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  • Question

    First, can a CPFF term "fee" be based on a percentage of labor rates or should it just be a fixed $ amount in the contract? If the fee can be based on rates, can the rates be given after award of the contract? Would any of this be considered a Cost Plus Percentage of Cost?


    Answer

    This response is based on the information provided.  We suggest you discuss with your contracting and finance team, program manager and/or legal department as appropriate.

     

    The fixed fee is based on the estimated cost of the contract at award.  Once established, the fee becomes a fixed dollar amount.  If you do not have established rates, you do not have a proper estimate to establish a fair fixed fee; we would argue , you do not have a definitive contract as all terms and conditions are not established, agreed to and contracted for.  If by "a percentage of labor rates" you mean the contractor has provided some but not all labor rates, we offer that you do not contract any labor categories without a known labor rate.  We do not understand how you could make a fair and reasonable determination without knowing labor rates.  We struggle with the concept that the contractor does not know what the labor rates are unless these are new categories of labor the company does not presently employ.  Does this lack of rates also apply to the FFP and T&M CLINs?  If not, why?  The labor rates should not differ by type of contract.

    We do not understand the CPFF LOE concept.  The FAR does not have this category of contract so we are not clear as to how you will execute modifications to this contract structure.

     

    We do not know how your team intends to execute the contract.  If the fixed fee remains fixed (unless the government chooses to expand the within scope contract effort), then the contract would be proper.

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