Realignment of CR ODC funds to CPFF Labor

[MuchToLearn]

Hello,

First time poster. I work as a Contracts Administrator for a Government contracting firm, and I have much to learn in the way of federal contracting.

A task order I administer has a CPFF Labor CLIN, and a CR ODC CLIN. As the base period drew to a close, it was apparent that we underran on ODC costs (as in, there was less of a need to purchase ODCs than was initially anticipated). Working with the Government COR, a request for quote was released for additional tasking that is within the scope of work. The understanding was that the ODC funds would be reallocated to the Labor CLIN to accomplish this work. In our proposal, we applied fixed fee for the proposed work.

Our CO is insisting that the fixed fee cannot be changed in this case: because the tasking is in scope, we are not entitled to charge fee on this work. My position is that, while the negotaited fee cannot be varied as a result of actual cost incurred by a contractor, here the fee should be adjusted upward because the work to be performed under the contract has changed from what was intially proposed (even though the change adds in-scope work). I feel that this is boltered by the fact that an RFQ was solicited to price the work. Additionally, since the ODC funds being reallocated were awarded on a CR CLIN, the initial fixed fee calculation did not include this amount (so its not a "double fee").

I believe I am right, but one nagging thing bothers me about the language in the FAR:

16.306 Cost-plus-fixed-fee contracts.

(a) Description. A cost-plus-fixed-fee contract is a cost-reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract. This contract type permits contracting for efforts that might otherwise present too great a risk to contractors, but it provides the contractor only a minimum incentive to control costs.

---Remainder of clause omitted---

I agree that the additional work is within scope, so at least in that sense it is not a "change." Had the Government not released an RFQ, and just instructed us to do the in-scope work and that we would be reimbursed at cost, would we have any case for applying fee?

[napolik]

Has the contracting officer (CO) issued, or does the CO intend to issue, a change order adding additional work? Or, does the CO say that the work described by the COR is already encompassed in the statement of work and included in the estimated cost?

If the contracting officer has issued, or will issue, a change order, you are entitled to an equitable adjustment in the estimated cost and in the fee. See the changes clause at 52.243-2 with alternate 1.

By the way, a change order can be issued only if the work described in the change is within the scope of the contract.

52.243-2 -- Changes -- Cost-Reimbursement.

Changes -- Cost-Reimbursement (Aug 1987)

(a) The Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following:

(1) Drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the Government in accordance with the drawings, designs, or specifications.

(2) Method of shipment or packing.

(3) Place of delivery.

(b ) If any such change causes an increase or decrease in the estimated cost of, or the time required for, performance of any part of the work under this contract, whether or not changed by the order, or otherwise affects any other terms and conditions of this contract, the Contracting Officer shall make an equitable adjustment in the --

(1) Estimated cost, delivery or completion schedule, or both;

(2) Amount of any fixed fee; and

(3) Other affected terms and shall modify the contract accordingly.

(c ) The Contractor must assert its right to an adjustment under this clause within 30 days from the date of receipt of the written order. However, if the Contracting Officer decides that the facts justify it, the Contracting Officer may receive and act upon a proposal submitted before final payment of the contract.

(d) Failure to agree to any adjustment shall be a dispute under the Disputes clause. However, nothing in this clause shall excuse the Contractor from proceeding with the contract as changed.

(e) Notwithstanding the terms and conditions of paragraphs (a) and (b ) above, the estimated cost of this contract and, if this contract is incrementally funded, the funds allotted for the performance of this contract, shall not be increased or considered to be increased except by specific written modification of the contract indicating the new contract estimated cost and, if this contract is incrementally funded, the new amount allotted to the contract. Until this modification is made, the Contractor shall not be obligated to continue performance or incur costs beyond the point established in the Limitation of Cost or Limitation of Funds clause of this contract.

(End of Clause)

Alternate I (Apr 1984). If the requirement is for services and no supplies are to be furnished, substitute the following paragraph (a) for paragraph (a) of the basic clause:

(a) The Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following:

(1) Description of services to be performed.

(2) Time of performance (i.e., hours of the day, days of the week, etc.).

(3) Place of performance of the services.

[Guest Vern Edwards]

Working with the Government COR, a request for quote was released for additional tasking that is within the scope of work... Our CO is insisting that the fixed fee cannot be changed in this case: because the tasking is in scope, we are not entitled to charge fee on this work.

If the government wants you to do work that is not now specified in the contract, then you are entitled to more fee, whether the work is within the scope of the contract or enlarges the scope of the contract. Scope has nothing to do with this. The fact that the work they want you to do is of the same kind as the work currently specified is not pertinent. If they want you to do something more than is currently specified, in scope or out of scope, then you are entitled to more fee. The amount of the additional fee is negotiable.

[MuchToLearn]

Thank you Vern, Thank you napolik; the scope vs. tasking in the contract distinction is useful...I took it to mean that it would be possible to be entitled to more fee on a CPFF contract without an equitable adjustment.

However, I'm finding it difficult to work through the implications. I may regret this statement, but isn't the "scope of the contract" also the work that is "currently specified" in a contract?

Hypothetically, if a task in the contract was to "perform risk analysis on various shipping scenarios", it would not mean additional fee could be requested every time a distinct scenario was added for risk analysis. In my mind, that is because the scope of work contemplates "various scenarios"...failure to insist on specificity means the Contractor would be on the hook for risk analysis for any scenario.

I would appreciate enlightenment on this final point...thank you again.

[Guest Vern Edwards]

The scope of the contract is defined by the specification or statement of work at the time of award. It's the work expressly described plus any work that would reasonably considered a part of the specified work.

Now, answer some questions for me:

You said you submitted a quote for "additional tasking". If you agreed to do risk analyses, what was the boundary of your obligation? Were you to do every risk analysis they assigned to you within the period of performance up to some ceiling amount in the contract? Or were you to do every risk analysis they assigned within the period of performance as long as they could fund it, without limit?

You said that you submitted a quote on "additional tasking". What did you mean by that? In what way would the tasking be "additional"? In addition to what? If you agreed to do risk analyses during a period of performance as long as the government could come up with money for it, and if they found more money, then how does adding the money amount to "additional tasking"?

[MuchToLearn]

Hi Vern,

I was overruled by my supervisor, who (erroneously) stated that the fixed fee on a CPFF contract can only be adjusted in connection with a PoP extension or an SOW change. The result was that we removed the fee component and reduced our total proposed cost...so the point is moot.

I still want to answer your questions so I can learn:

As I read it, the Task Order obligates the Contractor to do "risk analysis for various scenarios" that were assigned within the period of performance, as long as the Government could provide funding*.

I feel this must be the case because there is language indicating the contractor "is not restricted to the price delineated for the CLINs or sub-CLINs in the price schedule if the contractor anticipates the need to shift resources (level of effort) and/or capacity amongst CLINs or sub-CLINS. The contractor is athorized to use available resources and/or capacity across CLINs or sub-CLINs as necessary during the PoP as long as the ceiling price of this order is not exceeded."

The RFQ (connected to the reallocation of ODC funds) was to price a discreet task, with a deliverable. The task is associated with an identified subclin within the Task Order; the SOW reference is to the "various scenarios" language. It seems the RFQ was to price the risk analysis of one of the many scenarios that could have been assigned.

Working through your questions, I now believe the tasking was not "additional"...it is as you say, they found more money and wanted us to do more work.

Given the SOW description of the task, the "work" is entirely the same; I had hoped/believed that because this was a "new" scenario that was being analyzed, it constituted a "change in the work to be performed" contemplated by FAR 16.306(a). I read too much into the fact that they issued an RFQ asking us to price the task... I figured if the work was truly nothing new, why would we need to provide a quote?

*I now see why this would have been different if we had agreed to do the work up to a specified ceiling. Reallocate money and increase the CLIN ceiling would have a different outcome, since I can see that any work beyond that the CLIN ceiling would constitute something "not currently specified" by the task order, and thus additional fee would be possible.

Please let me know if you think I understand this. I appreciate you guiding me to this conclusion. I find WIFCON to be a terrific resource (even though I understand the sentiment that too many newbies simply ask for / google an answer rather than grappling witht he material).

-MuchToLearn

[Guest Vern Edwards]

Two questions:

1. Is the contract a task order contract, under which you work only in response to a government-issued ask order? Yes or no.

2. Does the government (a) reimburse your costs and pay a fee, or ( b ) pay you by the hour at fixed hourly labor rates? (a) or ( b )?

[MuchToLearn]

1. No.

2. (a) (monthly invoice for actual labor costs + burdens and fee)

-MuchToLearn

[Guest Vern Edwards]

I think you understand it correctly. It appears that the deal was to do a kind of work during a period for a fixed fee without any limitation on the amount of work as long as the government could fund it. Ordering work with the additional money available from the ODC CLIN did not change your obligation, so it did not entitle you to more fee.

I don't think that's a very advantageous relationship, but if that was the deal, then a deal is a deal.