Otterman Posted January 13 Report Share Posted January 13 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? Quote Link to comment Share on other sites More sharing options...
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