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I am working a FFP base oprations support C-type contract with multiple CLINs.  One of the CLINs was set up to include small dollar maintenance and repairs under $25k.  This CLIN, (CLIN 1), is fully funded and executed with the use of technical letters of direction (TLDs) as these small requirements are identified.  TLDs are signed by the KO.  The second CLIN, (CLIN 2), was established to complete larger dollar projects, those over $25k.  The TLDs and projects have all been within the scope of work.  

CLIN 2 has a NTE value of $4m.  Funding and value are increased for CLIN 2 each time a project is modified into the contract.  The result is a persistent change in contract value, with and without options.  The PMO indicated CLIN 2 exceeds the NTE every year and does not understand why this is an issue (surprise).   

I cannot find any information to support or dispute the persistent variation in contract value.  Is it acceptable for the contract value to vary this often?  If so, can someone send a reference or citation?

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Is the NTE value in the contract as a ceiling?

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And the authority for increasing the CLIN 2 NTE value is ... what? The Changes clause? Seems like a rather inefficient means of managing the contractor, in my opinion. It seems to me that use of FFP almost violates the FAR Part 16 description of when an FFP type should be used, since the parties cannot agree on a firm scope of work at the time of price agreement.

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I see nothing wrong with the approach, as described in the original posting.  It seems each project under CLIN 002 is FFP.  At contract award, CLIN 002 had $0 obligated and a ceiling of $4 Million.  When the first project was authorized, let’s say for $30K, the obligated amount became $30K and the ceiling is unchanged at $4 Million.  When the second project was authorized, let’s say for $50K, the obligated amount became $80K and the ceiling is still unchanged.  Is there a problem?

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6 hours ago, here_2_help said:

And the authority for increasing the CLIN 2 NTE value is ... what? The Changes clause? Seems like a rather inefficient means of managing the contractor, in my opinion. It seems to me that use of FFP almost violates the FAR Part 16 description of when an FFP type should be used, since the parties cannot agree on a firm scope of work at the time of price agreement.

It appears that the government is issuing technical letters of direction that are akin to "work orders" to liquidate the price of the maintenance and repair CLIN.  - which might be or might not be FFP.  Perhaps the individual work orders might or might not  be pre-negotiated as FFP or NTE? . We dont know the mechanics.

How is  the "NTE part of the contract ceiling"?  Are some or all of the FFP CLIN's unit priced and along with the "NTE" line items are subject to an overall not to exceed cieling?

I was involved in some huge FFP contracts where we added a million dollar or so cost reimbursement line item in each of three similarly designed contracts. The CLINS were for resolving numerous relatively small piping, electrical and structural interference problems in a Pollution Abatement System (PAS) for a large industrial plant with GFE process equipment and GFE PAS equipment. We issued cost reimbursement work orders  based upon ROM input from the individual contractors to avoid time and cost delay impacts. Each plant had individually purchased GFE equipment that were not identical across plants and often didnt have the same installation configurations as the design assumed. As is common with GFE, the designs assume some particular configuration or size and actual equipment size and configurations varied.

From the limited information provided, the contract administration might be sloppy.

 

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17 minutes ago, joel hoffman said:

From the limited information provided, the contract administration might be sloppy.

Or maybe not.  

For many, many years, the Air Force had a policy and a clause explicitly allowing for over-and-above work very similar to what is described in the original posting.  It can be done honorably and without sloppiness — of course, like anything else, it can also be done dishonorably and sloppily.  

What is described in the original posting sounds okay to me in principle.  Maybe the program manager needs some discipline to stay within the $4 Million ceiling.

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1 hour ago, ji20874 said:

Or maybe not.  

For many, many years, the Air Force had a policy and a clause explicitly allowing for over-and-above work very similar to what is described in the original posting.  It can be done honorably and without sloppiness — of course, like anything else, it can also be done dishonorably and sloppily.  

What is described in the original posting sounds okay to me in principle.  Maybe the program manager needs some discipline to stay within the $4 Million ceiling.

ji, the over and above approach is okay with me too. I was really referring to the program manager and/or contracting office exceeding the NTE without adjusting it. 

I’d  think that with all the wiz bang automated contracting systems these days, the software would catch something like that. I guess not every organization has that kind of sophistication. 

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3 hours ago, ji20874 said:

I see nothing wrong with the approach, as described in the original posting. ...  Is there a problem?

Yes, according to the PMO, as stated in the OP. The customer is unhappy ... that is normally considered to be a problem.

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here_2_help,

I’m not able to discern the problem in the original posting.

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It’s not clear to me what Big Bob’s (rsherbondy’s?) role is in “working” the contract. Is Big Bob the “CO”? He also mentioned the “KO”, which is a familiar term to me for “contracting officer”, for the Army at least. The term “CO”, in the Army, means Commanding Officer. 

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18 hours ago, ji20874 said:

I’m not able to discern the problem in the original posting.

Ditto.

On 3/27/2019 at 2:58 PM, BigBob said:

CLIN 2 has a NTE value of $4m.  Funding and value are increased for CLIN 2 each time a project is modified into the contract. 

It sounds like the customer needs to do a better job of estimating his or her requirement.  The TCV should be set such that it covers expected requirements for the entire PoP.  The fact you have to increase the TCV with every order means your ceiling isn't high enough.

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On 3/27/2019 at 11:58 AM, BigBob said:

The result is a persistent change in contract value, with and without options.  The PMO indicated CLIN 2 exceeds the NTE every year and does not understand why this is an issue (surprise). 

The problem? See above.

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The OP said the contract is a FFP, C type contract.  Yet the contract description states there is no fixed quantity and no dollars obligated at the time of award.  Rather, there is a NTE ceiling and work is ordered and funding obligated as requirements arise.  It sounds like despite awarding a FFP C type contract, they are administering it as a FFP or T&M, D type contract, it is hard to tell.

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3 hours ago, Lionel Hutz said:

The OP said the contract is a FFP, C type contract.  Yet the contract description states there is no fixed quantity and no dollars obligated at the time of award.  Rather, there is a NTE ceiling and work is ordered and funding obligated as requirements arise.  It sounds like despite awarding a FFP C type contract, they are administering it as a FFP or T&M, D type contract, it is hard to tell.

Ahhh, I thought that there are two “over and above” type CLINS within a larger FFP contract. I wish that the OP would clarify what his role is and whether most of the contract is otherwise FFP. I also speculated whether other CLINS are unit priced items. It would be helpful to confirm or correct my impression and those of others. 

How about it, BigBob or rsherbondy? Can you engage here, please? 

Edited by joel hoffman

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14 hours ago, Junius said:

Drive-by query.

I agree. Ambiguous question followed by moderate speculation.and lack of engagement by OP with dual identity. See rule 17, in Terms for Use. 

 I recommend closing the thread. 

P.S. “Contracting Workforce” is not the topic area to discuss contract pricing questions. Suggest moving the thread. Just sayin’...

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I will keep the thread open for a week after the orignal poster's second post.  On Monday, I will close it unless there is a response to the questions.

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