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Current facts -

Overhaul of commercial engine has been determined to be a commercial service

Service was not competed

Due to statute/regulation, commercial = firm fixed price (FFP)

Vendor who completes engine overhauls does not firm fix price to their commercial customers.  Some items in an overhaul are "on condition only", meaning the item will be inspected by the vendor and if it passes the inspection, will not be changed.  When an engine is received by the vendor, the vendor determines what is required to complete the overhaul but can only assess that once the engine is received.  If the Government is required to FFP based on the situation above, the Government may be paying more/less than what is actually required to overhaul the engine.

If more facts are needed, please let me know.....

Why did the powers that be mandate that a non-competed, commercial contract be FFP?


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I don’t know , off-hand. However, if that is the only way to price the effort,and if it must be sole-source, why does it have to be a Part 12 acquisition? 

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How about a two-step process?  STEP 1 tear-down and quote, STEP 2 repair.  You send an item to the vendor for STEP 1 at a firm-fixed-price.  The vendor does a tear-down and replies back to you with a FFP quote for the repair.  You negotiate the repair price and authorize the vendor to go into STEP 2 at a firm-fixed-price.

In the commercial sector, there might be a pre-existing pricelist for every replacement part and procedure -- every item on the list is FFP. 



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Can't this be done with a Time & Materials or Labor Hour contract, in accordance with FAR 12.207(b)(1)?


(1) A time-and-materials contract or labor-hour contract (see Subpart 16.6) may be used for the acquisition of commercial services when—

(i) The service is acquired under a contract awarded using—

  • (A) Competitive procedures (e.g., the procedures in 6.102, the set-aside procedures in Subpart 19.5, or competition conducted in accordance with Part 13);
  • (B) The procedures for other than full and open competition in 6.3 provided the agency receives offers that satisfy the Government’s expressed requirement from two or more responsible offerors; or
  • (C) The fair opportunity procedures in 16.505 (including discretionary small business set-asides under 16.505(b)(2)(i)(F)), if placing an order under a multiple-award delivery-order contract; and

(ii) The contracting officer—

  • (A) Executes a determination and finding (D&F) for the contract, in accordance with paragraph (b)(2) of this section (but see paragraph (c) of this section for indefinite-delivery contracts), that no other contract type authorized by this subpart is suitable;

    (B) Includes a ceiling price in the contract or order that the contractor exceeds at its own risk; and

    (C) Prior to increasing the ceiling price of a time-and-materials or labor-hour contract or order, shall—

    • (1) Conduct an analysis of pricing and other relevant factors to determine if the action is in the best interest of the Government;

      (2) Document the decision in the contract or order file; and

      (3) When making a change that modifies the general scope of—

      • (i) A contract, follow the procedures at 6.303;

        (ii) An order issued under the Federal Supply Schedules, follow the procedures at 8.405-6; or

        (iii) An order issued under multiple award task and delivery order contracts, follow the procedures at 16.505(b)(2).


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1 hour ago, newanalyst said:

Some items in an overhaul are "on condition only", meaning the item will be inspected by the vendor and if it passes the inspection, will not be changed. 

It sounds a lot like contractor-run depot maintenance.

For Naval aviation anyway, we used Basic Ordering Agreements, under which we could  issue orders for teardown and the resulting maintenance as separate actions.  Many times the maintenance part ended up being ceiling-priced  based on an FFP per hour estimate, with consumables and parts  priced at-cost.

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There's a procedure for vessel repair that's similar to what ji suggested at DFARS PGI 217.7103-5:



PGI 217.7103-5  Repair costs not readily ascertainable.

      If the nature of any repairs is such that their extent and probable cost cannot be ascertained readily, the solicitation should—

      (1)  Solicit offers for determining the nature and extent of the repairs;

      (2)  Provide that upon determination by the contracting officer of what work is necessary, the contractor, if requested by the contracting officer, shall negotiate prices for performance of the repairs; and

      (3)  Provide that prices for the repairs, if ordered, will be set forth in a modification of the job order.


Although it appears in the DFARS PGI coverage for vessel repair, it could be used for other types of repair.

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