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kristine

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  1. Thanks all, this has been really very helpful, including the discussion on excessive pass throughs. Joel do you know where I can get a copy of Foster Construction Company DOTCAB 71-16 73-1 BCA?
  2. I must be thickheaded because this has become confusing to me. Is the description below saying essentially the same thing as the responses above for A &E contracts? FAR 15.404-4 requires the use of a structured approached. The structured approach is defined by EFARS 15.404-73-101 Alternate Structured Approach for Architect-Engineer contracts as follows " (a) The pre-negotiation profit objective for a firm-fixed-price architect-engineer (including surveying and mapping) contract, contract modification, or task order will be determined as described below. The profit objective for all other types of A-E contracts will be determined in accordance with DFARS 215.404-71. Profit Objective = Cost x (Technical Complexity Factor + Length Factor + Support of Socioeconomic Program Factor) Where: (1) Cost is the total estimated costs, including general and administrative costs, of the prime contractor and any subcontractors, exclusive of any profit. However, normal profit need not be deducted from the prices for commercial supplies and services (such as airfares, reproduction, lab tests, express mail and materials) in developing the cost base. (2) Technical complexity factor will vary from 0.05 for low complexity (design of simple road repaving or routine boundary survey verification) to 0.10 for high complexity (design of nuclear chemistry laboratory or the design of the remediation of a very unusual and complex hazardous waste site). Consider the nature of the work, degree of management involvement required, schedule constraints, amount of Government assistance, and availability of design criteria. (3) Length factor is .02 for a contract action of 1 month or less, and increases proportionately to 0.04 for a contract action of 21 months or longer. Consider the time necessary to complete the substantive portion of work, including option periods. (4) Support of socioeconomic programs factor will vary from 0.0 for a prime contractor (including a small business prime contractor) who plans no subcontracting, to 0.02 for a contractor who demonstrates exceptional program support. Consider the contractor's past record as well as the instant contract with regard to mentoring and subcontracting with small businesses, small disadvantaged businesses, and historically black colleges and universities and minority institutions. " A relevant question regarding subcontractor profit can be found on the DAU ask a professor website. The entire question and answer can be found at https://akss.dau.mil/askaprof-akss/qdetail2...13&cgiQuest ionID=12857 The relevant part of the answer follows. "...I spoke with the author and proponent of the A-E method, which was developed circa 1995. The construction contract approach has been basically unchanged since the 1970's or earlier, as was the previous A-E method. You will note that one of the criteria for calculating the construction profit objective is the "amount of subcontracting." Thus, the construction prime's profit objective percentage should decrease as the amount of subcontracting increases. By not including sub's profits in the multiplier, the A-E profit objective method is different, but achieves similar results for evaluating overall profit. The A-E method provides an overall profit objective for the contract to be distributed any way the A-E team prefers. The author says that it doesn't matter how the A-E proposal calculates or distributes profit between the prime and its subconsultants; what is important for analysis and negotiations objectives is the overall amount of proposed profit. .." So, to reiterate, if the subcontractor's proposed cost do NOT include profit they would go above the profit line, however; if the proposed subcontractor's cost do include profit they would go below the profit line.
  3. Is there a DFARs or FAR clause that prohibits the Government from allowing a prime contractor to earn a profit on its subcontractor's cost? I see in the Defense Reauthorization Act where there is a prohiibition on excessive passthroughs, but I can't find a reference that prohibits a primes profit on its subs work. Is the prohibition applicable to contracts for A&E services? Also what is the definition of profit on profit?
  4. So Joel, it will be OK to set the fixed fee at 3 percent, and the award fee at 7% for the task orders that will be issued? There is no award fee plan yet. The weighted profit analysis produced a profit objective of 10%. This is consistent with previous FFP contracts for the same work. Those contracts were awarded TOs at 10% fee. Offering a combined 10% (3 fixed profit and 7 award fee,) should be OK? So there should not be an issue regarding whether or not we are compliant with FAR ..that calls for the fixed fee in FPAF to be the normal/regular fee? There is no award fee plan yet. We can also use CPAF and FFP, but the push is to use FPAF on A&E performance based contracts. I understand that more guidance regarding award fee will be in FAR in October. Does anybody know if there will be guidance specific to FPAF< or will the focus be CPAF.
  5. The RFP will set the profit as 3% as part of the FP, realizing that the bidder's actual profit experience may be more or less. The challenge is that regular profit for satisfactory work has been 10-12%, so to recognize this, the balance of the normal profit would be put in the award fee pool.
  6. The agency acknowledges that the 3% fee they are considering is much lower than what they have offered in other contracts for the same services under FFP type orders
  7. An agency is contemplating awarding CPAF and FPAF task orders on its multi-award contracts for A&E services. Over the course of 15 years, these contracts changed from CPFF to more recently CPFF and FFP. The % profit ranged from 8%-9% for CPFF and 10- to 12% for FFP. Under FPAF, the agency wants to allow 3% fixed profit with an award fee, and on CPAF is thinking of allowing a base fee of 3% with an award fee. The agency wants nearly all of the profit to be in the award fee. The Agency also wants nearly all of the orders to be FPAF. The services provided under both type orders are similar. The agency acknowledges that for FPAF, the fee they will probably offer will not be considered the regular fee, but says that is OK as long as it is in the award fee pool. Are there any guidelines on this approach? It seems that fees as low as 3% should be under a cost reimbursable type order.
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