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jtolli

What Type of Contract Do I Have?

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I am having a debate with someone in my office regarding the type of contract I am working with. Here are the pertinent details.

1. The contract is for network engineering services.

2. The contract does not include any payment clauses (e.g. FAR 52.232-7).

3. The contract does incorporate by reference FAR 52.212-4 (Contract Terms and Conditions?Commercial Items.)

4. The contract was awarded as an 8(a) set aside.

5. The contract has a labor CLIN that reads as follows: NETWORK ENGINEER, FFP. The quantity is 1920 Hours with a Unit Price in Dollars.

6. The contractor submits monthly invoices based on the actual number of hours worked for the month, multiplied by the unit price.

I say this is a T&M contract (it also has a CLIN for travel that is labeled as ?COST?). My office mate says it is a Firm Fixed Price contract because the labor CLIN says ?FFP?. My argument is that if it?s a FFP contract, then the CLIN would not be awarded with a quantity of hours and a unit price per hour. I believe when the contracting office awarded it the FFP refers to the fixed hourly rate.

Can you have FFP contracts that are awarded with a quantity of hours and an hourly price? Wouldn?t a FFP contract typically be awarded with a fixed lump sum for labor, or perhaps a fixed monthly price for labor?

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Couple questions first. Is the CO or Contract Specialist that awarded the contract available to talk with? Did the contract document get produced through contract writing software or an automated system that interfaces with a finance/budget system(s)? I'm asking that because sometimes they produce some strange results.

Apart from that information, it seems like the 8(a) contractor sees it as a T&M contract since they are invoicing as if they have one. I agree with your logic about it not being a FFP contract in that one usually doesn't compute the FFP by multiplying hours by an hourly rate.

What I would do is talk with the contractor and come to agreement on the contract type. They I would do a bilateral modification to straighten everything out.

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jtolli,

You said that the contract doesn't include any payment clauses, but then you said that it does include FAR 52.212-4. Did you look at the title of paragraph (i) of 52.212-4?

According to the contract, after the contractor has worked 1,920 hours are they still required to do something (e.g., complete a project) or have they fulfilled their commitment?

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Formerfed,

The contracting office considers it a FFP order. It was done through PD2. I am trying to understand how it can be a FFP contract based on how the CLIN is set up, and how the contractor bills. I have never seen a FFP contract with CLINs set up like that.

Don,

Thanks, yes I read paragraph (i) of 52.212-4, but didn't want to make my original post too long. I was mainly referring to the fact that it doesn't have the T&M payment clause in the contract, but wanted to point out it is obviously considered a commercial service since 52.212-4 is incorporated. In reading paragraph (i) it says, "Items accepted. Payment shall be made for items accepted by the Government that have been delivered to the delivery destinations set forth in this contract." So if this is a FFP contract, and hours are not worked, then I would say the items (hours) aren't delivered/accepted, and shouldn't be paid for. So, then it wouldn't seem to be a FFP contract. I am also aware that contracts for commercial services normally should be FFP. So I am wondering if maybe that's why the Contracting Office wants it considered a FFP contract.

Finally, there is no end deliverable to provide. The scope of the contract requires the contractor employee to come to work and provide support on a day-to-day basis. Since the contractor invoices us based on the number of hours worked, then my thinking is once they reach 1920 hours, they can't come to work any more unless a mod is done adding hours and funds to the contract. But the view of those who I am debating with say hours don't matter. If the contractor works more than 1920, then we don't care because it is fixed price. I haven't brought this up with them, but what if the contractor has billed us for all 1920 hours, I guess by their thinking the contractor would have to stop invoicing us as there would be no funds remaining to pay their invoice. The others in my office say if the contractor works less than 1920 hours, then they can submit an invoice at the end of the period of performance for all remaining funds, whether the hours are worked or not. That just seems so wrong to me. Again going back to 52.212-4(i), if we haven't received the items (hours), then why should we pay for them?

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Since the contractor is billing at hours expanded rather than 1/12th of the montly amount, they probably consider it a T&M. Or perhaps they consider it a FP level of effort. Who knows?

My experience with PD2 is there are various ways to input CLINS. If you intend for a FFP CLIN you enter "1" under "quantity", "each" or "lot" under the "unit", and the dollar amount. If you intend to do a T&M or LH, it's done as your described.

If the contracting office considers it FFP, they made a mistake setting up the CLIN.

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Guest Vern Edwards

Wait a minute! Contract type is determined primarily by contract clauses. If the contract includes 52.212-4 without Alt 1, then it is a firm-fixed-price contract. The contactor can bill for the actual number of hours worked at established unit prices up to the total quantity. However, unlike under a T&M contract, and absent any clause to the contrary, each hour is a separate deliverable and must be performed satisfactorily in order for the contractor to be entitled to payment. Of course, in this case, the government people appear to be clueless and have been treating it like a T&M contract.

So it goes.

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Wait a minute! Contract type is determined primarily by contract clauses. If the contract includes 52.212-4 without Alt 1, then it is a firm-fixed-price contract. The contactor can bill for the actual number of hours worked at established unit prices up to the total quantity. However, unlike under a T&M contract, and absent any clause to the contrary, each hour is a separate deliverable and must be performed satisfactorily in order for the contractor to be entitled to payment. Of course, in this case, the government people appear to be clueless and have been treating it like a T&M contract.

So it goes.

I agree. I wasn't thinking about 52.212-4. Each hour is a seperate deliverable the way it's written.

What I like about this site is I continuously learn.

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Guest Vern Edwards

The problem appears to arise from the way the CLINs are written. A CLIN is supposed to identify "deliverables" and their associated prices. In a service contract, the CLINs are usually brief summaries of the statement of work.

A CLIN might read something like:

SERVICE in accordance with Section C, Statement of Work

QTY: 1 (or more)

UNIT: JOB

or

QTY 1.920

UNIT: HOUR

jtolli said: "The scope of the contract requires the contractor employee to come to work and provide support on a day-to-day basis."

What, exactly, is the deliverable? What is "support"? Is it the employee's presence and engagement in a specified type of actiivity, one day at a time, or one hour at a time, with no particular output? Or was the employee expected to produce an output, one day or one hour at a time, such that the deliverable is a day's or an hour's worth of acceptable output?

Whatever--the contractor is to be paid a stipulated price per unit of delivery.

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Vern,

Wouldn't jtolli's contract be a FFP level of effort term contract? She's indicated that once the contractor has delivered 1,920 hours of support, they have met their commitment.

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Guest Vern Edwards
Vern,

Wouldn't jtolli's contract be a FFP level of effort term contract? She's indicated that once the contractor has delivered 1,920 hours of support, they have met their commitment.

Don,

It does sound like an FFP LOE.

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Thanks for all the good input. I like learning new things. So, let's assume that I have a FFP LOE contract. I notice FAR 16.207-3 (d) states one of the limitations for use of this type of contract is, "The contract price is $100,000 or less, unless approved by the chief of the contracting office." My contract is valued at nearly $4.5 million, so if it is a FFP LOE contract, then it would had to have been approved by the chief of contracting office, and it may have been but I don't have that information.

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Guest Vern Edwards

Let's slow down here. The contract type taxonomy probably does not make any difference at this point. The contract exists and it is what it is, whatever that is. What matters is what it says with respect to any particular issue. There is no reason to worry about whether it's this or that. The time for that was when the model contract was being put together for the solicitation. Calling it firm-fixed-price or something else isn't going to resolve any issues or solve any problems. With respect to any questions, what matters is what the contract says when interpreted as a whole.

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Let's slow down here. The contract type taxonomy probably does not make any difference at this point. The contract exists and it is what it is, whatever that is. What matters is what it says with respect to any particular issue. There is no reason to worry about whether it's this or that. The time for that was when the model contract was being put together for the solicitation. Calling it firm-fixed-price or something else isn't going to resolve any issues or solve any problems. With respect to any questions, what matters is what the contract says when interpreted as a whole.

Hello everyone - I am a small business contractor SDVOSB (single employee) - tagging onto this last post because my contract is very similar and much of the discussion matches my contract. (FFP with schedule of supplies/services expressed as consulting services and knowledge sharing, quantity 1020hrs, task orders to be issued by government, services to be performed at the contractor site and delivered to Gov't. The CO who awarded this is not available and I am dealing with a replacement CO. Contract period has expired. I'm trying to collect for services that were not utilized.

Should start a new post or can we discuss here? Thanks

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Hello everyone - I am a small business contractor SDVOSB (single employee) - tagging onto this last post because my contract is very similar and much of the discussion matches my contract. (FFP with schedule of supplies/services expressed as consulting services and knowledge sharing, quantity 1020hrs, task orders to be issued by government, services to be performed at the contractor site and delivered to Gov't. The CO who awarded this is not available and I am dealing with a replacement CO. Contract period has expired. I'm trying to collect for services that were not utilized.

Should start a new post or can we discuss here? Thanks

I think you should start a new post, this thread is very old and your issue may get overlooked.

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