I am the Prime on a FFP contract. A subcontractor is requesting a ~$4M FFPLOE type of subcontract. According to FAR 16.207(d), there is a limitation of $150K for a FFPLOE. Is that really the case or does that apply to the Contract Officer only to get approval for anything higher or does that even apply to me as the Prime? Please advise. Thank you.
The FAR specifically states "A firm-fixed-price, level-of-effort term contract is suitable for investigation or study in a specific research and development area.", at FAR 16.207-2. There is a cap of $150,000 on the type of contract, at FAR 16.207-3(d). The regulation is clear, and there is no additional guidance in the DFARS. As the prime, you should inform the subcontractor of the $150,000 limit, and consult with the Contracting Officer to determine what is the proper type of contract for the requirement. Based on the proposed dollar value, FFPLOE is not acceptable.