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  • Question

    A debate is raging around the office: If a contractor has a CPFF contract (services/term) with the DoD, and allowable costs incurred are estimated to exceed the CPFF ceiling, does the contractor have the flexibility to absorb the cost over-run by not billing those costs back to the Government, while still completing the period of performance term? Essentially, stop invoicing the Government once the CPFF ceiling is reached, but continue working thru completion.


    Answer

    The elements of a CPFF contract are estimated cost and fixed fee; it does not have a ceiling. Paragraph (d) of the Limitation of Cost clause at FAR 52.232-20 lays out the responsibilities of the Government and contractor with regard to payments and overruns. Paragraph (d)(2) states the contractor is not obligated to continue performance past the point when the estimated cost has been exceeded. However, it does not explicitly prohibit the contractor from continuing performance past this point.

    I recommend you contact the cognizant Government contracting officer with your intentions.

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