Edited February 27, 20187 yr by erock
clarity

Doesn't fixed fee mean fixed fee?   The fee should have been 6% of the original approved cost ( a real $$ value not a percentage) for each option period.  They do not get more fee or less no matter where the costs go.  The subs fee is part of the primes cost.  So if the cost goes down with fee dollars remaining the same, he gets a fee % increase but not more money.  I don't know your situation but my OIG does not like it if you increase fee or the price of a fixed price contract without a stellar justification for doing it.   

We must see the contract, or you must quote the exact language of the CLINs, in order for anyone to answer your question. Until you quote the exact language of the CLINs, all you're likely to get from anyone here are more questions.

34 minutes ago, Vern Edwards said:

We must see the contract, or you must quote the exact language of the CLINs, in order for anyone to answer your question. Until you quote the exact language of the CLINs, all you're likely to get from anyone here are more questions.

Agree. A CPFF contract format usually doesn’t provide much incentive for a contractor to save the government money. It appears that the contractor was able to self-perform some of the effort ast a lower cost than by subbing it out and wants to be rewarded for it. 

13 hours ago, erock said:

For the prime's portion of the work the negotiated fee is 6%,

I'm not sure I understand what this means.  Are you saying there was a separate fee negotiated for anticipated work to be performed by the prime and a separate fee negotiated for work to be performed by subs?

Focus on the contract at this point, rather than the negotiation. And like others have said, we don't know what's in your contract.

While you are at it, please indicate whether the prime contractor make or buy plan was incorporated into the contract and if so, what does it say regarding changes to such a plan.