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    In a service contract for grounds maintenance, can you set a specific number of times during the year, not to exceed a certain number and the contractor invoices for the specific number of lawn mowing occurrences and at the end of the firm fixed priced contract, any number of lawn mowing not used would be deobligated or contract modification to add more? Or any service really? Number of occurrences billed as used? Would this still be a firm fixed priced contract?


    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. 

     

    What your scenario describes is essentially an Indefinite Delivery, Indefinite Quantity contract; yes you could structure it that way.  A contractor may be willing to accept that contractual arrangement for grounds maintenance, but the structure introduces a level of price uncertainty.  Contractors will not be willing to invoice at the end of the period of performance.  The contractor will still want monthly payment or payment after each cut.  After signing, rather than knowing what cash flow I (the contractor) have over the period of performance, I now see the possibility of not doing/not being paid for the projected amount of work anticipated.  Competition may keep me from pricing that in.  If the offerors price that in, the overall price goes up to capture potential lost revenue.  If the offerors do not price it in because of competition, we could see the need (from the contractor's perspective) to spend less to recoup lost profit.

     

    You now have more administrative tasks, the main addition is that now the government (COR) decides when the mowing needs to be done.  The CO/COR needs to transmit a letter of direction.

    We believe your unit probably has good history of how many cuts are used on average over the course of a year to have a very good idea of an appropriate numbers of cuts such that the +/- is reasonably distributed between government and contractor.

     

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