Cost-Reimbursable Overrun/Change

[BorderC]

All,

There is a discussion in my office on the correct authority that gives the Government the right to increase the estimated cost (and funding) on a CPFF contract that is required due to contractor overruns. In this case, there has been no Government-directed change in the requirements. It is an R&D contract that, due to some performance complications, cost more than was competitively proposed and the Government wants to fund the overrun. The LoF clause says that the estimated cost must be increased as well. So, the office discussion has revolved around what gives the Government the authority to unilaterally increase the estimated cost in these circumstances.

One position/interpretation is that the Limitation of Funds clause itself grants the contracting officer the authority to increase the estimated cost and allotment of funds. This would allow the contracting officer to unilaterally increase the baseline cost estimate without increasing the fee.

Another position is that the Changes clause is the proper authority because to continue work past the baseline estimated cost requires additional time, effort, etc.(even though there is no change to the Government's requirements) from the contractor. From a fee perspective, the Contractor would then have the opportunity to propose fee but, in our circumstance, would be negotiated out.

I suppose that in both situations the contractor could always submit a claim for fee if they thought they deserved it.

This seems to be a pretty fundamental C-R issue but it shows how there are different interpretations from all levels (in my office at least) on what seems to be a right or wrong type of answer. So, I thought I'd come to this board to discuss/receive feedback and see if I can get some other opinions. Thanks.

[Don Mansfield]

BorderC,

One of the interpretations makes sense and the other is just plain dumb. Can you tell the difference?

[BorderC]

Fair question. At the risk of sounding dumb - I have argued the former position to little effect on some of my more seasoned (and more intelligent) colleagues. I have had a difficult time convincing them that My viewpoint is the better/right interpretation. I suspect it's either a lack of communication skills and knowledge/experience on my part or, simply, I am the plain dumb one. I could certainly use a better understanding regardless. Thanks.

[ji20874]

You're not the dumb one.