Changing Task Order from FFP to CPFF

[Aronson]

Hi, I have a small business with a 5 year FFP task order with a government customer that is set to run only a few more months. My customer wants to extend the TO for 6 months past the 5 year mark which is good news but they also want to convert the last 6 months to CPFF. I was wondering if anyone ever heard of this type of thing - that is changing the contract type with only 6 months left on a task order and an extension at that. We won this bidding it as FFP and now that we have a great team onboard and there is actually less risk as far as finding the right people etc they want to change the contract type. This means a lot more accounting headaches etc etc.

Any insight would be greatly appreciated.

Thanks!

[napolik]

Hi, I have a small business with a 5 year FFP task order with a government customer that is set to run only a few more months. My customer wants to extend the TO for 6 months past the 5 year mark which is good news but they also want to convert the last 6 months to CPFF. I was wondering if anyone ever heard of this type of thing - that is changing the contract type with only 6 months left on a task order and an extension at that. We won this bidding it as FFP and now that we have a great team onboard and there is actually less risk as far as finding the right people etc they want to change the contract type. This means a lot more accounting headaches etc etc.

Any insight would be greatly appreciated.

Thanks!

By FFP, I assume you mean FFP LOE or labor hour / time and material. Otherwise, the contracting officer may have lost his or her mind.

While there is a big push in government - particularly in DoD - to convert FFP LOE and labor hour / time and material contracts and orders to firm fixed price or cost reimbursement, I do not understand why your customer wishes to change contract type for 6 months. Talk to the contracting officer and suggest that he or she change contract type in the next competition, not in the last six months of your contract. If the contracting officer refuses to budge, you have a decision to make.

Since the change in task order type will be accomplished bilaterally, you must agree to it. You must decide if your pain of converting to cost reimbursement is greater or less than the pain your customer will feel and will remember in a subsequent source selection involving your firm.

[PSW]

Another consideration is under what authority the Contracting Officer plans to extend the contract by six months. If they are using 52.217-8 Option to Extend Services, which is a popular method of getting six more months out of services contracts, the clause limits the services to "within the limits and at the rates specified in the contract." I have always seen that interpreted to mean that the terms and conditions of the contract as they stand, including the work being performed, are continued as is. This is usually not in the contractor's favor as it means that unless the prevailing labor rates warrant an increase, the rates stay the same when they would ordinarily have the potential for an increase.

[woops85]

There's a 14 Sept memo out from OSD (AT&L) that covers SecDef Gates' 23 points. One of these specifically addresses a situations where DoD should have preference for FFP and when they should have preference for CPFF. If you read Federal Computer Week or Government Executive online, you can find a link to the memo