I am wanting to contract for repair of electronic components, shop replaceable assemblies (SRAs), for the EA 18G and P8A. If I make the determination in accordance with FAR 22.1003-6 that the repairs are so extensive as to constitute remanufacturing and the effort is therefore a supply effort rather than a service, can I use a Cost Plus Fixed Fee Level of Effort contact type? I would establish an estimated ceiling based on a level of effort defined by the estimated number of repairs over five years, and then fund it incrementally as assets are sent for repair. I have been told that I cannot use a CPFF LOE type contract for repairs that are considered supplies, but must call it a service. I see no where in the FAR or DFARS that explicitly say a CPFF LOE cannot be used for supplies. What is the correct 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 most important point is that in writing the contract, describe the performance expected form the contractor. You are using a type (not in the FAR) you refer to as CPFF-LOE. The Navy does refer to this contract type. All cost contracts (there can be rare exceptions) are best efforts (level of effort).
We do not believe you are wanting term performance (give us your best efforts over a period of time). We think that you want completion performance (give us your best efforts to make the repairs during the period of performance). We conclude this since you describe a number of repairs that will happen over the course of five years. You (probably) don't know how many or when, but from historical trends etc. you know they will be needed. This lends itself more to completion than term CPFF.
We suggest you revisit FAR 16.306. This excerpt is particularly germane, "FAR 16.306
(d) (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."
As you noted, nothing in the DFARS is related to your concern. We do suggest you look at any additional Navy implementation guidance or direction that may put greater restrictions on contracting officer discretion than the FAR does.