FFP services and incremental funding

[lotus]

My little company has a FFP services contract with DoD. 

The structure is CLIN's 1 thru 5 each corresponding to a year.  Prices are at the CLIN level, not per deliverable, or per day, or anything similar.

Billing is in 12 equal monthly amounts, based on the full year price.

DoD funded roughly 60% of the first year's price.  Insofar as I can tell, nothing compels DoD to fully fund it.

Assuming DoD doesn't timely come up with funding, when should I tell the PM to pull the people from the work site?  What measure should I use to make that determination?  Would that be some cost based measure, or passage of days, or what?

[Neil Roberts]

Does your contract have a partial funding clause? What does it say? In general, there should be some contract language that obligates your company to notify the Government when you reach x% of the current funding so that the Government has some time to get some more and fund the contract. If there is such a contract provision, and your company did not inform the Government of its additional funding needs, you may be at risk if you fail to continue performing until you comply with the funding notice requirement.

[ji20874]

DFARS 252.232-7007, Limitation of Government's Obligation, is probably the clause you should be looking for (since you are DoD contractor).

[Guest PepeTheFrog]

@lotus What is your job title for this defense contractor? Are you willing to provide a vague description of your authority, duties, and number of people or contracts you supervise or manage?

[lotus]

Thanks for the DFARS 252.232-7007 reference.  It is not in the contract, but it makes me think the best way to approach this is by counting days, so many dollars per day.

The services are delivered approximately on a straight line basis, with a team working full time.  It would be different if they were front loaded.

[ji20874]

If that clause were in your contract, you would be on notice that the obligated incremental amount is your only promise, and that even if the Government terminates the contract for its own convenience, tot total amount paid to you (costs for performed work + settlement expenses) cannot exceed that obligated amount.

For example, imagine that the CLIN amount is $1,000 per month, or $12,000 for the year, and the Government's incremental obligation amount is $6,000.  This might make you think that you could perform six months of work ($1,000 per month x 6 months = $6,000 obligated amount).  However, if you termination liability is $4,000, then you can only perform two months of work ($1,000 for one month + $1,000 for another month + $4,000 for termination liability = $6,000 obligated amount) -- you would want to stop work at the two-month point.

On ‎5‎/‎9‎/‎2019 at 10:44 AM, lotus said:

DoD funded roughly 60% of the first year's price.  Insofar as I can tell, nothing compels DoD to fully fund it.

DoD's own rules and basic principles of Government contracting require DoD to fully fund it.  The exception is if the contract includes the clause at DFARS 252.232-7007, Limitation of Government's Obligation.