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How to instruct offerors to submit CPFF price proposals in a solicitation


govt2310

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FAR 16.301-1 requires all cost-reimbursement contracts to establis ha ceiling price. In a cost-plus-fixed-fee or CPFF contract type, does that mean the solicitation must instruct the offerors to craft their price proposals to include all of three of the following: a ceiling price, an estimated cost, and a fixed fee? I tried to find an example of such instructions on a fedbizopps but to no avail. I have never had to do a CPFF contract before, and I can't find anyone in my agency who has either. So this is flying blind. I got access to the Army JAG Book Contract 101 Course Material, and the example math exercise in there shows a fact pattern with an estimated cost and a cost ceiling, which are different from each other. But I discussed this with a colleague here, and he thinks the math exercise looks strange, that in his view, the estimated cost and the ceiling price should be the same number. In all his years in acquisition, he has never seen a solicitation instructing the offerors to provide more than 1 price -- just the ceiling price. With CPFF, it looks like that we will have to ask for the offerors to provide 3 prices: (ceiling, estimated cost, and fixed fee). Can anyone out there provide guidance to clear this up for us?

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Guest Vern Edwards

govt2310, you wrote:

FAR 16.301-1 requires all cost-reimbursement contracts to establish a ceiling price.

FAR 16.301-1 does no such thing. It says:

These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer.

The estimated cost is the ceiling. You don't establish a separate ceiling price.

How on earth could you have misread that simple passage so badly?

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So if FAR 16.301-1 does not require a ceiling price but only "estimated cost" then, for a solicitation for a CPFF contract type, are we only to ask the offerors to provide the estimated cost and the proposed fixed fee? Going back to the JAG Book material, why does the example exercise in there for CPFF show a ceiling price if one is not required? Is it optional?

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Guest Vern Edwards
So if FAR 16.301-1 does not require a ceiling price but only "estimated cost" then, for a solicitation for a CPFF contract type, are we only to ask the offerors to provide the estimated cost and the proposed fixed fee? Going back to the JAG Book material, why does the example exercise in there for CPFF show a ceiling price if one is not required? Is it optional?

Throw that damned JAG book away. You ask for proposal of an estimated cost and a fixed fee. That's it.

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The ceiling is the estimated cost. Read the Limitation of Cost clause. It limits the Government's obligation to the estimated cost.

When a contract is not fully funded the ceiling is the amount funded per the Limitation of Funds clause.

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