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  • Question

    What's the impact of using a Cost Reimbursable CLIN on a primarily FFP Contract? Specifics: Facilities Maintenance Contract with a CLIN structured for Parts greater than a certain $amount to be CR NTE. In doing so, it eliminates some risk to the Contractor and drives down the overall contract price. Can this same CLIN be structured as a FPP CLIN with NTE, if it is, does the Contractor now have the ability to invoice for the full amount even if parts aren't needed?


    Answer

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

     

    An impact of using a cost reimbursement is that it can delay closing the contract while waiting for indirect costs of the company to be audited and settled if you cannot apply quick closeout procedures.

    If you establish a CLIN as FFP, once the government exercises the CLIN, the contractor has a right to all dollars on that CLIN. 

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