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CPFF Exceeding funding


jeff4757

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jpayne,

Are you asking about the situation alluded to in paragraph (f) of FAR 52.232-20,Limitation of Cost?

(f) If the estimated cost specified in the Schedule is increased, any costs the Contractor incurs before the increase that are in excess of the previously estimated cost shall be allowable to the same extent as if incurred afterward, unless the Contracting Officer issues a termination or other notice directing that the increase is solely to cover termination or other specified expenses.
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jpaynehydroid,

Yes. See the previous responses.

In addition, there are many court cases that have reinforced that notion.

The answer to your question is relatively black-and-white at this point. There is not really much gray area left.

Hope this helps.

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Heretalearn,

You are probably correct but don't both of the clauses have the same notification requirements? Yes, one applies to incremental funds while the other applies to fully funded contracts, but don't they operate the same way with respect to notification/failure to notify?

I have always thought so. It would be nice to learn something new today!

H2H

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H2H,

Yes, they do. And they also operate similarly with respect to exceeding the funding limit, whether it's incrementally funded or fully funded. Compare the excerpt from FAR 52.232-22, Limitation of Funds, to the one above from FAR 52.232-20.

(i) When and to the extent that the amount allotted by the Government to the contract is increased, any costs the Contractor incurs before the increase that are in excess of...[t]he amount previously allotted by the Government...shall be allowable to the same extent as if incurred afterward, unless the Contracting Officer issues a termination or other notice and directs that the increase is solely to cover termination or other specified expenses.

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H2H, the triggers are similar, but not identical. (All emphasis below is added.)

Limitation of Cost: "The Contractor shall notify the Contracting Officer in writing whenever it has reason to believe that (1) The costs the Contractor expects to incur under this contract in the next 60 days, when added to all costs previously incurred, will exceed 75 percent of the estimated cost specified in the Schedule; or (2) The total cost for the performance of this contract, exclusive of any fee will be either greater or substantially less than hand been previously estimated."

Limitation of Funds: "The Contractor shall notify the contracting Officer in writing whenever it has reason to believe that the cost it expects to incur under this contract in the next 60 days, when added to all costs previously incurred, will exceed 75 of (1) the total amount so far allotted to the contract by the government..."

The question was: "Does the FAR indicate that a Contractor-at its own risk-EXCEED funding limits on a CPFF contract?" It's pretty common for industry execs and managers to refer to cost and funding interchangeably. I'm not sure whether the OP really meant funding rather than cost, but I believe the answer in either case is that the Contractor does perform at its own risk when it exceeds either the estimated cost specified in the schedule or the total amount so far allocated to the contract.

Limitation of Cost FAR 52.232.20(d): "Except as required by other provisions of this contract, specifically citing and stated to be an exception to this clause (1) The Government is not obligated to reimburse the Contractor for costs incurred in excess of (I) the estimated cost specified in the Schedule...(2) The Contractor is not obligated to continue performance under this contract... or otherwise incur costs in excess of the estimated cost specified in the Schedule, until the Contracting Officer (I) notifies the Contractor in writing that the estimated cost has been increased and (2) provides a revised estimated total cost of performing this contract..."

Limitation of Funds FAR 52.232.22(B ): "...The Contractor agrees to perform, or have performed, work on the contract up to the point at which the total amount paid and payable by the Government under the contract approximates but does not exceed the total amount actually allotted by the Government to the contract... (e) If, after notification, additional funds are not allotted by the end of the period specified in the Schedule..., upon the Contractor's written request the Contracting officer will terminate this contract on that date... (f) Except as required by other provisions of this contract, specifically citing and stated to be an exception to this clause (1) The Government is not obligated to reimburse the Contractor for costs incurred in excess of the total amount allotted by the Government to this contract; and (2) The Contractor is not obligated to continue performance under this contract... or otherwise incur costs in excess of (I) The amount then allotted to the contract by the Government..."

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