Is there such a thing as a FFP/O&A contract type? I need to try out the following logic and argument. A hypothetical company has a FFP prime contract for DoD aircraft operations and maintenance with a CPFF CLIN for engine overhaul. The engine overhauls for the last four years have been subcontracted out to Vendor A. To speed up turn around on the subject contract, Vendor B (a separate, designated, overhaul facility for Vendor A) is being sole/source selected to alleviate Vendor A’s capacity constraints across contracts.

The best sole/source justification for selecting Vendor B instead of incumbent Vendor A appears to be a simple application of 6.302-3( (iii) at the prime level to meet customer requirements for turn-around. Because the aircraft is sold commercially, these engine repairs are deemed to be commercial. However, neither Vendor A nor Vendor B is willing to commit to a FFP contract without a clause covering its O&A material cost. For each engine repair, material drives anywhere from 60% to 80% of the overhaul price.

Vendor B has proposed 10% of its “estimated”, average, engine overhaul price as a flat labor charge and an additional 10% for mandatory supplies, kits, and tests. The additional 80% of its “estimated” price is based on actual material prices for services provided to other companies in the last two years. Vendor B has proposed the flat labor charge and mandatory supplies, kits, and tests as FFP; and has proposed the material charges as O&A (to be individually determined for each engine overhaul with no ceiling price.)

Originally, the company wanted to describe its subcontracts with Vendor A as being T&M. Two seeming difficulties with this are FAR 12.207( (1) and FAR 16.601(d). The reason FAR 12.207( (1) seems problematic is that the company was not regularly soliciting more competition on its engine overhaul subcontracts after Vendor A became the established service provider. The reason FAR 16.601(d) seems problematic was that the company did not establish a ceiling price for each engine overhaul.

Now, the hypothetical company wants to describe its proposed subcontract with Vendor B as being FFP due to an estimated 20% being fixed with Vendor B’s flat labor charge and mandatory supplies, kits, and test. The commerciality of the engine overhaul and the O&A estimate (not ceiling) is mentioned in the analysis. Is there any regulation similar to FAR 16.102( that would further support this commercial contract without running into difficulties due to FAR 16.301-3( and the 60%-80% O&A portion of the contract?

Well, O&A as far as I understand it is over and above work. So you would have a specification or statement of work for 'base work' which would probably look like some level of disassembly, inspection, refurbishment, and / or assessment and reporting; upon executing the base work you would probably have 'condition found reports' which identify items which require technical adjudication and a decision by the Government to perform the over and above work or not.

This could even be a mechanism in the prime contract using the DFARS Clause 252.217-7028, Over and Above Work; this process also must follow PGI 217.7701. But essentially, this is one way to manage the over and above work via the relationship between the Government and the Prime Contractor. This process recognizes that O&A work is a customary component of the performance of the contract.

That is nothing more than a FFP contract; FFP for the base work, negotiated over and above work via bilateral modification.

Thank You! I am learning. (I should have thought to look outside of FAR to DFARS for additional guidance.) This is just what I needed to know.