I am fairly new to Contracting only a few years into my career and new to CPFF type contracts.

My customer is requesting an increase of ceiling of work within the PWS.

We told the customer the contractor can exceed the ceiling at their own risk unless approved by the Contracting Officer and if increasing the ceiling is necessary adequate justification is necessary. I am not sure the steps to be taken or how to direct the customer in this situation. Any help is greatly appreciated, thanks.

You should review the Limitation of Cost clause at FAR 52.232-20 -- I suppose it is in your contract -- or maybe you have the Limitation of Funds clause at FAR 52.232-22.

The question for the Government is going to be whether you want ( a ) the contract to stop when the money runs out; or ( b ) the contract to continue with the addition of more money. Take your choice.

Has your customer increased the scope? If so, you would be increasing cost and fixed fee, ideally after receiving a requisition with the new scope, issuing an RFP or directing a change for the new scope, receiving a change order proposal or REA, and negotiating.

If the scope has not changed, then we are in the land of overruns, and the fixed fee stays fixed. Still need a req, at least in most organizations I've seen.

Thanks, Cajuncharlie -- my answer focused on "the contractor can exceed the ceiling at their own risk" but you more correctly focused on "My customer is requesting an increase of ceiling of work".

Guys, thanks for the input and there would be no scope increase. I will review those clauses. In the past I have seen the contractor notify us when there is a limitation of funds, just was different coming from the customer I guess. The POP ends in about 6 months and there is an option, I would say at this point it is 50 percent funded for the base year.

Thanks, Cajuncharlie -- my answer focused on "the contractor can exceed the ceiling at their own risk" but you more correctly focused on "My customer is requesting an increase of ceiling of work".

From a previous post of Mr. Edwards. Just so individuals aren't mislead when they read, "the contractor can exceed the ceiling at their own risk".

Mr. Edwards states:

You cannot say that the Government has no liability to pay just because the contract contains a limitation of cost or funds clause, since some boards of contract appeals and the Court of Federal Claims have found that the issuance of a change order might constitute a waiver of the limitation of cost or limitation of funds clauses, depending on the facts. See Nash and Feldman, Government Contract Changes 3d ? 8.14 (2011). Your "no liability to pay" statement goes too far. While the LOC and LOF clauses usually protect the government, they do not always protect the government.