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    1) can contractor add new positions or replace a position without the approval of the Contracting Officer. if yes, under what authority? 2) If contractor replaces a position without the approval of Contracting Officer that was approved for a less amount of daily rate with a higher amount of daily rate, does contractor has the authority to do so? if yes, under what regulation? 3) if the contractor is allowed to do so as explained in point 1 and 2 above, how will we ensure the cost control measures and reason-ability of cost. 4) does it also mean that contractor can exceed the budget line items without the approval of Contracting Officer. 5) Does above questions have different answer for other cost type contracts? like CPFF-Term Type etc. You may like to add anything that could be helpful in understanding the issue. Thanks and regards,


    Answer

    Questions 1,2, 3, 4, and 5:
    Review FAR 16.306(d) closely. It says:
    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

    With the completion form, the contractor is expected to produce an end product within the estimated cost. The actual costs can vary from the estimate. In fact, the contractor could complete the work using only a portion of the original estimate.
    However the term form requires the contractor to devote the specified level of effort for a stated time period. The contractor is required to utilize the agreed upon level of effort.
    So to answer your questions, it depends on the form of CPFF. Given it is a completion form, yes, the labor mix can vary from the estimate during contract performance.  If it were a term type, the answer is no. The contractor must provide the agreed upon level of effort.
     
     
    For Questions 4, also refer to
     
    16.301-1 -- Description.
    Cost-reimbursement types of contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer
     
    52.232-20 -- Limitation of Cost (Apr 1984) or 52.232-22 -- Limitation of Funds (Apr 1984) as included in the contract:
    (f) If the estimated cost specified in the Schedule is increased, any costs the Contractor incurs before the increase that are in excess of the previously estimated cost shall be allowable to the same extent as if incurred afterward, unless the Contracting Officer issues a termination or other notice directing that the increase is solely to cover termination or other specified expenses.

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