TO Completion CLINs Term (LOE) CLINs % LOE
0001 $8,243,675 $0 0
0002 $51,296,820 $6,318,972 12
0003 $18,391,607 $4,622,316 25
0004 $27,509,579 $7,431,177 27
Total $105,441,681 $18,372,465 17
16.306 Cost-plus-fixed-fee contracts.
(a) Description. A cost-plus-fixed-fee contract is a cost-reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract. This contract type permits contracting for efforts that might otherwise present too great a risk to contractors, but it provides the contractor only a minimum incentive to control costs.
(1) A cost-plus-fixed-fee contract is suitable for use when the conditions of 16.301-2 are present and, for example-
(i) The contract is for the performance of research or preliminary exploration or study, and the level of effort required is unknown; or
(ii) The contract is for development and test, and using a cost-plus-incentive-fee contract is not practical.
(2) A cost-plus-fixed-fee contract normally should not be used in development of major systems (see Part 34) once preliminary exploration, studies, and risk reduction have indicated a high degree of probability that the development is achievable and the Government has established reasonably firm performance objectives and schedules.
(c) Limitations. No cost-plus-fixed-fee contract shall be awarded unless the contracting officer complies with all limitations in 15.404-4(c)(4)(i) and 16.301-3.
(d) Completion and term forms. A cost-plus-fixed-fee contract may take one of two basic forms-completion or term.
(1) The completion form describes the scope of work by stating a definite goal or target and specifying an end product. This form of contract normally requires the contractor to complete and deliver the specified end product (e.g., a final report of research accomplishing the goal or target) within the estimated cost, if possible, as a condition for payment of the entire fixed fee. However, in the event the work cannot be completed within the estimated cost, the Government may require more effort without increase in fee, provided the Government increases the estimated cost.
(2) The term form describes the scope of work in general terms and obligates the contractor to devote a specified level of effort for a stated time period. Under this form, if the performance is considered satisfactory by the Government, the fixed fee is payable at the expiration of the agreed-upon period, upon contractor statement that the level of effort specified in the contract has been expended in performing the contract work. Renewal for further periods of performance is a new acquisition that involves new cost and fee arrangements.
(3) Because of the differences in obligation assumed by the contractor, the completion form is preferred over the term form whenever the work, or specific milestones for the work, can be defined well enough to permit development of estimates within which the contractor can be expected to complete the work.
(4) The term form shall not be used unless the contractor is obligated by the contract to provide a specific level of effort within a definite time period.
The aggregation of the four “Completion” CLINs vs the four “Term” CLINs does not accurately reflect a percentage of LOE type work. The percentage metric is calculated within each CLIN based upon the EV Technique used for EACH individual work package. “Completion” type CLINs will include a percentage of LOE type work. Some examples may include guard services, rigging temporary lighting or ventilation, or some other type support service. In fact, some LOE would be expected in most “Completion” type CLINs to provide various support services. Additionally, it would be prudent to verify whether discrete work exists within the “Term” CLINs. Based on the statement that an item within a “Term” CLIN is currently reflecting a 10 month delay in completion. That scenario conflicts with the definition of LOE in that LOE has no definable product or deliverable and earning for work completed (BCWP) will always equal the work scheduled (BCWS). However, as the EVMIG and IPMR DID excerpts below describe, LOE type tasks may be included in the IMS but should not be networked with logic in the schedule (IMS) to preclude the possibility that an LOE task could ever become part of the Critical Path.
Open full Question Details
Excerpt from EVMIG:
126.96.36.199.3 Non-Schedule-Based Contracts. The application of EVM to contracts that may be categorized as “non-schedule-based”, i.e., those that do not ordinarily contain work efforts which are discrete in nature, should be considered on a case-by-case basis. “Non-schedule-based” contracts include:
those compensated on the basis of “time and materials” (T&M) used, such as in time and material contracts,
any contracts composed primarily of Level of Effort (LOE) activity, such as program
management support contracts.
Indefinite Delivery/Indefinite Quantity (ID/IQ) or task order type contracts, within which work is awarded on the basis of delivery orders that may or may not be schedule-based. “Non-schedule-based” contracts might not permit objective work measurement due to the nature of the work most of which cannot be divided into segments that produce tangible, measurable product(s). The nature of the work associated with the contract is the key factor in determining whether there will be any appreciable value in obtaining EVM information. In cases where the nature of the work does not lend itself to meaningful EVM information, it may be appropriate to waive the EVM requirement. When appropriate, waiver requests should be included in the program acquisition strategy. If the EVM requirement is waived for a contract due to the nature of the work, the PM should implement an alternative method of management control to provide advanced warning of potential performance problems.
Every effort should be made to identify, separate, and measure any discrete work from any work that is typically identified as LOE in nature. Since the earned value metric, Budgeted Cost for Work Performed (BCWP), is automatically earned for LOE activities, i.e., BCWP = Budget Cost for Work Scheduled (BCWS), there can be no schedule variances for LOE activities. Also, since BCWP is not based on objective work measurement, the resulting cost variances arelikely to be misleading.
Additional information regarding LOE activities, as related to schedule, The following statement is common throughoutEVM documentation, including EVMIG and Data Item Description (DID) DI-MGMT-81861 (IPMR): “When LOE work packages or tasks/activities are included in the IMS they should be clearly identified as such. LOE should never drive the critical path(s)… this can be avoided by including LOE activities on the IMS without network logic. If LOE activities are included within the IMS, they are clearly identified as such. As a best practice, understand that LOE work package (or lower level task/activity), by definition, cannot influence an event-driven schedule and are not required to be included in the IMS. However, if inclusion is desired to maintain consistency with the cost system they should be included in such a way that they do not yield erroneous critical paths. LOE is required to be in the IMS whenever a resource-driven schedule is constructed utilizing resource limitations/constraints. In these cases, LOE is required to be included in the schedule along with the interdependencies with discrete work.”
Level of Effort (LOE). Effort of a general or supportive nature which does not produce definite end products and cannot be practically measured by discrete earned value techniques. Earned value is measured by the passage of time.