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jsimancas

Ceiling Indirect Rates

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Has anyone had any experience with ceiling indirect rates being increased in a CPFF. Does anyone know of a legal argument? We had our ceilings rates set on a CPFF contract at time when we were very young, very small and had never had an audit. Now that we understand how ceilings work, we have realized we have lost hundreds of thousands in actual costs. Does anyone anything we can do? The CO wants to work with us but needs legal arguments as to why he should increase the ceiling indirect rates.

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I have had experience expecting a contractor to honor the ceilings it proposed when the parties formed the cost-reimbursement contract. The parties can agree that indirect costs reimbusement will be limited to certain ceiling rates. See FAR 31.109. If a firm induced an agency to award it a cost-reimbursement contract with a promise of some ceiling rates in indirect costs, I think the contractor should honor its promise. To relieve the contractor of its promise by agreeing to pay more money, for no other reason than because the contractor realizes it made am imprudent business decision and in exchange for nothing in consideration, would seem to be a gift to the contractor.

However you might find an authority in FAR Subpart 50.1 under Public Law 85-804.

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