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Under what conditions would is fee be applied to material?

What an inane question. Are we supposed to guess what type contract and/or pricing arrangement is applicable or is this just a general interest question?

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The defintion of Inane is as follows:

1 : empty, insubstantial

2 : lacking significance, meaning, or point : silly <inane comments>

I always thought that there was no such thing as a "silly" question. It seems that Joel thinks otherwise. Please do me a favor Joel. If you take pleasure in answering questions in this manner, please do not responsd to questions I ask on these boards. This is supposed to be a place where people feel free to ask questions among professionals for those of us who are seeking more knowledge in the profession.

I posed this question as general question and I suppose you could replace fee with profit but if that would make things easier. However, If I have a T&M contract is the material portion of the contract allowed to have Fee or profit applied to it or is the fee or profit built into the labor portion of what is billed for the time portion of the "Time" and materials contract.

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AAC,

Your orginal question was just so broad, no one could tell what you asked. The answer is in two places in the FAR - part 16 on the use of T&M contracts and the payment clause in part 52.

FAR 16.601(:) states "(B) Description. A time-and-materials contract provides for acquiring supplies or services on the basis of?

(1) Direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit; and

(2) Actual cost for materials (except as provided for in 31.205-26(e) and (f))."

Also the payment clause for T&M, FAR 52.232-7(B)(7) adds " Except as provided for in 31.205-26(e) and (f), the Government will not pay profit or fee to the prime Contractor on materials."

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The defintion of Inane is as follows:

1 : empty, insubstantial

2 : lacking significance, meaning, or point : silly <inane comments>

I always thought that there was no such thing as a "silly" question. It seems that Joel thinks otherwise. Please do me a favor Joel. If you take pleasure in answering questions in this manner, please do not responsd to questions I ask on these boards. This is supposed to be a place where people feel free to ask questions among professionals for those of us who are seeking more knowledge in the profession.

I posed this question as general question and I suppose you could replace fee with profit but if that would make things easier. However, If I have a T&M contract is the material portion of the contract allowed to have Fee or profit applied to it or is the fee or profit built into the labor portion of what is billed for the time portion of the "Time" and materials contract.

Sorry to be acerbic, AAC. The question was inane in the manner which you asked. Your question was so broad that it would take an essay to answer it. I didn't understand the point of your question. "Fee" can be applied to materials or it can be excluded, depending upon the situation. There - I believe that I responded more politely your original question.

Materials could be involved in most contract types and pricing arrangements (supplies, services, A-E, construction R&D, FFP, CP, T&M, etc.). In FAR talk, the term "fee" is generally associated with cost reimbursement contracts (The Government Contracts Reference Book, 2nd Ed., by Nash, Schooner, Obrien). However, people often refer to "profit" as fee, which could be associated with various FFP contracts. In an A-E contract, "fee" is referred to in Federal Law as the price for various professional services. And in the commercial world, "fee" could mean many different things, including "costs", "markups" or the price for something. DHS referred to certain costs as fee, herein.

So, who could tell what the heck you were asking? In the future please be more specific when asking for advice. If you ask a question, please be prepared to promptly clarify if someone needs more information to answer. Responders often go to lengths to do some reasonable amount of research before responding. To answer your question would have taken a research paper. You asked the question late Thursday night or early Friday morning, two people asked for clarification and it appears that you didn't followup until Sunday**. So - sorry, but it is really aggravating when folks ask fuzzy questions, then don't bother to followup when others need clarification or more detail. I wasn't going to waste time researching or otherwise trying to answer such a "shotgun" (with an open choke) question.

**I do salute you for apparently reading and responding to my post on a Sunday, which is a day off in many places - unless, of course, you are in the Middle East in a Moslem country. There, "weekends" fall on Thursday and Friday, with Sunday being a regular workday.

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Sorry to be acerbic, AAC. The question was inane in the manner which you asked. Your question was so broad that it would take an essay to answer it. I didn't understand the point of your question. "Fee" can be applied to materials or it can be excluded, depending upon the situation. There - I believe that I responded more politely your original question.

Materials could be involved in most contract types and pricing arrangements (supplies, services, A-E, construction R&D, FFP, CP, T&M, etc.). In FAR talk, the term "fee" is generally associated with cost reimbursement contracts (The Government Contracts Reference Book, 2nd Ed., by Nash, Schooner, Obrien). However, people often refer to "profit" as fee, which could be associated with various FFP contracts. In an A-E contract, "fee" is referred to in Federal Law as the price for various professional services. And in the commercial world, "fee" could mean many different things, including "costs", "markups" or the price for something. DHS referred to certain costs as fee, herein.

So, who could tell what the heck you were asking? * In the future please be more specific when asking for advice. *If you ask a question, please be prepared to promptly clarify if someone needs more information to answer. Responders often go to lengths to do some reasonable amount of research before responding. To answer your question would have taken a research paper. You asked the question late Thursday night or early Friday morning, two people asked for clarification and it appears that you didn't followup until Sunday**. So - sorry, but it is really aggravating when folks ask fuzzy questions, then don't bother to followup when others need clarification or more detail. I wasn't going to waste time researching or otherwise trying to answer such a "shotgun" (with an open choke) question.

*If not a Forum rule, it ought to be...

**I do salute you for apparently reading and responding to my post on a Sunday, which is a day off in many places - unless, of course, you are in the Middle East in a Moslem country. There, "weekends" fall on Thursday and Friday, with Sunday being a regular workday.

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Guest Vern Edwards

AAC:

The real problem with your inquiry is that you did not read your contract. Assuming that your T&M contract is noncommercial, the clause at FAR 52.232-7, Payments Under Time-and-Material and Labor-Hour Contracts (FEB 2007), provides as follows at paragraph (B)(7):

Except as provided for in 31.205-26(e) and (f), the Government will not pay profit or fee to the prime Contractor on materials.

If your contract is for commercial items, then you should have read that the government will pay for materials in accordance with FAR 52.212-4, Contract Terms and Conditions -- Commercial Items (MAR 2009), Alt. I (OCT 2008), paragraph (i)(1)(ii), which provides as follows:

(A) If the Contractor furnishes materials that meet the definition of a commercial item at FAR 2.101, the price to be paid for such materials shall be the contractor's established catalog or market price, adjusted to reflect the—

(1) Quantities being acquired; and

(2) Any modifications necessary because of contract requirements.

(B) Except as provided for in paragraph

(i)(1)(ii)(A) and (D)(2) of this clause, the Government will reimburse the Contractor the actual cost of materials (less any

rebates, refunds, or discounts received by the contractor that are identifiable to the contract) provided the Contractor—

(1) Has made payments for materials in accordance with the terms and conditions of the agreement or invoice; or

(2) Makes these payments within 30 days of the submission of the Contractor’s payment request to the Government

and such payment is in accordance with the terms and conditions of the agreement or invoice.

Thus, under paragraph (A), the contractor might get profit on materials if it is making a profit at its established catalog or market price.

The problem was not that your question was "inane" (wrong word, Joel). The problem was that you could/should have answered it for yourself.

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It was lacking any meaning or point, as asked - inane. Nobody but the questioner knew until three days later that he or she was referring to a time and materials contract.

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