Sign In
  • Question

    During performance of the Contract after award can the Government add more funding to the individual FFP NTE and CR NTE CLINS to support requirements exceeding the initial awarded NTE contract amount?


    Answer

    1. The FAR references quoted in pertinent part are applicable to this response.

    FAR 16.202-1 -- Description

    A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.

    FAR 52.232-20 -- Limitation of Cost (Apr 1984)

    (a) The parties estimate that performance of this contract, exclusive of any fee, will not cost the Government more than:

          (1) The estimated cost specified in the Schedule

          (2) The Contractor agrees to use its best efforts to perform the work specified in the Schedule and all obligations under this contract within the estimated cost.

    (d) Except as required by other provisions of this contract, specifically citing and stated to be an exception to this clause --

          (2) The Contractor is not obligated to continue performance under this contract … or otherwise incur costs in excess of the estimated cost specified in the Schedule, until the Contracting Officer: (i) notifies the Contractor in writing that the estimated cost has been increased and (ii) provides a revised estimated total cost of performing this contract.

    FAR 52.243-1 -- Changes -- Fixed Price (Aug 1987), Alternate I (Apr 1984)

    (a) The Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following:

          (1) Description of services to be performed.

          (2) Time of performance (i.e., hours of the day, days of the week, etc.).

          (3) Place of performance of the services.

    (b) If any such change causes an increase … in the cost of, … any part of the work under this contract, … the Contracting Officer shall make an equitable adjustment in the contract price, … and shall modify the contract.

    FAR 52.243-2 -- Changes -- Cost-Reimbursement (Aug 1987), Alternate I (Apr 1984)

    (a) The Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following:

          (1) Description of services to be performed.

          (2) Time of performance (i.e., hours of the day, days of the week, etc.).

          (3) Place of performance of the services.

    (b) If any such change causes an increase … in the estimated cost of …, performance of any part of the work under this contract, …  the Contracting Officer shall make an equitable adjustment in the --

          (1) Estimated cost, delivery or completion schedule, or both;

          (2) Amount of any fixed fee; and

          (3) Other affected terms and shall modify the contract accordingly.

    2. Given the limited information provided in this inquiry, this response assumes that there is a very specific work statement requirement associated with each of the Firm-Fixed-Price (FFP) CLINs and with each of the cost reimbursement (CR) CLINs in question that are subject to separate “not-to-exceed” (NTE) contract amounts. Because this inquiry refers to the term “Task Order”, this response assumes that this is a services contract. Finally, this response assumes that the contract clauses listed in paragraph 1 above are included in the basic IDIQ contract.

    3. As set forth in FAR 16.202-1, a firm-fixed-price (FFP) contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. Therefore, if the work statement for an FFP NTE CLIN has not been changed after award, then additional funding may not be added to that FFP NTE CLIN to complete the specified work statement because the contractor takes full responsibility for all costs and resulting profit or loss under an FFP contract. However, if the work statement has been changed pursuant to contract clause FAR 52.243-1(a), then the FFP NTE CLIN price and associated funding may be increased as appropriate in accordance with FAR 52.243-1(b).

    4. With regard to any CR NTE CLINS, if the associated work statements have been changed pursuant to clause FAR 52.243-2(a), then the CR NTE CLIN estimated cost, any fee and associated funding may be increased as appropriate in accordance with FAR 52.243-2(b).  As set forth in clause FAR 52.232-20(a)(2), the contractor only agrees to use its best efforts to perform the work currently specified by the CR NTE CLINs and all obligations under those CLINs within their respective estimated costs. FAR 52.232-20(d)(2) means that the Contractor is not obligated to continue performance under any CR NTE CLIN or otherwise incur costs in excess of the NTE amount until the Contracting Officer: (i) notifies the Contractor in writing that the estimated cost has been increased and (ii) provides a revised estimated NTE cost of performing the CR NTE CLIN. Therefore in the event of a cost overrun of a CR NTE CLIN, the contracting officer may increase the estimated cost and associated funding in order to complete the CLIN work statement effort.

     

    Open full Question Details
Chat with DAU Assistant
Bot Image