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Found 11 results

  1. Somebody is adamant that a prime cannot charge a fee on top of a sub's fee on any cost proposal funded by the US Government, or at least not in the DOD sphere. For example, if the sub is proposing $100 in cost plus $5 fee, for a total of $105, and the prime contractor has costs of $195, the prime's budget without fee would be $300 ($195 being its costs plus $105 for the sub's total budget). This person is saying that the prime's fee cannot be 5% of $300 (or $15) because that would mean that the prime's fee was calculated on top of the sub's fee. At most it can be 5% of $295 (prime costs plus sub costs but excluding the $5 sub fee), or even better 5% of prime costs only ($195). This would be applicable to budgets leading to any contract type (CPFF, T&M, FFP). I disagree, based on my experience and various hints from the Government that the sub's total amount, inclusive of fee, is a direct cost to the prime. The sub's fee is also impossible to ascertain on T&M or FFP subcontracts, unless it is disclosed voluntarily by the subcontractor. In my experience, a few solicitations have specifically forbidden this type of calculation, but I am not aware of a blanket governmental prohibition of it. Does anyone have any insights, and any regulatory reference as to whether I am wrong or right to disagree with the assertion described above?
  2. Thanks for your help in advance. I have two questions, both pertaining to a CPFF effort. I am a contractor assembling a proposal to be a prime. Question #1: The contract period is a base period of 1 year, followed by 2 option years. The government fiscal year and the contract period dates do not line up. I have costs broken down by element by both the government fiscal year and contract period. Will the fee $ amount be set based on the government fiscal year, base period, or base period plus option years (very unlikely I imagine)? The contract will be completion form, but the "end product" will be the monthly reports on a continual effort vice a term form with a set LOE. Question #2: We do not currently have a certified final indirect cost rate proposal, and are using estimated indirect rates for the proposal. I want to make sure I understand the process - after a period of time, we will submit a certified final indirect cost rate proposal. Is that period of time a government fiscal year, or at the end of the base period?
  3. Good afternoon everyone, I have a couple questions concerning FAR 52.232-22 Limitation of Funds that I was hoping someone could answer. Does the LOF clause apply to each CLIN on a contract? In other words, if I have a contract containing a CPFF CLIN for Labor and a COST only CLIN for Travel, would I have to give separate notifications for each CLIN once 75% of the current funding is expended? Or is it based on the overall cumulative funded amount of both CLINS (Labor & Travel), in which case I would then give notice when 75% of the combined funding is expended. Is FAR 52.232-22 cost specific, or does it include incremental fixed fee funding as well? Section (b) of the LOF FAR states the following: " (b) The Schedule specifies the amount presently available for payment by the Government and allotted to this contract, the items covered, the Government’s share of the cost if this is a cost-sharing contract, and the period of performance it is estimated the allotted amount will cover. The parties contemplate that the Government will allot additional funds incrementally to the contract up to the full estimated cost to the Government specified in the Schedule, exclusive of any fee. The Contractor agrees to perform, or have performed, work on the contract up to the point at which the total amount paid and payable by the Government under the contract approximates but does not exceed the total amount actually allotted by the Government to the contract." Given this provision of the FAR I am assuming the LOF notification should be based on incremental COST funding only, and would exclude incremental Fixed Fee Funding, and would apply both to CPFF contracts and CPIF Cost Sharing Contracts . If anyone can provide any insight it would be much appreciated. Thank you.
  4. CFR 216.405-2 clearly states that the weighted guidelines method shall not be used to determine fee on CPAF contracts. If not the weighted guidelines, then how do CO's determine that a proposed fee on a CPAF contract is reasonable? Thank you!
  5. Hello all, Senario: The requirement is an 8(a) sole source for construction and a FFP type contract is contemplated. the estimated value is 3-5million. The ktr has an OH rate of 14.95%. We normally see overhead in the range of 6-10%. The ktr has a 10% fee on top of all the subcontractor's markup. All of the proposal backup for subcontracted work only has the lump some numbers on the quotes provided. Question: 1. Is the 14.95% allowable can this be negotiated? 2. Can a prime (8(a)) get profit on profit? Im looking for a dumb down answer on this one. I have seen that some say this is allowable however I need a FAR reference to validate. I have seen some post on this topic but none are plainly clear or easily spelled out with a clear yes/no and have a direct reference provided. Also, I have seen some site the excessive pass-through clause, this only applies to cost reimbursement type contracts for civilian agencies. 3. Can the Excessive pass-though rationale be used for an FFP construction contract in a civilian agency? Would this be a deviation since far only says it can be used for cost reimbursement?
  6. I administer a CPIF contract that is currently underrunning. The price summary of the order allows a billing fee rate of 13%. At what point does the supplier earn their incentive fee (the portion of the underrun above 13% target fee that they are entitled to)? Do I withhold until contract closeout?
  7. Does anyone here use the weighted guidelines to evaluate the reasonableness of a subcontractor's fee? Would that be appropriate? This a firm-fixed price subcontract.
  8. Hi All, My company submitted a CPFF proposal (~$3.5M) to a major university as a sub. The solicitation was a DOD BAA which provided that contracts, grants, or other instruments may be awarded. We've been informed that the university was selected for award, and that a grant will be used by DOD rather than a contract. The university claims that, because it is a grant, fee is not allowed, but that we can "absorb" the fee amount originally proposed in other areas. I've done a fair amount of reading and cannot find any reference to a prohibition on fee under a grant. However, I've never dealt with grants before, so perhaps I've missed something somewhere. Does anyone have any information or insight regarding prohibiting fee on grants to awardees and sub-awardees?
  9. Here is a scenario. A contracting activity releases a competitive solicitation for a requirements / firm-fixed price, materials reimbursement type contract. The solicitation also includes a performance incentive in which the winning contractor has the ability to receive a quarterly fixed amount if the contractor meets specific performance goals in that quarter. The contractors proceed to bid on the effort with either no or negative profit/fee. This is based on the intent that they will pass the performance goals and receive the performance incentive. In the follow-on competitive solicitation, the contracting activity decides to remove the performance incentive. Is there a process in place, either policy or regulation, or some instance in which a minimum profit/fee was included in the solicitation to prevent a contractor from bidding either no or negative profit/fee? Is it possible to establish a minimum or is it the contractor's business decision to bid that particular way?
  10. CPFF, completion type contract for R&D. Contract contains FAR 52.232-20. Effort includes a prototype as final deliverable, a demonstration of that prototype, and several data deliverables along the way (including reports). During performance, contractor was months late on delivering several important reports. The contractor does not dispute this fact, but argues that it gave its best effort overall under the contract. Oversight was not as thorough as it should have been, but the COR asked the contractor for the missing reports several times during performance. The contracting officer was not made aware of the late deliveries until one month before the contract expired; as a consequence, perhaps some good opportunities to issue show cause notices were missed. The contracting officer wants consideration for the late deliveries, and has explained his position to the contractor in detail. Why relax the delivery schedule for nothing in return? The contractor will absolutely not provide any form of consideration. Despite being late, all deliverables have been received except for the demonstration. The demonstration is scheduled for two weeks after contract expiration. As the contracting officer, you're considering an extension to allow the demonstration to take place. You'd prefer to formalize the consideration in this modification, but again, the contractor absolutely refuses to provide any. What contractual remedies are available to you? Note: Termination will not accomplish anything for you, because the contract is near completion and you still want to receive the upcoming demonstration. You just want some consideration.
  11. Many of you are asking yourselves why a company would do such a thing. I admit that it does sound very crazy and I think a contractor can go too far to please the Government customer. I would like to know whether a contractor is allowed to use their fee from their CPFF completion contract to pay for an overrun on the contract. My gut tells me that this is not allowable because the contractor would be giving free services to the Government and think this can be linked to 52.203-3 Gratuities however the "free" services (services at no charge to the Gov't) would not be given to an individual (they would benefit the whole agency). To say it a different way, the contractor wants to forego invoicing the government for a few months of services on a CPFF contract to alleviate an overrun at their own expense. The contractor would also be satisfied and would agree to having the CO move the amount on the fee CLIN to the labor CLIN. Additional information about the overrun: The overrun is primarily caused by the Government adding NEW scope to the contract. I know that the Government is obligated to pay for the additional scope costs with fee. Maybe I am thinking down the wrong path and there is a much simpler answer out there. I have done google/wifcon searches but have not seen anything out there on this specific topic. As usual, your help is very much appreciated. 52.203-3 Gratuities. As prescribed in 3.202, insert the following clause: Gratuities (Apr 1984) (a) The right of the Contractor to proceed may be terminated by written notice if, after notice and hearing, the agency head or a designee determines that the Contractor, its agent, or another representative— (1) Offered or gave a gratuity (e.g., an entertainment or gift) to an officer, official, or employee of the Government; and (2) Intended, by the gratuity, to obtain a contract or favorable treatment under a contract. ( The facts supporting this determination may be reviewed by any court having lawful jurisdiction. © If this contract is terminated under paragraph (a) of this clause, the Government is entitled— (1) To pursue the same remedies as in a breach of the contract; and (2) In addition to any other damages provided by law, to exemplary damages of not less than 3 nor more than 10 times the cost incurred by the Contractor in giving gratuities to the person concerned, as determined by the agency head or a designee. (This paragraph ©(2) is applicable only if this contract uses money appropriated to the Department of Defense.) (d) The rights and remedies of the Government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract. (End of clause)
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