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It is my belief that, if an agency posts a solicitation with a hybrid contract type, say CPAF and FFP. meaning some CLINs are CPAF and some CLINs are FFP, then the agency must conduct a Cost Realism Analysis for the CPAF CLINs.

However, I have a colleague who believes differently. They asked me where does it say Cost Realism Analysis must be done for those CLINs? All I can come up with is to say it just seems logical and fair to do it that way. That is not good enough for them.

Anybody got anything else?

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Guest Vern Edwards

If it's a competitive procurement, then you must conduct a cost realism analysis for the cost-reimbursement CLINs. See FAR 15.404-1(d)(2).

Also, what you described is a combination of types, not a hybrid. A hybrid would be a single CLIN that somehow combines features of two or more types (pricing arrangements). It would be neither one type nor the other. Hybrids are prohibited by the last sentence in FAR 15.102( b ) and would require an approved deviation.

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Ah, here is a GAO case that answers this question:

Solers Inc., B-409079, B-409079.2, Jan. 27, 2014:

"When an agency evaluates a proposal for the award of a cost-reimbursement contract, or portion of a contract (such as a cost-reimbursement CLIN), an offeror's proposed costs are not dispositive because, regardless of the costs proposed, the government is bound to pay the contractor its actual and allowable costs . . . Consequently, the agency must perform a cost realism analysis to determine the extent to which an offeror's proposed costs are realistic for the work to be performed . . ."

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Guest Vern Edwards

Had to have a "case", huh? From an organization whose decisions are not binding. The FAR was not enough. The GAO is always right, and a case seals the deal. We contract "specialists" don't know what our regs mean until the lawyers tell us.

I guess that's why the lawyers are considered the real pros in contracting. Nothing is decided until they say so. The government would make them the COs if they would take the job. But they won't take it because they think its just clerical work.

They're the mountaineers. The rest of us are just Sherpas.

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If it's a competitive procurement, then you must conduct a cost realism analysis for the cost-reimbursement CLINs. See FAR 15.404-1(d)(2).

Also, what you described is a combination of types, not a hybrid. A hybrid would be a single CLIN that somehow combines features of two or more types (pricing arrangements). It would be neither one type nor the other. Hybrids are prohibited by the last sentence in FAR 15.102( b ) and would require an approved deviation.

I believe Vern meant FAR 16.102 ( b ). Wouldn't the decision on whether to include cost realism as an evaluation factor or subfactor be predicated on a commom sense (not that there is much of that used in government contracting) litmus test associated with risk. If you have 10 FFP CLINS worth a total of $100M and one cost-reimbursement CLIN for a NTE for travel of $50k, wouldn't adminstrative effort to perform the analysis outway any potential beneft that could be derived from performing a cost realsim analysis on the cost-reimbursement CLIN? I am specifically talking about a circumstance where the exact travel requirements cannot be predicted and the government is establishing the Travel NTE base value to which the offerors are only applying their appicable indirect rates.

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Guest Vern Edwards

I did mean 16.102( b ). Thanks.

If you're talking travel, then I presume that the solicitation would not require the contractor to estimate the cost of travel. There would be no "proposed cost estimate", as mentioned in FAR 15.404-1(d)(1). The parties would simply agree to a budget for it. In that case, there would be nothing to determine the realism of. I think the language of the FAR eliminates any need for realism analysis in such cases.

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The only estimate would be the contractor's burden on the travel amount based on their applicable indirect rates. We always stipulate that the amount provided by the government in the RFP is a base direct cost amount and that it should be burdened with each contractor's applicable indirects. $1M of direct travel dollars may cost the government significantly more from one contractor to the next depending upon their burdens. Likewise, if you state the $1M provided is inclusive of all applicable burdens then a $1M Travel NTE line may buy you fewer trips (direct travel dollars) from one contractor to the next depending upon their burdens.

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Guest Vern Edwards

It needn't provide you with fewer trips. All you have to say is that the government can unilaterally increase the travel budget as it sees fit. If you're going to pay the burden anyway, why exclude it from the CLIN contract budget? If I were to let them add burden, I would insist upon a cap.

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It is not my intention to side track this discussion and with regards to travel my organization (USDA) sometimes uses invitational travel orders to get around cost reimbursement issues when the contractor is unwilling or unable to provide a firm fixed price for travel.

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Guest Vern Edwards

That's interesting, because under the DOD's regulations, invitational travel orders may not be issued to government contractor employees working on a contract. See DOD JTR Vol. 2, Appendix E, Part 3, A. "Travel of Government Contractor/Contractor Employee":

GOV'T contractor and contractor employee travel costs are governed by the rules in the Federal Acquisition Reguolations (FAR) § 31.205-46. For these reasons a contractor is not eligible for an Invitational Travel Authorization (ITA) in the execution of a contract. See DODI 3020.41 for information regarding contractors.
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