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  • Question

    Can Government force contractor to complete required reports without providing additional funding on the contract? Is contractor entitled to balance of fixed fee even though reports were not submitted to Government satisfaction?


    Answer

    In accordance with FAR 16.306 (d), if it is a CPFF term contract, then the fixed fee is payable at expiration.  If it is a CPFF Completion contract then you may withhold a portion of the fixed fee if the reports are a condition for payment in accordance with the terms of the contract.  If work can not be completed within the estimated cost, the government may require more effort without increase in fee, provided the government increases the estimated cost. 

    52.216-8 -- Fixed Fee (Mar 1997)

    (a) The Government shall pay the Contractor for performing this contract the fixed fee specified in the Schedule.

    (b) Payment of the fixed fee shall be made as specified in the Schedule; provided that after payment of 85 percent of the fixed fee, the Contracting Officer may withhold further payment of fee until a reserve is set aside in an amount that the Contracting Officer considers necessary to protect the Government’s interest. This reserve shall not exceed 15 percent of the total fixed fee or $100,000, whichever is less. The Contracting Officer shall release 75 percent of all fee withholds under this contract after receipt of the certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the Contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years’ settlements. The Contracting Officer may release up to 90 percent of the fee withholds under this contract based on the Contractor’s past performance related to the submission and settlement of final indirect cost rate proposals.

    You may want to discuss the details of your contract with your counsel in detemining what you can hold the contractor to deliver without increasing the contract ceiling.  Remember CPFF contracts are buying the contractor's best effort.

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