CPAF - AF Pool Fluctuation

[Tayloam]

One of my customers has recently told me that they will be issuing monthly modifications to a CPAF contract that change value and funding based on our monthly reports. Sometimes the modifications increase value/funding and sometimes there is a decrease (administration nightmare!). First question, this is a cost plus contract, can the government administer this way? Second question, can the CO modify the AF pool at the same ratio, whether there is an increase or a decrease?

[Guest Vern Edwards]

One of my customers has recently told me that they will be issuing monthly modifications to a CPAF contract that change value and funding based on our monthly reports. Sometimes the modifications increase value/funding and sometimes there is a decrease (administration nightmare!). First question, this is a cost plus contract, can the government administer this way? Second question, can the CO modify the AF pool at the same ratio, whether there is an increase or a decrease?

I'm not sure what you mean by "change value and funding." If you mean that the government will modify the contract in ways that will require the contractor to do less work or less demanding work, then the contracting officer must make an equitable adjustment in accordance with the contract changes clause. The changes clause for cost-reimbursement contracts, FAR 52.243-2, Changes--Cost Reimbursement (AUG 1987), says, at paragraph (:

If any such change causes an increase or decrease in the estimated cost of, or the time required for, performance of any part of the work under this contract, whether or not changed by the order, or otherwise affects any other terms and conditions of this contract, the Contracting Officer shall make an equitable adjustment in the (1) estimated cost, delivery or completion schedule, or both; (2) the amount of any fixed fee; and (3) other affected terms and shall modify the contract accordingly.

Emphasis added. Base fee and award fee pool are among the "other affected terms" that should be modified when a change reduces or makes less demanding the work that the contractor must do, as evidenced by a reduction of contract cost. The contractor should have less opportunity for fee when the work is reduced or made less demanding, don't you think?

[formerfed]

Tayloam,

The CO is just reacting to your monthly reports. If you forecast a cost underun, the CO then must make an adustment.

If there's widespread fluxuations in the month-to-month reporting, you might want to modify your reports to show long term trends. For example, if this month shows a reduction and the preceeding month forecasts an increase but historically actual costs don't vary from the estimated costs, you may want to report differently.