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CPFF - period that sets the fee and adjustment of indirect rates


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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?



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#1 I contemplate there would be a separate fee established for the base, and each option period of contract performance. For payment of fixed fee, FAR 52.216-8 should be included in the solicitation and contract. It provides information about payment and certified final indirect cost rates.

#2 FAR 52.216-7, which should be included in the solicitation and contract, includes information regarding final indirect cost rates and billing rates as indicated below.

(d)(2)(i) The Contractor shall submit an adequate final indirect cost rate proposal to the Contracting Officer (or cognizant Federal agency official) and auditor within the 6-month period following the expiration of each of its fiscal years. Reasonable extensions, for exceptional circumstances only, may be requested in writing by the Contractor and granted in writing by the Contracting Officer. The Contractor shall support its proposal with adequate supporting data.

(ii)The proposed rates shall be based on the Contractor’s actual cost experience for that period. The appropriate Government representative and the Contractor shall establish the final indirect cost rates as promptly as practical after receipt of the Contractor’s proposal.               

(e)Billing rates. Until final annual indirect cost rates are established for any period, the Government shall reimburse the Contractor at billing rates established by the Contracting Officer or by an authorized representative (the cognizant auditor), subject to adjustment when the final rates are established.

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The basis of your indirect cost rates is your fiscal year, except in very rare circumstances such as business combinations.

If a contract year crosses more than one of your fiscal years, you need to have two sets of indirect rates (one for each of your fiscal years). For example, assume CY1 starts October 1st and ends September 30, but your fiscal year starts January 1st and ends December 31st. You will have a set of indirect rates for base year (CY1) performance between October 1st and December 31st, and another set of indirect rates for CY1 performance between January 1st and September 30th.

Your first set of indirect rates would be submitted for government audit @ June 3th (six months after the end of your fiscal year). It would only cover the first part of CY1 performance. The second part of CY1 performance would be covered by a second, different, submission (of the second set of rates) @ June 30th of the following year. That second submission would include the second part of CY1 performance plus the performance of any Option Year 1 (OY1) work that took place up to December 31st (end of the second fiscal year).

Hope this helps.

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