B and choose it to appear at the bottom of the Section. Then type away at whatever you wish to appear that the standardized system does not have a spot for you to put in. Adding text is the easy way to allow yourself to type into the contract whatever you want to that the standard clauses may not include but is relevant for your situation.

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