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We always try to leave the remaining balance on the CLIN for Cost type contracts for final indirect rate calculations at contract closeout. However, the struggle you'll find (at least from the Government perspective) is that the customer is hunting every dollar to obligate. Sometimes the hardest thing is explaining to the customer (not necessarily your contracts counterpart) why the money should remain.

My biggest peeve is measuring program office performance in the Government by the amount they obligate and expend. It invites waste, but I don't see this changing anywhere in the near future.

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I have a couple of observations. First, you are expected to monitor your indirect rates in order to comply with the LOF/LOC clause(s) in your contract. Are you doing so and if so, how are your actuals running compared to provisional rates? If they are higher and you will exceed the estimated cost of the contract or current funding level, depending on whichever is applicable, have you informed the agency of this?

Next, you have not mentioned anticipated total billing for the base year compared to the estimated cost for the base year. If your billings are below estimated costs, will there be funds left that can be deobligated? If so, the amount of deobligation might be negotiable if you can show that your actual indirect costs will be higher than your billing rates.

Finally, when does the base year end? If it ends on 30 September and if the contract is funded with annual appropriations, deobligating any unexpended balances after the end of the fiscal year would not do the agency much good as the period of availability for obligation of those funds would have expired on 30 Sep.

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Good morning! We have arrived within a few weeks of the end of our funding for the base period of our CPAF (LOE) services contract. The customer has advised that we are to burn right up to the funded ceiling before they flip on the first option year and that any unburned nickels and dimes will be immediately de-obligated.

So if you have funding left, you keep on performing against the base period and the customer delays exercising the option? So the base period can extend indefinitely (so long as there's funding available) and the option period (which I assume was priced based on a certain period of performance) won't actually start until the indefinite base period ends--"ends" being defined by the use of all obligated funds and not by any calendar dates. Do I have that correct?

Weird.

Somehow I thought options needed to be exercised exactly as defined by the contract. I guess somebody smarter than me can set me straight on that notion.

H2H

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So if you have funding left, you keep on performing against the base period and the customer delays exercising the option? So the base period can extend indefinitely (so long as there's funding available) and the option period (which I assume was priced based on a certain period of performance) won't actually start until the indefinite base period ends--"ends" being defined by the use of all obligated funds and not by any calendar dates. Do I have that correct?

Weird.

Somehow I thought options needed to be exercised exactly as defined by the contract. I guess somebody smarter than me can set me straight on that notion.

H2H

yep. they continue to extend the base period in order to burn all of thier funding. this is one of those three letter customers that seems to be able to do a lot of extraordinary things with respect to contracting.

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Mayo, is the contract subject to the FAR or are you dealing with an agency that has its own procurement regulations independent of the FAR?

They have several FAR clauses incorporated into our contract so i assume they are subject to the FAR. Though, i am not informed enough to know whether or not citation of FAR clauses necessarily means that this agency is subject to FAR.

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