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    What is the maximum funded amount allowed on a cost CLIN in a scenario as stated, and what FAR or DFARS covers the maximum you are allowed on a cost CLIN?


    Answer

    1. The FAR reference quoted below in pertinent part is applicable to this response.

    FAR 16.601 -- Time-and-Materials Contracts
    (d) Limitations. A time-and-materials contract or order may be used only if—
      (2) The contract or order includes a ceiling price that the contractor exceeds at its own risk.

    2. The reference quoted below in pertinent part is also applicable to this response.

    DoD 7000.14-R Financial Management Regulation, Volume 3, Chapter 8, “Standards for Recording and Reviewing Commitments and Obligations”

    0805 Recording Obligations for Commercial Procurement Contracts and Orders
    080503. Cost-Reimbursement and Time-and-Material Contracts
    Cost-reimbursement and time-and-material contracts include: cost, cost-sharing, cost-plus-fixed-fee, cost-plus-incentive-fee, cost-plus-award-fee, time-and-material, and labor-hour contracts. When the contract is executed, an obligation shall be recorded. The amount of the obligation is the total estimated payment provided by the contract’s funded ceiling … . The amount recorded shall be increased or decreased by amounts provided by contract amendments … .

    2. Because CLIN 0002 will specify an NTE price of $300 and fixed billing rates for B&W and Color copies over their respective quantity limits, this CLIN represents the functional equivalent of a T&M type pricing arrangement. Therefore, pursuant to DoD 7000.14-R, Section 080503, an amount of $300 must be obligated for this CLIN at time of award to cover this NTE price (i.e., funding ceiling).

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