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FFP contracts required to bill as T&M type

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I have some seen posts on this but I'm still confused.  We have a number of contracts that are FFP but the government only allows us to bill actual hours against a labor category, like it is a T&M. 

The CLINS will be classified as FFP in the schedule, it is in the Federal database as a FFP but the CLIN states that hours are estimated and payment will only be made for actual hours worked.  Is isn't a LOE or incentive type FFP.  We priced it as a FFP.

I don't understand how we are not entitled bill to the total amount of funding on a FFP contract. .  Thanks

 

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It appears to be a unit priced contract line item where the rates are FFP.  The notes in the schedule are generally part of the contract terms and conditions.  Was the note in the solicitation that you used to propose and price the contract?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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No there is nothing in the terms and conditions.  If they are saying the rates are fixed then wouldn't that be a labor hour contract and not a FFP?

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Are you sure you haven't got a firm-fixed-price level-of-effort (FFP LOE) contract?

See FAR 16.207.

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I have seen this several times where an agency will write an FFP contract, but administer it as a T&M/LH contract.  This way of administering the contract is usually not disclosed to the contractor until after award.  In most cases, this is done with small business concerns who are usually reluctant or have a diminished capacity to push back against the agency.  I suspect this is done to avoid having to do a D&F justifying the use of a T&M contract.

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That's what I was afraid of and we have quite a few small businesses with this situation on several contracts.  I have contacted the ACO but I'm hearing crickets:)).  Do you know what language I could start with to push back?  Thanks so much

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Note sure I know how to answer.  It is a small business set aside so the accelerated payment to small businesses is there along with the DFAR electronic submission clause.  That's all I see. 

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15 hours ago, pat said:

That's what I was afraid of and we have quite a few small businesses with this situation on several contracts.  I have contacted the ACO but I'm hearing crickets:)).  Do you know what language I could start with to push back?  Thanks so much

Pat, I don't understand what you meant by the statement "...we have quite a few small businesses with this situation on several contracts. "  Please clarify.  Are you referring to subcontractor's to you as the prime contractor? Are you with the government or are you the contractor? 

Pat, you indicated that this was a competitive small business set-aside. You said that there was no indication in the solicitation prior to award that hours were estimated and payment will only be made for actual hours worked.  Please clarify when the statement below for the Line Item first appeared in the language of your contract:

18 hours ago, pat said:

but the CLIN states that hours are estimated and payment will only be made for actual hours worked. 

 

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15 hours ago, Retreadfed said:

I suspect this is done to avoid having to do a D&F justifying the use of a T&M contract

Has this D&F become harder to write over the years?  I don't remember it being too much of an obstacle, there was copious parroting of FAR 16.601.c.  I know the Obama Administration wanted less T&M.

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A lot of COs like to think of a fixed unit price labor hour contract as being "fixed price"   They like the fixed price clauses.   Many of these contracts do not have any deliverables except for the hours worked.  Therefore, every hour not worked is an hour not delivered and it can be deducted from the "fixed price". 

D&F not an issue for us, under 3 years only needs Branch Chief (level above CO) and over 3 years takes HCA but approval time for HCA is only a day or two. 

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Is that an acceptable way to treat these FFP contracts then, using the hours worked as the deliverable?

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Pat wants to know how how to "push back" to the government but doesn't seem to want to clarify when or how the statement in the CLIN was included that says "hours are estimated and payment will only be made for actual hours worked" .  Was it BEFORE or AFTER Pat's company submitted their proposal?

 I know that Pat has been viewing this thread within the past 7 hours, including a post just now.

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Yes.  I think I blew sending the last response.  FAR 52.232-1 is not in the contract.

We are a contractor with several small businesses.  We have prime contracts.  The line item language was in the award of contract only.  Think I covered all the questions.  Thanks so much.

 

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OK, thanks, Pat.  Then it looks like the government changed the terms of the contract. There was no meeting of the minds. Submit a claim. 

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Occam's Razor: the contracting agency doesn't know what they are doing.  

I've seen this more times than I can count:

  1. CO determines that FFP is appropriate
  2. IGCE uses labor hours and rates as the BOE
  3. CO issues FFP RFQ
  4. Award is made at an FFP, yet Section B retains the hours/rates pricing used in the IGCE and evaluation
  5. Micromanaging COR who only knows how to count butts in seats takes over administration of contract
  6. 1 FTE goes to Disneyland for a week
  7. COR decrements invoice for "40 hours not worked"
  8. Repeat until PoP expires

Lesson: it's much easier to award a LH contract when you call it FFP.  

(But the real fun comes when you try to close a physically complete FFP vehicle and there's a bunch of unexpended funds still on it, which, of course, should be impossible.)

This is a BS argument, but it's worked for me in the past: Explain to the government that the contract labor price was based on an 1880 hour year, which is 5 weeks short of the total number of workdays in a typical year; therefore, until the government can show that each FTE has  taken more than 5 weeks off , you can't decrement the  invoice. (one other tactic I have used is to price the deliverables individually.  At least that keeps the attention where it should be, which is on DELIVERIES) . :o

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On 4/12/2017 at 4:59 PM, napolik said:

Are you sure you haven't got a firm-fixed-price level-of-effort (FFP LOE) contract?

See FAR 16.207.

FFP LOE is narrowly applicable, and generally a terrible idea, so I suggest  you purge that bit of info from your data banks.  It will save you needless heartbreak and embarrassment in the future.

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REA'n, the FAR limitations on the use of FP LOE contracts are frequently ignored by the government.  I have seen more such contracts that do not comply with those limitations than those that do and that is quite a few. 

Pat may have left the building, but if (s)he is still around, maybe we can find out what payment clause is in the contract.  If it is an FFP contract, 52.232-1 should be the payment clause.

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Could be worse.

For example, I'm dealing right now with a client's (non-Federal) T&M contract that is being administered as a CPPC, with preliminary audit findings pertaining to the indirect costs used to build up the fixed-price hourly billing rates that were then escalated in accordance with written direction from the customer and written contract mod documenting the bilateral agreement as to escalated the hourly billing rates.

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I just awarded a FFP contract for our Accounting service (large business, GSA OASIS Program).  Our agency does not allow to do T&M contract.  My CLIN Unit was Monthly, the CLIN was included that says "hours are estimated and listed detailed labor categories and hours as below...."  I did not put "payment will only be made for actual hours worked".  My question is Can I ask contractor to bill the government based on actual hours worked?  How shall COR monitor this contract?  If the contractor proposed 10 personnel monthly for certain hours, but they only provide 9 people and less hours than they proposed, Are we (government) still pay the proposed monthly price?  Since the CLIN has detailed all estimated labor categories; hours; and price, the contractor should bill the government with a detailed breakdown invoice based on the actual hours worked.  Am I correct?  if so, how shall I provide my explanation?  Thank you.

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tj,

Your agency doesn't allow T&M contracts -- so why are you trying to do a T&M contract?

From the little you wrote, it seems your contractor should invoice for the agreed-upon firm-fixed-price each month.  The hours are estimated, and may fluctuate each month, but the invoice amount will be the same each month.

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