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primealpha

FFP LOE Subcontract question on reduced payments after work already done

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My client has signed an FFP LOE contract with a prime who is on a CP contract.  My client always worked previously as an FFP only so they submitted rates for hours to get to a specific deliverable as the LOE.  The Prime accepted their rates and put them in with their bid package and won the contract. This is a custom built software solution that requires X amount of time to get to a functional delivery (it is defined as a deliverable, it is produced as a stand-alone piece of the whole deliverable).  This is a new contract that they had to move to since their previous contract expired and this is a new prime. The prime has now come to them with a TO finally.  Apparently, there were issues on the task order that required a modification, after my client had already been approved to work and working for almost 90 days, and stated in this TO a reduced dollar amount from clients original submission a quote for this work.  So the rates they submitted and hours already worked are now too high.  The prime is saying they didn't get enough from the government and want my client to sign this task order with the new pricing.   What if any recourse does my client have other than not signing and than not being paid?

summary:

Client submitted pricing for the work requested under an FFP LOE agreement, they have an executed contract with prime for this work.  They now want to reduce price (by actually reducing the hours) because the government didn't give them enough money.  My client knows (based upon available information) what was put on the contract so know that the money is there just that the prime wants more money on there end.  So Prime now want client to sign this task order agreeing to the new price AFTER they have already performed 2/3's of the work for the 4 month period of the task order.  

What are their options?  I can clarify if anyone has questions on specific points.

Thanks!

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53 minutes ago, primealpha said:

"My client has signed an FFP LOE contract with a prime who is on a CP contract."  

"Apparently, there were issues on the task order that required a modification, after my client had already been approved to work and working for almost 90 days..."

Based on the above quotations, I don't understand your final point of "not signing and [then] not getting paid."  It appears that they already have a contract with the Prime.  Since it's LOE, there's no deliverable required other than their effort toward a specified objective.  I'd recommend getting solid on their existing contract and then going from there.

If they don't have a contract with the Prime, what was the "approval" they were working under?

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Patrick,

Sorry if I wasn't clear.  They do have a contract with the prime, I thought I explained that in the first sentence, it is a subcontracting agreement FFP LOE.  I mean that if they don't sign this new TO that is for work under this contract they can not invoice, hence get paid.  But the Task Order was sent almost 90 days after the government approved the start of work while they worked through a Modification to the contract (Some language on breaking out travel separately from other monies).  Did that clear that up?

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Posting back and forth always loses something in translation, so thanks for being patient. 

I'm still missing something here.  How was your client "approved" to do the work?  Do they have written documentation from someone at the Prime that carries contractual authority?  If so, and if they worked for 90 days based on that approval, then there doesn't appear to be an issue with getting paid for it.  Or does the "authorization" refer to the Gov authorizing the Prime?

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The client has approved PTE's for Travel from the Government under the task order and Authorization to work given by the Government to the prime and the prime to us.  The issue is that the Prime is now saying (after the work has already been completed and other work near completion) that the TO is for less than our agreed upon price (remember it is an FFP LOE) and want us to sign that modified TO.  The Prime said they need that TO signed before my client invoice's for their work. 

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Difficult to say what contract options there are without knowing all the contract terms and conditions. In general, it sounds like your client may sue the prime for breach of contract for 100% of the work unless the contract terms permits a unilateral change that reduces the work scope . From a business standpoint, it looks like under the given facts, your client has only completed 2/3 of the work. If that is the case, another option is to sign the task order that reduces the contract work, get paid for the completed 2/3 work and work with your prime to obtain more contract work in the future.

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