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A component that makes up a FFP CLIN has become obsolete. Our firm has provided a replacement part that requires "re-engineering" at a nominal cost.

The Government has come back to our firm to say that the burden of risk rests with us on that CLIN for meeting the specifications as it is a FFP. Therefore the replacement part and subsequent engineering should come at no cost to the Government.

The cost is nominal but our concern is the "precedent" it sets for more costly components that may become obsolete.

Your comment and feedback is greatly appreciated!

Thank you!

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You did not provide enough information to provide intelligent comments. My feedback is that we don't know what type of contract this is (supply, construction, design-build, etc.), what the contract line Item is for, what the component is, how it was specified and/or who designed it, etc.

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The contract is a supply contract.

The contract line is for engineering costs. This Clin is CPFF

The supporting clins are providing back-fit kits and parts for our product on a FFP basis.

The backfit kits designed by others. Our Engineering needs to modify it to work in our product.

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Obsolete means the manufacturer is not building them anymore. The spec is re-written to identify the new part.

There are engineering costs involved to accommodate the new part which increases the original cost of the part, provided to the Government on an FFP basis.

Thanks!

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You still haven't provided enough information. Did the Government provide you the re-written spec? Did you re-write the spec yourself to incorporate the new part? Does anything in your SOW provide for you to do this (i.e. Engineering Change Proposals)?

Is this a Government provided specification or a contractor developed specification (i.e. you proposed to a P-Spec and provided a design that would fit that)? There are a lot of variables here that change the answer you are provided.

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jpayne,

Unless there's a clause in the contract dealing with situations like this, you should probably proceed with the re-engineering, deliver the product for the agreed-upon firm fixed price and be grateful the cost is nominal. It won't set any precedent; it's just the nature of a firm fixed price contract, i.e. one with "a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract." [FAR 16.202-1.]

If you're in a line of business where parts obsolescence is a fact of life, you may want to consider setting up a DMSMS management program. DOD publishes a Guidebook on the subject.

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