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We are a telecommunications provider to the US Government and provide terrestrial data circuits to remote, and sometimes hostile, regions in the world. Under a 12-month contract, the Government requested a proposal for 12 months of service. The circuit is not considered accepted and billable until the Government performs its testing IAW the acceptance criteria. Given the regions we deliver service to, it is normal for circuit activation and testing to take three or more months from execution of a subcontract agreement to the activation and testing of the circuit. The salient points are: 1. The Government contracted for a terrestrial data circuit with a certain number of Megabits per second (Mbps) at a certain location specified in the SOW. 2. The period of performance was 5/1/15 – 4/30/16. 3. In Section B, the Unit specified was “EA,” and the quantity is “From 0.0000” “By 1.0000” to “To 1.0000” 4. The contract type was fixed price incentive in accordance with FAR Part 16.202. 5. We provided the Mbps to the locations specified in the contract beginning in November 2015. There are opinions internally whether we can bill the full amount based on service being provided for twelve months, even though the service was only accepted at month six or not. Terrestrial carriers (e.g. Verizon, Level3, etc.) typically require a 12 month commitment, so even though this firm price, severable service, extends beyond the PoP we will be billed for the full twelve months. The stronger and most likely reading of the contract is that the full amount of the annual service should not be charged unless the service was provided for the full 12-month period. However, reading the FAR suggests we may be able to bill for 12 months of service. Nonetheless, based on my experience with post hoc reviews by stakeholders OTHER THAN the contracting officer (such as inspectors general), a pro rated invoicing approach rather than invoicing the full amount, may be the correct interpretation. The contract does not state if it contemplated “immediate” commencement of performance, it is notable that the documents clearly provide that the period of performance was to be 5/1/15-4/30/16, which is exactly one year. (clause 152.211-705). In addition, the Statement of Work provides that the period of performance was to be “12 months from contract award.” Whether or not it is of note, there is no feasible way for service to commence immediately after order, and we are not billed by our subcontractor until the circuit is tested and accepted by the Government. The question then becomes whether “performance” in this context means (a) to begin to build the required communications capacity, or (b) to actually provide the required communications capacity. If “performance” requires only working on the development of the promised capacity, as opposed to actually providing the promised capacity as a service, then it appears that the fixed fee would have been owed. The contract does not offer any indication as to what it intended. I would also note that nothing in the contract appears to require a pro rating of the price to reflect the timing of the in-service dates (or acceptance dates). Nonetheless, there does not appear to be any language in the contract indicating that the customer can be charged for anything other than an operable network service that meets all of the speed and other technical parameters, and that this service is subject to a fixed price for a full 12-month service period. The task order has ended, but there is some discussion if we are entitled to invoice and be paid the fixed price established in the contract. The incentive monies are secondary, and will be determined and paid in accordance with the terms of the contract. The task order has ended, but there is some discussion if we are entitled to invoice and be paid the fixed price established in the contract. The incentive monies are secondary, and will be determined and paid in accordance with the terms of the contract. As a follow-on question: The Government awarded a single source follow-on contract for this service to begin 1 May 2016 – 30 April 2017. If the guidance is that we can bill for the full twelve months, should there be concern about billing, effectively, twice for the same service (trailing six months after PoP end, and first six months of follow-on) even though the same service is being provided under a different contract?
I'm working through a Prime proposal >TINA in response to a non-competitive FPIF RFP with progress payments. I have limited experience with FPIF, so I need some education. My question is regarding liquidation and profit: Assuming a 20% liquidation rate (80% progress payment) how and when does the contractor invoice profit/fee? Is it invoiced with customary progress payments and if so, what % is applied? The target fee % agreed to in negotiations? How/when is that then adjusted to reflect the outcome of the agreed to share ratios related to the FPIF? Thank you, Patrick