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CPFF Completion (Fee Ceiling in Base ID/IQ) vs CPFF Term Task Order


JAG51

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Base services ID/IQ's were competitively awarded a year ago. The base contract includes:

"5252.216-9200 PAYMENT OF FIXED FEE (COMPLETION TYPE) (JAN 1989) FIXED FEE ____*___The Government shall make payment to the Contractor when requested as work progresses, but no more frequently than biweekly, on account of the fixed fee, equal to __**__ percent of the amounts invoiced by the Contractor under the “Allowable Cost and Payment” clause hereof for the related period,

subject to the withholding provisions of paragraph (B) of the “Fixed Fee” clause. In the event of discontinuance of the work in accordance with clause of this contract entitled “Limitation of Funds” the fixed fee shall be redetermined by mutual agreement equitably to reflect the diminution of the work performed; the amount by which such fixed fee is less than, or exceeds payments previously made on account of fee, shall be paid, or repaid by, the Contractor, as the case may be.

*The total fixed fee under CPFF CLIN XXXX is $XXXXXXX (6.00% of CLIN XXXX cost), CPFF CLIN XXXX is $XXXXXXX (6.00% of CLIN XXXX cost), and CPFF CLIN XXXX is $XXXXXXXX (6.00% of CLIN XXXX cost).

**To be determined at the Task Order level. The allowable fee percentage will be negotiated at the Task Order Level. The Government does not anticipate task order blended fee to exceed the following rates based on expected performance and contract risk:

Base Period (CLIN XXXX): 6.00%

Option I (CLIN XXXX): 6.00%

Option II (CLIN XXXX): 6.00%

(End of clause)"

A competitive CPFF Task Order RFP is issued. The TO RFP language states:

"Task Order Type: Cost-plus-fixed fee (CPFF) Level of effort, type task order

Fee: The allowable fee percentage will be negotiated at the Task Order level and shall not exceed the blended percentage proposed at the basic contract level, Clause 5252.216-9200 PAYMENT OF FIXED FEE."

You'll note the base contract clause applies solely to CPFF Completion types of Task Order of which this Task Award is not. A $500k CPFF proposal is submitted in response to the TO RFP but with 6.5% fee.

Question 1: Would you consider the proposal non-responsive for exceeding the 6% ceiling of the base contract clause? If so, why? If not, why not?

Question 2: If you don't consider the proposal non-responsive, do you consider the statement "[t]he allowable fee percentage will be negotiated at the Task Order level" as establishing a condition precedent to agreement upon an acceptable fee percentage? In other words, do you believe the Gov't has obligated itself to negotiate the fee through the use of the words "will be negotiated" so as to give the contractor an opportunity to lower its fee to 6% to conform to the TO RFP language, even though the Task Order is a CPFF Term (LOE) as opposed to a CPFF Completion.

Curious.

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I guess "null" in mathematical terms is the appropriate response. As far as I can gather (as it was not my contract) during the original submission for the ID/IQ, the prime applied the fixed fee over itself and that of CPFF subcontractors. Subs did not propose any fee to the prime - why, I don't know. There are no subs being proposed for TO Award. I interpreted the blending to apply to the prime / sub relationship as opposed to a blending of differing fixed fee percentages over the number of awarded task orders. Btw - this is the first task order RFP under this program. In short, I ignored (rightly or wrongly) the blending statement.

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Guest Vern Edwards

I don't understand your last response, but no matter.

If the idea is that the contractor cannot propose a higher rate of fee than the rate it included in its contract proposal, and if that rate is 6 percent, then the GAO would say that a rate in excess of that amount would make the task order proposal unacceptable (not "nonresponsive"). That being said, the CO could call the contractor and tell them to reduce their fee or they're out. I am presuming that the task order RFP did not call FAR Part 15 procedures into play.

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TO RFP does call out FAR Part 15. It states:


"The offeror’s overall cost and fee will be evaluated. The Government will evaluate the proposed cost of each offer for realism and reasonableness in accordance with FAR Subpart 15.4 for all offerors."


Would you happen to have a GAO case name or number handy?

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Guest Vern Edwards

If the RFP called out FAR Subpart 15.4, then that does not bring the rules about discussions and final proposal revisions into play, since they are in FAR 15.306.

Please clarify: on what point do you want a GAO decision?

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GAO - exceeding a fixed ceiling on a base ID/IQ leads to an unacceptable determination as opposed to non-responsive.

Is FAR 15.306 required to be called out in the RFP TO in order for it to apply? The base ID/IQ expressly referenced FAR 15.306 in the initial award, but you're correct in that this RFP TO does not make reference to FAR 15.306.

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Also, on another note: 15.404-1 Proposal analysis techniques states the Gov't can adjust the fee when appropriate. Is it possible for the KO to adjust the fee downward, so it conforms to the 6% cap?

15.404-1 Proposal analysis techniques, cost realism analysis:

(d) Cost realism analysis.

(1) ...

(2) Cost realism analyses shall be performed on cost-reimbursement contracts to determine the probable cost of performance for each offeror.

(i) ...

(ii) The probable cost is determined by adjusting each offeror’s proposed cost, and fee when appropriate, to reflect any additions or reductions in cost elements to realistic levels based on the results of the cost realism analysis.

GAO - "We have held that agencies should make downward adjustments to an offeror’s evaluated cost where the proposal shows a misunderstanding of the requirements in a manner which would cause the government to incur a lower cost than that identified in the proposal. See Priority One Servs., Inc., B-288836, B-288836.2, Dec. 17, 2001, 2002 CPD ¶ 79 at 3-4"

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No.

In a cost realism analysis, when developing a probable cost, the Government analysis might show that the offeror proposed an estimated cost of $50 for a task but it will likely actually cost $55 (or $45) -- the $55 (or $45) figure is used for purposes of evaluation to determine the best value, but the contract award will still be for an estimated cost of $50. You can't do a probable cost analysis on a fixed-fee figure.

But you can negotiate anything.

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Vern, I believe I've found what is needed. It appears to be the embodiment of FAR 15.306 in the TO RFP. It states:

"Proposal Information

· The Government reserves the right to clarify certain aspects of one or more of the proposals, without contacting all offerors, unless such communication is used to materially alter the technical or cost elements and/or otherwise revise the proposal.”

This is essentially clarifications / discussions in a nutshell. I was hung up looking for FAR callouts and using specific search words such as clarification or discussion. Once I re-read the entire TO RFP front cover to cover, it became clear. Thank you for your prodding and assistance.

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