1: If we were to deobligate funds from the force majeure CLIN, we would need to decrease the target cost so the CLIN would remain fully funded (would not want CLIN value greater than funded value). By doing so, we would appear to break the limits for CPFF fee (above 15%).
1a: Can we legitimately request reconsideration of the CPFF fee for this CLIN? I believe the contractor would be under no obligation to agree to a reduced fee, but given the significant discrepancy between target and actual costs, it does not seem unreasonable to ask.
1b: If the contractor is unwilling to renegotiate the current fixed fee, does the Government have an option to decrease the CLIN value and deobligate funds for use on the overrun CLIN? Again, would not want to put ourselves in a situation with a fixed fee 500% of the new target cost, but do not see it as fiscally responsible to ask our customer for more funds when there is money available on the contract.
2: What is the standard procedure for requesting justification for a cost overrun? This is a Contractor Logistics Support contract and the CLS CLIN Is the one in the projected overrun situation. I believe we should request actuals and a detailed description of the contributing factors to the cost overrun. What else should be requested. I don't want us to incur the cost of a full proposal (especially since the contract POP is complete and everything should be in actuals). I'm looking for a recommendation on particular data to request as well as a procedure (i.e.- request justification/data, review, document with an MFR, negotiate any areas of disagreement, etc.).
Please refer to FAR part 16.3, specifically 16.306 Cost-plus-fixed-fee contracts. The premise of using a cost-plus-fixed-fee (CPFF) contract is because the level of effort required is unknown or not easily quantified. The established cost is just an estimate of the value and while the fixed fee does not vary with actual costs, it may be adjusted as a result of changes in the work to be performed under the contract. It appears from the discussion provided that some performance adjustment/scope occurred since the effort that was performed was just a fraction of the total estimated. This contract action is more than a deobligation - it should also reflect the change in the level of effort and scope of work that occurred on that CLIN - so when you renegotiate the value of the work, the fee should be renegotiated as well. Be sure to consult your program attorney as well as any special terms and conditions in the contract.
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